text
stringlengths 1
2.25M
|
|---|
375 S.C. 194 (2007)
652 S.E.2d 397
In the Matter of David B. GREENE, Petitioner.
Supreme Court of South Carolina.
October 17, 2007.
ORDER
On December 4, 2006, the Court definitely suspended petitioner from the practice of law for nine months.[1]In the Matter of Greene, 371 S.C. 207, 638 S.E.2d 677 (2006). In January 2007, he filed a Petition for Reinstatement and the matter was referred to the Committee on Character and Fitness (CCF). The CCF has filed a Report and Recommendation recommending the Court grant the Petition for Reinstatement. Neither petitioner nor the Office of Disciplinary Counsel (ODC) filed any exceptions to the CCF's Report and Recommendation.
The Court grants the Petition for Reinstatement on the condition that petitioner promptly reimburse the Lawyers' Fund for Client Protection (the Fund) should the Fund determine any claims adversely to petitioner. Petitioner is hereby reinstated to the practice of law.
IT IS SO ORDERED. *195 JEAN H. TOAL, C.J., JAMES E. MOORE, JOHN H. WALLER, JR., COSTA M. PLEICONES, and DONALD W. BEATTY, JJ.
NOTES
[1] In addition, the Court required petitioner to "take CLE courses regarding the proper use of trust accounts" and pay the costs of the disciplinary proceedings. Id., 371 S.C. at 217, 638 S.E.2d at 682. Petitioner submitted proof he attended two CLEs which addressed the proper handling of trust accounts and paid the costs of the disciplinary proceedings.
|
31 F.3d 935
63 USLW 2080, 18 Employee Benefits Cas. 1609
STEINER CORPORATION RETIREMENT PLAN, Plaintiff,andSteiner Corp., a Nevada corporation, and Carol S. McCormick,administrator of the Steiner CorporationRetirement Plan, Plaintiffs,Counter-Defendants, Appellants,v.JOHNSON & HIGGINS OF CALIFORNIA, a California corporation,Donald F. Reeves, and Roy J. Bertoldo,Counterclaim Defendants, Appellees.STEINER CORP., a Nevada corporation, Carol S. McCormick,administrator of the Steiner CorporationRetirement Plan, and Steiner CorporationRetirement Plan, Plaintiffs,Counter-Defendants, Appellees,v.JOHNSON & HIGGINS OF CALIFORNIA, a California corporation,Donald F. Reeves, and Roy J. Bertoldo, Defendants,Counter-Claimants, Appellants.
Nos. 92-4097, 92-4106.
United States Court of Appeals,Tenth Circuit.
July 7, 1994.
Peter W. Billings, Jr. (Jay B. Bell and John E.S. Robson, with him on the briefs), of Fabian & Clendenin, P.C., Salt Lake City, UT, for plaintiffs, appellants, cross-appellees.
Robert A. Lewis, of McCutchen, Doyle, Brown & Enersen, San Francisco, CA (John R. Reese and Robert M. Gilhuly, of McCutchen, Doyle, Brown & Enersen, San Francisco, CA and David A. Greenwood, of Van Cott, Bagley, Cornwell & McCarthy, Salt Lake City, UT, with him on the briefs), for defendants, appellees, cross-appellants.
Before TACHA, SETH, and BRIGHT*, Circuit Judges.
SETH, Circuit Judge.
1
Appellant Steiner Corporation and other plaintiffs, who are not parties to this appeal, sued Appellees Johnson & Higgins of California and two of its employees, Donald F. Reeves and Roy J. Bertoldo (collectively "J & H"), for professional malpractice and breach of contract, both of which implicated ERISA and the Internal Revenue Code. The crux of Appellant's complaint was that J & H breached its actuarial duties by not properly advising Appellant regarding the redrafting of Appellant's employee retirement plan ("Plan"), by improperly redrafting section 11.2 of the Plan, by not providing Appellant with information that it requested, and by improperly calculating the amount of Appellant's annual contributions to the Plan. J & H counterclaimed for unpaid fees.
2
After a bench trial before the United States District Court for the District of Utah, the court found that J & H negligently redrafted section 11.2 of the Plan and awarded damages. With respect to the Appellant's other claims, the court found either that J & H had not committed malpractice or that Appellant incurred no damages as a result of any misconduct by J & H. On J & H's counterclaim the court found that the fees at issue were attributable to J & H's negligence and therefore were not recoverable. Both parties appealed the district court's decision.
3
In its opening brief to this court, Appellant accepted as true the factual findings of the district court as paraphrased below. Appellant established the Plan in 1958 to provide retirement benefits for its employees. The Plan is governed by ERISA and qualifies as a "defined benefit plan" as that term is defined in the Internal Revenue Code ("IRC"). Under the Plan employees are entitled to receive a monthly annuity as the normal form of retirement benefit. As an alternative to the annuity, the Plan provides employees with the option to select a lump sum distribution.
4
Throughout the years the Plan was amended several times, but for purposes of our review we are only concerned with the versions of the Plan enacted on January 1, 1978 ("1978 Plan") and on October 30, 1985 ("1985 Plan"). At all times the Plan and other documents provided that the lump sum optional benefit was supposed to be the actuarial equivalent of the annuity. Specifically, actuarial equivalent was defined in section 1.17 of the 1978 Plan as "a benefit having the same value as the benefit which such Actuarial Equivalent replaces."
5
In 1958 Appellant adopted a formula for calculating the value of the lump sum benefit. Over the life of the Plan, the formula was modified such that it became a layered formula ("Layered Formula"); consequently, calculating a single lump sum payment for a retiree required adding together three separately calculated amounts. Each of these amounts was based upon select actuarial assumptions as applied to an individual's duration of employment with Appellant. For service prior to January 1, 1972, a 3.5% interest rate and a 1951 group mortality table were the actuarial assumptions. For service between January 1, 1972 and December 31, 1977, a 4% interest rate and a 1951 group mortality table were used. For service after January 1, 1978, a 6% interest rate and a 1971 group mortality table were the assumptions. These actuarial assumptions that comprised the Layered Formula were not specified in the Plan, but rather they were written as a separate document. If a fluctuating market interest rate, which is an accurate measure of the effect of inflation on the dollar, were used to calculate the lump sum, the lump sum would have been the real dollar equivalent to a monthly annuity paid over the life of a retiree. However, because the Layered Formula utilized fixed rates, the lump sum was more valuable than the annuity.
6
In 1977 J & H was hired to replace William M. Mercer, Inc. as the actuary for the Plan. J & H continued to provide actuarial services until 1988 when it was fired by Appellant. As a part of its services, J & H prepared annual actuarial statements that valued the Plan and provided a range of permissible annual contributions that were to be made by Appellant. Although almost all retirees historically opted for the lump sum, J & H evaluated the Plan based on the value of annuities rather than the more valuable lump sum. As a consequence, the Plan valuations substantially understated the value of the benefits and costs that Appellant had incurred.
7
For most of the time period relevant to this action, F.J. Kane was Appellant's Chief Financial Officer, and Daniel Harris was the Plan Administrator. Collectively, Mr. Kane and Mr. Harris were responsible for the entire operation and maintenance of the Plan, with J & H providing support services such as those mentioned above. Mr. Kane retired in 1984. It is undisputed that Mr. Kane knew that the Layered Formula provided a lump sum that was more valuable than the annuity despite the express language in the Plan that they were to be comparable.
8
On July 1, 1984, Kevin Steiner replaced Mr. Kane as Chief Financial Officer. The record reflects that unlike Mr. Kane, Mr. Steiner did not know that the lump sum was more valuable than the annuity. Also, there is no evidence that Mr. Harris informed Mr. Steiner of the disparity between the alternative benefits. Sometime in 1984 the decision was made to amend the Plan because of the enactment of the Retirement Equity Act and other applicable federal laws and regulations. The most important requirement imposed by these enactments was that by October 31, 1985 a qualified plan must specify all of the factors used to calculate the actuarial equivalence of optional benefits so that the calculations would be non-discretionary and known to a plan's participants.
9
Sometime in February 1985, Mr. Steiner met with representatives of J & H to discuss amending the Plan. Although J & H disputes the following, the record supports the court's finding that Mr. Steiner requested that J & H provide a valuation of the Plan assuming that all retirees opted for the lump sum as opposed to J & H's traditional method of valuating based on the annuity. Although Mr. Steiner made several more requests for this information, J & H did not provide the calculations until after the October 31, 1985 deadline for Appellant to submit its amended Plan for approval. Rather than make the requested calculations or inform Appellant that it could potentially change its Layered Formula when it amended the Plan, J & H submitted a proposed amended Plan for Mr. Steiner's approval that merely incorporated the preexisting Layered Formula. There were several other modifications made to the Plan that will be discussed later in this opinion. Without reading the proposed amended Plan or any of the previous plans, Mr. Steiner executed the proposed Plan on October 30, 1985.
10
Early in 1986, J & H finally provided the calculations requested by Mr. Steiner almost a year previously. Based on the calculations, Appellant amended the 1985 Plan in July 1986 so that the lump sum was in fact the actuarial equivalent of the annuity. However, because this amendment was made after October 31, 1985, it applied only to the prospective calculation of benefits accrued after July 1986. Mr. Steiner testified at trial that if J & H had submitted the requested calculations before October 31, then Appellant would have adopted a new formula for calculating the lump sum that would have retroactively affected retirees' benefits such that the lump sum would have been equal to the annuity benefit for anyone retiring after October 31.
11
Unrelated to the facts surrounding the Layered Formula, the court found that Appellant sold the stock of a subsidiary named Steiner Financial Corporation ("SFC") in 1987. As a result SFC's fourteen employees were transferred and later terminated. Of these fourteen employees, only one was fully vested under the Plan while the other thirteen were not. As a matter of percentages, the SFC employees constituted only 1.6 percent of all Steiner employees, and the thirteen non-vested SFC employees comprised 2.6 percent of Steiner's total non-vested employees.
12
When J & H revised the Plan in 1985, it rewrote section 17.3 of the 1978 Plan. As originally drafted, section 17.3 provided:
13
"In the event of permanent discontinuance of contributions or termination (whole or partial) of the Plan, all Participants for whom the Plan is being discontinued or terminated shall be fully vested with respect to benefits to which they would have been entitled had they terminated employment with a fully vested interest as of the date of such discontinuance or termination."
14
When it drafted the 1985 Plan, J & H replaced section 17.3 with section 11.2 which provided:
15
"As to any Employer for which there is a complete discontinuance of contributions, or for which the Plan is terminated or partially terminated, ... the Participants in its employ ... [shall be fully vested]."
16
The court found that Appellant did not want the Plan amended to provide greater rights than required by ERISA. Furthermore, the court found that Appellant incurred $119,000.00 in costs as a result of vesting the previously non-vested thirteen SFC employees when it discontinued making contributions to the Plan. The implication of this holding is that the vesting requirements of section 11.2 exceeded ERISA's mandate and therefore J & H's amendment to the Plan unjustly caused Appellant to vest its former employees.
17
Based on the facts as summarized above, the district court held:
18
1. J & H negligently failed to inform Appellant that it may have been possible to change the Layered Formula when Appellant adopted the 1985 Plan, and negligently failed to provide comparative calculations requested by Mr. Steiner in a timely manner.
19
2. The Layered Formula previously used by Appellant became a part of the Plan by administrative practice, usage and common consent; therefore, the lump sum actuarial equivalence factors could not be altered to reduce accrued benefits. 26 U.S.C. Sec. 411(d)(6); 29 U.S.C. Sec. 1054(g).
20
3. Appellant suffered no damages as a result of allegedly making insufficient contributions to the Plan because J & H failed to value the lump sum rather than the annuity, and because payment of additional contributions by Appellant was wholly speculative.
21
4. J & H negligently redrafted section 11.2 of the 1985 Plan, and Appellant was not contributorily negligent in this regard. Such negligence caused financial injury to Appellant in the amount of $119,000.00, plus interest.
22
5. J & H's counterclaim for unpaid fees is dismissed because the fees related solely to J & H's negligent conduct.
23
On appeal, the parties challenge every legal conclusion of the court. Appellant argues (1) that the Layered Formula could have been altered at the time the Plan was amended in 1985, and (2) that the court erred by concluding that it was wholly speculative whether Appellant would have made additional contributions to the Plan if J & H had correctly valued the lump sum in its annual actuarial statements. In its cross-appeal, J & H claims (1) that it did not improperly amend the 1985 Plan to require vesting of SFC employees, and (2) that there is no evidence supporting the court's decision that J & H's counterclaim for fees related exclusively to its own negligence. There are miscellaneous claims that will be expressly dealt with throughout this opinion.
24
It is well settled that we review the district court's findings of fact under the clearly erroneous test. Salve Regina College v. Russell, 499 U.S. 225, 111 S.Ct. 1217, 113 L.Ed.2d 190. (1991). By the same token, we review the court's conclusions of law de novo. Estate of Holl v. Commissioner, 967 F.2d 1437 (10th Cir.1992).
LUMP SUM ACTUARIAL FACTORS: LAYERED FORMULA
25
As we related in the recitation of the facts, the actuarial factors historically used by Appellant to calculate the lump sum optional benefit were included in a document that was separate and distinct from the Plan document. This is precisely why Appellant had to amend its Plan by October 31, 1985. See Rev. Rul. 79-90, 1979-1 C.B. 155; Rev. Rul. 81-12, 1981-1 C.B. 228. The issue we are concerned with is whether Appellant could have changed the actuarial assumptions at the time of amendment in October 1985 to retroactively reduce the lump sum benefit. If so, J & H was under a professional duty to provide Appellant with the necessary information and calculations to permit it to amend the Layered Formula. Although the parties have made numerous and often overly complex arguments relative to this question, we discern that the key lies in the express language of ERISA, the IRC, and related regulations at the time the Plan was amended.
26
By way of preface, we are assuming for purposes of this appeal that the Layered Formula was in fact a part of Appellant's Plan. Despite J & H's argument to the contrary, the applicable statutes, regulations, and revenue rulings clearly state that only amendments to a plan that adversely affect accrued benefits are to be restrained. While the parties make numerous arguments concerning the accuracy of such an assumption, we do so because our decision does not depend on whether or not there was a "plan amendment."
In 1985, 29 U.S.C. Sec. 1054(g) provided:
27
"(1) The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan, other than an amendment described in section 1082(c)(8) of this title.
28
"(2) For purposes of paragraph (1), a plan amendment which has the effect of--
29
"(A) eliminating or reducing an early retirement benefit or a retirement-type subsidy (as defined in regulations), or
30
"(B) eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reducing accrued benefits...."
31
Internal Revenue Code Sec. 411(d)(6) was essentially for all practical purposes the same as the above quoted ERISA section; thus, for ease of reference we will cite only to 29 U.S.C. Sec. 1054(g). Both sections have been amended over time but with no significant changes.
32
It is without a doubt that the lump sum is not an accrued benefit as that term is defined in 29 U.S.C. Sec. 1002(23) (accrued benefits are "expressed in the form of an annual benefit commencing at normal retirement age...."). (Emphasis Added.) Nor is there any argument that we are dealing with an early retirement benefit. Therefore, our inquiry is whether the lump sum is either a retirement subsidy or an optional form of benefit such that it may be subject to Sec. 1054(g)(2).
33
We recently ruled that a lump sum benefit is an optional form of benefit for purposes of Sec. 1054(g)(2). Counts v. Kissack Water & Oil Service, Inc., 986 F.2d 1322, 1324 (10th Cir.1993). We see no reason to depart from our conclusion in Counts by reason of the facts presented herein. See also Ross v. Pension Plan for Hourly Employees of SKF Indus., Inc., 847 F.2d 329, 333 (6th Cir.1988) (optional form of benefit usually involves choice of employee as to how benefit is received); Davis v. Burlington Indus., Inc., 796 F.Supp. 866 (E.D.N.C.1991). Because Sec. 1054(g)(2) distinguishes between optional forms and retirement-type subsidies, we find that generally a benefit is either one or the other, but not both.
34
Even if a lump sum optional form of benefit could also be a subsidy, such is not the case here. Appellees correctly point out that the Secretary has not yet defined retirement-type subsidy as provided for in the statute. Nevertheless, J & H contends that the lump sum is a subsidy because its value exceeded the annuity's. See Bencivenga v. Western Pennsylvania Teamsters, 763 F.2d 574 (3d Cir.1985); Costantino v. TRW, Inc., 773 F.Supp. 34 (N.D. Ohio 1991). After carefully reviewing these cases, we are not persuaded that they support J & H's position. Furthermore, J & H's contention is contrary to the legislative history, cited in its brief, that defines subsidy as a benefit "continu[ing] after retirement." S.Rep. No. 575, 98th Cong., 2d Sess. 30, reprinted in 1984 U.S.C.C.A.N. 2547, 2576. The lump sum benefit at issue is paid out in full at the time of retirement and does not continue thereafter like a subsidy. We therefore conclude that the lump sum optional benefit is not a retirement-type subsidy. See Costantino v. TRW, Inc., 13 F.3d 969 (6th Cir.1994) (subsidy is a type of benefit specified in the plan as monthly annuities available to early retirees which exceed the annuities for those who retire at a normal retirement age because an early retiree's benefits last longer).
35
According to the explicit language of Sec. 1054(g)(2), since the lump sum is an optional form of benefit, Appellant may be said to impermissibly reduce accrued benefits only if it were to eliminate the lump sum. However, the record is clear that if Mr. Steiner, who was responsible for the administration of the Plan at the critical time in question, October 31, 1985, had known that the lump sum was more valuable than the annuity, then he would have opted to change the actuarial factors to reduce the lump sum so that it was equivalent to the annuity. Furthermore, there is no argument by either party nor any evidence suggesting that Appellant ever intended to eliminate the lump sum benefit. Neither ERISA nor the IRC equates the reduction of an optional benefit with a reduction in accrued benefits, and it is only the reduction of accrued benefits that is not permitted by the statutes.
36
J & H attempts to depart from the express language of the statutes by looking to Treasury Regulation Sec. 1.411(d)-4, codified at 26 C.F.R. Sec. 1.411(d)-4. The gist of Appellees' argument is that "eliminating an optional form of benefit" is interpreted under Sec. 1.411(d)-4 as including "reducing" an optional benefit. Even if such an interpretation were accurate, Sec. 1.411(d)-4 A-9(a) provides that "the provisions of this section are effective January 30, 1986." Consequently, Sec. 1.411(d)-4 has no bearing on this dispute because all of the pertinent activities occurred prior to October 31, 1985.
37
Appellees also rely on Treasury Regulation Sec. 1.411(d)-3(b), codified at 26 C.F.R. Sec. 1.411(d)-3(b), which provides:
38
"(b) Prohibition against accrued benefit decrease. Under section 411(d)(6) a plan is not a qualified plan ... if a plan amendment decreases the accrued benefit of any plan participant.... For purposes of determining whether or not any participant's accrued benefit is decreased, all the provisions of a plan affecting directly or indirectly the computation of accrued benefits which are amended with the same adoption and effective dates shall be treated as one plan amendment. Plan provisions indirectly affecting accrued benefits include, for example, provisions relating to years of service and breaks in service for determining benefit accrual, and to actuarial factors for determining optional or early retirement benefits."
39
This regulation only prohibits the decrease in accrued benefits, which we have already held do not include lump sum payments. The regulation does not say that a change in actuarial factors that reduces optional benefits is prohibited, and we cannot infer such a meaning. Rather, it is more appropriate to read this regulation as conforming to the express language of the statute to which it relates. Again, as we have previously determined, only an elimination of the lump sum suffices to reduce accrued benefits for purposes of the statute. Thus, under the regulation only a change to the actuarial factors that effectively eliminates an optional benefit will effectuate an impermissible reduction of accrued benefits.
40
Based on the foregoing, we must conclude that the district court erred when it held that the Layered Formula could not be amended to reduce the lump sum optional benefit at the time Appellant adopted the 1985 Plan. In light of the record and our holding, we further hold that J & H had a duty to provide the lump sum calculations requested by Mr. Steiner and to inform Appellant that it could change the Layered Formula to make the lump sum equivalent to the annuity, and that J & H breached its duty by failing to provide this information by October 31, 1985. However, there still remain the issues of causation and damages; therefore, we REMAND to the district court for further proceedings on these issues. In addition, the merit of Appellees' defenses of laches and contributory negligence must also be decided on remand because the district court's opinion is silent as to these issues and they involve factual determinations that we are unwilling or unable to make.
CONTRIBUTIONS TO PLAN
41
The district court held that if J & H had annually calculated the value of accrued benefits based on the lump sum, Appellant would have needed to make substantially larger contributions to the Plan. Appellant argues that the court erred by finding that it was "wholly speculative" whether Appellant would have made such contributions because ERISA required plans to be adequately funded and because Appellant was capable of making the additional contributions. Unfortunately for Appellant, merely because the law requires a certain level of funding and Appellant could have attained that level, does not prove that Appellant would have in fact made the additional contributions. A thorough review of the record does not support the conclusion that the district court's factual findings were clearly erroneous. The trial court's decision of this claim is AFFIRMED.
VESTING
42
As we recited in the facts, section 11.2 of the 1985 Plan required Appellant to vest employees if for any employer, including a subsidiary like SFC, "there is a complete discontinuance of contributions, or ... the Plan is terminated or partially terminated." The district court agreed with Appellant that there had been a discontinuance of contributions to SFC in 1987, ostensibly when SFC was sold, and therefore Appellant was required to vest the previously non-vested thirteen SFC employees. The court also concluded that this vesting requirement was based on the language "as to any Employer" which did not appear in the 1978 Plan and was negligently inserted by J & H.
43
After carefully reviewing the record, we agree with the court that the phrase, "as to any Employer," was not present in the 1978 Plan and potentially increased Appellant's liability beyond the mandate of ERISA, 26 U.S.C. Sec. 411(d)(3). However, we find that the district court clearly erred when it found that the above quoted language caused Appellant to vest the SFC employees.
44
As a condition to vesting, section 11.2 required either a complete discontinuation of contributions to an employer or the total or partial termination of the Plan. We first look at the termination issue. Appellant would have us look only at SFC when determining whether or not there was a termination of the Plan. However, this argument is disingenuous in light of Appellant's earlier claim that a termination of a plan must be decided by looking to the plan in its entirety. We hold this to be the better argument, particularly since 26 U.S.C. Sec. 411(d)(3) clearly relates to the effect of a total or partial termination of an entire plan, not the total or partial termination of a portion of a plan. Because Appellant concedes that there is no total or partial termination of the entire Plan, see Weil v. Retirement Plan Admin. Comm., 913 F.2d 1045, 1051-52 (2d Cir.1990) ("significant percentage" of total number of employees must be fired to constitute partial termination of a plan), we must decide whether Appellant carried its burden of establishing that there was a complete discontinuance of contributions for SFC.
45
Initially, Appellees correctly discern that one of the SFC employees was vested at the time that SFC was sold; therefore, it is argued that there could not be a total discontinuance of contributions because Appellant was required to and in fact did make contributions for this employee. Even though this contention is persuasive, we find that the problem facing Appellant is its utter failure to illicit facts at trial that could support the district court's finding that Appellant had discontinued making contributions. Appellant points us to various passages in the trial transcript to bolster its assertion that the district court was correct, but the cited testimony only states that Mr. Steiner understood that section 11.2 required vesting if there had been a discontinuation and that he "thought that 11.2 required me to vest the employees." Aplt. Supp.App. at 62. This is not evidence that there was in fact a discontinuation of contributions, but merely is a statement as to Mr. Steiner's state of mind. At best the evidence suggests that Mr. Steiner vested the employees for unexplained reasons. We note that Appellant included in its supplemental appendix to this court a document purporting to show that there was indeed a discontinuation in 1987; however, it is beyond this court to entertain evidence that was not presented to the district court. Without this piece of evidence before the lower court, there were simply no facts alleged that could have supported the district court's finding of discontinuation. Consequently, the district court's holding that J & H owes Appellant $119,000.00, plus interest, based on the vesting of the SFC employees must be REVERSED.
UNPAID FEES
46
The parties make several arguments relative to the court's denial of J & H's counterclaim for unpaid fees because the fees related exclusively to J & H's negligence. Although we understand the holding of the district court, the court's opinion does not illuminate the factual findings supporting its legal conclusions. We therefore VACATE the court's holding as to this claim and REMAND for clarification.
47
Accordingly, the decision of the district court is AFFIRMED in part, REVERSED in part, VACATED in part, and REMANDED for proceedings consistent with this opinion.
*
Honorable Myron H. Bright, United States Circuit Judge for the Eighth Circuit, sitting by designation
|
Case: 14-15769 Date Filed: 01/12/2018 Page: 1 of 9
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-15769
Non-Argument Calendar
________________________
D.C. Docket Nos. 2:12-cv-14353-JEM,
2:08-cr-14003-JEM-1
TIMOTHY WAYNE CARVER,
Petitioner-Appellant,
versus
UNITED STATES OF AMERICA,
Respondent-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(January 12, 2018)
Before TJOFLAT, MARTIN, and NEWSOM, Circuit Judges.
PER CURIAM:
Timothy Wayne Carver, a federal prisoner, appeals the denial of his 28
U.S.C. § 2255 motion to vacate his convictions for attempting to use the internet to
entice a minor to engage in sexual activity, in violation of 18 U.S.C. § 2422(b)
Case: 14-15769 Date Filed: 01/12/2018 Page: 2 of 9
(“Count One”), and committing that offense while required to register as a sex
offender, in violation of 18 U.S.C. § 2260A (“Count Two”). He argues the district
court erred by not addressing some of the claims in his § 2255 motion and in
denying his motion for an evidentiary hearing. After careful review, we vacate and
remand for further proceedings.
I.
According to the stipulation of facts from Carver’s guilty plea to Count One,
Carver communicated through an internet chat room with an undercover officer
who was posing as the father of a minor girl with mental impairments. Carver
eventually agreed to pay $70 and meet the undercover officer at a set location,
where the officer would pick up Carver and drive him to the girl so he could
engage in sexual activity with her. Carver went to the meeting with condoms and
the agreed-upon $70 and was arrested after he got in the officer’s car.
Carver pled guilty to Count One and proceeded to a bench trial on Count
Two. At his bench trial, Carver stipulated that he was convicted of the offense
described in Count One and that he had previously been convicted of a sex crime.
The judge found him guilty of Count Two. Carver appealed, arguing that his
guilty plea was invalid and that he’d never formally waived his right to a jury trial
on Count Two. This Court affirmed Carver’s plea on Count One, but remanded for
a jury trial on Count Two. A jury then found Carver guilty of Count Two. On
2
Case: 14-15769 Date Filed: 01/12/2018 Page: 3 of 9
direct appeal of Carver’s Count Two conviction, his second appeal, this Court
affirmed.
Carver filed a § 2255 motion to vacate his sentence that raised three grounds
for relief. In Ground One, he claimed “ineffective assistance of counsel in relation
to jury trial.” He listed a number of counsel’s deficiencies: counsel’s failure to
advise him of his right to contest his guilt at trial; counsel’s failure to adequately
advise him regarding the stipulations of fact that led to the conviction; and
counsel’s failure to put on evidence that he did not specifically intend to entice a
minor to have sex. In Ground Two, Carver claimed “ineffective assistance of
counsel in relation to entry of a guilty plea,” arguing that his attorney failed to
advise him of the specific intent element of the offense charged in Count 1. He
said he did not intend to “persuade anyone of anything” and would not have pled
guilty if he understood the intent requirement. Finally, in Ground Three, Carver
claimed that his guilty plea for Count One was unknowing and involuntary because
it was based on a misunderstanding of the law and his defenses.
A magistrate judge issued a Report and Recommendation (“R&R”),
recommending that the district court deny Carver’s motion without an evidentiary
hearing. The magistrate judge wrote “[a]ll of the Movant’s arguments essentially
concern his decision to plead guilty to Count 1.” In effect, the magistrate judge
construed Ground One, which Carver titled “ineffective assistance of counsel in
3
Case: 14-15769 Date Filed: 01/12/2018 Page: 4 of 9
relation to jury trial,” as a claim of actual innocence relating to his guilty plea. The
magistrate judge also did not address each separate allegation of ineffective
assistance. Carver objected, arguing that the R&R “fail[ed] to address the
principal issue raised by the § 2255 motion: ineffective assistance of trial counsel.”
Carver also argued that an evidentiary hearing was warranted for his ineffective
assistance of counsel claims. The district court overruled Carver’s objections,
adopted the R&R, and denied Carver’s § 2255 motion.
This appeal followed. We granted a certificate of appealability (“COA”) to
address the following issues:
[1] Whether the District Court misconstrued the claims asserted in
ground one of Mr. Carver’s § 2255 motion alleging the ineffective
assistance of Mr. Carver’s trial counsel, or violated Clisby v. Jones,
960 F.2d 925 (11th Cir. 1992) (en banc), by failing to properly
address those claims?
[2] Whether the District Court erred in denying all of Mr. Carver’s
claims without conducting an evidentiary hearing?
We address each issue in turn.
II.
In a proceeding on a 28 U.S.C. § 2255 motion to vacate, we review the
district court’s factual findings for clear error and its legal conclusions de novo.
Lynn v. United States, 365 F.3d 1225, 1232 (11th Cir. 2004) (per curiam). The
scope of review is limited to the issues specified in the COA. Murray v. United
States, 145 F.3d 1249, 1250–51 (11th Cir. 1998) (per curiam).
4
Case: 14-15769 Date Filed: 01/12/2018 Page: 5 of 9
In Clisby v. Jones, we held that if a district court fails to address each claim
raised in a habeas petition, we “will vacate the district court’s judgment without
prejudice and remand the case for consideration of all remaining claims.” 960 F.2d
at 938; see also Rhode v. United States, 583 F.3d 1289, 1291 (11th Cir. 2009) (per
curiam) (applying Clisby to § 2255 motions). Under Clisby, our only role is to
determine whether a district court failed to address a claim; we do not address
whether the underlying claim is meritorious. Dupree v. Warden, 715 F.3d 1295,
1299 (11th Cir. 2013). To qualify for relief under Clisby, though, “[a] habeas
petitioner must present a claim in clear and simple language such that the district
court may not misunderstand it.” Id.
In addition, “the district court must develop a record sufficient to facilitate
our review of all issues pertinent to . . . the ultimate merit of any issues for which a
COA is granted.” Long v. United States, 626 F.3d 1167, 1170 (11th Cir. 2010)
(per curiam). When a district court summarily denies a § 2255 motion, we will
vacate and remand when “an adequate appellate review of the basis for the district
court’s decision requires something more than a mere summary denial.”
Broadwater v. United States, 292 F.3d 1302, 1304 (11th Cir. 2002) (per curiam).
Here, the district court erred by failing to address all of the claims in
Carver’s § 2255 motion. The magistrate judge read all of Carver’s arguments to
“essentially concern his decision to plead guilty to Count 1.” But Ground One of
5
Case: 14-15769 Date Filed: 01/12/2018 Page: 6 of 9
Carver’s § 2255 motion specifically related to his trial on Count Two, not his
guilty plea on Count One. And because the magistrate judge construed Ground
One of Carver’s motion as “essentially one of actual innocence,” not ineffective
assistance of trial counsel, he did not analyze Carver’s claims of trial counsel’s
ineffectiveness under the framework set out in Strickland v. Washington, 466 U.S.
688, 104 S. Ct. 2052 (1984). In addition, the magistrate judge did not specifically
address some of Carver’s arguments in support of Ground One, including that his
trial counsel failed to investigate certain aspects of his case. A denial of those
arguments without discussion does not provide us with an adequate basis for
appellate review. See Broadwater, 292 F.3d at 1304.
Further, contrary to the government’s assertions, neither the wording of
Ground One nor the fact that Carver is counseled defeat his claims of Clisby error.
While Carver’s counseled petition is not afforded the liberal construction given to
pro se parties, taken together, his § 2255 motion and his objection to the R&R were
sufficiently clear to alert the district court that he had raised a claim for ineffective
assistance of trial counsel on Count Two that had not been addressed by the
magistrate judge. See Dupree, 715 F.3d at 1299. We therefore vacate and remand
for the district court to address in the first instance Carver’s claims for ineffective
assistance of trial counsel alleged in Ground One of his § 2255 motion.
III.
6
Case: 14-15769 Date Filed: 01/12/2018 Page: 7 of 9
We review the denial of an evidentiary hearing for abuse of discretion.
Winthrop-Redin v. United States, 767 F.3d 1210, 1215 (11th Cir. 2014). An
evidentiary hearing must be held on a § 2255 motion to vacate “[u]nless the motion
and the files and records of the case conclusively show that the prisoner is entitled
to no relief.” 28 U.S.C. § 2255(b). “[I]f the petitioner alleges facts that, if true,
would entitle him to relief, then the district court should order an evidentiary
hearing and rule on the merits of his claim.” Aron v. United States, 291 F.3d 708,
714–15 (11th Cir. 2002) (quotation omitted). But if a petitioner’s claims “are
merely conclusory allegations unsupported by specifics, or if the record refutes the
applicant’s factual allegations or otherwise precludes habeas relief,” a district court
is not required to hold an evidentiary hearing. Allen v. Sec’y, Fla. Dep’t of Corr.,
611 F.3d 740, 745 (11th Cir. 2010) (quotations and citation omitted).
“To show that he is entitled to an evidentiary hearing on his ineffective
assistance of counsel claim, [Carver’s] § 2255 motion must allege facts that would
show (1) that counsel’s performance was deficient and (2) that the deficient
performance prejudiced the defense.” Griffith v. United States, 871 F.3d 1321,
1329 (11th Cir. 2017) (quotation omitted). When a defendant has pled guilty, he
can show deficient performance by demonstrating that his counsel did not provide
him “with an understanding of the law in relation to the facts, so that [he] may
make an informed and conscious choice” between pleading guilty and going to
7
Case: 14-15769 Date Filed: 01/12/2018 Page: 8 of 9
trial. See Stano v. Dugger, 921 F.2d 1125, 1151 (11th Cir. 1991) (quotation
omitted). He “can show prejudice by demonstrating a reasonable probability that,
but for counsel’s errors, he would not have pleaded guilty and would have insisted
on going to trial.” Lee v. United States, 582 U.S. ___, 137 S. Ct. 1958, 1965
(2017).
Given that a remand is appropriate for further consideration of Carver’s
claims pursuant to Clisby, a ruling on Carver’s appeal of the denial of his motion
for an evidentiary hearing would be premature. As to Ground One, because the
district court failed to address Carver’s ineffective assistance of trial counsel
claims, we cannot say whether the district court determined that the claims were
affirmatively contradicted by the record or otherwise clearly barred on their face.
Therefore we do not have a sufficient record for deciding whether it abused its
discretion in making that determination. See Allen, 611 F.3d at 745. In light of
the Clisby error and undeveloped record as to Ground One, we vacate and remand
for reconsideration of whether an evidentiary hearing is warranted for Carver’s
Ground One claims.
As to Grounds Two and Three, the reasoning for denying an evidentiary
hearing is also unclear. The R&R states “in light of the arguments and record,” the
court did not “see need for a hearing.” But the R&R did not point to specific
evidence in the record that contradicted Carver’s claims of ineffective assistance of
8
Case: 14-15769 Date Filed: 01/12/2018 Page: 9 of 9
counsel. We recognize that trial records are “often incomplete or inadequate” for
the purposes of an ineffective assistance claim. Massaro v. United States, 538 U.S.
500, 504–05, 123 S. Ct. 1690, 1694 (2003). And contrary to statements in the
R&R, a guilty plea does not bar Carver’s claims that he received ineffective
assistance of counsel in deciding whether to plead guilty or go to trial. See Lee,
137 S. Ct. at 1965. In his § 2255 motion, Carver said his attorney misinformed
him of the intent requirement and possible defenses he could have pursued for
Count One. He also said he would not have pled guilty if he had been properly
informed. In light of the limited record before us, we cannot say that the “records
of the case conclusively show that the prisoner is entitled to no relief.” 28 U.S.C.
§ 2255(b). We therefore vacate and remand with instructions to fully address
Grounds Two and Three under Strickland in the first instance, and to hold an
evidentiary hearing unless a full consideration of these claims reveals that no
hearing is required.
VACATED AND REMANDED.
9
|
128 F.2d 865 (1942)
WRIGHT
v.
GIBSON et al.
No. 10016.
Circuit Court of Appeals, Ninth Circuit.
June 15, 1942.
*866 Herbert T. Silverberg, of Los Angeles, Cal., for appellant.
Musick & Burrell and Harold H. Streight, all of Los Angeles, Cal., for appellee Homer L. Gibson.
Mosher & Shafer, of Los Angeles, Cal., for appellee Frank W. Royer.
Before WILBUR, DENMAN, and MATHEWS, Circuit Judges.
MATHEWS, Circuit Judge.
In an action by appellant against appellees, appellant filed a fourth amended complaint (hereafter called the complaint) which contained two counts. Appellees moved to dismiss the second count. The court heard the motions and, on July 12, 1941, filed a written opinion concluding with the statement that "The motion[1] * * * is granted." Thereupon, on July 12, 1941, the clerk of the court made a minute entry stating that the motions had theretofore been argued and submitted, and that "The court now files its opinion; and, pursuant thereto, said motions are granted." On October 10, 1941, appellant filed a notice of appeal reading as follows:
"Notice is hereby given that [appellant] hereby appeals to the Circuit Court of Appeals for the Ninth Circuit, from the order dismissing the second count of [appellant's] fourth amended complaint, and entered in this action on July 12, 1941."
Actually, no order dismissing the second count was ever entered. Indeed, so far as the record shows, no order, judgment or decree of any kind was ever entered in this case. The opinion was not an order, judgment or decree. Its filing, therefore, did not constitute the entry of an order, judgment or decree; nor did the clerk's statement that "said motions are granted" constitute such an entry. Thus, at the time the notice was filed, there was nothing from which an appeal could be taken.
A judgment dismissing an action is a final decision and hence is appealable.[2] An order which merely grants a motion to dismiss an action is not a final decision and is not appealable.[3] In this case, there was no motion to dismiss the action and, of course, no order granting such a motion, nor any judgment dismissing the action. The action is still pending in the District Court.
*867 Where a complaint sets forth, in separate counts, separate claims for relief, a judgment dismissing one of the counts is a final decision and hence is appealable,[4] but an order which merely grants a motion to that effect is not a final decision and is not appealable.[5] In this case, the complaint, although it contained two counts, set forth only one claim for relief. That was a claim for damages in the sum of $45,729.26,[6] with interest and costs. In the first count, the claim was predicated upon the common law. In the second count, it was predicated upon a statute.[7] Thus the complaint set forth, in separate counts, two grounds upon which relief was claimed, but set forth only one claim for relief. In this case, therefore, a judgment dismissing one count of the complaint, leaving the other count pending, would not be a final decision and would not be appealable.[8] Much less would an order which merely granted a motion to that effect be appealable.
Appeal dismissed.
NOTES
[1] Actually, there were two motions.
[2] Judicial Code, § 128(a), 28 U.S.C.A. § 225(a).
[3] City and County of San Francisco v. McLaughlin, 9 Cir., 9 F.2d 390.
[4] Reeves v. Beardall, 62 S.Ct. 1085, 86 L.Ed. ___, decided May 11, 1942.
[5] City and County of San Francisco v. McLaughlin, supra.
[6] $52,000, less $6,270.74.
[7] Securities Act of 1933, §§ 11 and 15, 15 U.S.C.A. §§ 77k and 77o.
[8] Ex parte National Enameling & Stamping Co., 201 U.S. 156, 26 S.Ct. 404, 50 L.Ed. 707; Memphis Keeley Institute v. Leslie E. Keeley Co., 6 Cir., 144 F. 628; Sheppy v. Stevens, 2 Cir., 200 F. 946; United States v. Bighorn Sheep Co., 8 Cir., 276 F. 710. See, also, Louisiana Navigation Co. v. Oyster Commission, 226 U.S. 99, 33 S.Ct. 78, 57 L. Ed. 138; Collins v. Miller, 252 U.S. 364, 40 S.Ct. 347, 64 L.Ed. 616.
|
51 Cal.Rptr.3d 741 (2006)
145 Cal.App.4th 495
Lee Max BARNETT, Petitioner,
v.
The SUPERIOR COURT of Butte County, Respondent;
The People, Real Party in Interest.
No. C051311.
Court of Appeal of California, Third District.
December 5, 2006.
*747 Daniel J. Broderick, Acting Federal Defender, Jennifer M. Corey, Assistant Federal Defender; Robert D. Bacon, for Petitioner.
No appearance for Respondent.
Bill Lockyer, Attorney General, Robert R. Anderson, Chief Assistant Attorney General, Mary Jo Graves, Senior Assistant Attorney General, Ward A. Campbell, Supervising Deputy Attorney General, Erie L. Christoffersen, Deputy Attorney General, for Real Party in Interest.
ROBIE, J.
Penal Code [1] section 1054.9 allows persons subject to a sentence of death or life in prison without the possibility of parole to file a motion for postconviction discovery to assist in seeking a writ of habeas corpus or an order vacating the judgment. In In re Steele (2004) 32 Cal.4th 682, 10 Cal.Rptr.3d 536, 85 P.3d 444, the California Supreme Court resolved a number of "important procedural and substantive issues regarding that section," (id. at p. 688, 10 Cal.Rptr.3d 536, 85 P.3d 444) but the court left many other issues unresolved.
Here, we have occasion to continue the work begun in Steele. In 2004, shortly after the publication of Steele, petitioner Lee Max Barnett filed a comprehensive motion for discovery under section 1054.9 in Butte County Superior Court. Ultimately, the court granted many of Barnett's requests but denied many others. Barnett brought this writ proceeding to challenge the denials.
As will be shown, we conclude the trial court did not abuse its discretion in denying most of Barnett's requests but did abuse its discretion in denying some, and therefore we will grant Barnett's petition in part and deny it in part. In reaching that result, we conclude (among other things) that: (1) the Legislature did not intend to require a defendant seeking discovery under section 1054.9 to prove the actual existence (or a good faith belief in the actual existence) of materials in the possession of the prosecution and/or the relevant law enforcement authorities before the court can order discovery under the statute; (2) in requesting materials pursuant to section 1054.9, a defendant does not have to provide the People with an inventory of every single document or other item the defendant possesses already; (3) section 1054.9 does not give a defendant the right to have the court order duplicative discovery; (4) section 1054.9 does not provide a vehicle for a defendant to enforce any obligation the People may have to produce exculpatory evidence they did not possess at time of trial; and (5) an unsworn denial of the existence of any further responsive documents is not a valid basis for upholding the denial of a defendant's motion for discovery under section 1054.9.
FACTUAL AND PROCEDURAL BACKGROUND
In 1988 in Butte County, Barnett was convicted of the murder of Richard Eggett (as well as other crimes) and sentenced to death. In 1998, the California Supreme Court affirmed his convictions and sentence. (People v. Barnett (1998) 17 Cal.4th 1044, 1075, 1104, 1183, 74 Cal. Rptr.2d 121, 954 P.2d 384.)
*748 In July 2004, Barnett filed a discovery motion pursuant to section 1054.9.[2] At the time, he had two petitions for habeas corpus pending in the California Supreme Court and one pending in federal court.[3]
In his discovery motion, Barnett sought various materials, including materials now missing from the numbered discovery provided during trial, materials the prosecution allegedly failed to produce in response to a discovery order during trial, and various other materials.
At a hearing on the motion in November 2004, in front of the same judge who had served as the trial judge 16 years earlier, the prosecutor told the court the parties had been working together outside of court to narrow the issues. Barnett's counsel agreed they had "made a lot of progress," but both sides acknowledged there would be areas of disagreement. Ultimately, the parties agreed to meet and confer on a proposed briefing schedule to address those areas of disagreement.
In December 2004, the court entered an order setting a briefing schedule to address "each specific item remaining at issue" and setting a further hearing for March 2005. Pursuant to the briefing schedule, Barnett filed a supplemental brief that identified 60 different items or categories of items that he was seeking to discover.
The People were to file their brief in January 2005, but failed to do so. In February, pursuant to the ordered briefing schedule, Barnett filed his reply brief asking the court to "grant discovery of all items requested in the amended discovery motion" due to the People's failure to file their brief.
At the hearing in March, the prosecutor apologized for failing to file his brief and said he would "like to try another round of informal [discussion with apposing counsel] before we involve the Court." Barnett's counsel agreed.
At a status conference in April, at the request of Barnett's counsel, the court ordered the People to produce by May 12 everything they were going to agree to produce. The parties and the court would then address "any areas of disagreement" at another status conference already set for July.
At the July status conference, Barnett's counsel acknowledged that the People had produced over 300 pages of discovery materials and 64 compact discs of audio tape recordings. Ultimately, it was agreed Barnett would file a further supplemental brief in August, with the People's response to follow in September.
In their response, the People argued, among other things, that: (1) "in requesting materials pursuant to section 1054.9, a petitioner must show that the requested *749 materials are not in his possession"; (2) to be entitled to an order for the production of documents, the prosecution was required, but failed, to disclose at trial, "a petitioner must overcome a presumption that the prosecution properly fulfilled its discovery obligations at trial"; and (3) to succeed on a motion under section 1054.9, "a petitioner must establish a good faith basis to believe the materials requested actually exist." The People also specifically responded to many of Barnett's discovery requests by noting that "[n]othing exists as to this request beyond that already disclosed to petitioner."
A further hearing on the discovery motion was held in October 2005, and in November the trial court issued its ruling, granting some requests and denying others. As to the requests the trial court granted, the court ordered that "if there [are] no discovery materials or no further discovery materials to be provided beyond what has already been provided, then the [People] should so state in a written declaration to be provided petitioner-defendant on or before the discovery deadline. [¶] The declaration should state the factual basis for the conclusion, quote, nothing exists to be discovered as to this item of discovery, end quote; or, quote, nothing exists as to the discovery item beyond what has already been provided, end quote, [¶] The declaration should address what efforts were made to find the item or items of discovery, including what, if any, agencies or individuals were contacted and their responses."
As to the requests the trial court denied, the court did not offer a separate reason for its ruling as to each request, but stated only that it was doing so "because I find that particular request falls outside the guidelines set forth in the Steele decision."
On November 30, 2005, Barnett commenced this proceeding by filing a petition for writ of mandate in this court seeking to compel the trial court to grant the various discovery requests it had denied. We ordered the issuance of an alternative writ of mandate.
DISCUSSION
At issue in this proceeding is the trial court's denial, in whole or in part, of 24 different discovery requests.[4] We will address each of those requests separately.
I
Home Addresses Of Law Enforcement Witnesses
In February 1987, on a motion by Barnett to compel discovery, the trial court ordered the People to make available to Barnett "[t]he names, addresses and telephone numbers of all witnesses, prepared in a written list, who may be called to testify by the prosecution at any hearing or phase of the trial in this case, including but not limited to the guilt trial and penalty phase."
In his motion for discovery under section 1054.9, Barnett asserted that "[t]he state never provided such a list." Barnett claimed "[t]he district attorney did provide a list of potential witnesses ..., but many of the witnesses who testified at trial are not on the list." Barnett requested "a complete and accurate witness list as was ordered in the trial court's discovery order."
The People asserted they had "no memory or documentation that such a specific list was given other than a partial subpoena list used for internal purposes." The *750 People did, however, "attempt[ ] to reconstruct the missing witness list with other information that existed in the People's files from the trial," but did not include in that list the home addresses of any law enforcement officers who testified. According to the People, the "home addresses of police ... witnesses ... were not reconstructed" because "a peace officer's home address is not to be disclosed."
The trial court ordered the People to provide the requested witness list, with the exception that "[n]o home addresses or telephone numbers of law enforcement officers are required to be disclosed."
Barnett contends the trial court erred in refusing to order the People to disclose the home addresses of the 15 law enforcement officers who testified at trial. He contends the home addresses of the law enforcement witnesses were relevant for impeachment purposes because "[a] credibility investigation includes an inquiry into the witnesses' reputation in their home communities" and denying him those addresses deprived him of various constitutional rights, including his Sixth Amendment right to confrontation.
In People v. Lewis (1982) 133 Cal.App.3d 317,184 Cal.Rptr. 31, a defendant who was charged with possession of phencyclidine (PCP) for sale "brought a discovery motion seeking to obtain ... the home addresses of the two arresting officers." (Id. at p. 319,184 Cal.Rptr. 31.) "The stated reason for the request was that, since appellant and the officers had different versions of the events leading up to appellant's arrest, and appellant's counsel had `reason to believe' that the officers' version was untrue, the officers' credibility was a crucial issue in the case and the defense should be allowed to investigate their reputations within their home communities for possible impeachment purposes." (Id. at p. 321, 184 Cal.Rptr. 31.)
The trial court denied the motion, and the appellate court affirmed that ruling. (People v. Lewis, supra, 133 Cal.App.3d at p. 321, 184 Cal.Rptr. 31.) The appellate court explained that "[t]he constitutionally guaranteed right to confront witnesses is not without limitations. One such limitation is where the disclosure of certain information about the witness, such as his residence address, would endanger the witness or his family. In California, the Legislature has seen fit to include peace officers within this protected group by enacting Penal Code section 1328.5, which provides: `Whenever any peace officer is a witness before any court or magistrate in any criminal action or proceeding in connection with a matter regarding an event or transaction which he has perceived or investigated in the course of his duties, where his testimony would become a matter of public record, and where he is required to state the place of his residence, he need not state the place of his residence, but in lieu thereof, he may state his business address.' [¶] This case presents the type of situation visualized by the Legislature when it enacted section 1328.5. It is not uncommon for criminal defendants and law enforcement officers to relate different versions of the events leading up to the defendant's arrest. The Legislature recognized the potential danger to which law enforcement officers and their families could be exposed if the officers were required to disclose their home addresses during the course of testimony, making such information available to discontented defendants and their associates. [¶] ... [Disclosure of the officers' home addresses without their authorization is specifically foreclosed by section 1328.5." (People v. Lewis, supra, 133 Cal.App.3d at pp. 321-322,184 Cal.Rptr. 31, fns. omitted.)
Barnett contends we are "not bound by Lewis" because "Lewis did not discuss alternatives *751 that would have provided the information to defense counsel, but not the defendant, such as a protective order" and because "Lewis was decided prior to the enactment of ... Penal Code section 1054.2(a)(1) [in 1990, which] requires defense counsel to keep confidential addresses and telephone numbers of witnesses, and not provide that information to the defendant or any other person." Barnett further contends that section 1054.2, subdivision (a)(1), and section 1328.5 "can be harmonized to allow disclosure of peace officers' home addresses to defense counsel in discovery subject to § 1054.2(a)(1), as opposed to in open court." Accordingly, Barnett concludes we have "discretion to grant [his] request" for the home addresses of the law enforcement witnesses.
Barnett's argument misapprehends both our role in this proceeding and the scope of discovery permitted by section 1054.9. First of all, it is not for us, as a reviewing court, to exercise our discretion in determining whether to grant or deny Barnett's request for discovery of particular materials. Our role is to review the ruling of the trial court, and (as Barnett admits elsewhere in his petition) an appellate court "generally review[s] a trial court's ruling on matters regarding discovery under an abuse of discretion standard." (People v. Ayala (2000) 23 Cal.4th 225, 299, 96 Cal. Rptr.2d 682, 1 P.3d 3.) Thus, the question for us is whether the trial court abused its discretion in denying Barnett's request for the home addresses of the law enforcement witnesses.
This leads us to Barnett's misapprehension of the scope of discovery permitted by section 1054.9. The statute specifically allows a defendant to seek discovery of materials "to which [he] would have been entitled at time of trial." (§ 1054.9, subd. (b).) As our Supreme Court explained in Steele, while this language is broad enough to make section 1054.9 more than just "a `file reconstruction statute,'" at the same time the statutory language "does not allow `free-floating' discovery asking for virtually anything the prosecution possesses." (In re Steele, supra, 32 Cal.4th at pp. 693, 695, 10 Cal.Rptr.3d 536, 85 P.3d 444.) Instead, section 1054.9 "provide[s] only limited discovery"; specifically, "the statute is limited to materials to which the defendant would have been entitled at the time of trial." (In re Steele, supra, 32 Cal.4th at p. 695, 10 Cal.Rptr.3d 536, 85 P.3d 444.)
In Steele, the Supreme Court explained that those materials include "materials the prosecution provided at trial but that the defendant can show have since been lost,"[5] as well as "materials to which the defendant was actually entitled at time of trial, but did not receive." (In re Steele, supra, 32 Cal.4th at p. 695, 10 Cal.Rptr.3d 536, 85 P.3d 444.) The court further explained that this latter category of materials could be further broken down into three subcategories: (1) "specific materials that the defendant can show the prosecution should have provided (but did not provide) at the time of trial because they came within the scope of a discovery order the trial court actually issued at time of trial or a statutory duty to provide discovery" "or the constitutional duty to disclose exculpatory evidence"; (2) "materials the prosecution should have provided at the time of trial because the defense specifically requested them at that time and was entitled to receive them"; and (3) "materials that the prosecution would have been obligated to provide had there been a specific defense request at trial, but was not actually obligated to provide because no such request *752 was made."[6] (Id. at pp. 695, 697, 10 Cal. Rptr.3d 536, 85 P.3d 444.)
With this understanding of what materials are discoverable under section 1054.9, the question for us is whether the trial court abused its discretion in determining that the home addresses of the law enforcement witnesses did not fall within any of the foregoing categories of materials to which Barnett would have been entitled at time of trial. Of course, since it is Barnett's burden to demonstrate an abuse of discretion by the trial court (see Denham v. Superior Court (1970) 2 Cal.3d 557, 566, 86 Cal.Rptr. 65, 468 P.2d 193), it falls to him to convince us that the material he seeks is something to which he would have been entitled at trial.
Here, Barnett contended in the trial court that the home addresses of the law enforcement witnesses were category No. 2 materials because they came within the scope of the discovery order the trial court issued in February 1987. The trial court implicitly concluded that the home addresses did not fall within this category, and the question for us is whether the trial court abused its discretion in making that determination.
We find no abuse of discretion. It is not clear from the face of the discovery order that the trial court intended to require the prosecution to disclose the material Barnett sought. The order directed the prosecution to make available to Barnett "[t]he ... addresses ... of all witnesses ... who may be called to testify by the prosecution." While the order was certainly broad enough to encompass any law enforcement witnesses, the reference to "addresses"unqualified by the word "home"makes it uncertain whether the trial court intended to require the disclosure of the home addressesrather than the work addressesof any law enforcement witnesses.
Because we draw all presumptions in favor of the trial court's order (see Benham v. Superior Court, supra, 2 Cal.3d at p. 566, 86 Cal.Rptr. 65, 468 P.2d 193), we presume that the trial court concluded disclosure of the home addresses of the law enforcement witnesses was not within the intended scope of the discovery order. This conclusion is reasonable for at least two reasons. First, because the judge ruling on the section 1054.9 motion was the same judge who issued the discovery order, he is the person most likely to know what the intended scope of the discovery order was. Second, at the time the trial court made the discovery order, Lewis had been the law for nearly five years. Lewis specifically held that "disclosure of the officers' home addresses without their authorization is specifically foreclosed by section 1328.5." (People v. Lewis, supra, 133 Cal. App.3d at p. 322, 184 Cal.Rptr. 31.) Since the trial court was bound by Lewis (see Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937), it is eminently reasonable to conclude that in ordering the disclosure of the "addresses" of all witnesses, the trial court did not intend to require the disclosure of the home addresses of those witnesses who were law enforcement officers, because Lewis prohibited the court from making such an order.
Accordingly, the trial court did not abuse its discretion in determining the home addresses of the law enforcement witnesses were not within the scope of the discovery order and therefore were not material to which defendant would have *753 been entitled at time of trial. To the extent Barnett asks us to determine whether Lewis was wrongly decided, or to revisit Lewis in light of the enactment of section 1054.2, we have no power to do so in this proceeding. As Barnett admits elsewhere in his petition, "[t]he law in effect at the time of his pre-trial and trial proceedings governs this Court's determination of what Mr. Barnett was entitled to receive in discovery." In 1987, Lewis was the law (and it remains the law today). Under Lewis, Barnett was not entitled to the home addresses of the law enforcement witnesses. Therefore, he is not entitled to that material now on a motion under section 1054.9, and thus the trial court did not abuse its discretion in denying this aspect of his motion.
II
Original Notes By Out-Of-State Law Enforcement Officers
In its February 1987 discovery order, the trial court granted Barnett's request for "[a]ll original notes taken by any police officer relating to the interview of any witness to be called to testify against the defendant."
In his motion for discovery under section 1054.9, Barnett asserted that "[n]o original notes of any witness interview were provided in discovery." Accordingly, Barnett requested "discovery of all notes taken by any law enforcement officer relating to the interview of any witness." (We will sometimes refer to this request as discovery item No. 6.)
In their informal response to this request, the district attorney (Michael Ramsey) and the chief investigator for the district attorney's office (Tony Koester) "reviewed all of the files in [their] possession relating to the Barnett case and ... discovered a number of sheets of notes which appear[ed] to be interview notes of witnesses." The People provided these notes to Barnett.
Barnett asserted that this response was "insufficient" because the People had "made no representation that they ha[d] asked [14 in-state law enforcement] officers [who were involved in witness interviews] for any original notes." Barnett asked the court to order the People to contact these officers "to ascertain whether any officer maintained original notes of the interviews in question." Barnett also asked the court to order the People to contact, for the same purpose, 22 out-of-state law enforcement officers who conducted interviews of witnesses who testified at trial.[7]
In their formal response, the People asserted that "[n]o notes of investigative officers were ever part of the discovery shared with trial defense counsel because none existed nor was there a duty to preserve." The People then clarified that "the `prosecution team' never had those notes" and argued that they should not have "to go on an expedition to hunt for other agencies' officers' notes ... that may have been created during the investigations of the petitioner's other decades' old crimes."
At the outset of its order on the section 1054.9 motion, the trial court made a ruling about which law enforcement agencies qualified as "law enforcement authorities" for purposes of section 1054.9 under the Supreme Court's decision in Steele. Recall that under subdivision (b) of the statute, the "discovery materials" to which the *754 People must provide the defendant access are limited to "materials in the possession of the prosecution and law enforcement authorities to which the same defendant would have been entitled at time of trial." In Steele, the Supreme Court explained that the term "law enforcement authorities" did "not extend to all law enforcement authorities everywhere in the world, but ... only to law enforcement authorities who were involved in the investigation or prosecution of the case." (In re Steele, supra, 32 Cal.4th at p. 696, 10 Cal.Rptr.3d 536, 85 P.3d 444.)
The trial court here extrapolated from the Supreme Court's language that the term "law enforcement authorities" included "any law enforcement agency involved in the investigation of any criminal conduct, be it a charged or uncharged crime that was presented against Mr. Barnett in the guilt phase or as an aggravating factor in the penalty phase of the case." The court referred to this ruling as "Point One."
Subsequently, in ruling on Barnett's motion for police notes of witness interviews (discovery item No. 6), the court ordered the People "to contact the agencies listed that meet the criterion recited in Point One, to ascertain if their case file or agency records currently contain any of the requested "materials." In making this order, however, the court limited its)ruling to the 14 in-state law enforcement officers Barnett had identified and did not include the 22 out-of-state officers.[8]
Barnett contends the trial court's refusal to order the production of interview notes from the out-of-state law enforcement officers "is contrary to Steele" because those officers "all were involved in the investigation and prosecution of the case against him." The People offer three responses to this argument, which we will address in turn.
A
Law Enforcement Authorities
We begin with the People's argument that "Barnett has interpreted the term `law enforcement' in section 1054.9 much too broadly." According to the People, law enforcement agencies are "involved *755 in the investigation and prosecution of the case" within the meaning of Steele only if those agencies can be deemed "part of the prosecution team at trial," only if they were "involved in the investigation and prosecution of the capital murder charged in this case," and only if they "work[ed] for or acted as an agency of the prosecutor in this case." The People further contend that "[j]ust because a law enforcement agency provides information about earlier criminal conduct of a defendant, unrelated to the charged offense that is the basis for the current trial, does not render that agency part of the prosecution team."
We believe it is not Barnett who has interpreted the statute too broadly, but the People who have interpreted it too narrowly. Barnett asserted in support of his motion that the 22 out-of-state law enforcement officers "conducted interviews of witnesses who testified at trial," and the People did not (and do not) dispute that assertion. Elsewhere in his moving papers, Barnett asserted that the People had provided in the original trial discovery the reports of those (and other) interviews; thus, it is apparent that the People obtained the reports of the interviews from the out-of-state law enforcement agencies for the purpose of preparing the capital case against Barnett.
The question, then, is whether a law enforcement agency that provides a report relating to previous criminal conduct by a defendant charged with a capital offense can be deemed to have been "involved in the investigation or prosecution of the case" against the defendant, such that materials in the possession of that agency are subject to discovery under section 1054.9. We conclude the answer to that question is "yes."
In Steele, the Supreme Court stated that the law enforcement agencies that are excluded from the reach of section 1054.9 are those "that were not involved in the investigating or preparing of the case against the defendant." (In re Steele, supra, 32 Cal.4th at p. 696, 10 Cal.Rptr.3d 536, 85 P.3d 444.) A capital case like this frequently encompasses investigation and proof of prior felony convictions the defendant has suffered because the jury may consider such convictions in determining whether to impose the death penalty or life without the possibility of parole. (People v. Gurule (2002) 28 Cal.4th 557, 636, 123 Cal.Rptr.2d 345, 51 P.3d 224; § 190.3, subd. (c).) Thus, the investigation of prior felony convictions, and preparation of the evidence necessary to prove those convictions, is a standard part of the prosecution of a capital case. To the extent the out-of-state law enforcement agencies here provided the People, during their preparation of the capital case against Barnett, with reports of his prior criminal conduct that resulted in felony convictions, those agencies were without question "involved in the investigating [and] preparing of the case against" Barnett. That their involvement may have been limited to providing reports the People requested from them does not change the fact that they were "involved."
Citing Moon v. Head (11th Cir.2002) 285 F.3d 1301, the People argue that a law enforcement agency that merely provides information about earlier criminal conduct "does not render that agency part of the prosecution team." The implied point of this argument is that a law enforcement agency must be "part of the prosecution team" in order to be deemed "involved in the investigation or prosecution of the case" within the meaning of Steele. We disagree.
This argument arises from that part of Steele in which our Supreme Court concluded that limiting the term "law enforcement authorities" in section 1054.9 to *756 agencies "involved in the investigation or prosecution of the case" was "consistent with the scope of the prosecution's constitutional duty to disclose exculpatory information." (In re Steele, supra, 32 Cal.4th at p. 696, 10 Cal.Rptr.3d 536, 85 P.3d 444.) According to the court, under case law from the United States Supreme Court, "the prosecution is responsible not only for evidence in its own files but also for information possessed by others acting on the government's behalf that were gathered in connection with the investigation." (Id. at p. 697, 10 Cal.Rptr.3d 536, 85 P.3d 444.) Thus, by interpreting the term "law enforcement authorities" in section 1054.9 to mean agencies "involved in the investigation or prosecution of the case," our Supreme Court sought to establish parity between the prosecution's constitutional duty to disclose exculpatory information and the availability of discovery under section 1054.9.
In Moon, a case that involved the constitutional duty to disclose exculpatory information, the Eleventh Circuit held that that duty did not extend to information in the possession of an out-of-state law enforcement agency because that agency was not part of the "prosecution team." (Moon v. Head, supra, 285 F.3d at pp. 1309-1310.) Relying on Moon, and the parity our Supreme Court established in Steele, the People here reason that because the out-of-state law enforcement agencies at issue here were not part of the "prosecution team" for purposes of the constitutional duty to disclose exculpatory information, they likewise do not qualify as "law enforcement authorities" within the meaning of section 1054.9.
The People's reliance on Moon is misplaced. Unlike the Eleventh Circuit, California courts do not interpret the constitutional duty to disclose exculpatory information as limited to information in the actual possession of the "prosecution team." Instead, as explained in People v. Superior Court (Barrett) (2000) 80 Cal. App.4th 1305, 96 Cal.Rptr.2d 264 (which our Supreme Court cited with approval in Steele, supra, 32 Cal.4th at p.. 697, 10 Cal.Rptr.3d 536, 85 P.3d 444), prosecutor's duty under Brady [v. Maryland (1963) 373 U.S. 83, 83 S.Ct. 1194, [10 L.Ed.2d 215]] to disclose material exculpatory evidence extends to evidence the prosecutoror the prosecution team knowingly possesses or has the right to possess.... In Kyles v. Whitley (1995) 514 U.S. 419, 437-438 [115 S.Ct. 1555, 1567, 131 L.Ed.2d 490], the Supreme Court held that a prosecutor has a duty to learn of favorable evidence known to other prosecutorial and investigative agencies acting on the prosecution's behalf, including police agencies. The scope of the prosecutorial duty to disclose encompasses exculpatory evidence possessed by investigative agencies to which the prosecutor has reasonable access. [Citation.] [¶] A prosecutor has a duty to search for and disclose exculpatory evidence if the evidence is possessed by a person or agency that has been used by the prosecutor or the investigating agency to assist the prosecution or the investigating agency in its work. The important determinant is whether the person or agency has been `acting on the government's behalf [citation] or `assisting the government's case.' [Citation.] [¶] Conversely, a prosecutor does not have a duty to disclose exculpatory evidence or information to a defendant unless the prosecution team actually or constructively possesses that evidence or information. Thus, information possessed by an agency that has no connection to the investigation or prosecution of the criminal charge against the defendant is not possessed by the prosecution team, and the prosecutor does not have the duty to search for or to disclose such material." (People v. Superior *757 Court (Barrett), supra, 80 Cal.App.4th at pp. 1314-1315, 96 Cal.Rptr.2d 264.)
Here, even if the out-of-state law enforcement agencies were not part of the "prosecution team," the People used those agencies to assist in their prosecution of the capital case against Barnett. Accordingly, the People had constructive possession of information possessed by those agencies, and the People's constitutional duty to disclose exculpatory information extended to information in the possession of those agencies. It follows then that those agencies were "involved in the investigation or prosecution of the case" against Barnett within the meaning of Steele. Consequently, the People cannot avoid their duty of disclosure under section 1054.9 by claiming otherwise.
B
Actual Existence Of Discovery Materials
This leads us to the People's next argument in defense of the trial court's denial of Barnett's request for discovery of interview notes from the out-of-state law enforcement officers. The People argue that "Barnett has not made the necessary showing that he was unsuccessful in obtaining these materials, to the extent they exist, from trial counsel." The People concede that "Barnett exercised good faith efforts to obtain discovery material from trial counsel. Indeed, the record indicates that Barnett received trial counsel's entire file." Nevertheless, the People contend "Barnett has never made the necessary showing that his efforts at obtaining discovery materials were `unsuccessful.' To make such a showing, Barnett must establish that some discovery materials actually exist beyond those obtained from trial counsel. Unless additional discovery materials are shown to exist, there is no basis to conclude that Barnett was unsuccessful in obtaining the discovery materials defined by section 1054.9."
As applied to the documents presently at issue, the People's argument would mean that before Barnett is entitled to discovery under section 1054.9 of the original police notes to which he sought access, he must prove that those notes actually exist. As we will explain, we find no basis for any such requirement in section 1054.9 or in Steele.
As an initial matter, however, we address Barnett's argument that this issue is not properly before us. We previously explained that with respect to the discovery requests the trial court denied, the court stated that it was doing so because it found those requests fell "outside the guidelines set forth in the Steele decision." According to Barnett, since those "guidelines" did not include a requirement that the defendant show the materials sought actually exist (because that issue was not tendered to the Steele court), "[t]he Superior Court did not require Mr. Barnett to show that the materials he sought existed." In Barnett's view, the People's attempt to raise the "existence" issue now is a challenge to this aspect of the trial court's ruling, which is barred because the People did not file their own petition for a writ of mandate.
We are not persuaded. As an appellate court, "we review the correctness of the trial court's ruling, not the reasons underlying it." (People v. Koontz (2002) 27 Cal.4th 1041, 1075, fn. 4, 119 Cal. Rptr.2d 859, 46 P.3d 335.) "A judgment or order correct in theory will be affirmed, even where the trial court's given reasoning is erroneous." (Punsly v. Ho (2003) 105 Cal.App.4th 102, 113, 129 Cal.Rptr.2d 89.) What that means here is that the question before us is whether the trial court abused its discretion in denying Barnett's request for the original notes of the *758 out-of-state law enforcement officers, whatever the trial court's reason may have been for its ruling. If we determine the denial of that request was the correct result because Barnett did not make a foundational showing of the existence of the requested documents, we will uphold the trial court's ruling, even if that is not the reason the trial court gave for doing what it did. Accordingly, we proceed to consider the validity of the People's argument.
Although the People purport to premise their argument on the word "unsuccessful," a careful examination of the argument reveals that it actually rests more substantially on the definition of "discovery materials" contained in subdivision (b) of section 1054.9. Subdivision (b) expressly defines "discovery materials" as "materials in the possession of the prosecution and law enforcement authorities to which the same defendant would have been entitled at time of trial." As the Supreme Court explained in Steele, this definition encompasses only those materials "in their possession currently." (In re Steele, supra, 32 Cal.4th at p. 695,10 Cal.Rptr.3d 536, 85 P.3d 444.) According to the People, under this definition "a finite set of [discovery] materials actually exists for every case" specifically, those materials to which the defendant would have been entitled at time of trial that are currently in the possession of the prosecution or of a law enforcement authority that was involved in the investigation or prosecution of the case.
Under subdivision (a) of the statute, a fundamental prerequisite to obtaining a discovery order is "a showing that good faith efforts to obtain discovery materials from trial counsel were made and were unsuccessful." (§ 1054.9, subd. (a), italics added.) By the People's reasoning, a defendant cannot establish the requisite lack of success "[u]nless [he] establishes that some materials from th[e] finite universe [of `discovery materials'] were missing from trial counsel's files." In other words, the defendant must prove that the material he is seeking is "discovery material" in the first place by proving not only that the material is something to which he would have been entitled at time of trial, but also that the material is currently "in the possession of the prosecution and law enforcement authorities." Under this reasoning, if the material does not exist, then it cannot be "in the possession of the prosecution and law enforcement authorities" and is therefore not "discovery material" subject to discovery under section 1054.9.
Another way of looking at the People's argument is in relation to requests for categories of materialssuch as the request at issue here for interview notes. If a defendant receives some interview notes from trial counsel, but then asks for interview notes again under section 1054.9, he cannot show his effort to get interview notes from trial counsel was "unsuccessful" unless he shows that there are some notes that exist other than those he has received already. If the defendant already received all of the interview notes that exist from trial counsel, then obviously his efforts were successful, rather than unsuccessful.
Accordingly, under the People's reading of the statute, before he can obtain a discovery order under section 1054.9, the defendant must prove that any particular material or category of material to which he seeks access: (1) is something to which he would have been entitled at time of trial; (2) actually exists; (3) is currently in the possession of the prosecution and law enforcement authorities that were involved in the investigation or prosecution of the case; and (4) was not provided to him by trial counsel, despite his good faith efforts to obtain the material from trial counsel.
*759 Although this interpretation of the statute has some superficial appeal, it erects a standard that is virtually impossible, if not absolutely impossible, for a defendant to meet. This is so because a defendant cannot prove what materials actually and currently exist in the possession of the prosecution and/or law enforcement authorities, unless, perhaps, the prosecution or a relevant law enforcement authority revealed its possession of those materials to the defendant immediately before the filing of the section 1054.9 motion. Even then, the defendant cannot prove the requested materials actually exist at the time the court rules on the motion; that is information only the prosecution and/or the law enforcement authorities themselves have until they disclose the materials. If the People's construction of the statute were to prevail, then even the "main focus" of section 1054.9"to permit reconstruction of lost files" (In re Steele, supra, 32 Cal.4th at p. 694, 10 Cal.Rptr.3d 536, 85 P.3d 444)would be virtually impossible for a defendant to achieve, because he could almost never prove what materials he formerly had (even assuming he could specifically identify materials he no longer possesses)[9] are currently in the possession of the prosecution and relevant law enforcement agencies.
"Our obligation is to interpret the statute `to effectuate the purpose of the law.' [Citation.] `[S]tatutes must be construed in a reasonable and common sense manner consistent with their apparent purpose and the legislative intent underlying them one practical, rather than technical, and one promoting a wise policy rather than mischief or absurdity.'" (Weidenfeller v. Star & Garter (1991) 1 Cal.App.4th 1, 5-6, 2 Cal.Rptr.2d 14.)
Here, requiring the defendant to prove what materials actually, currently exist in the possession of the prosecution and/or law enforcement authorities before allowing him access to those materials would defeat the purpose of section 1054.9 by preventing most, if not all, discovery under the statute. Moreover, requiring the defendant to prove the actual existence of the materials he is seeking would be inconsistent with our Supreme Court's decision in Steele. There, the court concluded the defendant was "entitled to discovery of materials within the scope of [his] current request that [he] does not possess but that the prosecution and law enforcement authorities involved in the case currently possess, if any exist." (In re Steele, supra, 32 Cal.4th at p. 689, 10 Cal.Rptr.3d 536, 85 P.3d 444, italics added; see also ibid, at p. 703, 10 Cal.Rptr.3d 536, 85 P.3d 444.) Thus, the Supreme Court did not require proof of the actual existence of the requested materials as a predicate to a discovery order under section 1054.9, and neither can we.
Interestingly, even the People implicitly recognize the nearly impossible burden their interpretation of the statute would impose on a defendant because, although they initially argue for proof the materials "actually exist," their argument later morphswithout explanationinto an argument that a defendant needs to show only "that the requested materials likely exist" or a "good faith basis to believe that the requested materials actually exist," instead of actual existence of the materials. Although a "good faith belief in the existence of or "likelihood of existence" standard might be more workable than an "actual existence" standard, the former standards have no basis in the language of *760 the statute. Based on the statutory definition of "discovery materials," as interpreted in Steele, either the defendant has to show that what he is requesting qualifies as "discovery materials"that is, something currently in the possession of the prosecution or law enforcement authoritiesor he does not. There is simply no basis for us to read into the statute the requirement of showing a "good faith basis" for believing the materials exist, or proof that they "likely" exist.
Irrespective of category No. 1 materialswhich the defendant used to have but does not have anymoreand category No. 4 materialswhich the defendant never had but would have been entitled to if he had asked for themthe People argue that a requirement of proof of the actual existence of categories Nos. 2 and 3 materials is supported by Evidence Code section 664. That statute provides for an evidentiary presumption "that official duty has been regularly performed." According to the People, "when a petitioner seeks discovery under section 1054.9 for materials in ... categories [Nos. 2 and 3, which should have been provided at trial but were not,] the petitioner is necessarily claiming that a discovery violation occurred, else the materials would have been in trial counsel's files." In the People's view, Evidence Code section 664 requires the court to presume that a discovery violation did not occur and places the burden on the defendant to prove that one did occur, which can be accomplished only by proving that materials exist which the prosecution should have turned over at trial but did not.
We begin by noting that when a defendant seeks discovery of materials that should have been provided at trial, he is not necessarily claiming that a discovery violation occurred. Given that a substantial amount of time may pass between a capital trial and the defendant's subsequent request for discovery under section 1054.9 (here, 16 years elapsed, and Barnett's trial counsel died in the interim), it is possible that a defendant seeking discovery under section 1054.9 will simply have no idea whether the materials he obtained from trial counselassuming he obtained any at allamount to all of the materials the prosecution turned over during trial. Absent such knowledge, a request for materials that should have been provided at trial does not imply a discovery violation by the prosecution. For example, a requestlike the one at issue herefor all original notes of police interviews of witnesses who testified at trial, where such materials came within the scope of a discovery order the court made at time of trial, does not imply a discovery violation if the defendant does not know whether what he obtained from trial counsel is every note the prosecution produced at trial. In other words, in a given case, a defendant who requests materials that should have been provided at trial may not know whether he is requesting materials that were provided but then lost (category No. 1 materials) or materials that were never provided (category No. 2 and/or No. 3 materials).
But what if, as here, the defendant asserts in his motion that "[n]o original notes of any witness interview were provided in discovery"? In such a circumstance, the defendant is expressly requesting category No. 2 and/or No. 3 materials, and there are two possible explanations: either no such notes existed or such notes did exist, but the prosecution failed to comply with the court's order to disclose them. In the People's view, in requesting discovery of such materials under section 1054.9, Barnett is necessarily implying that the second explanation is the correct onethat such notes do exist, but the prosecution *761 failed to comply with the court's order to disclose them, i.e., a discovery violation occurred.[10] According to the People, "Evidence Code section 664 should apply when a discovery violation is alleged. Absent evidence `to the contrary, a prosecutor should be presumed to have properly fulfilled all discovery obligations at trial."
There is some support in Steele for the People's argument that Evidence Code section 664 has a bearing on a discovery motion under section 1054.9. In Steele, while arguing that section 1054.9 should be interpreted as "only a `file reconstruction statute,'" the People asserted that any broader interpretation of the statute would make it "redundant of other law" because "prosecutors have a continuing duty to disclose information favorable to the defense, and we expect and assume that they will perform this duty promptly and fully, and, moreover, ... `[i]t is presumed that official duty has been regularly performed.' (Evid.Code, § 664.)" (In re Steele, supra, 32 Cal.4th at pp. 693-694, 10 Cal.Rptr.3d 536, 85 P.3d 444.) The Steele court rejected this argument as a basis for interpreting the statute, noting that "[n]one of this changes the plain meaning of the statute's inclusion of materials to which the defendant Svould have been entitled.'" (Id. at p. 694, 10 Cal.Rptr.3d 536, 85 P.3d 444.) Before doing so, however, the court made this observation: "the expectation and assumption [that prosecutors will promptly and fully disclose information favorable to the defense] merely mean that normally, and unless the defendant overcomes Evidence Code section 664's presumption as to specific evidence, there will be no discovery for the trial court to order that the prosecutor should have provided at trial." (Ibid.)
Of course, this passage from Steele is dictum because the court there was addressing whether section 1054.9 should be interpreted as only a file reconstruction statute, not what must be shown by a defendant to prevail on a section 1054.9 motion when the materials sought are something the prosecutor should have provided at time of trial. Indeed, the court in Steele ultimately determined that, with respect to the materials at issue there (materials regarding the defendant's behavior in prison), it did "not matter for purposes of discovery under section 1054.9" whether the defendant requested those materials at time of trial, because even if he did not request it he "would have been entitled [to the materials] at time of trial had he specifically requested [them]." (In re Steele, supra, 32 Cal.4th at p. 702, 10 Cal.Rptr.3d 536, 85 P.3d 444.) What this means is that the Supreme Court ultimately treated the materials at issue in Steele as category No. 4 materials. Consequently, the Steele court had no occasion to determine what showing a defendant must make when the materials sought fall in category No. 2 and/or No. 3, and the court's statement about the operation of Evidence Code section 664 in those instances is dictum.
Although we are not bound by dictum from our Supreme Court (State of California v. Superior Court (2000) 78 Cal. App.4th 1019, 1029, 93 Cal.Rptr.2d 276), "When the Supreme Court has conducted a thorough analysis of the issues and such analysis reflects compelling logic, its dictum should be followed." (Hubbard v. Superior Court (1997) 66 Cal.App.4th 1163, 1169, 78 Cal.Rptr.2d 819.) Here, it does not appear from the opinion in Steele that the Supreme Court's brief statement about Evidence Code section 664's application to *762 discovery motions under section 1054.9 was based on such an analysis of the issue. Accordingly, we will now consider whether the official duty presumption of Evidence Code section 664 has any bearing on a motion for discovery under section 1054.9.
"A presumption is an assumption of fact that the law requires to be made from another fact or group of facts found or otherwise established in the action." (Evid.Code, § 600, subd. (a).) The official duty presumption is a presumption affecting the burden of proof. (Evid.Code, § 660.) A presumption affecting the burden of proof "impose[s] upon the party against whom it operates the burden of proof as to the nonexistence of the presumed fact." (Evid.Code, § 606.)
In the People's view, a defendant's request in a motion under section 1054.9 for materials that should have been provided at time of trial triggers the presumption in Evidence Code section 664, requiring the court to assume, as a matter of fact, that the prosecution regularly performed its official duty and provided the defendant with whatever materials the prosecution had that it was required to provide. Thus, in the People's view, the court must assume that the prosecution possesses no additional materials, and it falls to the defendant to prove otherwise. In this way, the People argue, Evidence Code section 664 requires the defendant to prove the actual existence of category No. 2 and/or No. 3 materials that were not previously provided before the court can order discovery of those materials under section 1054.9.
This argument is much like the People's previous argument that the Legislature intended to require the defendant to prove the actual existence of the documents he is seeking before the court can order discovery under section 1054.9. Although both arguments have some superficial appeal, acceptance of either of them would essentially eviscerate the discovery rights the statute was designed to provide.
As we explained above, a defendant in a given case may have no idea whether the materials he obtained from trial counsel amount to all of the materials the prosecution turned over during trial. Consider, for example, a defendant who can prove there was a discovery order issued at time of trial but does not know if the materials he has obtained from trial counsel include all of the materials the prosecutor produced in compliance with that order. This defendant makes a motion for discovery under section 1054.9, explains his situation, and requests all of the materials that were subject to the discovery order. In the People's view, proof of the discovery order triggers the official duty presumption of Evidence Code section 664 and requires the court to assume that the prosecution has already turned over everything that it was required to turn over under that order. It then falls to the defendant to prove either that the prosecution did not turn over everything it was supposed to (i.e., that he is seeking category No. 2 materials) or that he did not receive from his trial counsel everything that the prosecution turned over (i.e., that he is seeking category No. 1 materials). Regardless of the alternative, however, the defendant is put to the burden of proving the existence of documents he does not havea burden he may have no means of meeting.
This example shows that the impact of the application of Evidence Code section 664 to a motion for discovery under section 1054.9 extends beyond categories Nos. 2 and 3 materials to category No. 1 materials, because the defendant in a given case may have no basis for distinguishing between the various categories. Thus, as we have observed already, if the People's argument were to prevail, even the "main focus" of section 1054.9"to permit reconstruction *763 of lost files" (In re Steele, supra, 32 Cal.4th at p. 694, 10 Cal.Rptr.3d 536, 85 P.3d 444)could be virtually impossible for a defendant to achieve. We will not attribute the Legislature an intent to create a statutory scheme for discovery that in many cases will achieve nothing. Consequently, we conclude the Legislature did not intend the official duty presumption of Evidence Code section 664 to require a defendant seeking discovery under section 1054.9 to prove the actual existence of materials in the possession of the prosecution and/or the relevant law enforcement authorities before the court can order discovery under the statute.
Indeed, this case provides a prime example of why the Legislature could not have intended to impose such a requirement. In moving for discovery of the original police notes, which were within the scope of a discovery order issued at time of trial, Barnett asserted that no such notes were ever provided; but he did not offer any assertion about whether such notes existed, nor does it appear he had any ability to prove the existence of such notes. If the People's argument were correct, then the People could have successfully opposed the motion solely on the ground that Barnett had not proved the existence of any original police notes and thereby avoided reviewing the prosecution's files again for discoverable materials. Recall, however, that in response to Barnett's discovery motion, the district attorney and his chief investigator did review their files and "discovered a number of sheets of notes which appear[ed] to be interview notes of witnesses." Thus, documents within the scope of the discovery order that Barnett could not prove existed did exist, but probably never would have come to light if the People's interpretation of the statute were to prevail.
In summary, we conclude that in moving for discovery under section 1054.9, the defendant does not have to prove the actual existence (or a good faith belief in the actual existence) of discovery materials in the possession of the prosecution and/or the relevant law enforcement authorities as a prerequisite to obtaining an order for discovery under the statute.[11]
C
Materials In The Defendant's Possession
The People's final argument in defense of the trial court's denial of Barnett's request for discovery of interview notes from the out-of-state law enforcement officers is that "Barnett has not indicated what materials in this category, if any, he currently possesses." According to the People, because section 1054.9 "covers only materials to which `defendant would have been entitled at time of trial' but does not currently possess" (In re Steele, supra, 32 Cal.4th at p. 695, 10 Cal.Rptr.3d 536, 85 P.3d 444), "in requesting materials pursuant to section 1054.9, a petitioner must show that the requested materials are not in his or her possession."
Barnett complains that "[t]his argument was not made below, and should not be heard here." Barnett is mistaken. The People offered this very same argument in their response to Barnett's motion in the trial court.
On the merits, Barnett contends this argument fails because "it is unsupported in the statute and such a rule would violate due process and the work product privilege." He also contends that he "did identify *764 which trial discovery documents were in trial counsel's files."
We agree with Barnett that the requirement the People advocate is not supported by the language of the statute, and thus we do not reach the issues of due process and work product. Section 1054.9 requires nothing more than the showing of good faith, but unsuccessful, efforts to obtain the materials from trial counsel before moving for a discovery order under the statute. Such a showing can be made in several ways without creating an inventory of every single document or other item the defendant possesses already. In Steele, the defendant provided a declaration from his current attorney attesting that he had reviewed trial counsel's file and interviewed trial counsel and ascertained that the materials sought in the motion were not provided to trial counsel. (In re Steele, supra, 32 Cal.4th at p. 689, 10 Cal.Rptr.3d 536, 85 P.3d 444.) Here, Barnett's motion attested to the transfer of trial counsel's entire trial file through several attorneys to his present attorneys and identified the numbered discovery pages in trial counsel's file that were missing or illegible.[12] Since the People provided the numbered discovery in the first place, they could determine what documents Barnett obtained from his trial counsel and which of those documents he now did not have. They were entitled to nothing more.[13]
D
Conclusion
For the reasons set forth above, we conclude the trial court abused its discretion when it denied Barnett's request for any original notes taken by the 22 out-of-state law enforcement officers who conducted interviews of witnesses who testified at trial (as identified in Barnett's second brief regarding discovery). Accordingly, we will grant this aspect of Barnett's petition and order the issuance of a writ of mandate directing the trial court to correct this error.
III
Criminal Records And Charges
In its February 1987 discovery order, the trial court granted Barnett's requests for "[t]he criminal record of all witnesses who may be called to testify at the trial of this case" and for "all agreements, promises, threats, inducements, offers of reward or immunity, witness fees, transportation assistance, assistance to members of the witness' family or to associates of the witness, or affirmative representations, whether written or oral, made or implied to such persons or to their attorneys, executed or not, in an effort to obtain information or testimony as to the investigation and/or prosecution of the offenses charged in the information." The court, however, did not grant Barnett's request for discovery of "all pending criminal charges against [all witnesses who may be called to testify at trial in this case] anywhere in the State of California, all information regarding the current parole and/or probation status of such persons, and all arrests, criminal charges, ongoing criminal investigations, or actions pending anywhere in the State of California since the date of the *765 alleged offense charged in the Information." Apparently, the court limited this request to only Barnett and his alleged coparticipant.
In his motion for discovery under section 1054.9, Barnett asserted that the prosecution failed to comply or did not fully comply with the two requests the trial court granted. Barnett asserted that because the prosecution did not provide the complete criminal record for all prosecution witnesses, he "cannot say whether other witnesses had charges pending against them or were otherwise under the control of the court or probation office when they testified." He also argued that the trial court had erroneously denied his request for discovery of the pending charges against, and parole and/or probation status of, the prosecution's witnesses. Accordingly, Barnett requested "any records indicating that charges were pending or contemplated against any State witness prior to their testimony against Mr. Barnett and for a period of one year after his sentencing on November 30, 1988." He also requested "the complete criminal record of all the State's witnesses, including arrests, felony and misdemeanor convictions, ongoing criminal investigations, probation and/or parole status, and actions pending against each witness within and without California."
In their informal response to this request, the People did not provide any of the requested information, asserting the request was "[t]oo broad and factually impossible to determine."
Barnett contended "the prosecution was obliged to disclose the information no matter how burdensome it may have been to compile" because the information "could have been used to impeach the State's witnesses."
In their formal response, the People stood by their assertion that the request was "over broad" and contended the trial court had recognized as much "when it limited a similar pre-trial request to only the petitioner and [his] co-participant."
In ruling on this request, the trial court first noted that it had already ordered discovery of "[t]he discoverable items herein" in ruling on an earlier request. (Specifically, the trial court had granted Barnett's request for any agreements, promises, inducements, or offers of immunity.) The trial court then ruled that "[t]he balance of material listed herein does not fall within the Steele criteria, and the request for discovery in those areas is denied."
Barnett contends the trial court's refusal to order discovery of this material was "contrary to Steele" because "[everything requested is information that could have been used to impeach the State's witnesses" and is therefore within the prosecution's constitutional obligation to disclose evidence favorable to the defendant under Brady v. Maryland (1963) 373 U.S. 83, 83 S.Ct. 1194,10 L.Ed.2d 215.
In their response to this argument, the People contend "this request is beyond the scope of section 1054.9 in that it seeks materials or information that post-date the trial." To the extent Barnett sought "any records indicating that charges were pending or contemplated against any State witness ... for a period of one year after [Barnett's] sentencing on November 30, 1988," we agree. By its very terms, section 1054.9 covers only materials to which the defendant "would have been entitled at time of trial." (§ 1054.9, subd. (b), italics added.) Thus, Barnett's request for records relating to charges pending or contemplated after his trial is beyond the scope of the statute.
The fact that (as Barnett notes) "exculpatory evidence that comes to light after *766 trial must be disclosed" under Brady does not change this result. Whether the People had a posttrial duty under Brady to disclose to Barnett criminal charges that were pending or contemplated against one of their witnesses within a year after Barnett was sentenced has nothing to do with whether the People can be ordered to produce such information under section 1054.9. Because it is limited to materials to which the defendant would have been entitled at time of trial, that statute simply does not provide a vehicle for a defendant to enforce any posttrial Brady obligations the People may have.
Other than Barnett's request for information postdating the trial, it does not appear to us that the People are offering any argument against the requests now at issue that we have not rejected already. Nonetheless, because we presume the trial court's order is correct and the burden is on Barnett to establish an abuse of discretion (see Denham v. Superior Court, supra, 2 Cal.3d at p. 566, 86 Cal.Rptr. 65, 468 P.2d 193), Barnett still bears the burden of persuading us that his requests are proper under section 1054.9 and Steele. To carry this burden, Barnett must persuade us the materials he is seeking fall within one of the Steele categoriesthat is, are materials to which he would have been entitled at time of trialand that the trial court abused its discretion in concluding otherwise. He has failed to do so.
As noted above, Barnett contends "[everything requested is information that could have been used to impeach the State's witnesses" and therefore falls within the prosecution's duty to disclose under Brady. In other words, Barnett contends they are category No. 2 materialsi.e., materials "the prosecution should have provided at time of trial because they came within ... the constitutional duty to disclose exculpatory evidence." (In re Steele, supra, 32 Cal.4th at p. 697, 10 Cal.Rptr.3d 536, 85 P.3d 444.) Thus, the question is this: Did the prosecution have a duty under Brady to disclose to Barnett: (1) "any records indicating that charges were pending or contemplated against any State witness prior to their testimony against Mr. Barnett" and "the complete criminal record of all the State's witnesses, including arrests, felony and misdemeanor convictions, ongoing criminal investigations, probation and/or parole status, and actions pending against each witness within and without California"?[14] To answer that question, we must examine the scope of the prosecution's duty under Brady.
"The prosecution has a duty under the Fourteenth Amendment's due process clause to disclose evidence to a criminal defendant. [Citation.] [¶] But such evidence must be both favorable to the defendant and material on either guilt or punishment. [Citation.] [¶] Evidence *767 is `favorable' if it either helps the defendant or hurts the prosecution, as by impeaching one of its witnesses. [Citation.] [¶] Evidence is `material' `only if there is a reasonable probability that, had [it] been disclosed to the defense, the result ... would have been different.' [Citations.] The requisite `reasonable probability' is a probability sufficient to `undermine[ ] confidence in the outcome' on the part of the reviewing court." (In re Sassounian (1995) 9 Cal.4th 535, 543-544, 37 Cal. Rptr.2d 446, 887 P.2d 527, fn. omitted.)
Under the foregoing principles, the fact that evidence could have been used for impeachment purposes alone does not mean that evidence is subject to the Brady duty of disclosure and therefore something to which the defendant is entitled under section 1054.9. Showing that evidence could have been used for impeachment purposes satisfies the requirement that the evidence must be "favorable" to the defendant; however, to fall within the constitutional duty of disclosure, the evidence must also be "material"that is, it must be of such significance that it raises a reasonable probability the result at trial would have been different if it had been disclosed to the defense.[15]
Here, Barnett has made no effort to show that the materials he is seeking meet this materiality standard, and this omission is fatal. Steele makes clear that, to obtain a discovery order under section 1054.9, the defendant bears the burden of showing that the materials he is requesting are materials to which he would have been entitled at time of trial. (See In re Steele, supra, 32 Cal.4th at p. 688, 10 Cal.Rptr.3d 536, 85 P.3d 444 ["section 1054.9's discovery ... is limited to, specific materials ... that the defendant can show fall into any of these categories ..."]; see also ibid, at p. 697, 10 Cal.Rptr.3d 536, 85 P.3d 444.) Barnett has not carried that burden here because he has not shown that the materials he is seeking were subject to disclosure under Brady.[16]
The cases Barnett cites to support his discovery request are of no assistance to him. In People v. Coyer (1983) 142 Cal. App.3d 839, 191 Cal.Rptr. 376, the appellate court concluded that a defendant was "entitled to discovery of criminal charges *768 currently pending against prosecution witnesses anywhere in the state." (Id. at p. 842.) Coyer, however, did not address the constitutional duty of disclosure; instead, Coyer was decided under the case law that governed criminal discovery in California before 1990. Thus, Coyer does not support Barnett's claim to these materials under Brady.
Of course, because the trial in this case occurred in 1988, discovery at time of trial was governed by the pre-1990 case law, and it could be argued that under Coyer Barnett was entitled to the materials he now seeks. That argument does not assist Barnett, however, because he specifically asked the trial court for discovery of these materials at time of trial, but the trial court denied his requests. For this reason, Barnett cannot now claim he was entitled to these materials at time of trial because they fell within the scope of the February 1987 discovery order; they plainly did not. Moreover, section 1054.9 does not provide a vehicle for Barnett to make a belated challenge to that discovery order. If Barnett believed the trial court wrongfully denied his request for discovery of these materials at time of trial, he needed to raise that issue on appeal from his conviction. Having failed to do so, Barnett is now precluded from contending he was entitled to these materials at time of trial unless he demonstrates they were subject to the constitutional duty of disclosure.
Barnett's reliance on People v. Santos (1994) 30 Cal.App.4th 169, 35 Cal.Rptr.2d 719 is likewise misplaced. In Santos, the appellate court concluded that "the due process clause of the federal Constitution compels disclosure of misdemeanor convictions of witnesses when requested by defendant." (Id. at p. 173, 35 Cal.Rptr.2d 719.) In reaching that conclusion, however, the court failed to note or apply the requirement (later explained in Sassounian) that to be subject to the constitutional duty of disclosure, evidence must be "material," such that there is a reasonable probability the result of the trial would have been different if the evidence had been disclosed. Thus, Santos is of no help either.
In People v. Hayes (1992) 3 Cal.App.4th 1238, 5 Cal.Rptr.2d 105, the appellate court determined that the trial court erred in denying a discovery request for "`the alleged victim's criminal convictions, pending charges, status of being on probation, any acts of victim's dishonesty and, any prior false reports of sex offenses by the victim'" because such evidence was within the prosecution's constitutional duty of disclosure. (Id. at pp. 1243-1245, 5 Cal. Rptr.2d 105.) Upon doing so, however, the appellate court remanded the case to the trial court for that court to determine if the evidence (assuming it existed) was material. (Id. at p. 1245, 5 Cal.Rptr.2d 105.) The flaw in this approach is that, as previously shown, evidence is not within the prosecution's constitutional duty of disclosure unless it is both favorable and material. In essence, the appellate court in Hayes found a Brady violation without determining whether the evidence at issue was material. That was erroneous, and therefore Hayes is of no use to us.
In the remaining three federal cases and two state cases Barnett cites, the appellate courts both recognized and applied the materiality element of the constitutional duty of disclosure. (See Crivens v. Roth (7th Cir.1999) 172 F.3d 991, 998 [finding a Brady violation where the prosecution failed to disclose the criminal record of a witness whose "testimony form[ed] the heart of the state's case against" the defendant]; U.S. v. Steinberg (9th Cir.1996) 99 F.3d 1486, 1492 [finding a Brady violation because the prosecution failed to disclose *769 evidence of ongoing criminal activity by a "key witness in the trial"], disapproved on other grounds in U.S. v. Foster (9th Cir.1999) 165 F.3d 689, 692, fn. 5; United States v. Auten (5th Cir.1980) 632 F.2d 478, 482 [finding a Brady violation where the prosecution failed to disclose additional convictions of a witness whose testimony was "of substantial weight"]; People v. Little (1997) 59 Cal.App.4th 426, 429-435, 68 Cal.Rptr.2d 907 [concluding the prosecution had a duty to disclose the felony conviction of a witness whom the trial court characterized as a "`critical witness'" whose "`credibility was very, very important in this case'"]; People v. Martinez (2002) 103 Cal.App.4th 1071, 1081-1082, 127 Cal.Rptr.2d 305 [finding a Brady violation where the prosecution failed to disclose pending charges against a "pivotal witness"].) These cases do not help Barnett because he has made no showing of materiality here.
At first glance, there may appear to be a conceptual problem in requiring a defendant to demonstrate the materiality of evidence that may not even exist, but that difficulty is illusory. If the defendant seeks the discovery of materials under section 1054.9 on the ground he was entitled to them at time of trial because they fell within the prosecution's constitutional duty of disclosure, he must simply describe those materials with sufficient particularity to explain whyassuming they existthey would have been both favorable and material and thus subject to disclosure. It will then be for the trial court to decide, in the exercise of its discretion, whether the defendant has shown both the favorableness and the materiality of the evidence the defendant seeks. If the defendant cannot describe evidence that would be both favorable and material, then he has not shown that what he is seeking qualifies as "discovery materials" under section 1054.9, that is, something to which he would have been entitled at time of trial.[17] If, however, the trial court concludes the defendant has met his burden of showing favorableness and materiality and thus shown a potential Brady violation, the defendant is entitled to a discovery order for that evidence under section 1054.9. Of course, if the requested material does not exist or is not in the possession of the prosecution or the relevant law enforcement officials, then the People need simply say so in responding to the discovery order.
Here, Barnett has never made any effort to explain why "any records indicating that charges were pending or contemplated against any State witness prior to their testimony against Mr. Barnett" and "the complete criminal record of all the State's witnesses, including arrests, felony and misdemeanor convictions, ongoing criminal investigations, probation and/or parole status, and actions pending against each witness within and without California" were material, such that the evidence, if it exists, would raise a reasonable probability the result at trial would have been different had it been disclosed.
Part of the problem is the breadth of Barnett's discovery request. It is so broad it would encompass the criminal records of witnesses whose testimony was of little or no value in securing his conviction. Certainly such evidence is not "material" so as to fall within the constitutional duty of disclosure and thus is not evidence to which Barnett was entitled at time of trial under Brady.
*770 Moreover, even as to witnesses who might have been "key" or "pivotal," any additional impeachment evidence that might have been available, such as convictions or pending charges, would not necessarily have been material. It is possible that an extensive amount of impeachment materials were already offered for such witnesses (assuming there were any) and that the presence of some additional impeachment evidence might not have made any difference. We cannot determine if that is the case, however, because Barnett has made no attempt to address the materiality element of the constitutional duty of disclosure.[18]
Having failed to show the materiality of the evidence he seeks, Barnett has failed to show an abuse of discretion by the trial court in denying this discovery request under section 1054.9.
IV
Inducements
Barnett contends the trial court erred in denying his request for discovery of "any inducements offered or made to [six particular] State witnesses." As the People point out, the trial court noted that this request was subsumed in an earlier request for discovery of inducements offered to any witness, which the trial court granted. The trial court denied the subsequent request only "[t]o the extent th[e subsequent] discovery request seeks more than [the earlier request]."
Barnett does not suggest that this request sought anything more than the earlier request, which the trial court granted. Indeed, Barnett fails to address the overlap between the two requests. Section 1054.9 does not give a defendant the right to have the court order duplicative discovery. Accordingly, Barnett has failed to show any abuse of discretion in the trial court's ruling.
V
Lies To Law Enforcement
In his motion under section 1054.9, Barnett contended he was "entitled to know whether any witness had lied to law enforcement." In his initial brief, he asserted this constituted category No. 2 material under Steele.
In their formal response, the People asserted "Nothing exists as to this request beyond that already disclosed to petitioner. Further the prosecution has no duty to actively investigate the facts and circumstances of these activities for the benefit of the petitioner."
The trial court denied this request.
Barnett contends the trial court abused its discretion in denying this request because "[s]uch information is Brady material, and must be disclosed."
The People offer no response to Barnett's assertion that this request seeks Brady material. Instead, they argue that "[g]iven the district attorney's statement [that nothing exists as to this request beyond that already disclosed], the [trial] court did not abuse its discretion in denying a request for materials that do not exist or are not possessed by the relevant agencies."
Barnett complains that "[t]he District Attorney's statement that no responsive records exist was not made under oath, under penalty of perjury" and that "[t]he *771 prosecutor's denial was not the reason the Superior Court denied this request."
As we have noted already, we are not concerned with the reason the trial court denied the discovery request, but only with whether the decision to deny it was correct. Thus, the issue before us (at this point) is whether a trial court abuses its discretion in denying a motion for discovery under section 1054.9 when the People, in their unsworn opposition to the motion, assert that no documents responsive to the discovery request exist beyond those already provided.
It could be argued that requiring a court to order the prosecution to provide the defendant access to materials the prosecution has already asserted do not exist would be an idle act. In construing section 1054.9, however, we must respect the statutory language. The statute provides that "on a showing that good faith efforts to obtain discovery materials from trial counsel were made and were unsuccessful, the court shall [with an exception not applicable here] order that the defendant be provided reasonable access to" the discovery materials. (§ 1054.9, subd. (a), italics added.) The statute does not allow the People to preempt a discovery order by asserting in an unsworn opposition to the defendant's motion that none of the documents the defendant seeks exist. Nor is it necessarily a meaningless act to require the People to assert their denial of the existence of any responsive document after the issuance of a court order. Particularly where the denial of existence of any further responsive documents is unsworn, the existence of a court order requiring the prosecution to provide access to discovery materials emphasizes the seriousness of the issue.
Moreover, there is an additional reason in this case to require the People to assert their denial of the existence of any responsive materials after the issuance of a discovery order. As previously explained, the trial court here ordered that, with respect to the requests it granted, "if there is no discovery materials or no further discovery materials to be provided beyond what has already been provided, then the [People] should so state in a written declaration to be provided petitioner-defendant on or before the discovery deadline, [¶] The declaration should state the factual basis for the conclusion, quote, nothing exists to be discovered as to this item of discovery, end quote; or, quote, nothing exists as to the discovery item beyond what has already been provided, end quote, [¶] The declaration should address what efforts were made to find the item or items of discovery, including what, if any, agencies or individuals were contacted and their responses."
If we were to determine that Barnett's discovery request was otherwise proper under section 1054.9 and Steele, but that the People's unsworn denial of the existence of any further responsive documents was a sufficient basis for the trial court's denial of the request, then Barnett would be denied the information that the trial court ordered the People to give him with respect to other discovery requests the trial court granted.[19]
For these reasons, we conclude that the People's unsworn denial of the existence of *772 any further responsive documents is not a valid basis for upholding the denial of Barnett's request for discovery of information that any witness lied to law enforcement.[20]
That leaves us with the question of whether the trial court abused its discretion in denying this request because the materials fall within the prosecution's duty of disclosure under Brady. We find no abuse of discretion because, as before, Barnett has failed to demonstrate the materiality of the evidence he seeks. Moreover, the three additional cases he now cites do not excuse his failure because each recognizes and applies the materiality element of the constitutional duty of disclosure. (See Carriger v. Stewart (9th Cir. 1997) 132 F.3d 463, 480 [finding a Brady violation where the prosecution failed to disclose the corrections file of its "star witness"]; U.S. v. Bernah-Obeso (9th Cir. 1993) 989 F.2d 331, 336 [concluding "a material lie by a critical informant-witness about his prior record would be exculpatory and thus discoverable Brady information which the government would be under a Constitutional duty to disclose"]; U.S. v. Brumelr-Alvarez (9th Cir.1992) 991 F.2d 1452, 1458 [concluding that "[e]vidence impeaching the testimony of a government witness falls within the Brady rule when the reliability of the witness may be determinative of a criminal defendant's guilt or innocence"].)
VI
Ongoing Criminal Activities
In his motion under section 1054.9, Barnett contended he was "entitled to know of any state witness's ongoing criminal activities." In his initial brief, he asserted this constituted category No. 2 material under Steele.
In their formal response, the People asserted, "Nothing exists as to this request beyond that already disclosed to petitioner. Further the prosecution has no duty to actively investigate the facts and circumstances of these activities for the benefit of the petitioner."
The trial court denied this request.
Barnett contends the trial court erred in denying this request because "a witness who is committing crimes has a motive to help law enforcement in order to avoid punishment for his own crimes." In essence, Barnett contends once more that the information he is seeking would have been relevant for impeachment purposes and was thus discoverable under Brady. The People do not offer any argument against this request that we have not already rejected. Once again, however, Barnett has failed to show the materiality of the evidence he seeks. Accordingly, he has again failed to show the trial court abused its discretion in denying his request.
VII
Drug Use Or Addiction
In his motion under section 1054.9, Barnett contended he was "entitled to disclosure of any information in the government's possession indicating that a witness was a drug addict or used drugs." In his initial brief, he asserted this constituted category No. 2 material under Steele because "[s]uch information is relevant to the witness's ability to perceive and recall events and also as impeachment material."
*773 In their formal response, the People asserted, "Nothing exists as to this request beyond that already disclosed to petitioner. Further the prosecution has no duty to actively investigate the facts and circumstances of these activities for the benefit of the petitioner."
The trial court denied this request.
Barnett contends the trial court erred in denying this request because "such evidence is impeaching, showing that the addict's testimony is inherently suspect and that the fact of addiction is probative of other motive for testifying." The People do not offer any argument against this request that we have not already rejected.
The two California cases Barnett cites on this point are inapposite. In People v. Melton (1988) 44 Cal.3d 713, 736-737, 244 Cal.Rptr. 867, 750 P.2d 741, the court concluded that "[a] witness's drug intoxication may indeed be a basis for impeaching his credibility," but that conclusion related to a witness the defendant claimed was intoxicated at the time he was testifying. In People v. Rocha (1971) 3 Cal.3d 893, 901, 92 Cal.Rptr. 172, 479 P.2d 372, the court concluded "[e]vidence of consumption of narcotics is admissible for impeachment purposes if there is expert testimony substantiating the effects of such use," but that conclusion related to a witness (the defendant himself) who was allegedly under the influence of marijuana at the time of the crime. Neither of these cases stands for the proposition that evidence of a witness's drug use or addiction in general is relevant for impeachment purposes.
The federal cases on which Barnett relies provide some support for the proposition that when an informant witness is also a drug addict, the witness's drug addiction is relevant to his credibility. For example, in United States v. Kinnard (D.C.Cir.1972) 465 F.2d 566, 570, the court stated that "a government informer's addiction to narcotic drugs and his indictment for narcotics violations ... increased] the danger that he will color his testimony to place guilt on the defendant for his own benefit." These cases, however, do not support the broader proposition that any witness's drug addiction is relevant to the witness's credibility. In the absence of any other authority, we conclude that Barnett has failed to show that the materials he seeks would have been favorable to him; thus, we need not address his failure (once again) to demonstrate their materiality. Under these circumstances, the trial court did not abuse its discretion in denying this request.
VIII
Motive To Lie Or Bias
In his motion under section 1054.9, Barnett contended he was "entitled to disclosure of any information in the government's hands regarding any of its witnesses' motives to lie or biases for the State or against Mr. Barnett." In his initial brief, he asserted this constituted category No. 2 material under Steele.
In their formal response, the People asserted, "Nothing exists as to this request beyond that already disclosed to petitioner. Further the prosecution has no duty to actively investigate the facts and circumstances of these activities for the benefit of the petitioner."
The trial court denied this request.
Barnett contends the trial court abused its discretion in denying this request because "[s]uch evidence is quintessential impeachment material." The People do not offer any argument against this request that we have not already rejected.
We agree with Barnett that materials reflecting any motive to lie or bias by the People's witnesses for the People or *774 against Barnett would have been favorable to him, but he has again failed to make any showing of materiality. Accordingly, the trial court did not abuse its discretion in denying this request.
IX
Records
In his motion under section 1054.9, Barnett contended he was entitled to the following records regarding all of the People's witnesses: probation records, juvenile records, mental health records, governmental records indicating drug use and/or addiction, and prison records. In his initial brief, he asserted these records constituted category No. 2 and/or category No. 4 material under Steele.
In their formal response, the People asserted they were not in possession of any probation reports that were in the hands of the court or the probation office and that "[t]he rest of the request is to items outside of the prosecution team's possession or knowledge."
The trial court denied this request.
Barnett contends "[t]he trial court's ruling is contrary to law because probation, juvenile, and mental health records may be used to impeach."[21] The People do not offer any argument against this request that we have not already rejected.
Barnett first relies on Davis v. Alaska (1974) 415 U.S. 308, 94 S.Ct. 1105, 39 L.Ed.2d 347 for the proposition that he was entitled to discovery of the juvenile records of the People's witnesses. In People v. Hammon (1997) 15 Cal.4th 1117, 1124, 65 Cal.Rptr.2d 1, 938 P.2d 986, however, our Supreme Court explained that Davis v. Alaska did not involve discovery rights: "By its terms, the decision in Davis ... involved a defendant's trial rights only: The court held a defendant could not be prevented at trial from cross-examining for bias a crucial witness for the prosecution, even though the question called for information made confidential by state law [i.e., the witness's juvenile probationary status]."
Under Pennsylvania v. Ritchie (1987) 480 U.S. 39, 107 S.Ct. 989, 94 L.Ed.2d 40, however, juvenileand other potentially confidentialrecords in the possession of the prosecution may be subject to discovery because "the due process clause requires the `government' to give the accused all `material' exculpatory evidence `in its possession,' even where the evidence is otherwise subject to a state privacy privilege, at least where no clear state policy of `absolute' confidentiality exists." (People v. Webb (1993) 6 Cal.4th 494, 518, 24 Cal. Rptr.2d 779, 862 P.2d 779.) Again, however, Barnett has failed to demonstrate the materiality of the evidence he seeks, which is a prerequisite to demonstrating his entitlement to that evidence under Brady and section 1054.9. Accordingly, he has failed to show the trial court abused its discretion in denying this request.
X
Work Product In District Attorney's Files
In his motion under section 1054.9, Barnett requested the "Butte County District Attorney's files regarding [himself] and Thomas Burgess [his alleged coparticipant]." In his initial brief, he explained *775 that this request was limited to documents "the State has not yet disclosed" and included "a request for documents that the District Attorney claims are work product"specifically, a file box that the district attorney had pointed out to Barnett's attorneys and told them he was not going to disclose. Barnett requested that the court order the People "to file a privilege log, describing each document withheld with sufficient specificity to enable [him] to argue that such document is not covered by the statutory work product protection and should be disclosed."
In their formal response, the People asserted that they had "disclosed all discoverable matters," but had "not discovered papers reflecting the prosecution's own impressions of witnesses, trial notes, and legal researchi.e. work product, not required to be disclosed."
The trial court denied this request.
Barnett contends the trial court's ruling was an abuse of discretion "because the District Attorney is not entitled to claim work product protection in these circumstances and because the trial court failed to examine any of the materials in camera for Brady material."
Barnett's first contentionthat the People are not entitled to claim work product protection in these circumstancesis premised on his belief that his "right to Brady material must overcome the work product protection." Defendant's belief is correct (see People v. Collie (1981) 30 Cal.3d 43, 59, fn. 12, 177 Cal. Rptr. 458, 634 P.2d 534 [work-product doctrine "manifestly ... cannot be invoked by the prosecution to preclude discovery by the defense of material evidence, or to lessen the state's obligation to reveal material evidence even in the absence of a request therefor"]); however, the assertion that the People are not entitled to claim work product protection is true only if, and to the extent, the documents the People have withheld actually include Brady material. It is because of the possibility that the documents withheld include Brady material that Barnett offers his second contentionthat the trial court was obliged to conduct an in camera review of the documents or at least require the People to provide a privilege log. In essence, Barnett wants the trial court to examine in camera, and/or the People to prepare a privilege log for, those documents in the district attorney's files regarding himself and Thomas Burgess that the district attorney contends are protected as work product, because some of those documents may contain Brady material.
The People assert that "the prosecution has the final word on what is disclosed pursuant to Brady and an in camera review of the prosecution's files is not constitutionally nor statutorily compelled." In support of this argument they cite Pennsylvania v. Ritchie, supra, 480 U.S. at p. 59, 107 S.Ct. at p. 1002, 94 L.Ed.2d at pp. 58-59, in which the court stated that "[a] defendant's right to discover exculpatory evidence does not include the unsupervised authority to search through the Commonwealth's files.... Unless defense counsel becomes aware that other exculpatory evidence was withheld and brings it to the court's attention, the prosecutor's decision on disclosure is final." (Fn.omitted.)
This passage from Pennsylvania v. Ritchie is inapposite because Barnett is not seeking the right to personally examine the documents the People withheld to determine if they contain Brady material; rather, he is seeking to have the trial court conduct that examination. In fact, Ritchie actually supports Barnett's position because in Ritchie, the Supreme Court held that confidential records in the possession *776 of the prosecution that are not subject to a clear state policy of absolute confidentiality are subject to discovery if they contain Brady material, and "[w]hen the state seeks to protect such privileged items from disclosure, the Court must examine them in camera to determine whether they are `material' to guilt or innocence." (People v. Webb, supra, 6 Cal.4th at p. 518, 24 Cal.Rptr.2d 779, 862 P.2d 779.)
It is important to note, however, that Barnett cannot simply request discovery of all of the district attorney's work product and thereby require the trial court to examine all such documents for Brady material. This is so because, as our Supreme Court noted in City of Los Angeles v. Superior Court (2002) 29 Cal.4th 1, 124 Cal.Rptr.2d 202, 52 P.3d 129, under Ritchie a defendant cannot "`require the trial court to search through [privileged documents] without first establishing a basis for his claim that [they] contain material evidence' [citation], that is, evidence that could determine the trial's outcome, thus satisfying the materiality standard of Brady, supra, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215.'" (City of Los Angeles v. Superior Court, supra, 29 Cal.4th at p. 15, 124 Cal.Rptr.2d 202, 52 P.3d 129, quoting Pennsylvania v. Ritchie, supra, 480 U.S. at p. 58, fn. 15, 107 S.Ct. at p. 1002, fn. 15, 94 L.Ed.2d at p. 58, fn. 15.)
Here, Barnett has not addressed whether the documents he is seeking constitute "material" evidence. Thus, he has not met the threshold burden required to trigger the trial court's obligation to review the documents in camera for Brady materials. Under these circumstances, we find no abuse of discretion in the trial court's denial of this discovery request.
XI
Rap Sheets And Police Reports Regarding Juror C.L.
In his motion under section 1054.9, Barnett requested "[r]ap sheets, police reports, and any other portions of the Butte County Superior Court's file on Juror [C.L.]'s certificate of rehabilitation which have not yet been disclosed to Mr. Barnett's counsel." In his initial brief, he explained that his postconviction investigation had revealed that C.L. was ineligible to serve on a jury because he had prior felony convictions and his civil rights had not been restored, despite his statement to the contrary on his juror questionnaire.[22] Barnett further explained that the superior court had denied him copies of the rap sheet and the police reports that were in the court file. He contends that "[t]he information in the sealed portion of the court file, as well as any information in the possession of the District Attorney and law enforcement agencies involved in investigating [C.L.]'s past criminal conduct and his application for certificate of rehabilitation, must be disclosed."
In their formal response, the People asserted that "[j]uror [C.L.] was not a witness and therefore the People are not required to supply petitioner with any information about him under any conceivable discovery rule and particularly not under Penal Code section 1054.9."
Noting that it had "reviewed what is available in action 82726"the court case in which C.L. sought a certificate of rehabilitationthe *777 trial court denied this request. The court stated for the record that it had placed a copy of the court file in a sealed envelope as a court exhibit.
Barnett contends he has "stated a reasonable basis to believe that there is relevant evidence in Juror [C.L.J's file," and he "urges this Court to examine the records and disclose any information that would bolster the claim that Juror [C.L.] lied during voir dire about his own criminal record or that of his family."
We deny this request because the present proceedingan original writ proceeding brought to obtain appellate review of the trial court's ruling on a motion under section 1054.9is simply not the proper vehicle for Barnett to obtain what he seeks. Section 1054.9 allows a defendant to obtain discovery from the prosecution and/or the law enforcement authorities involved in investigating or preparing the case against the defendant of materials in their possession. It does not provide a vehicle for seeking access to sealed portions of a court file from the court.
Barnett argues that "[a]ny postconviction discovery mechanism that does not allow for such discovery violates the Sixth and Fourteenth Amendment right to be tried by a fair and impartial jury and the Fourteenth Amendment right to due process in state postconviction proceedings." We are not persuaded, as Barnett cites no authority supporting that proposition. The general principle he cites that once a state makes postconviction review available, "its operation must conform to the due process requirements of the 14th Amendment" (Easter v. Endell (8th Cir. 1994) 37 F.3d 1343, 1345) is not enough to sustain his argument because Barnett fails to explain why a statute that provides for postconviction discovery from the prosecution and relevant law enforcement authorities violates due process if it does not also provide for discovery of sealed materials in the possession of the court.
Barnett next contends that even if section 1054.9 "does not authorize such disclosure, then the Superior Court had inherent power to authorize disclosure." Again, however, Barnett cites no authority for this assertion. Moreover, whether the court has such authority is simply not a question that is properly answered in this proceeding, which is a proceeding to obtain discovery from the prosecution and/or the law enforcement authorities involved in investigating or preparing the case against him.
Because the materials at issue include "rap sheets" and police reports, however, the question remains whether Barnett is entitled to obtain discovery of those documents that are in the possession of the prosecution and/or the relevant law enforcement authorities, and not simply in the court file relating to C.L.'s certificate of rehabilitation. We address that question next.
XII
Criminal Records Of Jurors CL. And L.F.
In addition to requesting the materials addressed above regarding Juror C.L., in his motion under section 1054.9 Barnett requested more broadly "information regarding any arrests or convictions and all criminal activity known to law enforcement for [C.L.] and [L.F.] and their family members." In his initial brief, Barnett broadened this request even further, asserting that he was seeking "information regarding any arrests or convictions and all criminal activity known to law enforcement for the trial jurors, especially [C.L.] and [L.F.] and their family members." (Italics added.) He contended this information *778 constituted category No. 4 material under Steele.
In their formal response, the People incorporated their response to Barnett's previous request.
The trial court denied this request.
Barnett contends the trial court erred in this ruling because he "has good cause for seeking this discovery." According to Barnett, his own postconviction investigation has uncovered information that C.L. "lied about his own criminal record and that of his adult sons" and that L.F. "concealed his own illegal drug use during the trial and his connections with criminals." Barnett further contends that both jurors have no privacy interest in their records because they are now deceased.
Good cause for the discovery is not the relevant standard, however. As we have repeatedly stated, section 1054.9 entitles a defendant to discovery only of materials to which he would have been entitled at time of trial. Thus, to convince us the trial court erred, Barnett must convince us that he would have been entitled to the criminal records of C.L. and L.F. (and presumably the other trial jurors) at time of trial.
Barnett first cites People v. Murtishaw (1981) 29 Cal.3d 733, 175 Cal.Rptr. 738, 631 P.2d 446 for the proposition that he "is entitled to information concerning the jurors in the hands of the prosecution and law enforcement agencies involved in the investigation of the case." That is an overstatement of the holding in Murtishaw. In Murtishaw, the defendant moved for "discovery of prosecutorial investigations of prospective jurors or for $1,000 to enable the defense to conduct a similar investigation." (Id. at p. 765, 175 Cal. Rptr. 738, 631 P.2d 446.) Despite the district attorney's acknowledgement "that his office had conducted field investigations of prospective jurors and maintained records showing how the jurors had voted in prior cases and whether they had arrest records," the trial court denied the defendant's motion. (Ibid.)
On review, the Supreme Court observed that "[w]hen courts ... deny defendants who cannot afford similar investigations access to the prosecutor's records, the result is that prosecutors in case after case will have substantially more information concerning prospective jurors than do defense counsel. Such a pattern of inequality reflects on the fairness of the criminal process." (People v. Murtishaw, supra, 29 Cal.3d at pp. 766-767, 175 Cal.Rptr. 738, 631 P.2d 446, fn. omitted.) Accordingly, the court held that in future cases trial courts would have "discretionary authority to permit defense access to jury records and reports of investigations available to the prosecution." (Id. at p. 767, 175 Cal. Rptr. 738, 631 P.2d 446.)
Murtishaw is of no assistance here because, as the People point out, "there is no indication in the record that the prosecution engaged in [a field] investigation" of prospective jurors. Absent evidence that the prosecution conducted such an investigation and therefore had "substantially more information concerning [the] prospective jurors than d[id Barnett's] defense counsel," there is no reason to believe that a request for the prosecution's juror information under Murtishaw would have been successful at time of trial, and if Barnett was not entitled to the materials he is seeking at time of trial, then he is not entitled to them under section 1054.9.[23]*779 The question, then, is whether there is any other authority that would have allowed Barnett to obtain from the prosecution the criminal records of any of the jurors at time of trial, even though the prosecution may not have availed itself of the availability of those records.
Barnett contends "[t]he logic of cases such as Brady v. Maryland impels this Court to order disclosure of records in the possession of the government relating to [his] jurors." We cannot agree. "Under Brady, supra, 373 U.S. 83, 87 [83 S.Ct. 1194, 1196-1197], the prosecution must disclose to the defense any evidence that is `favorable to the accused' and is `material' on the issue of either guilt or punishment." (City of Los Angeles v. Superior Court, supra, 29 Cal.4th at p. 7, 124 Cal. Rptr.2d 202, 52 P.3d 129, italics added.) Even assuming a juror's criminal record could be deemed favorable to the defendant, it certainly cannot be deemed material on the issue of guilt or punishment. Thus, Barnett's right to exculpatory information under Brady does not support his request for the criminal records of the trial jurors.
Barnett contends that "[i]f at trial, Mr. Barnett had learned that Juror [C.L.] lied about his criminal record and his civil rights, Mr. Barnett would have been entitled to an inquiry." The authorities Barnett cites, however, stand for nothing more than the proposition that when a question of juror partiality or misconduct arises, the defendant should be given the opportunity to prove juror bias or misconduct. (See, e.g., Smith v. Phillips (1982) 455 U.S. 209, 215, 102 S.Ct. 940, 944-45, 71 L.Ed.2d 78, 85 ["the remedy for allegations of juror partiality is a hearing in which the defendant has the opportunity to prove actual bias"].) Barnett offers no authority for the further proposition that the opportunity to prove juror bias or misconduct includes the right to discovery from the prosecution of materials relating to the juror in question.
Barnett tries to bridge this gap by arguing that "[i]f a prosecutor conceals information about a juror's biases, the prosecutor violates his obligations pursuant to the Due Process Clause." While that may be so, it provides no basis for Barnett's discovery request here. Barnett has offered nothing to suggest that at time of trial the People were aware of, but actively concealed from him, the criminal records of C.L., L.F., or any of the other trial jurors. Moreover, that the People may have the obligation not to conceal information about a juror's biases does not mean a defendant has the right to compel the People to obtain and disclose the criminal records of trial jurors.
In the absence of any authority suggesting that Barnett would have been entitled to compel the People to obtain and provide him with the criminal records of the trial jurors (and their family members) at time of trial, the trial court did not abuse its discretion in denying this request for the same discovery under section 1054.9.
XIII
Criminal Records Of Witnesses' Family Members
In his motion under section 1054.9, Barnett requested "information regarding any arrests or convictions and all criminal activity known to law enforcement for family members of the State's witnesses." *780 In his initial brief, he asserted this constituted category No. 4 material under Steele.
In their formal response, the People asserted that "[n]othing exists as to th[is] request[ ] beyond that already disclosed to petitioner. As already noted, the prosecutor has no duty to actively investigate the facts and circumstances of the case for the benefit of the accused. [Citation.] Nor are the People required to make a complete and detai[l]ed accounting to the defense of all police investigative work on a case."
The trial court denied this request.
Barnett contends "[t]his ruling was an abuse of discretion because such information can be impeaching." Beyond the arguments we have rejected already, the People assert only that the trial court "was within its discretion to deny discovery requests for materials that provide, at most, limited relevance for collateral impeachment of a witness."
In support of his discovery request, Barnett cites People v. Crawford (1967) 253 Cal.App.2d 524, 61 Cal.Rptr. 472. In Crawford, the defendant complained "that his cross-examination of a prosecution witness was unduly restricted by the trial court" because the court "refus[ed] to permit him to cross-examine [a] witness ... in the presence of the jury on the alleged arrest of [the witness's] wife" "the previous night." (Id. at p. 533, 61 Cal.Rptr. 472.) The appellate court concluded "the arrest would have been material to impeach the witness (by showing a motive for testifying against [the defendant]) if it also could be shown by direct or circumstantial evidence that the witness had knowledge of the arrest" but "the defendant failed to offer any proof that the witness knew or could have known of his wife's arrest." (Id. at pp. 533-534, 61 Cal. Rptr. 472.)
At its broadest, Crawford stands for the proposition-that evidence of the recent arrest of a prosecution witness's close family member may be relevant for impeachment purposes if it can be shown that the witness knew of the arrest, because the arrest may provide a motive for the witness to cooperate with the prosecution and thereby may suggest prosecutorial bias on the part of the witness.
U.S. v. Lankford (11th Cir.1992) 955 F.2d 1545the other case Barnett cites in support of his argumentis similar. There, the appellate court held the trial court erred by limiting the defendant's cross-examination of the chief government witness against him about "the fact that [his] sons had been arrested by state authorities for the sale of twenty pounds of marijuana." (Id. at pp. 1548-1549.) According to the appellate court, "Notwithstanding the fact that [the witness] had made no deal with the government concerning a federal investigation into his sons' marijuana arrest, his desire to cooperate may have in fact been motivated by an effort to prevent such an investigation. We cannot imagine a much stronger motive for testifying on behalf of the government than the desire to protect one's children." (Id. at p. 1549, fn. omitted.)
As we have noted previously, "[t]he prosecution's constitutional duty to disclose all substantial material evidence favorable to an accused `extends to evidence which may reflect on the credibility of a material witness.'" (People v. Hayes, supra, 3 Cal.App.4th at p. 1244, 5 Cal. Rptr.2d 105.) Even under the reasoning of Crawford and Lankford, however, the fact that a close family member of a prosecution witness was recently arrested does not reflect on the credibility of the witness unless the witness knows of the arrest. Thus, contrary to Barnett's assertion, the *781 mere fact of the arrest alone is not "impeaching." It is only the combination of the arrest and the witness's knowledge of it that provides a basis for impeaching the witness.
Barnett offers no authority for the proposition that a fact that in and of itself does not bear on a witness's credibility must be disclosed because it might bear on the witness's credibility if another fact is also true. In the absence of such authority, we conclude that Barnett has failed to show an abuse of discretion by the trial court in the denial of this discovery request.
It is also worth noting that even if the arrest of a close family member, by itself, could be deemed impeaching, Barnett's discovery request was not limited to information about any arrest of a close family member of a prosecution witness for which charges could still be brought. Instead, Barnett asked for "information regarding any arrests or convictions and all criminal activity known to law enforcement for family members of the State's witnesses." Thus, Barnett's request encompassed all arrests of family members, not only those for which charges could still be brought, as well as all convictions, which fall outside the reasoning of Crawford and Lankford and have no discernible bearing on the witness's credibility. The overbreadth of Barnett's request provides yet another reason for us to find no abuse of discretion in the trial court's denial.
XIV
Communications Regarding Barnett, The Case Against Him, And The Witnesses
In his motion under section 1054.9, Barnett requested "any document, record or paper and audio or video recording of all information relayed to law enforcement regarding [him], the case against him and the State's witnesses." He also requested "all records of all communications about [him], the case against him, or the State's witnesses between law enforcement and any person, including the dates, times, locations, and details of all such communications." In his initial brief, he asserted these materials fell within the scope of the discovery order from trial and were therefore category No. 2 materials under Steele.[24]
In their formal response, the People asserted that "[n]othing exists as to these requests beyond that already disclosed to petitioner. As already noted, the prosecutor has no duty to actively investigate the facts and circumstances of the case for the benefit of the accused. [Citation.] Nor are the People required to make a complete and detai[l]ed accounting of all police investigative work on a case."
The trial court denied these requests.
Barnett contends the trial court abused its discretion in denying these requests "because the information sought would facilitate the ascertainment of facts and a fair trial" and he "is entitled to discover `any unprivileged evidence, or information that might lead to the discovery of evidence, if it appears reasonable that such knowledge will assist him in preparing his defense.'" The People do not offer any argument against these requests that we have not already rejected.
Since Barnett no longer contends these requests were for materials that fell within the scope of the February 1987 discovery order, we consider these requests as ones for category No. 4 materialsthat is, materials to which he would have been entitled at time of trial if he had asked for *782 them. Viewed in that light, we conclude the trial court did not abuse its discretion in denying these requests.
Barnett cites three authorities in support of his requests.[25] The first is Pitchess v. Superior Court (1974) 11 Cal.3d 531, 113 Cal.Rptr. 897, 522 P.2d 305, in which our Supreme Court explained that "an accused in a criminal prosecution may compel discovery by demonstrating that the requested information will facilitate the ascertainment of the facts and a fair trial." (Id. at p. 536, 113 Cal.Rptr. 897, 522 P.2d 305.) The Pitchess court also explained, however, that "[t]he requisite showing may be satisfied by general allegations which establish some cause for discovery other than `a mere desire for the benefit of all information which has been obtained by the People in their investigation of the crime.'" (Id. at p. 537, 113 Cal.Rptr. 897, 522 P.2d 305, italics added.)
Here, Barnett has not made the showing required by Pitchess because he has not established any cause for his broad discovery requests "other than `a mere desire for the benefit of all information which has been obtained by the People in their investigation of the crime.'" (Pitchess v. Superior Court, supra, 11 Cal.3d at p. 537, 113 Cal.Rptr. 897, 522 P.2d 305.) Accordingly, Pitchess is of no assistance to him.
The second case Barnett cites is Ballard v. Superior Court (1966) 64 Cal.2d 159, 49 Cal.Rptr. 302, 410 P.2d 838. In Ballard, the court quoted a law review article by Chief Justice Traynor, in which he wrote, "`A showing, however, that the defendant cannot readily obtain the information through his own efforts will ordinarily entitle him to pretrial knowledge of any unprivileged evidence, or information that might lead to the discovery of evidence, if it appears reasonable that such knowledge will assist him in preparing his defense.'" (Id. at p. 167, 49 Cal.Rptr. 302, 410 P.2d 838.) The court also explained, however, that "[a] defendant's motion for discovery must nevertheless describe the requested information with at least some degree of specificity and must be sustained by plausible justification." (Ibid.)
Here, Barnett does not seek any specific information supported by plausible justification. Instead, his requests for "all information relayed to law enforcement regarding [him], the case against him and the State's witnesses" and "all records of all communications about [him], the case against him, or the State's witnesses between law enforcement and any person" together amount to nothing less than a request for all information the People obtained in their investigation of the crime, which is supported by no particular justification other than the suggestion that something useful to him may be found therein. Ballard, like Pitchess, does not support such broad requests.
Finally, Barnett cites People v. Riser (1956) 47 Cal.2d 566, 305 P.2d 1. There, the court stated that "the state has no interest in denying the accused access to all evidence that can throw light on issues in the case." (Id. at p. 586, 305 P.2d 1.) The court also explained, however, that a defendant's right to compel production of evidence from the prosecution during trial arises only "on a proper showing ... when it becomes clear during the course of trial that the prosecution has in its possession relevant and material evidence." (Id. at pp. 585-586, 305 P.2d 1.)
Barnett has not made any such showing here. His requests for essentially all of *783 the information the People obtained in their investigation of the crime are not requests for "relevant and material evidence." Accordingly, like Pitchess and Ballard, Riser does not support the requests.
In light of Barnett's failure to show that he would have been entitled at time of trial to the materials he seeks, the trial court did not abuse its discretion in denying these requests.
XV
Records Of Conversations With Witnesses
In his motion under section 1054.9, Barnett requested "audio and/or video records and notes or documentation of any sort of any conversations between law enforcement and Delinda Olsen or Philippe Enoingt at their home, or any other person at the Olsen-Enoingt home, from July 7, 1986 through August 31, 1986." In his initial brief, he asserted these materials fell within the scope of the discovery order from trial and were therefore category No. 2 materials under Steele.
In their formal response, the People asserted that "[n]othing exists as to th[is] request[ ] beyond that already disclosed to petitioner. As already noted, the prosecutor has no duty to actively investigate the facts and circumstances of the case for the benefit of the accused. [Citation.] Nor are the People required to make a complete and detai[l]ed accounting to the defense of all police investigative work on a case."
The trial court denied this request.
Barnett contends the trial court's ruling was an abuse of discretion because when Olsen testified against him, there were multiple felony counts pending against her and Enoingt in Butte County. He contends he "was entitled to investigate Olsen and Enoignt's contacts with law enforcement to explore their bias against him or for the State or motive to curry favor with the State." He also claims that "law enforcement had come to [Olsen's] home to discuss the case against Mr. Barnett with her and Enoingt at least twice before ... June 2, 1987" and that "Olsen has stated in a sworn declaration that law enforcement threatened to take Olsen's children from her unless she testified against Mr. Barnett."
The People do not offer any argument against this request that we have not already rejected.
Whether we consider this a request for category No. 4 materials or a request for category No. 2 materials subject to disclosure under Brady,[26] we find no abuse of discretion in the trial court's ruling. In support of this discovery request, Barnett cites only People v. Crawford, supra, 253 Cal.App.2d at page 533, 61 Cal.Rptr. 472 and United States v. Lankford, supra, 955 F.2d at pages 1548-1549, which we have discussed already. Those cases stand for the proposition that evidence of the recent arrest of a prosecution witness's close family member may be relevant for impeachment purposes if it can be shown that the witness knew of the arrest. That proposition has no relevance here. To the extent Barnett seeks these materials on the belief they may contain some evidence of threats Olsen claims were made to get her to testify against Barnett, Barnett has failed to offer any explanation of what Olsen's testimony was or why it was material to his conviction. Absent such an explanation, we conclude he has failed to show an *784 abuse of discretion by the trial court in its denial of this request.
XVI
BINTF
In his motion under section 1054.9, Barnett requested "any notes, reports or documentation of any sort, including audio or video recordings, of any interview or contact by members of the Butte Interagency Narcotics Task Force (BINTF) and any person concerning Mr. Barnett, the case against him, or the State's witnesses, including contacts initiated in pursuance of other criminal cases." In his initial brief, he asserted these materials fell within the scope of the discovery order from trial and were therefore category No. 2 materials under Steele.
In their informal response to this request, the People noted, "Two (2) Daily Information Memo's (DIM's) provided."[27] Barnett complained that one of the two documents was "heavily redacted," and he requested "access to all records in the possession of BINTF regarding [him] in unredacted form."
In their formal response, the People asserted that BINTF was not part of the prosecution team because BINTF did not "assist[ ] in the investigation of the murder with which petitioner was charged." Nevertheless, the People explained that "at the specific request of the petitioner's appellate counsel, the People requested any information that BINTF had in its files on petitioner. The People received that information by way of subpoena and disclosed it to petitioner."
The trial court denied this request.
Barnett contends the trial court abused its discretion in denying this request because "BINTF was involved in the investigation of the case against [him] and codefendant Tom Burgess." Noting the People's production of the two DIM's, Barnett contends "the State recognizes that BINTF was an agency involved in the investigation and prosecution of the case."
The People contend that "Barnett has not established that BINTF was part of the prosecution team as defined by Steele" and "[t]he fact that the prosecutor, in the spirit of cooperation [citation], obtained materials from BINTF on petitioner's behalf in no way establishes that BINTF was part of the prosecution team in this case."
According to Barnett, BINTF was involved in the investigation and prosecution of the charges against him because (1) BINTF arrested Burgess, his alleged coparticipant; (2) BINTF produced (in response to the People's subpoena) a report noting that a "CI" (confidential information or citizen informant) reported that Barnett and Burgess were involved in methamphetamine trafficking; and (3) BINTF admitted in 2001 that it had records regarding Barnett, but they had been destroyed.
The three factors on which Barnett relies do not demonstrate the BINTF was involved in the investigation or prosecution of the case against him. The mere fact that BINTF officers arrested an alleged coparticipant for the same crimes does not establish that agency's involvement in the investigation or prosecution of the case against Barnett. Similarly, the mere fact that BINTF had in its records a report from a "CI" that Barnett and Burgess were both involved in trafficking methamphetamine does not establish that agency's *785 involvement in the investigation or prosecution of the murder case against Barnett. Finally, the fact that BINTF, at one time, had "files concerning Mr. Barnett" does not establish that agency's involvement in the investigation or prosecution of this case against Barnett.
In short, Barnett has not pointed to anything that establishes BINTF was one of the "law enforcement authorities" to which section 1054.9 applies. Accordingly, Barnett has failed to show any abuse of discretion by the trial court in its denial of this request.
XVII
Witnesses' Other Cases
In his motion under section 1054.9, Barnett requested "the case name, number, and county of any case other than People v. Barnett, Butte County Superior Court Case No. 91850, that any witness in the Barnett trial also testified in," as well as "a listing of those witnesses who have provided information to law enforcement in connection with any other investigation" and "documentation, including audio or video recordings of such contacts between witnesses and law enforcement, including the content of such contact, and documentation in any form of law enforcement's evaluation of the witness's credibility." In his initial brief, he asserted "[t]his information may provide impeachment material or, in the case of defense witnesses, evidence that could have been used to bolster their credibility after their credibility was attacked on cross-examination." He further asserted "[t]his information falls within Category 4."
In their formal response, the People asserted, "Nothing exists as to this request beyond that already disclosed to petitioner." The People further asserted that the burden placed on the People to comply with the request far exceeded Barnett's need for the discovery.
The trial court denied this request.
Barnett contends this ruling was an abuse of discretion for the same reasons discussed above in connection with his requests for information relayed to law enforcement regarding him and all records of all communications about him. Specifically, Barnett relies on Pitchess, Ballard, and Riser to justify his discovery request because the information requested might lead to the discovery of information that would call into question the credibility of the People's witnesses or bolster the credibility of his witnesses.
The People contend that "[g]iven the speculative and generalized nature of Barnett's request, in addition to its incredible breadth, the respondent court properly denied Barnett's fishing expedition."
Barnett first contends that "the burden on the State is no justification for failing to comply with disclosure obligations." In support of that contention, Barnett cites In re Brown (1998) 17 Cal.4th 873, 72 Cal.Rptr.2d 698, 952 P.2d 715, a case involving the prosecution's failure to comply with its constitutional duty to disclose exculpatory material under Brady. Brown is inapposite here because Barnett's present request was not one for exculpatory Brady material; rather, it was for detailed information about other cases and investigations the witnesses in his trial had participated ininformation which might well have no bearing on the murder case against Barnett at all.
Contrary to Barnett's assertion, the burden on the People of complying with a broad discovery request such as the one at issue here is a relevant factor when the defendant seeks information that is not subject to Brady. Indeed, as Barnett himself later admits (in contradiction of his *786 earlier argument), California case law establishes that, "[a]lthough policy may favor granting liberal discovery to criminal defendants, courts may nevertheless refuse to grant discovery if the burdens placed on government and on third parties substantially outweigh the demonstrated need for discovery." (People v. Kaurish (1990) 52 Cal.3d 648, 686, 276 Cal.Rptr. 788, 802 P.2d 278.) Barnett contends, however, that "here, the State made no showing in the Superior Court regarding the burden on the State to provide the information Mr. Barnett seeks."
Barnett cites no authority for the proposition that the People must make an evidentiary showing of the burden involved in complying with a particular discovery request before the trial court can exercise its discretion to deny that request under Kaurish and related authorities. Indeed, there is nothing in Kaurish even suggesting such a requirement. There, the defendant had sought to "discover `police reports pertaining to child molestation killings in the Hollywood area' for the six months preceding and following the murder" at issue. (People v. Kaurish, supra, 52 Cal.3d at p. 686, 276 Cal. Rptr. 788, 802 P.2d 278.) The trial court granted a motion to quash the subpoena, and on review the Supreme Court concluded the trial court did not abuse its discretion. (Id. at p. 687, 276 Cal.Rptr. 788, 802 P.2d 278.) In doing so, the court did not cite to any evidence of the burden the discovery request placed on the People, but instead simply noted that "defendant's request was broad and somewhat burdensome, both with regard to expenditure of police resources to review files and to the privacy interests of third parties." (Ibid.) Presumably the court reached this conclusion based on the face of the request alone.
On its face, Barnett's request here is even more burdensome than the request at issue in Kaurish in that it seeks information on cases and investigations throughout the state involving any witness who testified in Barnett's murder prosecution. Moreover, Barnett's request is not supported by any particularly compelling justification. He has not alleged that he expects to find information bearing on the credibility of the witnesses in the materials he has requested, only that he may find it. Under these circumstances, we find no abuse of discretion in the trial court's denial of this discovery request.
XVIII
Street Talk Regarding Barnett's Innocence
In his motion under section 1054.9, Barnett requested "documentation in any form of any person conveying information to law enforcement in Butte County, including BINTF, regarding Mr. Barnett, the case against him or the witnesses in his case. This request includes information about any person who conveyed information to law enforcement regarding `street talk' about the case, and any `street talk' to the effect that Mr. Barnett was innocent, was being set up and/or was framed." In his initial brief, he asserted these materials fell within the scope of the discovery order from trial and were therefore category No. 2 materials under Steele.
In their formal response, the People asserted, "Nothing exists as to this request beyond that already disclosed to petitioner. Furthermore, the constitutional mandate of the People to disclose exculpatory evidence to a defendant does not require the prosecutor to disclose a `rumor' of exculpatory evidence."
The trial court granted the request "contained in the first sentence" but denied the *787 request "as far as any, quote, street talk, end quote, is concerned."
Barnett contends "[t]his order is unfathomable'" because "[t]here is evidence in the record that witnesses told law enforcement that `street talk' indicated that Mr. Barnett was being framed," and "[s]uch information is exculpatory and must be disclosed."
The People contend that under Brady, "the prosecution is not required to disclose mere `rumors' of exculpatory evidence." They cite two cases in support of that assertion. The firstUnited States v. Agurs (1976) 427 U.S. 97, 107, 96 S.Ct. 2392, 2399, 49 L.Ed.2d 342, 351-352is inapposite, because it deals with the duty of a prosecutor to produce evidence to the defendant when the defendant makes only a general request for Brady material, or no request at all. That is not the case here. Here, we are dealing with the People's duty to produce evidence in response to a specific requestthat is, for "information about any person who conveyed information to law enforcement regarding `street talk' about the case, and any `street talk' to the effect that Mr. Barnett was innocent, was being set up and/or was framed." On that subject, the court in Agurs had this to say: "Although there is, of course, no duty to provide defense counsel with unlimited discovery of everything known by the prosecutor, if the subject matter of such a request is material, or indeed if a substantial basis for claiming materiality exists, it is reasonable to require the prosecutor to respond either by furnishing the information or by submitting the problem to the trial judge. When the prosecutor receives a specific and relevant request, the failure to make any response is seldom, if ever, excusable." (Agurs, at p. 106, 96 S.Ct. at p. 2399, 49 L.Ed.2d at p. 351.)
The second case the People citeSmith v. Stewart (9th Cir.1998) 140 F.3d 1263, 1273is somewhat closer on point. There, the defendant argued "that his Brady rights were violated because counsel had not been informed that the police had heard about a rumor in the community to the effect that [his] brother was in the car with him, but that Smith himself had gone into the store to commit the robbery." (Smith v. Stewart, supra, 140 F.3d at p. 1273, fn. omitted.) In rejecting this argument, the court stated: "No doubt under Brady the state had the obligation to disclose favorable evidence to Smith. [Citation.] However, it is pretty difficult to see how the information was favorable. If it were, it was so weak, so remote, and so inconclusive that it is highly unlikely that it would have had any effect whatever upon the verdict, much less would it `undermine confidence in the outcome' of the trial." (Ibid.)
The problem with the People's reliance on Smith is that the rumor in Smith was not really exculpatory, since the rumor only confirmed that the defendant had committed the crime (albeit with the possible assistance of his brother). Here, on the other hand, the "street talk" that Barnett's request sought information about was exculpatory, to the extent that "street talk" was "to the effect that Mr. Barnett was innocent, was being set up and/or was framed." Moreover, it appears Smith, like Agurs, involved the prosecutor's duty to disclose exculpatory evidence when no request for Brady material had been made. This case, on the other hand, involves a request for a specific category of information.
We believe that Barnett's request for information received by law enforcement about "street talk" regarding Barnett's innocence "describe[s] the requested information with at least some degree of *788 specificity" and is "sustained by plausible justification." (Ballard v. Superior Court, supra, 64 Cal.2d at p. 167, 49 Cal.Rptr. 302, 410 P.2d 838.) Thus, had Barnett sought this information at time of trial, he would have been entitled to it, and therefore it was an abuse of discretion for the trial court to deny his request for this information in his motion under section 1054.9.
XIX
Information Regarding Pathologist
In his motion under section 1054.9, Barnett requested "information which the prosecution knew or should have known about [pathologist Gwen] Hall's testimony in other cases involving death by stabbing, including the number of autopsies she had performed on such decedents, testimony in other cases involving death by shotgun shots, including the number of autopsies she had performed, and testimony involving decedents who had been bound, including the number of such autopsies she had performed." Barnett further requested "the preliminary hearing and trial testimony of every case in which Dr. Hall testified as a prosecution witness from 1984-2000 and copies of all coroner's reports relating to such testimony. As to those cases, Mr. Barnett requests the case names and numbers and county where tried." Barnett also requested "copies of any document generated by or in the possession of law enforcement concerning Dr. Hall's credibility and any written complaints pertaining to Dr. Hall's credibility"; "any information regarding arrests and/or convictions of Dr. Hall"; and "a list of all instances in which Dr. Hall changed her reports or testimony in any case, or where an attorney accused her of changing her findings or opinions or of being biased or giving false testimony or fabricating evidence, including the names and numbers of the cases, the county where tried, and the names of the attorneys involved." In his initial brief, he asserted these materials were category No. 2 and/or No. 4 materials under Steele.
In their formal response, the People asserted, "Nothing exists as to this request beyond that already disclosed to petitioner." The People further asserted that the burden placed on the People to comply with the request far exceeded Barnett's need for the discovery.
The trial court denied the request.
Relying on Pitchess and Ballard, Barnett contends the trial court abused its discretion in denying this request because he is "seek[ing] any information in the hands of the State bearing on Dr. Hall's credibility and expertise."
The People contend that "Barnett's request is beyond the scope of section 1054.9" because he is "seeking materials from as late a date as 2000." To the extent Barnett's request encompasses material that did not exist at time of trial, we agree it is beyond the scope of the statute. As we have explained already, by its very terms section 1054.9 covers only materials to which the defendant "would have been entitled at time of trial." (§ 1054.9, subd. (b), italics added.) Thus, Barnett's request for materials relating to Dr. Hall's involvement in other cases after his trial is beyond the scope of the statute. Whether the People had a posttrial duty under Brady to disclose some or all of this material to Barnett has nothing to do with whether the People can be ordered to produce such information under section 105.9. Because it is limited to materials to which the defendant would have been entitled at time of trial, that statute simply does not provide a vehicle for a defendant to enforce any posttrial Brady obligations the People may have.
*789 Of course, that does not entirely resolve Barnett's request, since the request encompassed other materials that existed (if they existed at all) at time of trial. As to those materials, the People contend the trial court's rating was not an abuse of discretion because the burden on the People of complying with the request outweighed any possible benefit to Barnett of compliance.
"In the exercise of its discretion, the court may compare the defendant's demonstration of need for the matter sought with the burden that would be placed on the prosecution in providing it. [Citations.] Pertinent considerations include whether the demand for discovery is overly broad [citations] and, importantly, the nature of discovery that has been granted." (Lemelle v. Superior Court (1978) 77 Cal.App.3d 148, 165, 143 Cal. Rptr. 450.)
On the issue of burden, Barnett repeats his argument that the People offered no evidence of the burden. We have concluded already, however, that an evidentiary showing is not required. The question is whether the trial court could have reasonably determined that the apparent burden of complying with Barnett's broad request substantially outweighed Barnett's need for discovery. Of course, that requires us to examine the "need" Barnett demonstrated for the information he seeks. On this point, Barnett contends the information he seeks is relevant to impeaching Dr. Hall's credibility. He further claims that he "has already developed evidence that Dr. Hall misrepresented her qualifications in this trial." That evidence consists of a letter from the American Board of Pathology which allegedly shows that Dr. Hall testified falsely at Barnett's preliminary examination when she claimed she had certificates in forensic pathology and anatomic pathology.
Under these circumstances, we find no abuse of discretion in the trial court's ruling. Barnett's request sought an extremely broad array of materials, .including (but not limited to) the preliminary hearing and trial testimony of every case in which Dr. Hall testified as a prosecution witness over a four-year period (from 1984 through 1988), and copies of all coroner's reports relating to such testimony. As justification for that request, Barnett asserted only that Dr. Hall's credibility was in issue because of an allegedly false statement she made at his preliminary examination about her certifications in pathology. It is a matter of great speculation, however, whether any of Dr. Hall's other testimony which Barnett sought to discover would have provided any further basis to challenge her credibility as a witness. Moreover, the trial court granted another request Barnett made for discovery related to Dr. Hallspecifically, his request for "any record to which the prosecution has reasonable access regarding [her] qualifications." In light of all these factors, we cannot say the trial court acted outside the bounds of reason in denying this discovery request.
XX
Homicide Investigation Manuals
In October 2004, after Barnett filed his motion under section 1054.9 and after his attorneys met with the district attorney in an attempt to resolve the matter, Barnett's attorneys noted in a letter to the district attorney that "[t]he recent discovery disclosures" had "prompt[ed some] additional discovery requests." One of those requests was for "the protocols, guidelines or manual in effect in 1986-1988 for homicide investigations by the Butte County Sheriffs Office and the Butte County District Attorney's investigative *790 staff." In his initial brief on the motion, Barnett added this request to those made in the motion and asserted these materials were category No. 4 materials under Steele.
In their informal response to the motion, the People asserted, "No manual existed in 1986-1988." In his second brief, Barnett requested "a declaration to that effect from persons with personal knowledge." In their formal response to the motion, the People asserted that Barnett had "failed to show a plausible justification for" the requested material.
The trial court denied the request.
Barnett contends the trial court's ruling was an abuse of discretion because he is "entitled to investigate the quality of the police investigation in the case against him and to investigate whether the police followed their own protocols in investigating the case."
The People respond that Barnett has not offered a "plausible justification" for his request because the request is "based on nothing more than his speculative hope that something helpful to him will turn up."
The cases on which Barnett relies to support his discovery request may stand for the proposition that evidence of a poor police investigation can be relevant in a criminal prosecution. It does not follow, however, that just because the quality of the investigation is a relevant subject, a trial court abuses its discretion if it refuses to allow discovery of any written protocols, guidelines, or manuals that exist for conducting such investigation. Here, Barnett has not offered any fact or even any allegation suggesting there was something wrong with the quality of the investigation in this case. In the absence of any asserted basis for believing the investigation was flawed, we cannot say the trial court acted beyond the bounds of reason in determining that Barnett had not shown a plausible justification for the discovery he sought. Accordingly, we find no abuse of discretion in the trial court's denial of this request.
XXI
Burgess's Arrests
In their letter to the district attorney in October 2004, Barnett's attorneys noted that Burgess's rap sheet (which was among the missing pages of trial discovery the People had recently provided) "shows that he was arrested on July 10, 1986, and charged with assault with deadly weapon, robbery and possession of narcotics. No disposition of those charges is indicated on the rap sheet. What is the disposition of those three charges? If they were dismissed, when were they dismissed?" In his initial brief on the motion under section 1054.9, Barnett added this request to those made in the motion and asserted the request was for category No. 2 materials under Steele.
In their informal response to the motion, the People asserted, "The arrest on July 10, 1986 was relative to the initial charges in this matter. The charges were dismissed." In his second brief, Barnett requested "documentation establishing these facts from prosecution and law enforcement agencies involved in the investigation and prosecution of the case." In their formal response to the motion, the People asserted that "[t]he short answer is that the entire discovery given over to petitioner at trial establishes these `facts.' Further, the dismissal of the charges against Burgess is in the court record, having occurred pursuant to Penal Code Section 1099 on May 9, 1988, the first day of trial."
The trial court denied the request "to the extent it requests information beyond *791 what has already been provided for and/or ordered herein."
Barnett contends the court's ruling was an abuser of discretion because he "could have impeached [Burgess, who testified against him,] with the fact that he had charges pending against him that were not disposed of until after he testified." Barnett contends the People's explanation for the disposition of the charges against Burgess "does not account for the narcotics charge."
The rap sheet for Burgess that was part of the original discovery appears to show that Burgess was arrested on July 10, 1986, for assault with a deadly weapon, robbery, and possession of a controlled substance. On July 14, 1986, a complaint was filed in the Oroville Justice Court charging Burgess with assault by means likely to produce great bodily injury and four counts of kidnapping. On August 11, 1986, an information was filed in the superior court charging Burgess with two counts of robbery, assault with a firearm, and four counts of kidnapping. On the first day of trial, the trial court granted the People's motion to dismiss the information against Burgess.
Barnett complains that the dismissal of the information "did not resolve the narcotics charge because the narcotics charge was not included in the complaint or information filed against Burgess." Thus, he implies, there must be other material in the possession of the prosecution and/or the relevant law enforcement authorities showing the disposition of the narcotics charge.
That Barnett was arrested for possession of a controlled substance does mean that a charge of possession of a controlled substance was ever filed against him. Indeed, it appears from the materials already in Barnett's possession (described above) that no such charge was ever filed.
Under these circumstances, we find no abuse of discretion in the trial court's denial of this discovery request.
XXII
"The Hooker Rape Victim"
In early September 2004, Barnett's attorneys apparently had a conversation with the district attorney and his chief investigator regarding Barnett's discovery motion. During that conversation, the investigator apparently referred to someone as "the hooker rape victim." That reference generated the following inquiry in a letter dated September 9, 2004: "Please provide any information or records, in any form, regarding the witness whom Mr. Koester referred to as `the hooker rape victim.' There were two witnesses who alleged that Mr. Barnett raped them: [M.G.] and [H.T.]. While we assume that Mr. Koester's comment referred to one of these two witnesses, we ask for any information or records indicating that any of the State's witnesses was a `hooker.'"
Having received no response to their inquiry, Barnett's attorney reiterated their request for information on the "hooker rape victim" in their October 2004 letter. In his initial brief on the motion under section 1054.9, Barnett added this request to those made in the motion and asserted the request was for category No. 2 materials under Steele.
In their informal response to the motion, the People asserted, "This comment made by [Koester] was in reference solely to the attire worn by [H.T.], a witness in the People's penalty phase case. The state has no information which connects [H.T.] with the crime of prostitution. A rap sheet for [H.T.] has been acquired and is included." In his second brief, Barnett requested "that Mr. Koester provide this information in a declaration under oath."
*792 In their formal response to the motion, the People asserted, "Nothing exists as to this request beyond that already disclosed to petitioner. This is not a proper discovery request but a request for the People to write a postconviction report for the petitioner, which is beyond the scope of Penal Code Section 1054.9 and Steele. Additionally there is no duty to prepare notes or a report at the request of a defendant of conversations (or observations) not presently reduced to writing. [Citation.] Nor are the People required to make a complete and detailed accounting to the petitioner of all investigative work on a case."
The trial court denied the request.
Barnett contends the trial court's ruling was an abuse of discretion because "[i]nformation that one of the State's witnesses was a prostitute was impeachment material that was not disclosed at the time of trial." The People do not offer any argument against this request that we have not already rejected.
To the extent Barnett seeks information about the particular witness to whom the investigator referred as "the hooker rape victim," the People's informal response provided Barnett everything to which he might have been entitled. The investigator identified the witness to whom he was referring, explained that his reference to her as a "hooker" was based on her attire, stated that the People had no information actually connecting her with the crime of prostitution, and provided Barnett with a copy of her rap sheet. As to this aspect of Barnett's request, there was no discovery left for the court to order.
Barnett's request, however, also sought "any information or records indicating that any of the State's witnesses was a `hooker.'" (Italics added.) Barnett contends he was entitled to such material "because evidence of a witness's criminal activity could have been used to impeach."
Even assuming there was evidence one or more of the prosecution's witnesses was a prostitute, the People had no constitutional duty to disclose that evidence to Barnett unless it was material. Because Barnett has failed to demonstrate the materiality of any such evidence, he has failed to show he was entitled to such evidence at time of trial. Accordingly, the trial court did not abuse its discretion in denying this request.
XXIII
Dave McGee's Propensity For Violence
Other comments the investigator apparently made during the conversation in early September 2004 about being threatened by one Dave McGee led Barnett's attorneys to recount an incident Barnett had told them about McGee in which McGee allegedly "climb[ed] on top of a police car and defecat[ed]." Based on these incidents, Barnett's attorneys requested "any information regarding Dave McGee's history of violence and disrespect for law enforcement." In his initial brief on the motion under section 1054.9, Barnett added this request to those made in the motion and asserted the request was for category No. 2 materials under Steele.
In their informal response to the motion, the People asserted, "The State has no information regarding the incident as described in the defendants [sic ] brief. Indeed, had the incident actually happened, it would be common knowledge within Butte County law enforcement as a legend which would endure the decades of time." In his second brief, Barnett requested "that the Court compel the prosecution to provide a declaration under oath to that effect, detailing its efforts to investigate the matter in the records of other prosecution and law enforcement agencies involved in the investigation and prosecution *793 of the case." In their formal response to the motion, the People asserted, "Nothing exists as to this request beyond that already disclosed to petitioner. This is not a proper discovery request but a request for the People to write a post-conviction report for the petitioner, which is beyond the scope of Penal Code Section 1054.9 and Steele. Additionally there is no duty to prepare notes or a report at the request of a defendant of conversations (or observations) not presently reduced to writing. [Citation.] Nor are the People required to make a complete and detailed accounting to the petitioner of all police investigative work on a case."
The trial court denied the request.
Barnett contends the trial court abused its discretion in denying this request because "McGee testified that Mr. Barnett was the aggressor in a fight between them, whereas Mr. Barnett testified that McGee was the aggressor." According to Barnett, "In a contest of credibility, evidence of McGee's reputation for violence would have been compelling evidence impeaching McGee and corroborating Mr. Barnett."
The People do not offer any argument against this request that we have not already rejected.
Even assuming evidence of McGee's reputation for violence would have been favorable to Barnett, he has failed to make any showing that such evidence would have been material. Thus, he has failed to show any abuse of discretion by the trial court in its denial of this request.
XXIV
Identification Of Redacted Documents
In his second brief on the motion under section 1054.9, Barnett added this final request: "[S]ometimes it is hard to tell if a document has been redacted. Mr. Barnett requests that the Court compel the prosecution to provide a declaration from someone with personal knowledge stating which documents provided in discovery are redacted and that none of the other documents have been redacted."
In their formal response to the motion, the People did not respond to this request.
The trial court denied the request.
Barnett contends this ruling was an abuse of discretion because "[t]here is no legitimate state interest in hiding redacted material, or concealing the fact that material has been redacted." The People respond that "Barnett has presented no case or other rule for this novel request.... Certainly nothing in section 1054.9 or in California's general discovery laws requires such a[n] undertaking by the prosecution." In reply, Barnett asserts that "[t]he [federal] Freedom of Information Act ... requires government agencies to indicate on the document where any deletions or redactions were made." He also cites a state court decision from Florida.
Barnett contends that information about which documents have been redacted "will enable [him] to ascertain whether there has been full compliance with the discovery order entered at the time of trial and with the discovery order entered on" his motion under section 1054.9. He does not explain how this is so, however. Knowing that something is missing from a document does not necessarily give you any basis for knowing what is missing.
In any event, under section 1054.9 Barnett is entitled to discovery of materials to which he would have been entitled at time of trialnothing more, nothing less. If part of a document falls within that category, then he is entitled to that part of the document, but not the rest. Just as he has no right to know exactly which documents the People have withheld from discovery because they are not materials to which he *794 would have been entitled at time of trial, Barnett has no right to know exactly what portions of the documents the People have produced were redacted because those portions are not materials to which Barnett would have been entitled at time of trial. Accordingly, the trial court did not abuse its discretion in denying this request.
DISPOSITION
The petition is granted in part and denied in part. Having served its purpose, the alternative writ is discharged.
Let a peremptory writ of mandate issue directing the respondent court to modify its discovery order by granting Barnett's requests for the following materials:
(1) "[a]ll original notes taken by any police officer relating to the interview of any witness to be called to testify against the defendant," including the 22 out-of-state officers identified by Barnett; and
(2) "documentation in any form of any person conveying information to law enforcement in Butte County, including BINTF, regarding Mr. Barnett, the case against him or the witnesses in his case," including "information about any person who conveyed information to law enforcement regarding `street talk' about the case, and any `street talk' to the effect that Mr. Barnett was innocent, was being set up and/or was framed."
I concur: SCOTLAND, P.J.
Concurring opinion of SIMS, J.
I concur in Justice Robie's thoughtful and thorough opinion. In my view, he has correctly construed Penal Code section 1054.9 (section 1054.9) in accordance with the intent of the Legislature.
I write separately to share my views on the current state of death penalty litigation and on the relationship of section 1054.9 to that litigation.
The typical modern death penalty case usually involves four trials.
The first trial determines whether the defendant is guilty of the offense. If the jury finds him guilty with special circumstances, the second trial determines the penalty: death or life without possibility of parole.
The third trial is the trial of the jurors who arrived at the decisions in the first two trials. The third trial is usually initiated by an investigator for the defendant, who locates trial jurors and gets one or more of them to supply an affidavit detailing what went on in the jury room. Then, the third trial examines the jurors' deliberations in minute detail in order to make sure that the jurors have not engaged in any "misconduct," such as telling other jurors about their own personal experiences in life. (See e.g., People v. Schmeck (2005) 37 Cal.4th 240, 292-294, 33 Cal. Rptr.3d 397, 118 P.3d 451; People v. San Nicolas (2004) 34 Cal.4th 614, 643, 651, 21 Cal.Rptr.3d 612,101 P.3d 509.)
If the conviction and death penalty survive the third trial, the groundwork has been laid for the fourth trial, which is the trial of the attorneys (both prosecutor and defense counsel) who participated in the original trial. This fourth trial ordinarily arises in habeas corpus proceedings. The Legislature has seen fit to aid everybody in this fourth trial with the enactment of section 1054.9, which, as Justice Robie's opinion spells out, allows a defendant to "discover," among other things, every scrap of paper currently possessed by the prosecution or law enforcement that was prepared by any law enforcement agency that had anything to do with any witness. In this trial, appellate attorneys spend hours in the quiet of their offices composing attacks on the decisions of trial counsel *795 made instantly in the heat and crush of trial.
One consequence of all these trials, and associated appeals and writ proceedings, is that there is an extraordinary delay between a defendant's commission of his crime and his execution. For example, the most recent execution in California was Clarence Ray Allen, executed on January 17, 2006, for killings committed in 1980 (by hit men he solicited from prison). (Doyle, Egelko, & Finz, Ailing Killer Executed at Age 76 (San Francisco Chronicle (Jan. 17, 2006) p. A-l); see also People v. Allen (1986) 42 Cal.3d 1222, 1241, 1243-1244, 232 Cal.Rptr. 849, 729 P.2d 115.) So Clarence Ray Allen was executed some 26 years after he had committed his crime.
One month earlier than Allen's execution, Stanley "Tookie" Williams was executed for murders committed in February and March 1979. (Finz, Fimrite & Fagan, Williams Executed (San Francisco Chronicle, (Dec. 13, 2005) p. A-l); see People v. Williams (1988) 44 Cal.3d 1127, 245 Cal. Rptr. 635, 751 P.2d 901.) Again, the period between commission of the crime and execution was 25 or 26 years.
In my view, section 1054.9 will further delay the final adjudication of death penalty cases. The statute provides yet another excuse for a defendant to litigate, and litigate, and litigate.
These delays between commission of the crime and punishment are the direct result of attempts to create perfect due process for those receiving the death penalty. Section 1054.9 is simply the most recent manifestation of such attempts. Of course, when the time lag between crime and punishment is more than a quarter of a century, all deterrent effect of the punishment is lost. The truth of the matter is that opponents of the death penalty have won.
This fixation with attempting to provide perfect justice [1] has emasculated the death penalty in California. This is in absolute and complete derogation of the will of the voters of California who have repeatedly approved the death penalty by initiatives since 1978.[2]
*796 In the present case, defendant and petitioner, Lee Max Barnett, committed his crimes, including a murder that involved the infliction of torture, 20 years ago on July 6, 1986. (People v. Barnett (1998) 17 Cal.4th 1044, 1069, 74 Cal.Rptr.2d 121, 954 P.2d 384.) He is just now getting the discovery described in Justice Robie's opinion. His case will be going on for a long, long time.
In its opinion affirming his death penalty sentence, our Supreme Court summarized evidence of defendant Barnett's background as follows:
"In addition to relying on the circumstances of the instant crimes, the prosecution presented evidence of defendant's prior felony convictions and evidence of his prior violent criminal activity, as follows:
"In 1965, defendant was being pursued in a vehicle when he injured a state trooper in New York by running him off the road. Defendant was convicted of second degree assault, transportation of a stolen vehicle across state lines, and felony attempted prisoner escape.
"In March of 1969, defendant robbed the clerk of a liquor store in New York at knife point. Prior to taking the money, defendant had proposed to the clerk that they split the proceeds. A week later, defendant robbed him again, this time claiming to have a gun in his coat. After his arrest, while the clerk was sitting near him in court, defendant repeatedly warned the clerk in a low voice to say he did not remember anything.
"In September of 1970, defendant was arrested for a series of robberies in the Calgary area. At the time of his arrest, defendant was a passenger in a truck and raised a loaded handgun up off the seat with his left hand. A second officer stopped defendant from using the gun. He was convicted of five counts of armed robbery.
"In December of 1971, defendant tried to rob the owner of a North Miami Beach restaurant at gunpoint. He was thwarted when the owner slammed the cash register drawer on his hand as he tried to grab the money. He fled and police pursued. During the pursuit, defendant backed his vehicle into a police officer, hitting him in the right leg. He also sideswiped a police car and ran into a fence. Defendant eventually was shot in the left leg after he pointed a gun at an officer.
"In April of 1972, defendant robbed the attendant of a Phoenix gas station at gunpoint. Prior to committing the robbery, defendant had tried unsuccessfully to get the attendant to set up a robbery and share the proceeds.
"In September of 1973, defendant, while in custody at a medical facility, resisted being transported back to jail. He broke away from officers and started smashing at the glass door of a fire extinguisher compartment. He had to be Maced before he could be handcuffed.
"On October 26, 1977, defendant raped 17-year-old Mae G. when they went for a *797 drive in his car. Defendant took her to an isolated location where he raped her, sodomized her, and forced her at knife point to perform oral sex.
"In November of 1979, defendant was convicted of assault on David Sinopoli and sentenced to prison in Massachusetts.
"In November of 1982, defendant met Helen T. in a bar in Albany, New York, and got her in his car on the pretext of sharing some marijuana. He took her to an isolated area and raped her.
"On January 10, 1987, defendant, while incarcerated in jail, used a razor blade to slash the arm of Arthur Jordan, an inmate in the next cell, as Jordan was leaning on the bars watching television. Defendant had accused the victim of having his buddy, the former resident of the cell, moved.
"On May 13, 1987, defendant caused a disturbance in the jail yard by refusing to wear his jumpsuit as required by jail rules. As he was being led back to his cell, he threw his fist towards the head of one of the officers. The fist did not connect because another officer grabbed defendant's arm with both hands.
"On May 24, 1988, defendant spit at three correctional officers, hitting two in the face, as he resisted being loaded into a transportation van. Once in the van, defendant kicked out one of the windows.
"On July 22, 1988, defendant tried to kick out the windows of the patrol car he was riding in. When an officer tried to grab him, he spit in his face." (People v. Barnett, supra, 17 Cal.4th 1044, 1080-1081, 74 Cal.Rptr.2d 121, 954 P.2d 384.)
If the day ever comes when we have afforded perfect due process to this model citizen, Lee Max Barnett, and he is executed, few will remember the circumstances of his crimes, which involve the torture and stabbing to death of Richard Eggett. Few will remember that, before stabbing Eggett to death, Barnett snagged Eggett in the back with a treble fish hook and yanked on it. (People v. Barnett, supra, 17 Cal.4th at p. 1073, 74 Cal.Rptr.2d 121, 954 P.2d 384.) I say "few" will remember because one group of people will doubtless remember: the family of Richard Eggett, who will have endured painful decades of living with Eggett's murder without closure.
Something really must be done about the current state of death penalty litigation, and it is not to provide defendants (who have had the death penalty imposed by a jury) with more post-conviction discovery.
NOTES
[1] All further statutory references are to the Penal Code unless otherwise indicated.
[2] As relevant here, that statute provides as follows: "(a) Upon the prosecution of a postconviction writ of habeas corpus or a motion to vacate a judgment in a case in which a sentence of death or of life in prison without the possibility of parole has been imposed, and on a showing that good faith efforts to obtain discovery materials from trial counsel were made and were unsuccessful, the court shall, except as provided in subdivision (c) [relating to access to physical evidence for the purpose of examination], order that the defendant be provided reasonable access to any of the materials described in subdivision (b). [¶] (b) For purposes of this section, `discovery materials' means materials in the possession of the prosecution and law enforcement authorities to which the same defendant would have been entitled at time of trial." (§ 1054.9.)
[3] The Supreme Court has since denied both petitions. (In re Barnett (July 27, 2005, S096831) [den. by order]; In re Barnett (May 17, 2006, S120570) [den. by order].) Barnett's federal petition remains pending.
[4] Originally, there were 25 requests at issue, but in his replication, Barnett withdrew his objection to the denial of one of those requests.
[5] We will refer to these materials as category No. 1 materials.
[6] We will refer to these materials, respectively, as category No. 2 materials, category No. 3 materials, and category No. 4 materials.
[7] Barnett explained elsewhere that the six law enforcement agencies for whom these 22 officers worked had been involved in investigating Barnett's prior crimes that were used as aggravating factors in the penalty phase of his trial.
[8] There is reason to believe the court may not have intended to limit its ruling in this manner. The court's exclusion of the out-of-state officers from its ruling on Barnett's request for original notes occurred because the court referenced a particular page and line numberpage 29, line 1of one of Barnett's briefs. Had the court referenced line 21, instead of line 1, the out-of-state officers would have been encompassed in the ruling. There are two reasons to believe the trial court's reference to line 1, instead of line 21, was a mistake. First, the court's definition of "law enforcement authorities" in its ruling on "Point One" was broad enough to encompass the out-of-state officers because those officers appear to have investigated charged or uncharged crimes that were presented against Barnett in the guilt phase or as an aggravating factor in the penalty phase of the case. Second, immediately after the ruling at issue here, the trial court granted a request for (among other things) "all notes and memorandum of any kind, handwritten or typed ... relating to statements made by any witness the prosecution intended to call...." This request (discovery item No. 7) was broad enough to subsume Barnett's more specific request for "original notes" at issue here (discovery item No. 6), but the trial court did not exclude the out-of-state officers from the scope of this subsequent ruling.
Given that the court's ruling on discovery item No. 7 appears to require the People to provide Barnett access to all of the material that he is otherwise seeking under discovery item No. 6, we could decline to further consider Barnett's challenge to the partial denial of his request for original police notes. To provide clarity, howeverand because neither party has raised the point of whether discovery item No. 6 is subsumed in discovery item No. 7we choose to address and resolve the parties' dispute over discovery item No. 6.
[9] Here, it appears the discovery provided by the prosecution at time of trial was consecutively numbered. Accordingly, Barnett was able to identify by the missing page number documents that he once had but now did not. That may not always be the case, however.
[10] Indeed, earlier in his motion Barnett specifically asserted that "the prosecution failed to fully comply with the [discovery] order."
[11] The People use this argument as one of their responses to virtually every one of the discovery requests remaining at issue in this proceeding. Having rejected the argument here, we will not address it again.
[12] Barnett did not submit any declarations to support the unsworn statements in his motion, and thus there was technically no evidence to support the showing required by section 1054.9; however, the People forfeited any objection on this ground by not raising it in the trial court.
[13] The People use this argument as one of their responses to virtually every one of the discovery requests remaining at issue in this proceeding. Having rejected the argument here, we will not address it again.
[14] As we have noted, the February 1987 discovery order required the prosecution to disclose "[t]he criminal record of all witnesses who may be called to testify at the trial of this case." At the same time, however, the court denied Barnett's request for discovery of "all pending criminal charges against [those witnesses] anywhere in the State of California, all information regarding the current parole and/or probation status of such persons, and all arrests, criminal charges, ongoing criminal investigations, or actions pending anywhere in the State of California since the date of the alleged offense charged in the Information," except as to Barnett and his alleged coparticipant. Thus, the trial court apparently concluded the details specified in the second request were not part of the "criminal records" the court was ordering produced in response to the first request. This explains why Barnett has not claimed those details were subject to disclosure under Steele because they came within the scope of the February 1987 discovery order and instead is relying solely on Brady to justify his request for those details.
[15] At this point, we are concerned only with evidence a defendant seeks on the ground it was subject to the prosecution's constitutional duty to disclose exculpatory evidence under Brady. We express no opinion on what must be shown to obtain evidence that was subject to a statutory duty to provide discovery, such as the duty imposed on the prosecution by subdivision (e) of section 1054.1 to disclose "[a]ny exculpatory evidence." The reciprocal discovery statutes (§ 1054 et seq.) of which section 1054.1 is a part were not enacted until 1990, two years after Barnett's trial. Thus, those statutes do not govern what Barnett would have been entitled to at time of trial and therefore have no bearing on his section 1054.9 motion.
[16] We recognize that the Supreme Court in Steele directed the superior court to issue a discovery order under section 1054.9 for materials the defendant contended fell within the Brady duty of disclosure without expressly requiring the defendant to demonstrate materiality. Instead, the Supreme Court simply noted that "[i]f the defense had specifically requested the prosecution to provide all of petitioner's prison records in its possession," "the prosecution would have been obligated to provide them" "assuming the records were otherwise material." (In re Steele, supra, 32 Cal.4th at p. 702, 10 Cal.Rptr.3d 536, 85 P.3d 444, second italics added.) By this assertion, however, the court did recognize that materiality was an essential element in showing that the defendant would have been entitled at time of trial to the documents now sought, and since Steele elsewhere makes clear that the defendant bears the burden of making this showing, it follows that the showing of materiality must be made by the defendant before he is entitled to a discovery order under section 1054.9.
[17] Again, at this point we are concerned only with materials to which a defendant claims entitlement under the constitutional duty of disclosure, and not with materials to which a defendant may claim entitlement under a discovery order issued at time of trial or a statutory duty of disclosure.
[18] We note that the defendant in In re Sassounian, supra, 9 Cal.4th at page 535, 37 Cal.Rptr.2d 446, 887 P.2d 527 made the same mistake over a decade ago in pursuing habeas relief based on an alleged Brady violation. (See id. at p. 550, fn. 14, 37 Cal.Rptr.2d 446, 887 P.2d 527.) Thus, there can be little (if any) excuse for Barnett's failure to do so here.
[19] We note that there is no explicit authority in section 1054.9 or Steele for the declaration requirement the trial court imposed here. We have no occasion to decide, however, whether the imposition of this requirement was improper, because the People did not seek review of the trial court's discovery order by filing a petition for writ of mandate, nor have they raised any issue regarding the validity of this requirement in response to Barnett's petition.
[20] The People use this argument as one of their responses to virtually every one of the discovery requests remaining at issue in this proceeding. Having rejected the argument here, we will not address it again.
[21] Barnett notes that "[r]ecords regarding drug use and abuse" fall within the scope of one of his earlier requests, which we have addressedand rejectedalready. He also notes that the trial court granted him access to the prison records of the People's witnesses in response to another request. Accordingly, in considering the present request, welike Barnettlimit ourselves to probation, juvenile, and mental health records.
[22] In one of his habeas corpus petitions, Barnett alleged that while C.L. obtained a certificate of rehabilitation from the superior court in 1984, the Governor refused to pardon him and therefore his civil rights were not restored. (See § 4852.17 [civil rights restored by the granting of "a full and unconditional pardon by the Governor, based upon a certificate of rehabilitation"].)
[23] Barnett asks us to infer that the People did "conduct[] juror investigations" from the fact that "[i]n response to other discovery requests, [the People were] quick to say that the requested materials did not exist," "[y]et as to juror investigations, [they] made no such denial." That criminal records for Jurors C.L., L.F., and potentially others may exist (which may be inferred from the People's failure to assert otherwise in response to Barnett's request for such records) does not mean the People conducted investigations of those jurors at time of trial and thus availed themselves of those records. Accordingly, the inference Barnett asks us to draw is not a reasonable one.
[24] Specifically, Barnett asserted that the materials fell within the scope of 35 specific discovery requests in the discovery order from trial, 34 of which the trial court granted.
[25] Because discovery at the time of Barnett's trial was governed by California case law, it is appropriate for us to consider that case law in determining whether Barnett would have been entitled to these materials if he had asked for them at that time.
[26] Barnett no longer contends this request was for materials that fell within the scope of the February 1987 discovery order.
[27] The People apparently obtained these documents from BINTF pursuant to a subpoena issued in March 2005.
[1] There is, of course, no such thing possible in the affairs of men and women.
[2] The last time the voters approved of the death penalty was in the March 7, 2000, Primary Election, when the voters approved amendments to the death penalty statute (Pen.Code, § 190.2) in Proposition 18 and (initiative measure) Proposition 21. (Historical and Statutory Notes, 47A West's Ann. Pen. Code (2006 Supp.) foll. § 190.2, p. 127; People v. Shabazz (2006) 38 Cal.4th 55, 65, 40 Cal.Rptr.3d 750, 130 P.3d 519 [stating voters approved Proposition 21].) Proposition 18 provided special circumstances warranting the death penalty for intentional murder committed in connection with kidnapping or arson or committed by "means of" (rather than "while") lying in wait. (Ballot Pamp., Primary Elec. (Mar. 7, 2000) text of Prop. 18, p. 117.) Proposition 21, section 11, added gangrelated murder as a special circumstance warranting the death penalty. (Historical and Statutory Notes, 47A West's Ann. Pen. Code (2006 Supp.) foll. § 190.2, p. 127; Notes, Deering's Ann.Code Pen.Code (2006 Supp.) foll. § 190.2, p. 76 [quoting Proposition 21]; Ballot Pamp., Primary Elec. (Mar. 7, 2000) text of Prop. 21, p. 121 et seq.)
Before that, the voters approved the death penalty in the March 26, 1996, Primary Election, when they approved Propositions 195 and 196, expanding the list of special circumstances warranting the death penalty.' (Historical and Statutory Notes, 47A West's Ann. Pen.Code (1999 ed.) foll. § 190.2, pp. 207-208; Ballot Pamp., Primary Elec. (Mar. 26, 1996) text of Props. 195 & 196, pp. 56, 58.)
Before that, the voters at the June 5, 1990, Primary Election approved Proposition 114, conforming § 190.2's special circumstance for murder of peace officer to legislative reclassification of peace officers. (Yoshisato v. Superior Court (1992) 2 Cal.4th 978, 983, 9 Cal.Rptr.2d 102, 831 P.2d 327; Historical and Statutory Notes, 47A West's Ann. Pen. Code (1999 ed.) foll. § 190.2, p. 207; Ballot Pamp., Primary Elec. (June 5, 1990) text of Prop. 114, p. 29.) Also at the June 5, 1990, Primary Election, voters approved initiative measure Proposition 115, which among other things restricted attorney voir dire in all criminal cases, including death penalty cases. (People v. Ramos (2004) 34 Cal.4th 494, 511, 21 Cal.Rptr.3d 575, 101 P.3d 478; Historical and Statutory Notes, 47A West's Ann. Pen. Code (1999 ed.) foll. § 190.2, p. 207; Ballot Pamp., Primary Elec. (June 5, 1990) text of Prop. 115, p. 33.)
Before that, the voters at the General Election on November 7, 1978, adopted the death penalty initiative approving Penal Code section 190.2. (People v. Hernandez (2003) 30 Cal.4th 835, 865-866, 134 Cal.Rptr.2d 602, 69 P.3d 446; People v. Teron (1979) 23 Cal.3d 103, 123-125, 151 Cal.Rptr. 633, 588 P.2d 773, dissenting opinion of Clark, J., reciting history of death penalty in California.)
|
63 Ill. App.2d 475 (1965)
212 N.E.2d 299
The People of the State of Illinois, Plaintiff-Appellee,
v.
Gilmer McDonald, Defendant-Appellant.
Gen. No. 50,129.
Illinois Appellate Court First District, Fourth Division.
September 24, 1965.
Allan S. Ganz, of Chicago, for appellant.
William G. Clark, Attorney General, of Springfield (Daniel P. Ward, State's Attorney of Cook County, of Chicago, Fred G. Leach, Assistant Attorney General, Elmer C. Kissane and Matthew J. Moran, Assistant State's Attorneys, of counsel), for appellee.
MR. JUSTICE ENGLISH delivered the opinion of the court.
In a bench trial defendant was convicted of murder and on November 17, 1961 he was sentenced to a term *476 of twenty years.[1] On writ of error, review was sought in the Supreme Court which has transferred the case to this court.
The facts are essentially undisputed, and the sole point raised by defendant is that he should have been found guilty of voluntary manslaughter only.
In 1961 defendant was 47 years old. He had been living with Babe Butler for some 25 years. He testified that he loved her. She was 4'9" tall and was 84 years old.
Shortly after midnight on August 12, 1961 defendant and three coworkers at the steel plant finished work for the day. On the way home in a car they consumed some whiskey and beer. Defendant invited the others to indulge in more of the same at his apartment and they accepted. When they arrived there at about 12:40 a.m. there were no lights on in the apartment. Upon turning on the light, defendant saw Babe in bed and one Fat standing at the foot of the bed. Both were fully clothed. Defendant was acquainted with Fat but did not know him by any other name.
Defendant proceeded to get out a half-pint bottle of whiskey. He then told his friends to go into the breakfast room where they resumed their drinking. Fat, exhibiting either a high degree of savoir faire or, as argued by defendant, extreme effrontery, asked defendant for a cigarette. Being told by defendant that he didn't have any, Fat departed from the premises. As he was leaving, Miss Butler said to him, "Stop in, come back."
*477 The supply of whiskey was exhausted by 1:05 a.m. so defendant and friends walked to a nearby tavern where they stayed until it closed at 2:00 a.m. They then went to a "chicken shack" and ate some fish and chips. From there they walked back to defendant's apartment shortly before 4:00 a.m. The three friends got in their car and left.
Defendant saw a light on his porch. When he walked in, Fat walked out and said, "I'll see you all." Babe was in bed with her nightgown on. Defendant asked her what was going on. She replied something which he didn't understand. He got a gun from the kitchen, filled it with cartridges, and asked her the same question again. Sitting on the side of the bed, she again replied, but her answer was still unintelligible to defendant, so he shot her in the face, the chest, and through the arm. Another bullet hit the bed and two others were buried in the wall. Defendant got a wet towel from the kitchen and wiped Babe's face. He "noticed she was dead."
Defendant was so upset he was unable to call the police. He knocked on a neighbor's door, told him that he had killed Babe, and asked him to phone the police. The neighbor inquired of defendant if he was drunk, but defendant told him that he was not.
The police arrived in a short time and were told by defendant, "I done killed Babe." They confirmed that she was dead, and found six expended shells in the revolver which was on top of the oil stove. Defendant identified the gun as the one he had used to shoot Babe. (Ballistics tests later confirmed this fact.) One of the police officers testified that defendant "seemed normal, not like he was drinking." Defendant was arrested and taken to the Criminal Court building where he gave a written statement setting forth the pertinent facts as outlined above.
*478 At the trial defendant's counsel stated that defendant "admits the facts of the charge and, in effect is pleading nolo contendere to the charge of murder but would plead guilty to voluntary manslaughter." His offer was not accepted and the trial proceeded on a plea of not guilty to the indictment which charged murder only.
Murder and voluntary manslaughter were defined in Chapter 38 of the Illinois Revised Statutes (1959) as follows:
§ 358. Murder
Murder is the unlawful killing of a human being, in the peace of the people, with malice aforethought, either expressed or implied. The unlawful killing may be perpetrated by ... shooting, or by any other of the various forms or means by which human nature may be overcome, and death thereby occasioned. Express malice is that deliberate intention unlawfully to take away the life of a fellow creature, which is manifested by external circumstances capable of proof. Malice shall be implied when no considerable provocation appears, or when all the circumstances of the killing show an abandoned and malignant heart.
§ 361. Manslaughter defined
Manslaughter is the unlawful killing of a human being without malice, express or implied, and without any mixture of deliberation whatever. It must be voluntary, upon a sudden heat of passion, caused by a provocation apparently sufficient to make the passion irresistible, or involuntary in the commission of an unlawful act, or a lawful act without due caution or circumspection.
*479 § 362. Manslaughter, voluntary
In cases of voluntary manslaughter, there must be a serious and highly provoking injury inflicted upon the person killing, sufficient to excite an irresistible passion in a reasonable person, or an attempt by the person killed to commit a serious personal injury on the person killing. The killing must be the result of that sudden, violent impulse of passion supposed to be irresistible; for if there should appear to have been an interval between the assault or provocation given, and the killing, sufficient for the voice of reason and humanity to be heard, the killing shall be attributed to deliberate revenge, and punished as murder.
One other section of the statute is also pertinent. It reads:
§ 373. Burden of proof
The killing being proved, the burden of proving circumstances of mitigation, or that justify or excuse the homicide will devolve on the accused, unless the proof on the part of the prosecution sufficiently manifests that the crime committed only amounts to manslaughter, or that the accused was justified or excused in committing the homicide.
Defendant's contention is that his finding of Babe and Fat in "compromising circumstances," the effrontery of Fat in asking for a cigarette, Babe's telling Fat to come back, defendant's drinking, and his finding Fat at the apartment a second time in a "compromising situation," all combined to demonstrate the absence of malice in the killing.
Defendant has cited four cases all of which resulted in new trials or convictions for a crime less than first *480 degree murder. Each, however, involved factual situations which we consider distinguishable from the case at bar. In People v. Jones, 384 Ill. 407, 51 NE2d 543, a wife stabbed her husband to death upon finding him in a tavern with another woman. On an earlier occasion the two women had engaged in a knife fight. The court refused to upset a jury verdict of manslaughter. Canister v. State, 46 Tex Crim 221, 79 SW 24, was a case in which a husband shot another man on being informed of adulterous conduct between the latter and defendant's wife. In Smith v. State, 174 Ga. 878, 164 SE 762, a husband killed his wife immediately after he was told by one Doodlefinger that he had seen defendant's wife in the act of adultery. Haddock v. State, 129 Fla 701, 176 So 782, involved defendant's killing of a man who he learned had engaged in sexual relations with defendant's 15-year-old daughter.
[1, 2] To apply the principles of these cases to the facts of the instant case would be to misread the Illinois statutes quoted above. In the first place we do not think that the facts in evidence disclose the "compromising situation" which defendant uses as the base for his argument. Beyond that, however, we are aware of no case which applies the exculpatory features of crime passionel to the killing of a mistress, regardless of the duration of the relationship. We will not do so in this case.
The judgment and sentence of the Criminal Court are affirmed.
Affirmed.
McCORMICK, P.J. and DRUCKER, J., concur.
NOTES
[1] This case is not governed by the 1961 Criminal Code nor by the 1963 Code of Criminal Procedure except that defendant has asked this court to exercise its authority under the latter code to reduce the offense to voluntary manslaughter and impose a lesser sentence appropriate to that crime. Ill Rev Stats (1963), c 38, § 121-9(b) (3) (4). See also § 125-3(b) (c).
|
134 B.R. 562 (1991)
In re Michael Leon RUNNELS and Judy Kay Runnels, Debtors.
Michael Leon RUNNELS and Judy Kay Runnels, Plaintiffs,
v.
INTERNAL REVENUE SERVICE, Defendant.
Bankruptcy No. 90-10257, Adv. No. A-90-1094.
United States Bankruptcy Court, E.D. Texas, Beaumont Division.
August 28, 1991.
*563 Frank Maida, Beaumont, Tex., for debtors Michael Leon Runnels and Judy Kay Runnels.
David E. Whitcomb, Sp. Asst. U.S. Atty., Houston, Tex., for U.S.
OPINION
DONALD R. SHARP, Bankruptcy Judge.
COMES NOW BEFORE THE COURT, the Complaint of Michael Leon Runnels and wife, Judy Runnels, hereinafter ("Debtors"), to Compel Turnover of Property by the Internal Revenue Service, hereinafter ("IRS") pursuant to a regularly scheduled hearing on May 30, 1991, in Beaumont, Texas. This opinion constitutes findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052 and disposes of all the issues presented to the Court.
FACTUAL AND PROCEDURAL BACKGROUND
The facts of this case are not materially disputed. Debtors filed for relief under Chapter 7 of the Bankruptcy Code on April 17, 1990. Subsequently, Debtors were granted a discharge pursuant to 11 U.S.C.A. § 727 on August 14, 1990. The Debtors' personal liability for the 1984 taxes was clearly included in this general discharge.
On September 24, 1990, the United States through its agency, the IRS, notified the Debtors of the application of their 1989 tax overpayment in the amount of $1,442.00 to Debtors' liability for unpaid income taxes for the taxable year 1984. In response, Debtors filed in this Court a Complaint to Compel the IRS to Turnover the 1989 tax refund. The position of the IRS has been and continues to be that the IRS has exercised its valid rights of setoff pursuant to 11 U.S.C.A. § 553 of the Bankruptcy Code. All parties are in agreement that the following three issues remain to be decided by this Court:
1. Whether the United States through its agency, the IRS, could setoff the Debtors' 1989 tax refund against the Debtors' 1984 tax liability;
2. Whether the Debtors' listing of the 1989 tax refund as exempt property affects the setoff right of the United States through its agency, the IRS; and
3. Whether the Debtors' discharge of their 1984 tax liability affects the setoff right of the United States through its agency, the IRS.
DISCUSSION OF LAW
The right to setoff is governed by the provisions of 11 U.S.C.A. § 553(a) which provides in pertinent part that:
"Except as otherwise provided in this section or in sections 362 and 363 of this title, this title does not affect any right *564 of a creditor to offset a mutual debt owing by such creditor to the debtor that arose before the commencement of the case under this title against a claim of such creditor against the debtor that arose before the commencement of the case...."
In substance, that provision establishes that the three requirements for the exercise of a setoff are 1) a valid right to setoff, 2) the existence of prepetition debts owed by the creditor to the debtor and the debtor to the creditor, and 3) the mutuality requirement must be met i.e., the debts must be in the same right and between the same parties, standing in the same capacity.[1]
The Court finds that the IRS has a valid right of setoff pursuant to 26 U.S.C.A. § 6402(a) (West 1989 and Supp. 1991) of the Internal Revenue Code of 1954 which provides "in the case of an overpayment, the [IRS], may credit the amount of such overpayment ... against any liability in respect of an internal revenue tax on the part of the person who made the overpayment ..." In re: Eggemeyer, 75 B.R. 20, 21 (Bankr.S.D.Ill.1987). Thus, it is clear that notwithstanding Debtors' bankruptcy petition, that the IRS had a statutory right to setoff Debtors' 1989 tax refund against Debtors' 1984 tax liability.
The next step in establishing a valid right to setoff requires that both the creditor and the debtor owe each other prepetition debts. In the case of the IRS, it is not disputed that Debtors' 1984 tax liability constitutes a valid prepetition debt owed to the IRS. However, Debtors dispute that their 1989 tax refund constitutes a valid prepetition debt owed by the IRS to Debtors. The rationale for Debtors' position is that since Debtors did not file an income tax return for 1989, which established their 1989 tax refund, until after the filing of their petition in Chapter 7, that the resulting tax refund constitutes a postpetition debt owed by the IRS to Debtors and hence is not subject to setoff. The Court disagrees.
In the opinion of this Court, December 31, 1989, is the appropriate time at which Debtors became entitled to their 1989 tax refund. In re: Rozel Industries, Inc. 120 B.R. 944, 949 (Bankr.N.D.Ill.1990); In re: Eggemeyer, 75 B.R. 20, 22 (Bankr.S.D.Ill. 1987); Harbaugh v. United States, 89-2 U.S.T.C. para. 9608 (W.D.Pa.1989) aff'd. Harbaugh v. United States, 902 F.2d 1560 (3rd Cir.1990). The Court is in accord with the explanation advanced by the IRS that on December 31, 1989, all of the events necessary to establish Debtors' tax liability, vel non have already occurred. At that point, Debtors' tax liability, vel non for 1989 was fixed albeit unliquidated. Eggemeyer, 75 B.R. at 22 (the date the return is actually filed is not relevant in determining when [a] debt arose). Therefore, since Debtors' right to receive their 1989 tax refund from the IRS was established on December 31, 1989, it is clearly a prepetition debt.
The final requirement necessary to establish a right to setoff is a demonstration that the debts are owed in mutual capacities. Clearly, that is the case in this matter. This dispute centers on the allocation of prepetition tax liabilities and overpayments between the same parties. The Court finds that the mutuality requirement has been satisfied. In re: Rozel Industries, Inc., 120 B.R. 944, 949 (Bankr. N.D.Ill.1990). Therefore, the Court finds that the IRS is entitled to setoff Debtors' 1989 tax refund against Debtors' 1984 tax liability.
The second issue for consideration by this Court is whether the setoff rights of the IRS can be defeated by a claim to the 1989 tax refund by the Debtors as exempt property. The Court is of the opinion that it does not. In addressing this issue, the Eggemeyer court relied on the statutory language in 11 U.S.C.A. § 542(b) which excepted from turnover debt subject to offset pursuant to § 553. Id. at 22. Even an exemption claim can not defeat this exception to turnover. Id. at 22.
The final issue before this Court concerns whether the Debtors' discharge in *565 bankruptcy as to the 1984 tax liability defeats the IRS's attempt to setoff this liability against Debtors' 1989 tax refund. While this argument has some facial appeal, this Court is unpersuaded. As argued by the Eggemeyer court, "the discharge of a debt in a bankruptcy proceeding does not affect the creditor's right to setoff, provided that the right to setoff existed at the time the bankruptcy petition was filed." Id. at 22; In re: Conti, 50 B.R. 142, 149 (Bankr.E.D.Va.1985). Since this Court has already determined that the IRS had a valid right of setoff prior to the filing of Debtors' petition in Chapter 7, the Court is of the opinion that the discharge of Debtors' 1984 tax liability does not affect the right of the IRS to offset this liability against Debtors' 1989 tax refund.
For these reasons, it is the opinion of this Court that Debtors' Complaint to Compel the IRS to Turnover Debtors' 1989 tax refund is without merit, and accordingly, it is the judgment of this Court that Debtors' Complaint be DENIED.
NOTES
[1] See discussion in 4 Collier on Bankruptcy para. 553.04 at pg. 553-20 (15th ed. 1989).
|
657 So.2d 857 (1995)
ERICSSON GE MOBILE COMMUNICATIONS, INC., etc.
v.
MOTOROLA COMMUNICATIONS & ELECTRONICS, INC., et al.
1931189.
Supreme Court of Alabama.
March 17, 1995.
*858 William G. Somerville III and Paul E. Toppins of Powell & Frederick, Birmingham, for plaintiffs.
Michael D. Knight and Allen S. Reeves of Hand, Arendall, Bedsole, Greaves & Johnston, Mobile, for Motorola Communications & Electronics, Inc.
Demetrius C. Newton and William M. Pate, City Attorney's Office, Birmingham; Donald V. Watkins, Birmingham; Joe R. Whatley, Jr., and Peter H. Burke of Cooper, Mitch, Crawford, Kuykendall & Whatley, Birmingham, for Mayor Richard Arrington and the City of Birmingham.
ALMON, Justice.
The United States District Court for the Northern District of Alabama, the Honorable William M. Acker, Jr., presiding, has certified questions in a dispute under Alabama's competitive bid law in which a dissatisfied bidder, Ericsson GE Mobile Communications, Inc. ("EGE"), has challenged the City of Birmingham's contract with Motorola Communications & Electronics, Inc. ("Motorola"), for a new public safety radio communications system. This Court has agreed to answer questions concerning the appropriateness of requesting alternative bids, whether this contract qualifies as a "sole source" contract (and therefore is exempt from the bid law), and the relevance of the City's outside consultant's close cooperation with Motorola.
Because the certified question procedure does not place this Court in a position of making factual findings, we set forth the following primary facts, as provided by the district court and the materials submitted by the parties, merely to provide a context within which our answers may be understood. The City of Birmingham decided to replace *859 its old public safety communications system, and on May 27, 1993, issued a request for bids for a "Digital 800 MHZ Trunked Simulcast Radio System." The request for bids included four alternatives:[1]
"Alternative # 1A system compatible with APCO[[2]] project 25 interim standards.
"Alternative #2A system compatible with APCO 16 standards.
"Alternative #3A system compatible with present APCO 16 standards with a capability to migrate to APCO 25 standards.
"Alternative # 4A Mobile Data Terminal System.
"A vendor may bid on any or all of these Alternatives."
The APCO project 25 standards are entitled "interim" because the project 25 is an evolving system still in the development stages, with certain targets and expectations but with no final written specifications or guarantees of future performance in certain of its aspects. APCO, however, has approved the APCO 16 standards.
The two bids received were opened August 2, 1993. Motorola bid for the APCO 25 Interim Standard System under Alternative # 1, and EGE bid for the APCO 16 Standard System under Alternative # 2. The mayor and the city council were the City's decision-makers on the project. A special committee of four City employees recommended that the City accept EGE's bid as the lowest responsible bid. Floyd Dyar, the City's purchasing agent, was among those who recommended that the APCO 16 system offered by EGE be accepted. The mayor, however, decided that the City's needs would be better served by the APCO 25 Interim Standard System and recommended it to the City Council.
After obtaining advice from Alton Hambric, the City's outside consultant on the project, and upon instruction from the mayor, the City rejected both bids on October 27, 1993. The City thereafter entered into negotiations with Motorola and entered into a contract with Motorola in March 1994. The contract states on its face that it is for an APCO 25 Radio System.
EGE filed a complaint in the Federal district court, seeking to enjoin execution of the contract as violating the Alabama competitive bid law, Ala.Code 1975, § 41-16-50 et seq. The bid law provides:
"All expenditure of funds of whatever nature for ... the purchase of ... equipment... involving seven thousand five hundred dollars ($7,500) or more, ... made by or on behalf of ... the governing bodies of the municipalities of the state ..., except as hereinafter provided, shall be made under contractual agreement entered into by free and open competitive bidding, on sealed bids, to the lowest responsible bidder."
§ 41-16-50(a). The statute applies to municipalities and to various other political subdivisions and agencies of the state, collectively referred to hereinafter as the "purchasing authority." "[A]ny bona fide unsuccessful bidder on a particular contract shall be empowered to bring a civil action in the appropriate court to enjoin execution of any contract entered into in violation of the provisions of this article." § 41-16-61. "Contracts entered into in violation of this article shall be void...." § 41-16-51(d). EGE petitioned for preliminary and permanent injunctions to stop the implementation of the contract, and the defendants moved for a summary judgment.
Question 1: "Did the City's request for bids constitute a binding concession by the City that the APCO 16 and the APCO 25 alternatives are functional equivalents for purposes of applying the Competitive Bid Law?"
EGE contends in its briefs to this Court that the answer to the first certified question should be yes, but conceded the issue in oral *860 argument, stating that the request for bids was not a binding concession by the City. However, because this question is related to the second certified question, we will briefly address the issue.
The defendants argue that the most reasonable interpretation of the request for bids is that APCO 16 and APCO 25 were not presented as functional equivalents and that the City at least implicitly reserved the right to choose between alternatives. The City's request for bids stated that, in preparing the request, the City had "determined that two (2) major technologies exist in the public safety communications industry." The request closes as follows: "In the interest of fairness, these specifications provide for both technologies. Vendors are encouraged to propose either APCO 16 or APCO 25, or both." The "Preface" to the request for bids states: "The first phase of the project shall consist of an indepth review of the latest technologies on the market and how those technologies may benefit the City of Birmingham." The request continues: "Each bid should demonstrate the vendor's best technical approach to resolving the public safety communication needs of the city."
We conclude that such an "indepth review" and request for the vendor's "best technical approach" would be pointless if the City anticipated basing its decision solely on the prices of the bids. EGE has not presented any arguments, based upon a construction of the City's request for bids or otherwise, that support the conclusion that the request constituted "a binding concession by the City that the APCO 16 and the APCO 25 alternatives are functional equivalents for purposes of applying the Competitive Bid Law." Judge Acker states in the order certifying these questions that EGE and Motorola both acted in a manner indicating their understanding that the issue in the City's selection process was a comparison between competing technologies and systems as well as between prices. We conclude that the most reasonable interpretation of the request for bids is that it incorporates distinct alternatives without a concession of functional equivalency.
Question 2: "Under the facts, when a municipality issues a request for bids in the form of alternatives without therein stating a preference as between alternatives, does it thereafter retain the authority to determine which alternative is in its best interest and to select that alternative regardless of whether a lower bid is submitted by a responsible bidder on another alternative?"
EGE stated at oral argument that the City "clearly" retained the authority to determine which system best met its needs, but argued that the EGE system met the City's objectives and that the City's decision was tainted by its reliance on what EGE alleges to be biased advice of the City's outside consultant. It was not clear at oral argument whether EGE also conceded the second component of the question, whether the City may select an alternative where there is a lower bid submitted by a responsible bidder on another alternative. Because both components of the question present an issue of first impression, the resolution of which is critical to this case, it is necessary to analyze the issue.
EGE contends in its briefs to this Court that, once it was determined to be a responsible bidder and to have submitted the lowest bid, the City did not have the authority to select Motorola's higher bid under another alternative. EGE cites no authority for this specific proposition or for the more general proposition that alternative bidding is prohibited or disfavored under Alabama's competitive bid law or is contrary to the purpose of the law; nor does EGE submit that the bid law should or could be interpreted to prohibit alternative bidding.
EGE relies upon Poyner v. Whiddon, 234 Ala. 168, 174 So. 507 (1937), and Ward Int'l Trucks, Inc. v. Baldwin County Bd. of Educ., 628 So.2d 572 (Ala.1993). Neither of these cases, however, addresses a request for bids that expressly sets out alternatives allowing a vendor or supplier to bid on any or all of the alternatives. In Poyner this Court held that the bid law would void a contract "let to the highest, not the lowest responsible bidder." 234 Ala. at 171, 174 So. at 509-10. In the present case, it is clear that the bid law would void any contract entered into by the City for a particular alternative where *861 there was a lower bid submitted by a responsible bidder on the same alternative, but Poyner is not relevant to whether the City may select a particular alternative where there is a lower bid submitted by a responsible bidder on another alternative. In Ward Int'l, this Court reversed a summary judgment for the defendants, the Baldwin County Board of Education and Moyer Ford Company, holding that the plaintiff, Ward International Trucks, Inc., had submitted substantial evidence that the Board violated the competitive bid law and that it had acted arbitrarily in contracting with Moyer Ford; the evidence tended to show that the Board ignored the advice of its attorney and staff members in accepting the plaintiff's bid. Ward Int'l, 628 So.2d at 574. We find that that case may be relevant herein to the question whether the City abused its discretion in selecting a particular alternative among those included in the request for bids, but that case does not address the underlying question, that of the appropriateness under the bid law of the practice of requesting alternative bids.
We hold that the practice of requesting alternative bids, as the City has done in this case, is consistent with the Alabama competitive bid law.[3] It is a well-established proposition in our law that competitive bidding does not require an award to go simply to the lowest bidder, but to the lowest responsible bidder. Ala.Code 1975, § 41-16-50(a); see White v. McDonald Ford Tractor Co., 287 Ala. 77, 248 So.2d 121 (1971). The factors to be considered in determining the lowest responsible bidder are prescribed by statute. The bid law states: "When purchases are required to be made through competitive bidding, awards shall be made to the lowest responsible bidder taking into consideration the qualities of the commodities proposed to be supplied, their conformity with specifications, the purposes for which required, the terms of delivery, transportation charges, and the dates of delivery." Ala. Code 1975, § 41-16-57(a). Thus, the statute itself provides a measure of discretion within which the purchasing authority may discriminate among products and vendors. One general means of discriminating among products that has been upheld under the bid law is for the purchasing authority to formulate bid specifications that are reasonable and appropriate, although narrowly tailored to qualify a product with particular characteristics. See White v. McDonald Ford, supra. We discern no meaningful distinction between the practice of determining the lowest responsible bidder or the practice of formulating reasonable bid specifications around a particular type of product predetermined by the purchasing authority to meet its needs and the practice of selecting among bids on expressly defined alternative specifications.[4]
Our cases make it clear that the purchasing authority's determination of the lowest responsible bidder and its formation of bid specifications may be exercised with a wide margin of discretion. In Carson Cadillac Corp. v. City of Birmingham, 232 Ala. 312, 167 So. 794 (1936), the plaintiff brought an action against the City, seeking an injunction to compel the City to modify its bid specifications for water pipe couplings for an industrial water supply project. The plaintiff claimed that it could not meet the specifications and that if they were allowed to stand then only one company could successfully bid on the project. The trial court denied the injunction, and this Court affirmed, stating:
*862 "From the averments of the bill, it is apparent that the appellant ... seeks to compel the commission to modify its specifications so that complainant may submit bids or prices for the sale of its bolted joint couplings for the steel pipes, ... on the theory that appellant's coupling is the equal or superior of any such coupling obtainable.
"To grant such relief would be to substitute the judgment of the court and its process for the judgment and discretion of the Engineering Commission as to technical matters within the field of engineering."
232 Ala. at 317, 167 So. at 798.
In Mitchell v. Walden Motor Co., 235 Ala. 34, 177 So. 151 (1937), Henry County had selected a bid for Chevrolet trucks over the lower bid for Ford trucks. This Court concluded that the local competitive bid law did not apply, but, if it had applied, that there would have been no violation. The Court noted: "In determining who is the lowest responsible bidder, the proper authorities may take into consideration the quality of the materials as well as their adaptability to the particular use required." 235 Ala. at 38, 177 So. at 154. Therefore, the Court concluded that, absent a showing that the county did not honestly exercise its discretion in selecting a particular make of truck, the contract would not be invalid, even where there was a lower bid for trucks of another make. Id.
In White v. McDonald Ford, supra, the Alabama Highway Department had solicited bids for tractors to cut grass along state highways. The specifications had been drawn around the Massey-Ferguson turf tractor, because the Department's engineers "agreed that this type tractor was best suited for the purposes for which the tractors were required." 287 Ala. at 79, 248 So.2d at 123. An unsuccessful bidder who had submitted a lower non-conforming bid based upon a Ford tractor brought an action to enjoin execution of the contract. The specific question before the Court was whether, under the bid law, "specifications [could] be drawn to fit a particular article or piece of equipment which has been determined to be suitable for the needs and purposes required prior to the time the equipment is requisitioned." 287 Ala. at 80, 248 So.2d at 123. The trial court granted the injunction, but this Court reversed, stating:
"[The] appellee contends that the admission by the State that the Massey-Ferguson turf tractor was used to write the specifications is sufficient in and of itself to void the contract without reference to the intent with which the act was done. We cannot agree that our legislature intended such a result. The wording of the statute itself follows very closely some of the language used by this Court in [Mitchell v. Walden Motor Co., 235 Ala. 34, 177 So. 151 (1937)], wherein this Court said that in determining who is the lowest responsible bidder the proper authorities may take into consideration the quality of the materials as well as their adaptability to the particular use required."
287 Ala. at 84, 248 So.2d at 127-28. The Court emphasized that "State authorities should have discretion in determining who is the lowest responsible bidder." 287 Ala. at 86, 248 So.2d at 129.
In International Telecommunications Systems v. State, 359 So.2d 364 (Ala.1978), the State solicited bids for replacement crystals for radios installed in State Trooper automobiles. The request for bids "specified GE parts of different serial numbers `or equal.'" The plaintiff submitted the lowest bid, but both of the types of crystals it offered were determined to be inferior, according to the tests performed by the chief radio engineer for the Department of Public Safety. GE was determined to be the lowest responsible bidder and was awarded the contract. In affirming the trial court's denial of injunctive relief, this Court relied upon White v. McDonald Ford, and held that the testing procedures employed by the State constituted a nonarbitrary basis upon which the State could legitimately discriminate among the respective products. 359 So.2d at 366-68.
Finally, in Mobile Dodge, Inc. v. Mobile County, 442 So.2d 56 (Ala.1983), the sheriff's department requested bids on new patrol cars. The specifications required heavy-duty full length frames and front and rear coil-spring suspension systems. An unsuccessful *863 bidder, who submitted a nonconforming lower bid, brought an action for injunctive relief, alleging that the specifications had been intentionally drawn to exclude it from the bid process. The trial court denied the injunction, and this Court affirmed, stating:
"While it is true that, due to the fact that all Chrysler products are manufactured with unitized bodies and torsion bar suspension systems, Mobile Dodge is effectively excluded from bidding on patrol cars for the Mobile County Sheriff's Department, we cannot upon the record conclude that the specifications calling for full frames and coil spring suspension systems are ... arbitrary and capricious.... Nor are we able to find any evidence ... contrary to the trial court's finding that the county officials engaged in a reasonable and rational process in selecting the requirements most suitable to meet their needs...."
442 So.2d at 60-61 (citation omitted).
The practices employed by a purchasing authority in determining the lowest responsible bidder and in formulating narrow bid specifications, which the previous cases hold may be exercised within the authority's discretion, are very similar to the process that the City alleges it employed with the use of alternative bidding in this case. A purchasing authority's determination of the lowest responsible bidder is to be, in part, based upon consideration of "the qualities of the commodities" and "the purposes for which required," see Ala.Code 1975 § 41-16-57(a), factors that should be, along with price, also essential considerations in selecting among alternative bids. Here the request for bids makes it clear that the City intended to review the competing technologies reflected in the bid alternatives in relation to resolving the public safety communication needs of the City. The City alleges that, based upon its review, APCO 25 was determined to be best suited to the City's needs.
In the cases upholding the practice of formulating bid specifications around a particular type of product, this Court has consistently deferred to the honest exercise of discretion by purchasing authorities in determining that the products meeting such specifications are those that will best fulfill the authority's needs. The process of formulating alternative specifications, taking bids, and selecting the alternative that will best fulfill the authority's needs should be entitled to no less deference. The City alleges that in this case it requested bids on various products meeting alternative specifications that could potentially meet its needs, and then, with the various qualities, capabilities, and prices in mind, decided that the higher-priced APCO 25 alternative would better suit its objectives. The principal difference between the practice of formulating narrow bid specifications, previously upheld by this Court, and the practice of using alternative bids appears to be that, in alternative bidding, the purchasing authority would have more detailed product information and would have received competitive bid prices before determining the product characteristics that will best suit its objectives.
That the access to price information is an advantage to the purchasing authority is reflected in the defendants' argument here that alternative bidding is supportable as a policy matter. The defendants note, for instance, that if the City had decided, before requesting bids, that its preference was for technology meeting the APCO 25 Interim Standard, bid specifications could have been drawn based upon that standard alone; a request for bids would have been issued; Motorola would have known that it alone could respond; and Motorola would have had an opportunity to inflate its profit margin in responding to the bid. The defendants contend that the request for alternative bids widened the options available to the City while also maintaining price competition, and that the City benefited from the knowledge of respective prices and features when deciding among the alternative systems.
Arguments against the validity of alternative bidding stem from concern that the process could be used as a subterfuge to select a preferred vendor's product by means of bid specifications specifically drawn to a particular vendor's product, or by requesting bids among alternatives that are not in fact unique in a manner related to the use of the product and to the objectives of the purchasing *864 authority for which it is to be acquired. It is evident from the discussion of the cases discussed above that narrow bid specifications or even specifications based upon a specific vendor's product do not ipso facto violate the competitive bid law. See Mobile Dodge, 442 So.2d at 60; International Telecommunications Systems, 359 So.2d at 366. However, this Court has warned that bid specifications may not be drawn in bad faith:
"[I]f the specifications were intentionally drawn so as to exclude others in order to purchase from a favored bidder because of some bad or improper motive, on the part of State officials, then the practice could not be condoned....
". . . .
"... The single most important requirement of the Competitive Bid Law is the good faith of the officials charged in executing the requirements of the law."
White v. McDonald Ford, 287 Ala. at 82, 86, 248 So.2d at 125, 129. Our cases interpreting the bid law also note that a purchasing authority's determination of the lowest responsible bidder or use of narrow specifications may violate the competitive bid law if the authority acts irresponsibly, impulsively, or without reason, and, therefore, arbitrarily and capriciously. Mobile Dodge, supra; International Telecommunications Systems, supra; White v. McDonald Ford, supra.
It is clear that a purchasing authority must have an articulable and reasonable basis upon which to determine that a particular bidder is the lowest responsible bidder or upon which to employ narrow bid specifications to qualify a product with particular characteristics, and we think it also clear that that basis must be related to the use of the product and to the objectives of the purchasing authority for which it is to be acquired. No less is required where the purchasing authority selects among bids on alternative specifications. Thus, the acceptance of alternative bidding does not introduce any truly new phenomena or risks into the competitive bid process and our current bases of review of a purchasing authority's decisions are already suited to correct any abuse of the process. Accordingly, the question whether the process employed here by the City violated the competitive bid law should be resolved with reference to this opinion and the precedents discussed herein.[5]
Question 3: "Under the facts, is the City's negotiated contract with Motorola exempt from Alabama's Competitive Bid Law under Ala.Code (1975), § 41-16-51[(a)(13)], as a purchase for which there is only one vendor or supplier?"
Question 4: "If competing bids meet the same stated `objectives,' does the mere `uniqueness' of features within a higher bid create a basis for a `sole source purchase' from the higher bidder?"
Section 41-16-51(a), Ala.Code 1975, provides that "the competitive bidding requirements of this article shall not apply to: ... (13) Contractual services and purchases of commodities for which there is only one vendor or supplier." The leading case in Alabama defining the "sole source" exception to the bid law is General Electric Co. v. City of Mobile, 585 So.2d 1311 (Ala.1991). The district court essentially asks this Court for a determination of whether this contract meets the mandate of General Electric and is therefore exempt from the bid law. The parties allotted considerable time at oral argument to addressing the merits of this exception and the applicability of General Electric, but *865 no reason was given, even when specifically asked for, why this Court is required to, or otherwise should, reach this issue if we were to answer the first two questions in favor of the defendants.
The Motorola contract is a "sole source" contract only if the system based on the APCO 25 Interim Standard is unique in a manner "substantially related to the intended purpose, use, and performance" of the communications system, and if other similar communications systems "cannot perform the desired objectives" of the City. 585 So.2d at 1315-16. Thus, an answer to questions 3 and 4 would require a resolution of the technical debate between the parties regarding the achievability, features, and capabilities of systems complying with the respective APCO standards, the resolution of which is for the trier of fact. Even if we were to answer that the contract did not qualify under the sole source exemption to the bid law, the issue would then be whether the City's contract with Motorola violated the competitive bid law. EGE's arguments that the bid law was violated are, first, that alternative bidding is not allowed by the bid law, an argument abandoned by EGE at oral argument and decided in the defendants' favor here; and, second, that the conduct of the City's outside consultant tainted the bidding process, an argument addressed below. Thus, even if questions 3 and 4 were answered in EGE's favor, the effective result would be to implicate questions 1, 2, and 5 which we answer herein; there is no reason to address the questions concerning the sole source exception to the bid law.[6]
Question 5: "Is the fact that the independent consultant employed by the City cooperated closely with Motorola to the extent of their mutually participating in the drafting of crucial documents, relevant in deciding any of the previous questions?"
We interpret this question broadly, as asking whether the full range of the conduct of Alton Hambric, the City's outside consultant, is relevant in deciding the critical issues in this case. We have held that the use of alternative bidding does not violate the bid law; thus, the overriding issue is whether for any other reason the City's contract with Motorola violates the competitive bid law. The issue turns on whether the City abused its discretion in selecting a system based upon the APCO 25 Interim Standard, the alternative upon which Motorola based its bid. This Court has held:
"State authorities should have discretion in determining who is the lowest responsible bidder. This discretion should not be interfered with by any court unless it is exercised arbitrarily or capriciously, or unless it is based upon a misconception of the law or upon ignorance through lack of inquiry or in violation of law or is the result of improper influence."
White v. McDonald Ford, 287 Ala. at 86, 248 So.2d at 129. The conduct of the City's consultant is relevant in the review of the discretion exercised by the City.[7]
Because we have decided that alternative bidding is consistent with the competitive bid law, and that the practice should be governed by established precedent, we hold that judicial review of a purchasing authority's selection among bidding alternatives should be according to a standard commensurate with the review of a purchasing authority's determination of the lowest responsible bidder or its use of narrow bid specifications to qualify a product with particular characteristics. Therefore, the answer to question 5 is that the conduct of the City's outside consultant is relevant in determining whether the City's exercise of discretion was based upon "ignorance through lack of inquiry," or was "the result of improper influence," or was otherwise arbitrary or capricious. These are primarily questions of fact, *866 and we express no opinion as to whether any violation of the competitive bid law has occurred.
QUESTIONS ANSWERED.
MADDOX, SHORES, HOUSTON, INGRAM, COOK and BUTTS,[*] JJ., concur.
NOTES
[1] The parties have not provided information as to the extent to which alternative bidding may be presently employed statewide in Alabama. However, Floyd Dyar, Birmingham's purchasing agent, stated that it was common practice for Birmingham to take alternative bids.
[2] "APCO" is an acronym for the Association of Public Communication Officers, an international organization whose function is to evaluate and approve proposed communications systems for use within the public sector.
[3] We note that other jurisdictions have upheld the validity of alternative bidding under applicable competitive bid laws. See L.G. De Felice & Son, Inc. v. Argraves, 19 Conn.Supp. 491, 118 A.2d 626 (1955); Otter Tail Power Co. v. Village of Wheaton, 235 Minn. 123, 49 N.W.2d 804 (1951); Mayer Bros. Constr. Co. v. Erie Parking Auth., 189 Pa.Super. 1, 149 A.2d 495 (1959); Automatic Merchandising Corp. v. Nusbaum, 60 Wis.2d 362, 210 N.W.2d 745 (Wis.1973); see generally L.C. Warden, Annotation, Differences in Character or Quality of Materials, Articles, or Work as Affecting Acceptance of Bid for Public Contract, 27 A.L.R.2d 917 (1953).
[4] While the practice of determining the lowest responsible bidder is explicitly prescribed in the bid law, the practice of formulating bid specifications around a particular type of product is not. However, the latter practice has been held under certain circumstances by this Court to be consistent with the bid law. Accordingly, our holding that the practice of selecting among bids on expressly defined alternative specifications is consistent with the bid law, even though the practice is not explicitly prescribed in the bid law, is not unprecedented.
[5] We note that, after requesting and receiving alternative bids, the City rejected both bids and proceeded to negotiate a contract with Motorola for a price lower than the bid price. If the City had initially requested bids based on the APCO 16 Standard and subsequently rejected all bids, then had requested bids based on the APCO 25 Interim Standard and received only Motorola's bid, the City could have availed itself of the following provision of the bid law: "In the event only one bidder responds to the invitation to bid, the awarding authority may reject the bid and negotiate the purchase or contract, providing the negotiated price is lower than the bid price." Ala.Code 1975, § 41-16-50(a). We find, given the nature of the alternative bid process, that the actual procedure followed by the City is consistent with this provision of the bid law. But if, for example, the City had requested alternative bids, had selected APCO 16 technology, and had received more than one bid on that alternative, the bid law would require that the contract be awarded to the lowest responsible bidder.
[6] We note, without deciding the issue, that where alternative bidding is employed and only one bid is received on the alternative selected by the purchasing authority, the authority may be entitled to proceed to negotiate with that bidder without ever ascertaining whether the bidder qualifies under the sole source exception. See footnote 5, and § 41-16-50(a), Ala.Code 1975.
[7] Other facts alleged by EGE, such as the City's failure to follow the advice of its evaluation committee, may also be relevant in the review to determine whether the City abused its discretion. See Ward Int'l, supra.
[*] Although Justice Butts was not a member of this Court when this case was orally argued, he has listened to the tape of oral argument and has studied the record.
|
442 F.2d 1337
John Michael COFFEY, Petitioner-Appellee,v.Walter E. CRAVEN, Warden, California State Prison at Folsom,Respondent-Appellant.
No. 24858.
United States Court of Appeals, Ninth Circuit.
June 9, 1971.
Joyce F. Nedde, Deputy Atty. Gen., (argued), Evelle J. Younger, Atty. Gen., San Francisco, Cal., for respondent-appellant.
Joseph A. Filippelli (argued), of Filippelli & Eisenberg, San Francisco, Cal., for petitioner-appellee.
Before CHAMBERS and CARTER, Circuit Judges, and JAMESON,1 district judge.
PER CURIAM:
1
The order granting a writ of habeas corpus is reversed.
2
We find that Coffey's psychiatric evidence based upon observation years later was too remote to be of much value in this case in evaluating the situation at the time of trial.
3
The record seems clear that the state trial judge had no doubt as to the competency of Coffey at any critical time.
4
We cannot find that the happenings in the state process at the trial or in the legal processes preceding the trial show any denial of any federal constitutional right.
1
The Honorable William J. Jameson, United States District Judge for the District of Montana, sitting by designation
|
658 F.Supp.2d 892 (2009)
RHINO LININGS USA, INC., Plaintiff/Counter-Defendant,
v.
Martin A. HARRIMAN, Rhino Sales, Inc. n/k/a Von Martin, Inc., Defendants/Counter-Claimants,
Martin A. Harriman, Rhino Sales, Inc. n/k/a Von Martin, Inc., Third Party Plaintiff,
v.
Auto X-10'D, Inc., Third Party Defendant.
Case No. 1:07-cv-1087-DFH-JMS.
United States District Court, S.D. Indiana, Indianapolis Division.
September 29, 2009.
*894 James Dimos, Joel E. Tragesser, Richelle Marie Harris, Frost Brown Todd LLC, Indianapolis, IN, for Plaintiff/Counter-Defendant.
Brett J. Miller, Bingham McHale LLP, David Scott Klinestiver, Gary P. Price, Peter S. French, Randall D. Rogers, Jr., Sara R. Bradbury, Lewis & Kappes, Indianapolis, IN, for Defendants/Counter-Claimants/Third Party Plaintiff.
Patrick F. Mastrian, III, Indianapolis, IN, for Third Party Defendant.
ENTRY ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
DAVID F. HAMILTON, Chief Judge.
The principal parties in this diversity jurisdiction case are a national manufacturer and a former local franchisee whose contract was terminated. The third-party defendant is the new franchisee that replaced the former one. The parties have filed cross-motions for summary judgment. As explained below, all three motions are granted in part and denied in part.
Pursuant to a written agreement, defendant Martin Harriman became a Rhino Linings dealer in July 1995, with the exclusive right to sell the products of plaintiff Rhino Linings, Inc. in Indianapolis and the seven surrounding counties. Rhino manufactures polyurethane-based formulations for industrial, commercial and retail applications, most notably used as sprayed-on linings for truck beds and trailers. Harriman's dealer contract was for a term of ten years with a provision for subsequent year-to-year renewals if the parties reached new agreements each year on the dealer quota for product purchases. During that ten year period Harriman, through his business then known as Rhino Sales, Inc. and now known as Von Martin, Inc., established operations in as many as six cities. In July 2005, following the expiration of the first ten years, the parties renewed the dealer contract at the same minimum quota that had been in place during the first ten years. The following year the same thing occurred, though it is not clear whether a written renewal was ever signed for the second renewal.
*895 In December 2006, Rhino national sales manager Jeff Savell wrote to Harriman to inform him that his quota for the next renewal (July 2007) would be for the annual purchase of over 79,000 pounds, a nearly four-fold increase above his current yearly quota of 5,000 pounds for each of his four stores. Savell's letter asked Harriman to contact Rhino so that the two parties could agree on a specific quota for renewal. A month later Savell wrote again, this time indicating that, based on truck sales within Harriman's territory, the quota for renewal would be in excess of 36,000 pounds much lower than Rhino's initial proposal but still a dramatic increase over the current quota. During this time period, Harriman was looking for purchasers for some of his stores. A third letter came in May 2007, after Harriman had sold one of his stores. In the letter, Savell insisted that Harriman would still need to agree to a 36,000 pound quota, more than double Harriman's past quota for his three remaining stores.[1] Efforts by Harriman to obtain Rhino's agreement to extend the contract without such a sharp escalation of his quota were unsuccessful, as were his efforts to sell his business and territory rights.
On August 15, 2007, Rhino sent Harriman a letter informing him that his right to sell Rhino products had expired and that he was to cease using its trademarks, service marks, and products. The letter also informed Harriman that he owed Rhino more than $79,000 for prior product and equipment purchases. In September 2007, third-party defendant Auto X-10'D, Inc. ("AutoX"), a former competitor of Harriman's, received authorization to sell Rhino products in Harriman's former territory. Earlier in the year, AutoX had discussed with Harriman the purchase of one or more of his stores, and they had also had some similar discussions several years previously. AutoX received its license to offer Rhino products from Ziebart International Corporation, which had entered into a nationwide development agreement with Rhino in 1999, the stated purpose of which was to allow Rhino dealers to acquire Ziebart franchises and to allow Ziebart businesses to sell Rhino products and services.
AutoX acquired its first Ziebart franchise in 1982 and went about expanding the number of its aftermarket auto and truck accessory stores in the central Indiana market. Despite the 1999 Ziebart/Rhino national development agreement, Harriman's Dealer Contract had previously prevented AutoX from obtaining the rights to sell Rhino products in those Indiana counties where Harriman held the exclusive rights. Although it had been able to offer Rhino products in its stores outside of the Indiana counties reserved to Harriman, AutoX had offered a competing spray on bed-lining product in the stores it operated in direct geographical competition with Harriman in his Rhino territory.
Some time in the 2000 to 2001 time frame, Harriman had attempted to obtain a Ziebart franchise for his Columbus, Indiana store; however, one of AutoX's principals, Denny Fryman, and another Indiana Ziebart dealer, who also competed with Harriman's stores, apparently objected to Harriman obtaining the right to sell Ziebart products, prompting an attempt by Rhino's CEO to broker a compromise that would have allowed Harriman to become a Ziebart dealer and the two objectors to purchase a lesser Rhino bed lining product to sell under a Ziebart trade name. The compromise was never reached and Harriman never became a Ziebart dealer. But Harriman claims that AutoX and other *896 Ziebart dealers later began to advertise within his exclusive territory, claiming to offer Rhino products.
A little more than a month after it sent its August 15, 2007 letter to Harriman confirming the expiration of the dealer contract, Rhino filed this lawsuit seeking to enjoin Harriman from any continued use of the Rhino name or sale of its products and to recover the money it claims it is owed by Harriman for products he ordered. The parties quickly reached an agreement on the terms of a permanent injunction prohibiting Harriman from acting as a Rhino dealer or using its products. Harriman then filed counterclaims against Rhino contending that the company had wrongfully terminated the dealer contract and had breached the exclusivity and good faith and fair dealing provisions of the agreement.
Harriman has also filed a third-party complaint against AutoX, the entity that took over his former Rhino territory. Harriman asserts AutoX gained access to his territory by tortiously interfering with his contractual relationship with Rhino and conspiring with Rhino to cause his dealership rights to be terminated. Harriman's third-party complaint includes a separate unfair competition claim against AutoX.
It is undisputed that AutoX's business manager Jim Harris contacted Rhino's CEO at some point in 2006 to ask about acquiring Harriman's exclusive geographical region and that a Rhino account manager mentioned in an e-mail in early 2007 that Rhino was helping AutoX to acquire Harriman's territory. Furthermore, Jim Harris of AutoX had at least one conversation with Harriman in 2007 regarding acquiring Harriman's business. Harriman maintains that discussions with Harris regarding a purchase of his business ceased rather abruptly, and he suspects that Rhino's insistence on an unreachable quota in order for him to renew the Dealer Contract was an alternative strategy by Rhino to allow AutoX to obtain the territory.
Rhino, Auto X, and Harriman have all moved for summary judgment in their favor on some or all of the claims brought by them or against them. This entry addresses all of those motions.
I. Summary Judgment Standard
The purpose of summary judgment is to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Summary judgment is appropriate when there are no genuine issues of material fact, leaving the moving party entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party must show there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A factual issue is material only if resolving the factual issue might change the suit's outcome under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual issue is genuine if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party on the evidence presented. Id.
In deciding a motion for summary judgment, the court may not make credibility determinations, weigh the evidence, or choose from among different reasonable inferences that might be drawn from the evidence. Paz v. Wauconda Healthcare and Rehabilitation Centre, LLC, 464 F.3d 659, 664 (7th Cir.2006) (reversing summary judgment); Payne v. Pauley, 337 F.3d 767, 770 (7th Cir.2003) (reversing summary judgment). The court must view the evidence in the light reasonably most favorable to the non-moving party. Paz, 464 *897 F.3d at 664; Pourghoraishi v. Flying J, Inc., 449 F.3d 751, 754 (7th Cir.2006).
The fact that all parties have filed motions for summary judgment does not alter the applicable standard and does not imply that there are no genuine issues of material fact. R.J. Corman Derailment Services, LLC v. Int'l Union of Operating Engineers, 335 F.3d 643, 647 (7th Cir. 2003). The court must consider each motion independently and must deny any motion as to which there is a genuine issue of material fact. E.g., Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993); Harms v. Laboratory Corp. of America, 155 F.Supp.2d 891, 906 (N.D.Ill. 2001). Thus, in considering cross-motions for summary judgment, the court must consider the evidence through separate lenses, always allowing the non-moving party the benefit of all conflicts in the evidence and choices among reasonable inferences from that evidence.
II. Rhino's Breach of Contract Claim
After the parties reached an agreement on terms of a permanent injunction barring Harriman's use of Rhino's trademarks, service marks, and products, Rhino's remaining claim is its breach of contract claim against Harriman for the money it says it is owed for chemical products he ordered. To support its motion, Rhino has submitted the affidavit of Sandra Sue Roberts, its vice president and CFO. She attests to Harriman's unpaid bill of $79,038.72 for chemical products he ordered and received from Rhino prior to the termination of the Dealer Contract. She provides no back-up invoices or purchase orders which might detail and support her calculation. While there are some spreadsheets submitted as exhibits to her deposition, it is clear from her deposition testimony that these spreadsheets do not contain the entirety of the accounting entries that would be necessary to calculate an accurate account balance.
Harriman responds by submitting his own affidavit stating that he acknowledges a debt to Rhino for past purchases but disputing the amount claimed as due and owing. He indicates his account was entitled to certain credits for product returns and that he has been unable to obtain documentation from Rhino that would allow him to reconcile the amount sought by Rhino with his own accounting records. Like Rhino, Harriman offers no individual account balance documentation to assist in accurately computing what he owes. In addition, Harriman points to portions of Roberts' deposition where she admitted to errors and discrepancies in the spreadsheets she used to compute the amount of money still owed Rhino by Harriman. Harriman contends that he is entitled to an inference that credits were likely not applied and that the amount he owes is not consistent with the amount claimed by Rhino.
As the Seventh Circuit has often observed, most summary judgment affidavits are self-serving, but that does not mean they may not be used to support or oppose summary judgment. See, e.g., Payne v. Pauley, 337 F.3d 767, 771-72 (7th Cir. 2003). In this case, the problem is that both the Roberts and Harriman affidavits are conclusory. Neither provides the specific facts needed to establish a fact beyond reasonable dispute. See Fed. R.Civ.P. 56(e). As the moving party on a claim for which it bears the burden of proof, Rhino has failed to establish beyond reasonable dispute its claim for $79,038.72. Its motion for summary judgment on the claim must be denied.
III. Harriman's Counterclaims for Breach of the Dealer Contract
The dealer contract between Rhino and Harriman was governed by California law *898 and contained the following provisions relevant to Harriman's counterclaim of breach:
1.01 PURPOSE: The purpose of THIS AGREEMENT is to establish DEALER as the exclusive Dealer for RHINO'S services and products, ..., and to set forth the respective duties, obligations and responsibilities of RHINO and of DEALER in the sale of these products/services by RHINO to DEALER, and the sales of products by DEALER.
1.03 FINANCIAL AND PHYSICAL RESOURCES: RHINO has elected to enter into this AGREEMENT with DEALER with the recognition that RHINO's success depends on financially sound, responsible, efficient, vigorous and successful independent Dealers. It is mutually agreed that the conduct of business between the parties will be fair and will be free of false, deceptive or misleading advertising, merchandising, pricing, and service practices.....
1.05 EXPECTATIONS OF PARTIES: It is the expectation of the parties that by entering into this agreement, and by the full and faithful observance and performance of its duties, obligations and responsibilities, a mutually satisfactory relationship between them will be established and maintained.....
2.02 EXCLUSIVE TERRITORY LIMITATIONS: During the continuance of THIS AGREEMENT, RHINO shall not appoint another distributor or different person, firm, or corporation to sell or distribute the same products and services in any exclusive geographic area granted to DEALER. RHINO agrees that RHINO will not sell/place any of RHINO's products, equipment or services under the RHINO name or any other name, to any business entity located within DEALER'S Exclusive Territory[2], if said business entity intends to offer RHINO products or services for sale.
2.09 SELLING RIGHTS RESERVED: RHINO reserves the right to sell, directly or through its other distributors any of its products or services to any of the following located in DEALER'S Exclusive Territory, on the condition that the products or services are for consumption and not for resale.
A. The United States Government...
B. Any foreign government ...
C. Any national corporations.
2.10 FREE TO SOLICIT BUSINESS: It is agreed that it is to the benefit of all parties that RHINO and all its authorized DEALERS be free to solicit business from any source. Subcontracting of work is encouraged. The terms and conditions will be negotiated in good faith between or among RHINO and its various DEALERS as the situation warrants.
At the heart of Harriman's counterclaims is the assertion that Rhino failed to deal with him fairly and in good faith. Section 1.03 requires both parties to act fairly and free from deception when doing business with each other. Section 1.05 sets forth an expectation that the parties will fully and faithfully observe and perform all the duties, obligations, and responsibilities they have accepted. Even *899 without these stated obligations of good faith in the written agreement, California law implies a duty of good faith and fair dealing in performance and enforcement of every contract. Carma Developers (Cal.), Inc. v. Marathon Development California, Inc., 2 Cal.4th 342, 371-72, 6 Cal.Rptr.2d 467, 826 P.2d 710 (1992).
A. Bad Faith Failure to Renew Dealership
Harriman contends that Rhino acted in bad faith in dealing with him concerning the renewal of the dealer contract for the renewal year beginning in July 2007. According to Harriman, Rhino insisted on a quota that was more than double previous quotas, despite the fact that, according to the testimony of Pauline Chin, Rhino's legal administrator, the company was not enforcing quotas against its dealers during that time frame. Adding insult to injury, when AutoX took over Harriman's territory in 2007, Rhino and AutoX agreed on a quota well below the quota that Rhino had tried to impose on Harriman as a condition of extending his franchise. Harriman contends that these facts and others show an effort on the part of Rhino to rid itself of Harriman and to transfer his territory to AutoX, which had become the biggest Rhino/Ziebart dealer in the country and also occupied a seat on the Rhino Dealer Advisory Board.
Harriman relies on additional facts to support summary judgment in his favor. In his affidavit he avers that Rhino ignored his efforts, beginning in 2006, to obtain a long term renewal of his dealer contract. The lack of any Dealership Renewal Worksheet in Rhino's dealer file on him is, according to Harriman, further evidence that there was no good faith effort to reach an agreement on renewal in 2007. Prior to the time for renewal of a Rhino dealership agreement, someone at Rhino prepares Dealership Renewal Worksheet and sends it to Ms. Chin, who processes renewals. Chin testified that if a renewal worksheet had been prepared for Harriman's territory, it would have been put in Harriman's dealership file, but no such worksheet was in his file. She had no personal knowledge as to why such a worksheet was not in Harriman's file.
Rhino seeks to avoid summary judgment against it and insists that it is entitled to a summary judgment in its favor on the issue of bad faith failure to renew. Its first argument is that the dealer contract was never terminated but simply expired pursuant to its own terms because the parties never agreed on a new quota. It is undisputed that the dealer contract was to expire in July 2007 unless agreement could be reached on a new quota, and that no agreement was reached. However, the court interprets the dealer contract as requiring Rhino to negotiate in good faith toward a mutually agreeable quota for renewal. Rhino's argument is undermined by its obligation to act in good faith in its dealings with Harriman and in the performance of the contract and by Harriman's evidence supporting an inference that Rhino simply decided to replace Harriman with AutoX and insisted in bad faith on an arbitrary and unreasonable quota as a means of reaching that end. It is undisputed that Rhino made an offer to renew Harriman's Dealer contract based on a 36,000 pound quota, which was more than double the previous quota per store. There is a genuine issue of material fact as to whether that proposal was reasonable and made in good faith, especially in light of Rhino's failure to enforce other quotas and its agreement to use a much lower quota for AutoX when it took over Harriman's territory.
Rhino also relies on Harriman's testimony that he never proposed a specific alternative quota to the 36,000 pound quota proposed by Rhino. Rhino contends that *900 Harriman cannot maintain a claim of bad faith failure to negotiate when he did not propose an alternative number for the quota. This argument ignores Harriman's contention, supported by copies of letters as well as his own testimony, that he had been trying for more than a year to negotiate a new agreement and that he had asked to enter into discussions regarding the quota. After placing phone calls and leaving messages with several management personnel at Rhino, regarding the need for a meeting or phone conference to discuss a new quota, Harriman claims he was given the "run around" or his messages were ignored. Rhino denies this, but this is all a matter of factual dispute that cannot be resolved on summary judgment.
Harriman further claims that the 36,000 pound quota was presented as a take it or leave it proposition and was entirely unreasonable in light of past performance and economic conditions in the territory. Because Rhino disputes Harriman's efforts to negotiate a new quota and supports its position with a July 12, 2007 letter from Harriman to Jeff Saville that contains no attempt to propose an alternative quota, Harriman is not entitled to summary judgment. However, the circumstantial evidence offered by Harriman with regard to the actions of Rhino in its dealings with him, AutoX and others is more than ample to avoid summary judgment based on his failure to make a specific counter-proposal.
B. Breach of Exclusivity Provisions
Harriman's counterclaim includes a count alleging that Rhino's dealings with Ziebart or AutoX, and Dallman Industrial Corporation violated the exclusivity provisions of the dealer agreement.[3] Harriman asserts in the "Additional Material Facts" subsection of his supporting brief that Rhino, by entering into the original nationwide development agreement with Ziebart in 1999, acted deceptively and in bad faith in violation of the dealer contract. Harriman did not pursue the point in his argument, and, as pointed out by Rhino, the national development agreement with Ziebart was executed in March 1999. California has a four year limitations period for breach of contract actions, Cal.Code Civ. Proc. § 337, which bars Harriman's pursuit of a breach of contract claim based on that 1999 arrangement.
The argument Harriman develops in the argument section of his brief is directed at Rhino's recruitment of and communication and interaction with AutoX after the national agreement. In short, Rhino allowed AutoX, through its Ziebart franchise arrangement, to become a purveyor of Rhino products in areas outside Harriman's territory. According to Harriman, Rhino then looked the other way when AutoX used the expertise and know-how it gained to compete against Harriman in its stores within his exclusive territory. Eventually, Rhino's actions led to AutoX taking over Harriman's territory. Harriman also complains that Rhino recruited additional dealers in his territory before his contract had expired. Harriman complains about the following actions:
1. AutoX was given the Rhino "know-how" when its Ft. Wayne, Indiana store obtained the right to sell Rhino products and services through Zeibart, even though AutoX had competing stores within Harriman's exclusive territory that sold similar non-Rhino products.
*901 2. AutoX, which competed with Harriman, was given an influential position on Rhino's Dealer Advisory Board.
3. In 2006, AutoX and Rhino had discussions regarding AutoX's desire to sell Rhino products at its stores within the territory then exclusive to Harriman. According to Harriman, the difficulties he faced with Rhino, including Rhino's sudden interest in increasing his quota, came only after AutoX expressed an interest in acquiring the right to sell Rhino products within his exclusive territory.
4. In February 2006, there was an email exchange in which a Rhino manager was soliciting Pearson Ford, an auto dealer and repair shop within Harriman's exclusive territory, and Pearson was inquiring if all hurdles had yet been removed so that it could become a Rhino dealer. A later email chain shows that the Rhino employee soliciting Pearson was told by Pauline Chin that Pearson's shop was within Harriman's territory, that negotiations with Harriman for renewal were at a standstill, and that nothing further could be done with Pearson until that issue was resolved.
5. A February 2007 intra-company email discussed the recruitment of Ziebart dealers in areas where other dealers had rights to sell Rhino products. The email was sent to several individuals, including the new CEO of Rhino, stating that Rhino was helping the principals of AutoX to buy out Harriman.
At different points in his supporting briefs, Harriman discusses these incidents as though each represents the foundation for an individual breach of contract action. In the court's view, they represent circumstantial evidence supporting Harriman's claim of bad faith termination of his agreement. But the dealer contract did not prohibit Rhino from offering its products outside of Harriman's territory to companies that otherwise competed with Harriman inside his territory, nor did it prohibit Rhino from appointing such a dealer to the advisory board. The fact that Rhino had discussions with other potential dealers regarding Harriman's territory is not itself an independent breach of the dealer contract. Few contracts last forever; Rhino was entitled to look to future choices if Harriman might falter, just as Harriman was free to explore other business options for himself. What matters is the parties' actions. The five matters identified above were not independent breaches of Rhino's contract with Harriman, and Rhino is entitled to summary judgment to that effect.
There is, however, one situation that amounted to a breach of the exclusivity provisions of the contract. Dallman Industrial Corporation is an Indiana company that manufactures automatic teller machine kiosks, enclosures, and canopies and that it is located within the boundaries of Harriman's exclusive territory. In 2001, Rhino opened a direct account with Dallman to supply it with Rhino spray products so that Dallman could apply them directly to the outside of its enclosures and canopies as a part of its manufacturing process. Before Rhino intervened and opened a direct account, Dallman had been having one of Harriman's locations spray the Rhino lining onto its ATM products. Rhino's contract with Dallman ended in 2005.
Rhino's contract with Dallman prohibited Dallman from applying the Rhino products in connection with any automotive use, and Dallman did not sell, distribute, or use the products outside its own manufacturing process. Rhino contends that Section 2.10 of its contract with Harriman *902 specifically reserved to Rhino the right to solicit such business. Rhino argues that because Dallman was an original equipment manufacturer ("OEM") and did not offer the Rhino products for sale other than as components of the products it manufactured, there was no violation of Section 2.02 of the dealer contract.
Section 2.02, 2.09 and 2.10 of the dealer contract all relate to Rhino's selling product or soliciting business within Harriman's exclusive territory. As applied to the Dallman business, each of these provisions is, by itself, ambiguous in some respect. California law provides that a contract should be read as a whole, of course, with each clause having meaning and effect and each also assisting in the interpretation of the others. See Cal. Civ. Code § 1641. Contract interpretation is a matter of law for the court. When an instrument is susceptible to multiple interpretations, a court should favor a construction which makes the contract reasonable, enforceable, and definite. Cal. Civ.Code § 1643; see also Badie v. Bank of America, 67 Cal.App.4th 779, 800, 79 Cal. Rptr.2d 273, 286 (1998). When ordinary principles of contract interpretation do not allow for a resolution of the ambiguity, the contract language should be construed against the party who drafted it. Cal. Civ.Code § 1654.
Section 2.02 forbids Rhino from selling product to any business entity within Harriman's territory if that entity intends to offer the Rhino product for sale. Whether that prohibition against Rhino's sale of its product applies when that product is resold as a component of another product is left unclear.
Section 2.09 states that Rhino reserves the right to sell directly to national corporations and certain government entities, but Dallman was neither. Even then the reservation is qualified by language stating that it is "on the condition that products or services are for consumption and not for resale," again leaving unanswered the question whether an "OEM" applying a Rhino product in its own manufacturing process for resale of the entire product has consumed the product or resold it.
Finally, Section 2.10 stated that Rhino and its authorized dealers were "free to solicit business from any source" and that "subcontracting" was encouraged with the terms and conditions to be negotiated in good faith between Rhino and the dealers as warranted. This provision clearly did not mean that Rhino was free to ignore its dealers' exclusive territories. The provision allowed solicitation of business. But to prevent this provision from completely undermining an exclusive territory, it must be read as requiring Rhino in such instances to negotiate a good faith agreement with the local dealer before Rhino could actually sell directly (not merely solicit business) in a dealer's exclusive territory.
The contract did not allow Rhino to solicit business from anyone it chose and then to sell the products it has agreed to allow Harriman to sell exclusively in his territory without reaching some acceptable arrangement with Harriman. To find otherwise would frustrate the geographic exclusivity clause of the agreement. The undisputed facts show that Rhino violated the dealer agreement from 2001 to 2005 by selling to Dallman. Details are sparse in this record, amid the many issues the parties have briefed, but the undisputed facts show that Rhino is liable for the breach, at least to the extent that Harriman can prove damages. On this portion of this claim, Harriman is entitled to partial summary judgment on the question of liability.
IV. Harriman's Third-Party Complaint Against AutoX
Harriman relies on two theories against AutoX. First, he maintains that AutoX *903 tortiously interfered with his contractual relationship with Rhino. Second, he contends that AutoX engaged in unfair competition in attempts to confuse consumers in Harriman's exclusive territory into believing that AutoX stores in that territory also offered Rhino products. AutoX seeks summary judgment in its favor on both theories, and both parties cite decisions under Indiana common law to support their positions.
In Felsher v. University of Evansville, 755 N.E.2d 589 (Ind.2001), the Indiana Supreme Court describes a cause of action for unfair competition as "historically considered a subspecies of the class of torts known as tortious interference." Id. at 598. The claim is available when a party engages in conduct, the natural and probable effect of which is to deceive the public into believing that its goods or practices are those of another, the most common example of which involves trademark use. Id.; see also Westward Coach Mfg. Co. v. Ford Motor Co., 388 F.2d 627 (7th Cir.1968). The court finds that AutoX is entitled to summary judgment on the unfair competition claim.
First, the evidence that Harriman offers to show specific instances where AutoX allegedly infringed on his exclusive right to sell Rhino products in his territory is nearly universally inadmissible as hearsay. For example, he claims to have viewed a television commercial in which Ziebart (who is not a party) advertised that its franchises offered Rhino products. The commercial concluded with a listing of authorized Ziebart franchises in the area which included AutoX stores within Harriman's territory. His recitation of the Ziebart website's representation regarding AutoX being an authorized dealer of Rhino products similarly amounts to hearsay. Harriman's reliance on hearsay continues with his claim that he was told by employees at car dealerships, which constitute a large source of the spray on bed-lining business, that they were sending business to AutoX because it offered Rhino products at a cheaper price and that he was told the same by individual customers. Harriman further relies on hearsay responses given during anonymous telephone calls he placed when asking AutoX stores in his territory about their bed-lining products. Evidence to support or oppose summary judgment cannot be hearsay, but must meet the same admissibility standards applicable at trial. Bombard v. Ft. Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir.1996).
There is another reason why Harriman cannot pursue a separate unfair competition claim, one that was essentially summarized by Harriman himself in his deposition. Harriman was asked if he ever complained directly to AutoX regarding any of the representations he claims AutoX was making about offering Rhino products. In response, he said that it was not his trademark at issue:
Q Did you ever make any complaints directly to AutoX-10'd?
A No.
Q You always complained to Rhino Linings USA and let them handle it?
A That is correct.
Q Why didn't you ever make any complaints to AutoX-10'd?
A Because it was Rhino USA's logo, it was Rhino USA's trademark that they were violating. It wasn't my position to protect that trademark; it was Rhino USA's.
The unfair competition claim is not sufficiently supported by the evidence to stand as an independent claim.
The essential elements of a claim of tortious interference with a contractual relationship are:
*904 1. The existence of a valid and enforceable contract;
2. The defendant's knowledge of the existence of the contract;
3. The defendant's intentional inducement of a breach of the contract;
4. The absence of justification; and
5. Damages resulting from the defendant's interference.
Stoffel v. Daniels, 908 N.E.2d 1260, 1270 (Ind.App.2009). AutoX argues that it is entitled to summary judgment because Harriman has failed to support the first four elements. The court disagrees.
AutoX first argues that there was no contract between Rhino and Harriman at the time it took over his territory. This argument is a complete non-starter. Viewing the evidence in the light reasonably most favorable to Harriman, the interference he complaints about occurred while his dealer contract with Rhino was in place, even if it did not reach its culmination until his contract expired and Rhino replaced him with AutoX.
Next, AutoX contends that Harriman has no evidence that it knew of any contractual agreement between Rhino and Harriman. While there may be no direct evidence that AutoX knew the specific details of the contractual relationship, there is powerful circumstantial evidence showing that AutoX was well aware of the existence of Harriman's dealer contract, including its geographical exclusivity provisions. In addition to the evidence discussed earlier in this entry with regard to the claim against Rhino, the following additional facts point to AutoX's knowledge of the existence of the contract and likely understanding of its exclusivity provisions before it took over Harriman's territory:
1. AutoX purchased a similar Rhino dealership in Ft. Wayne, Indiana in 2004.
2. AutoX became a seller of Rhino products and services as a Ziebart Franchisee in areas surrounding Harriman's territory years before Harriman's dealer contract expired.
3. Denny Fryman, the owner of AutoX, admits to knowing his competitors and, specifically, that Harriman owned the rights to sell Rhino products in the Indianapolis area.
4. There is a letter written, but not sent, by Rhino's former CEO that discusses a compromise between Harriman, Fryman, and another of Harriman's competitors regarding the use of certain Rhino products and Harriman's pursuit of a Ziebart franchise.
5. Harriman and Jim Harris, who managed the AutoX business on a day-to day basis, had discussions regarding the sale of some or all of Harriman's stores to AutoX as far back as 2005 and again in 2007.
6. Harris sat on the Rhino Dealer Advisory Board, beginning in 2006.
The third element of Harriman's tortious interference claim is evidence to support the inducement of a breach by AutoX. This is where Harriman's evidence thins, but not so much as to require summary judgment against him. There is circumstantial evidence indicating that the principals of AutoX had long had an interest in becoming a Rhino dealer in at least a portion of Harriman's exclusive territory. First, there is Harriman's testimony that he obtained the Rhino dealership rights only after Jim Harris's attempt to obtain the rights fell through.[4] Next, there was *905 an inquiry made by Harris to Harriman some time in 2004 or 2005 as to Harriman's willingness to sell his Greenwood, Indiana store, a store within Harriman's exclusive territory. Finally there is the testimony of Pierre Gagnon, who became Rhino's CEO in 2006, that some time during that year Harris expressed to him an interest in acquiring Harriman's Rhino dealerships on behalf of AutoX.
An interest in acquiring the Rhino dealerships is not sufficient by itself of course to support a claim that AutoX induced a breach of the dealer contract. However, when combined with the evidence that Harriman describes as the "smoking gun," it is enough to take Harriman past the summary judgment motion. That evidence is the February 2007 email sent by one of Rhino's regional account managers to, among others, Pierre Gagnon. The email discussed the pursuit of another dealer, which happened to be within 38 miles of the Ft. Wayne Ziebart franchise held by AutoX, to sell Rhino products. The email reminded those who received it that the Ft. Wayne store was the top selling Rhino store for Ziebart and then went on to state in pertinent part: "we are working on having Jim [Harris] and Denny [Fryman] buy out Marty Harriman. Based on that overall scenario, I would recommend putting this dealer on hold for now to see how the rest of the business comes together for Jim and Denny." The relevant portion of the email concluded with the regional manager stating that he would like to see Jim and Denny's deal, presumably for Harriman's territory, closed before aggressively pursuing the new dealer.
The email is susceptible to several interpretations, but at this stage it must be viewed in a light most favorable to Harriman as the non-moving party. From that email and other circumstantial evidence, a jury could infer that AutoX wielded significant influence with Rhino due to its being Rhino's top selling dealer. Certainly, from the email one can easily conclude that Rhino was reluctant to pursue another dealer in an area too near an AutoX store until it had helped AutoX with its objective of obtaining the Rhino sales rights in the Indianapolis area then held by Harriman. With that in mind, it would not be too big a logical leap to infer that Rhino was helping AutoX by pressuring Harriman out of his contract by demanding an unreasonable increase in his quota. Accordingly, AutoX is not entitled to summary judgment on the third-party claim against it for tortious interference with a contractual relationship.
Conclusion
The major issues in this case pivot on conflicting testimony and competing inferences to be drawn from the facts. There is too much competing evidence regarding material questions of fact for any of the parties to avoid a trial. All three parties' motions are granted in part and denied in part. Rhino's motion for summary judgment is granted with respect to Harriman's counterclaim that Rhino breached the exclusivity provisions of the dealer contract in its dealings with Ziebart and AutoX while Harriman was still a dealer. Rhino's motion is denied in all other respects. Harriman's motion is granted as to liability on his counterclaim that Rhino breached the exclusivity provisions by supplying Dallman Industrial Corporation, but is denied in all other respects. AutoX's motion is granted in part with respect to Harriman's distinct claim of unfair competition. AutoX's motion is denied in all other respects.
So ordered.
NOTES
[1] Harriman at one time owned and operated as many as six stores, but through sale or closure had, by 2007, reduced the number of stores he owned to three.
[2] The exclusive territory initially granted Harriman included the following Indiana counties: Hamilton, Boone, Hendricks, Morgan, Johnson, Shelby, Hancock and Marion. A later written amendment to the dealer contract eliminated Hancock County from the exclusive territory.
[3] In his pleadings, Harriman also alleges that Rhino breached the exclusivity provisions of the contract in its dealings with a company known as Wax Werks. In response, Rhino claimed that it has never done business with Wax Werks, and Harriman has abandoned any claim of breach in that regard.
[4] AutoX questions Harriman's ability to testify with personal knowledge of any attempt by Harris to obtain such rights; but, notably, it never offers any contrary sworn testimony.
|
666 F.2d 733
Thomas F. LIMERICK, et al., Plaintiffs, Appellants,v.Carol S. GREENWALD, et al., Defendants, Appellees.
No. 81-1087.
United States Court of Appeals,First Circuit.
Submitted June 5, 1981.Decided Dec. 18, 1981.Rehearing Denied Jan. 18, 1982.
Robert H. Tobin and Tobin & Tobin, Roslindale, Mass., on brief for appellants.
John J. McCarthy, Stanley V. Ragalevsky, and Warner & Stackpole, Boston, Mass., on brief for appellee, Cooperative Central Bank.
Francis X. Bellotti, Atty. Gen., and Stephen S. Ostrach, Asst. Atty. Gen., Boston, Mass., on motion for summary disposition for appellees, Carol S. Greenwald et al.
Before COFFIN, Chief Judge, ALDRICH and BREYER, Circuit Judges.
COFFIN, Chief Judge.
1
This is another in a series of cases, in both state and federal courts, arising out of the Cooperative Central Bank's takeover of the Roslindale Cooperative Bank ("Roslindale"). The plaintiffs in this action are two former officers of Roslindale: Thomas Limerick (Executive Vice President and Treasurer) and Marie Grassia (Assistant Treasurer). The defendants are the Cooperative Central Bank of Massachusetts, a former Commissioner of Banks, the present Commissioner of Banks, the present Deputy Assistant Commissioner of Banks, and a present Administrative Assistant to the Commissioner of Banks. We have set forth the history of the controversy in Roslindale Cooperative Bank v. Greenwald, 638 F.2d 258 (1st Cir.), cert. denied, --- U.S. ----, 102 S.Ct. 128, 70 L.Ed.2d ---- (1981).
2
The complaint below presented four counts. The first suggests that the defendants improperly certified Roslindale before taking it over, thereby depriving the plaintiffs of their jobs without due process. The second count asserts that the defendants failed to comply with Massachusetts open-meeting laws and freedom of information provisions, and thereby "contributed to the length of the plaintiffs' constitutional deprivations." The third count alleges that the Central Bank violated Massachusetts law by failing to enact proper regulations concerning the operation of Roslindale, a failure which "further contributed to the length of the plaintiffs' constitutional deprivations." The fourth count alleges that the plaintiffs were not given a "name-clearing administrative hearing" after the defendants made false statements that publicly stigmatized them, in violation of the Massachusetts Information Practices Act, Mass.Gen.Laws c. 66A, and "settled constitutional law decisions". The district court dismissed the complaint for failure to state a federal claim and this appeal followed.
3
The district court correctly ruled that the first count failed to state a claim. The facts alleged are no different from those described in Roslindale Cooperative Bank, supra. In that case we held that the provisions of the Massachusetts Declaratory Judgment Act satisfy the due process requirements associated with whatever property deprivation a bank and its directors may arguably suffer when its assets and business are transferred to the Cooperative Central Bank pursuant to Mass.Gen.Laws c. 170 App. § 2-4. Those procedures would equally well protect any property interests of the bank officers.
4
The second and third counts are based on state law violations that are only vaguely alleged to raise federal constitutional issues. The unadorned allegation that a state law has been violated does not establish a claim under the federal Constitution. Snowden v. Hughes, 321 U.S. 1, 64 S.Ct. 397, 88 L.Ed. 497 (1944). The district court was not required to guess what particular federal right could have been implicated by failure to comply with these particular state procedures. Beaumont v. Morgan, 427 F.2d 667 (1st Cir. 1970). Thus, the dismissal of these counts was also proper.
5
With regard to the fourth count, however, we cannot say "it appears beyond doubt that the plaintiff(s) can prove no set of facts in support of (their) claim which would entitle (them) to relief." Conley v. Gibson, 335 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). The complaint alleges that the defendants
6
"gave out information ... to the public media ... as well as making additional false statements such as, 'No one in the Bank could be trusted'; various 'mismanagement' claims and outright falsehoods pertaining to the management and condition of said bank that reflected upon the management.... (These statements) were a stigma of ridicule, embarrassment and dishonor to the plaintiffs. They were made in violation of the plaintiffs constitutional 'liberty rights'.... This stigma actually denied to the plaintiffs the opportunity to continue their careers in banking...."
7
It is possible that, pursuant to these allegations, plaintiffs could adduce facts showing that the defendants' actions threatened their reputations with unusually serious harm, while stripping them of their responsibilities as bank managers and threatening their future employability. Such a showing would demonstrate deprivation of a constitutionally protected liberty interest. See Owen v. City of Independence, 445 U.S. 622, 633 n.13, 100 S.Ct. 1398, 1406, n.13, 63 L.Ed.2d 673 (1980); Board of Regents v. Roth, 408 U.S. 564, 573, 92 S.Ct. 2701, 2707, 33 L.Ed.2d 548 (1972); Beitzell v. Jeffrey, 643 F.2d 870, 878 (1st Cir. 1981); Rodriguez de Quinonez v. Perez, 596 F.2d 486, 488-89 (1st Cir.), cert. denied, 444 U.S. 840, 100 S.Ct. 78, 62 L.Ed.2d 51 (1979). Cf. Paul v. Davis, 424 U.S. 693, 706, 708, 710, 96 S.Ct. 1155, 1163, 1164, 47 L.Ed.2d 405 (1976).
8
If such a deprivation were established, due process would require a post-deprivation proceeding at which the plaintiffs could clear their names. Although the state's declaratory judgment procedure is adequate to protect a property interest, Roslindale Cooperative Bank, supra, it is not adequate to protect a liberty interest in reputation. To be meaningful, the name-clearing proceeding must be run by the same actor who diminished the plaintiffs' reputations. See Owen v. City of Independence, supra, 445 U.S. at 434, n.13, 100 S.Ct. at 1406 n.13 (hearing owed by the city); Board of Regents v. Roth, supra, 408 U.S. at 573, 92 S.Ct. at 2707 (hearing owed by university officials).
9
The Supreme Court has observed that federal courts perform a very limited task when assessing the sufficiency of a complaint. "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely, but that is not the test." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). Although the plaintiffs' complaint may fairly be characterized as only minimally sufficient, it is adequate to withstand a motion to dismiss.
10
One appellee (the Bank) argues that, even if the complaint sets forth a federal claim, the motion to dismiss was properly granted on res judicata grounds. It suggests that the plaintiffs here were in privity with the plaintiffs in the prior action and should be bound by the result there. We have held that, where the substantive rights of parties are not endangered, a district court may in its discretion consider res judicata issues raised by motion to dismiss, rather than by the more usual form of an answer to a complaint. Diaz-Buxo v. Trias Monge, 593 F.2d 153 (1st Cir. 1979). In this case, however, the district court did not rely on res judicata analysis. Given the many factual questions raised under the elusive concept of privity, General Foods Corp. v. Massachusetts Dept. of Public Health, 648 F.2d 784, 787-90 (1st Cir. 1981); Griffin v. Burns, 570 F.2d 1065, 1070-72 (1st Cir. 1978), we believe it would be premature to consider the issue on this appeal, before the parties have developed a factual record.
11
The case is remanded to the district court for further consideration of the issue raised in the fourth count of plaintiffs' complaint. Of course, the district court may consider whether it wishes to exercise its discretion to consider any of plaintiffs' state claims under its pendent jurisdiction, if it finds that those claims satisfy the tests of Aldinger v. Howard, 427 U.S. 1, 96 S.Ct. 2413, 49 L.Ed.2d 276 (1976) and Mine Workers v. Gibbs, 383 U.S. 715, 725-26, 86 S.Ct. 1130, 1138-39, 16 L.Ed.2d 218 (1966). And it should consider the validity of the appellees' res judicata arguments.
12
We observe, finally, that our analysis was considerably encumbered by the same gallimaufry of conclusory argumentation that characterized appellants' presentation in Roslindale Cooperative Bank, supra. Accordingly, the parties shall bear their own costs.
13
The judgment is vacated and the cause remanded for further proceedings in accordance with this opinion.
|
5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
3XUVXDQW WR 6L[WK &LUFXLW 5XOH
(/(&7521,& &,7$7,21 )(' $SS $ WK &LU
)LOH 1DPH DD
81,7('67$7(6&28572)$33($/6
)257+(6,;7+&,5&8,7
BBBBBBBBBBBBBBBBB
81,7(' 67$7(6 2) $0(5,&$ ;
3ODLQWLII$SSHOOHH
1R
Y
!
0$5/21 5(('
'HIHQGDQW$SSHOODQW
1
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL
1R n+HUPDQs:HEHU'LVWULFWsXGJH
$UJXHG $SULO
'HFLGHGDQG)LOHG sXQH
%HIRUH 1255,6DQG*,/0$1&LUFXLWsXGJHV +22'
'LVWULFWsXGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 5LFKDUG:6PLWK0RQDKDQ2)),&(2)7+(
)('(5$/ 38%/,& '()(1'(5 &LQFLQQDWL 2KLR IRU
$SSHOODQW 7LPRWK\ ' 2DNOH\ $66,67$17 81,7('
7KH +RQRUDEOH sRVHSK 0 +RRG 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH
(DVWHUQ 'LVWULFW RI .HQWXFN\ VLWWLQJ E\ GHVLJQDWLRQ
8QLWHG6WDWHVY5HHG 1R
67$7(6 $77251(< &LQFLQQDWL 2KLR IRU $SSHOOHH
21%5,() 5LFKDUG:6PLWK0RQDKDQ2)),&(2)7+(
)('(5$/ 38%/,& '()(1'(5 &LQFLQQDWL 2KLR IRU
$SSHOODQW 7LPRWK\ ' 2DNOH\ $66,67$17 81,7('
67$7(6$77251(<&LQFLQQDWL2KLRIRU$SSHOOHH
+22''sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK
1255,6 s MRLQHG *,/0$1 s SS GHOLYHUHG D
VHSDUDWHGLVVHQWLQJRSLQLRQ
BBBBBBBBBBBBBBBBBBBBB
$0(1'('23,1,21
BBBBBBBBBBBBBBBBBBBBB
s26(3+ 0 +22' 'LVWULFW sXGJH 2Q 'HFHPEHU
0DUORQ5HHGHQWHUHGDFRQGLWLRQDOJXLOW\SOHDWRRQH
FRXQWRISRVVHVVLRQZLWKWKHLQWHQWWRGLVWULEXWHFUDFNFRFDLQH
SXUVXDQWWR86& D $VDUHVXOWRIKLVSOHDWKH
GLVWULFW FRXUW VHQWHQFHG 5HHG WR QLQHW\WZR PRQWKV
LQFDUFHUDWLRQZLWKDWKUHH\HDUSHULRGRIVXSHUYLVHGUHOHDVH
DQG D ILQH RI ZLWK D VSHFLDO DVVHVVPHQW RI
+DYLQJ UHVHUYHG KLV ULJKW WR DSSHDO WKH VHDUFK DQG VHL]XUH
LVVXHLQKLVFDVH5HHGILOHGDWLPHO\DSSHDORIWKHGLVWULFW
FRXUWjVGHFLVLRQWRGHQ\KLVPRWLRQWRVXSSUHVVWKHQLQHWHHQ
LQGLYLGXDOO\ZUDSSHGFUDFNFRFDLQHURFNVIRXQGLQD)ULWR/D\
EDJRQ5HHGjVSHUVRQ7KLVDSSHDOVSHFLILFDOO\FKDOOHQJHVWKH
GLVWULFW FRXUWjV ILQGLQJ WKDW SUREDEOH FDXVH IRU KLV DUUHVW
H[LVWHG
,)DFWXDO%DFNJURXQG
7KH HYHQWV OHDGLQJ XS WR 5HHGjV DUUHVW DUH DV IROORZV
2IILFHUVsRH\7KRPSVRQDQG5REHUW+RUWRQREVHUYHG5HHG
RQWKHVLGHZDONSUHPLVHVRIDKRXVLQJGHYHORSPHQWNQRZQDV
WKH %XWOHU 0HWURSROLWDQ +RXVLQJ $XWKRULW\ KHUHLQDIWHU
m%0+$l 7KH RIILFHUV NQHZ 5HHG E\ VLJKW IURP SULRU
FRQWDFWZLWKKLP2IILFHU7KRPSVRQKDGSHUVRQDOO\ZDUQHG
5HHGWRVWD\DZD\IURPWKH%0+$SURSHUW\RQDSUHYLRXV
RFFDVLRQ DV 5HHG ZDV QRW D UHVLGHQW RI WKH KRXVLQJ
GHYHORSPHQW6LQFH%0+$jVSUHPLVHVFRQWDLQHGWZHQW\VL[
1R 8QLWHG6WDWHVY5HHG
m1R7UHVSDVVLQJlVLJQVWKHRIILFHUVDSSURDFKHG5HHGIRUWKH
SXUSRVHRIDUUHVWLQJKLPIRUFULPLQDOWUHVSDVVSXUVXDQWWRD
+DPLOWRQ2KLRRUGLQDQFH
:KHQ5HHGDWWHPSWHGWRTXLFNO\ZDONDZD\WKHRIILFHUV
VXEGXHGKLP2IILFHU7KRPSVRQWKHQEHJDQDmSDWGRZQlRI
5HHGZKRVWDUWHGWRWXUQKLVERG\DZD\5HHGWKHQUHPRYHG
WKH)ULWR/D\EDJFRQWDLQLQJWKHFUDFNFRFDLQHDQGDWWHPSWHG
WR WRVV LW WRZDUG D IULHQG VWDQGLQJ QHDUE\ ZKLOH
VLPXOWDQHRXVO\ VWDWLQJ WKDW KH GLG QRW ZDQW WR JLYH XS KLV
mZHHGl $ IHPDOH SLFNHG XS WKH EDJ ZKHUHXSRQ 2IILFHU
7KRPSVRQLPPHGLDWHO\UHWULHYHGLWIURPKHU5HHGZDVWKHQ
WDNHQWRWKH+DPLOWRQ3ROLFH'HSDUWPHQWIRUERRNLQJ
3ULRU WR WULDO 5HHG ILOHG D PRWLRQ WR VXSSUHVV WKH FUDFN
FRFDLQH7KHGLVWULFWFRXUWGHWHUPLQHGWKDWSUREDEOHFDXVH
H[LVWHGLQ5HHGjVDUUHVWDQGGHQLHGVDLGPRWLRQRQWKHEDVLV
WKDWWKHHYLGHQFHZDVVXEVHTXHQWO\REWDLQHGE\WKHRIILFHUV
LQFLGHQWDO WR WKH DUUHVW ,Q KLV DSSHDO 5HHG DUJXHV WKDW
SUREDEOH FDXVH ZDV ODFNLQJ WKHUHE\ UHQGHULQJ KLV DUUHVW
XQODZIXO5HHGIXUWKHUDUJXHVWKDWDOOHYLGHQFHREWDLQHGDVD
UHVXOWRIWKLVXQODZIXODUUHVWVKRXOGKDYHEHHQVXSSUHVVHGE\
WKHGLVWULFWFRXUW
,,$QDO\VLV
m,Q UHYLHZLQJ D GLVWULFW FRXUWjV GHWHUPLQDWLRQV RQ
VXSSUHVVLRQTXHVWLRQVDGLVWULFWFRXUWjVIDFWXDOILQGLQJVDUH
DFFHSWHG XQOHVV WKH\ DUH FOHDUO\ HUURQHRXV KRZHYHU WKH
GLVWULFW FRXUWjV DSSOLFDWLRQ RI ODZ WR WKH IDFWV VXFK DV D
ILQGLQJ RI SUREDEOH FDXVH LV UHYLHZHG GH QRYRl 8QLWHG
6WDWHVY7KRPDV)G WK&LU
7KHWKUHVKROGIRUSUREDEOHFDXVHLVEDVHGXSRQmµIDFWXDO
DQG SUDFWLFDO FRQVLGHUDWLRQV RI HYHU\ GD\ OLIHj >WKDW@ FRXOG
OHDGDUHDVRQDEOHSHUVRQWREHOLHYHWKDWWKHUHLVDSUREDELOLW\
WKDWDQLOOHJDODFWKDVRFFXUUHGRULVDERXWWRRFFXUl8QLWHG
6WDWHVY6WULFNODQG)G WK&LU FLWLQJ
,OOLQRLVY*DWHV86 2IILFHUVDUHQRW
UHTXLUHGWRUXOHRXWHYHU\SRVVLEOHH[SODQDWLRQRWKHUWKDQD
VXVSHFWjV LOOHJDO FRQGXFW EHIRUH PDNLQJ DQ DUUHVW 6HH
8QLWHG6WDWHVY5HHG 1R 1R 8QLWHG6WDWHVY5HHG
6WULFNODQG)GDW+RZHYHUDQDUUHVWLQJRIILFHU SUREDEOHFDXVH&RQVHTXHQWO\WKHRIILFHUVKDGWKHULJKWWR
PXVW EH DEOH WR DUWLFXODWH mFRQFUHWH IDFWVl IURP ZKLFK WKH VWRS5HHGXQGHU7HUU\DQGDVNKLPZKHWKHUKHOLYHGRQWKH
mWRWDOLW\ RI WKH FLUFXPVWDQFHVl LQGLFDWHV WKDW DQ DUUHVW LV SURSHUW\RUZDVYLVLWLQJDUHVLGHQW%XWWKHRIILFHUVKDGQR
ZDUUDQWHG,GDW *DWHV86DW 7KHGHQLDO ULJKWWRLPPHGLDWHO\DUUHVWKLPIRUFULPLQDOWUHVSDVV
RI 5HHGjV VXSSUHVVLRQ PRWLRQ ZDV EDVHG RQ WKH GLVWULFW
FRXUWjV ILQGLQJ RI SUREDEOH FDXVH LQ 5HHGjV DUUHVW 5HHG , ZRXOG WKHUHIRUH VXSSUHVV WKH HYLGHQFH RI WKH FUDFN
DUJXHVWKDWSUREDEOHFDXVHIRUFULPLQDOWUHVSDVVZDVODFNLQJ FRFDLQHDQGUHYHUVHWKHMXGJPHQWRIWKHGLVWULFWFRXUW
XQGHU +DPLOWRQ FLW\ RUGLQDQFH 6DLG RUGLQDQFH
SURYLGHVLQSHUWLQHQWSDUW
D 1RSHUVRQZLWKRXWSULYLOHJHWRGRVRVKDOOGRDQ\RI
WKHIROORZLQJ
.QRZLQJO\HQWHURUUHPDLQRQWKHODQGRUSUHPLVHVRI
DQRWKHU
.QRZLQJO\HQWHURUUHPDLQRQWKHODQGRUSUHPLVHVRI
DQRWKHUWKHXVHRIZKLFKLVODZIXOO\UHVWULFWHGWRFHUWDLQ
SHUVRQVSXUSRVHVPRGHVRUKRXUVZKHQWKH RIIHQGHU
NQRZV KH LV LQ YLRODWLRQ RI DQ\ VXFK UHVWULFWLRQ RU LV
UHFNOHVVLQWKDWUHJDUG
5HFNOHVVO\HQWHURUUHPDLQRQWKHODQGRUSUHPLVHVRI
DQRWKHUDVWRZKLFKQRWLFHDJDLQVWXQDXWKRUL]HGDFFHVV
RU SUHVHQFH LV JLYHQ E\ DFWXDO FRPPXQLFDWLRQ WR WKH
RIIHQGHURULQDPDQQHUSUHVFULEHGE\ODZRUE\SRVWLQJ
LQ D PDQQHU UHDVRQDEO\ FDOFXODWHG WR FRPH WR WKH
DWWHQWLRQ RI SRWHQWLDO LQWUXGHUV RU E\ IHQFLQJ RU RWKHU
HQFORVXUHPDQLIHVWO\GHVLJQHGWRUHVWULFWDFFHVV
%HLQJRQWKHODQGRUSUHPLVHVRIDQRWKHUQHJOLJHQWO\
IDLORUUHIXVHWROHDYHXSRQEHLQJQRWLILHGWRGRVRE\WKH
RZQHURURFFXSDQWRUWKHDJHQWRUVHUYDQWRIHLWKHU
G :KRHYHUYLRODWHGWKLVVHFWLRQLVJXLOW\RIFULPLQDO
WUHVSDVVDPLVGHPHDQRURIWKHIRXUWKGHJUHH
7KHRIILFHUVEDVHGWKHLUILQGLQJRISUREDEOHFDXVHWRDUUHVW
5HHGIRUFULPLQDOWUHVSDVVRQWKHIROORZLQJIDFWRUV 5HHG
ZDV JLYHQ SULRU ZDUQLQJ QRW WR HQWHU %0+$ SURSHUW\ E\
2IILFHU 7KRPSVRQ 5HHG ZDV REVHUYHG RQ %0+$
SURSHUW\ 5HHGZDVQRWDUHVLGHQWRIWKH%0+$KRXVLQJ
SURMHFW WKHUH ZHUH WZHQW\VL[ m1R 7UHVSDVVLQJl VLJQV
SRVWHGWKURXJKRXWWKH%0+$SURSHUW\SURYLGLQJDGHTXDWH
8QLWHG6WDWHVY5HHG 1R 1R 8QLWHG6WDWHVY5HHG
0RUHRYHU , EHOLHYH WKDW P\ YLHZ LV FRQVLVWHQW ZLWK WKH QRWLFH 5HHGZDONHGDZD\XSRQWKHODZIXODSSURDFKRIWKH
VSLULWRIWKH6XSUHPH&RXUWjVUHFHQWXQDQLPRXVKROGLQJLQ RIILFHUV7KHVHIDFWRUVPXVWEHPHDVXUHGXSWRWKHWLPHDW
)ORULGDYs/BB86BB6&W ,Qs/ ZKLFK5HHGWKRXJKWKHZDVQRWUHDVRQDEO\mIUHHWROHDYHl
DQDQRQ\PRXVFDOOHUWHOHSKRQHGWKHSROLFHWRLQIRUPWKHP 8QLWHG6WDWHVY0HQGHQKDOO86 7KH
WKDWWKH\VKRXOGZDWFKIRUDEODFN\RXWKLQDSODLGVKLUWDWD IDFWRUVGRQRWKDYHWRHVWDEOLVKDSULPDIDFLHFDVHIRUFULPLQDO
SDUWLFXODU EXV VWRS EHFDXVH KH ZDV FDUU\LQJ D JXQ 6L[ WUHVSDVV KRZHYHUVDLGIDFWRUVPXVWEHVXIILFLHQWWRLQGLFDWH
PLQXWHV ODWHU RIILFHUV ZHQW WR WKDW SDUWLFXODU EXV VWRS DQG WR D UHDVRQDEOH SHUVRQ WKDW DQ LOOHJDOLW\ KDV RFFXUUHG RU LV
IRXQGD\RXWKPHHWLQJWKHFDOOHUjVGHVFULSWLRQ7KHRIILFHUV DERXWWRRFFXU6HH6WULFNODQG)GDW
VWRSSHG DQG IULVNHG WKH VXVSHFW XQFRYHULQJ D ILUHDUP ,Q
FRQFOXGLQJ WKDW WKH RIILFHUV GLG QRW KDYH D UHDVRQDEOH :KHUH SUREDEOH FDXVH H[LVWV m>D@ SROLFH RIILFHU LV
VXVSLFLRQWRVWRSWKH\RXWKDQGWKDWHYLGHQFHRIWKHILUHDUP SHUPLWWHG WR PDNH DQ DUUHVW ZLWKRXW D ZDUUDQW IRU D
VKRXOG EH VXSSUHVVHG WKH 6XSUHPH &RXUW FRPPHQWHG WKDW PLVGHPHDQRUFRPPLWWHGLQKLVSUHVHQFHl8QLWHG6WDWHVY
mWKH )RXUWK $PHQGPHQW LV QRW VR HDVLO\ VDWLVILHGl ,G DW 6PLWK)G WK&LU 7KH&RXUWILQGV
,IWKHRIILFHUVLQs/GLGQRWKDYHDUHDVRQDEOHEDVLVWR WKDW WKHVH ILYH IDFWRUV FRQVWLWXWH WKH OHYHO RI HYLGHQFH
FRQGXFW HYHQ D7HUU\ VWRS XQGHU WKH FLUFXPVWDQFHV RI WKDW QHFHVVDU\WRHVWDEOLVKSUREDEOHFDXVHIRU5HHGjVDUUHVW$OO
FDVHWKHQ,FDQQRWIDWKRPKRZWKHRIILFHUVLQWKHSUHVHQWFDVH ILYHIDFWRUVH[LVWHGGXULQJWKHWLPHLQZKLFK5HHGZDVIUHHWR
KDYHVDWLVILHGWKH)RXUWK$PHQGPHQWjVKLJKHUSUREDEOHFDXVH OHDYH $ UHDVRQDEOH RIILFHU LQ WKH SRVLWLRQ RI HLWKHU
VWDQGDUGLQDUUHVWLQJ5HHG 7KRPSVRQRU+RUWRQFRXOGFRQFOXGHIURPWKHWRWDOLW\RIWKH
FLUFXPVWDQFHVWKDWSUREDEOHFDXVHGH[LVWHGWRDUUHVW5HHGIRU
)LQDOO\,QRWHWKHJRYHUQPHQWjVDOWHUQDWLYHDUJXPHQWVWKDW FULPLQDOWUHVSDVV$OWKRXJK5HHGKDVVHWIRUWKQRFRQWUROOLQJ
WKHFUDFNFRFDLQHVKRXOGQRWEHVXSSUHVVHGHLWKHUEHFDXVH DXWKRULW\LQGLFDWLQJWKDWWKHRIILFHUVPXVWFRQFOXGHSULRUWR
LWZDVLQSODLQYLHZRU LWZDVDEDQGRQHGE\5HHG7KHVH WKHDUUHVWZKHWKHU5HHGHQMR\HGWKHSULYLOHJHRIHQWHULQJRU
DUJXPHQWVKDYHOLWWOHPHULW%DVHGRQP\YLHZWKDWWKHDUUHVW UHPDLQLQJ RQ %0+$ SURSHUW\ ZH DUH PLQGIXO RI WKH
RI 5HHG ZDV LOOHJDO DQG EHFDXVH WKH LOOHJDO DUUHVW FDXVHG GLVFXVVLRQGXULQJRUDODUJXPHQWWKDW:DVKLQJWRQY%ODLU
5HHGWRUHPRYHWKH)ULWR/D\EDJIURPKLVSRFNHWDQGWKURZ 3G :DVK&W$SS ILQGVSUREDEOHFDXVHWREH
LWWRZDUGDIULHQGVWDQGLQJQHDUE\WKHHYLGHQFHIURPWKHEDJ ODFNLQJ LQ FLUFXPVWDQFHV LQ ZKLFK DQ RIILFHU KDG QR
LV LQDGPLVVLEOH XQGHU WKH mIUXLWV RI WKH SRLVRQRXV WUHHl NQRZOHGJHRIWKHH[LVWHQFHRISULYLOHJHSULRUWRDQDUUHVWIRU
GRFWULQH 6HH :RQJ 6XQ Y 8QLWHG 6WDWHV 86 FULPLQDOWUHVSDVV+RZHYHUZHEHOLHYHWKH:DVKLQJWRQVWDWH
H[SODLQLQJWKHGRFWULQH 8QLWHG6WDWHVY6LPSVRQ FRXUW GHFLVLRQ ZDV EDVHG XSRQ D UHTXLUHPHQW QHJDWLQJ WKH
) 6XSS 6' ,QG KROGLQJ WKDW LI DIILUPDWLYHGHIHQVHRISULYLOHJHSULRUWRDUUHVWLQJDSHUVRQIRU
WKHUHLVDFDXVDOQH[XVEHWZHHQWKHSROLFHjVPLVFRQGXFWDQG
WKHmDEDQGRQPHQWlWKHQWKHHYLGHQFHPXVWEHVXSSUHVVHG
8QLWHG6WDWHVY)RVWHU)6XSS ''&
m>$@Q DEDQGRQPHQW WKDW LV WKH SURGXFW RI SROLFH
$FFRUGLQJ WR WKH GLVVHQW mWKH IDFW WKDW 5HHG VWDUWHG WR ZDON DZD\
PLVFRQGXFWLVQRWYROXQWDU\DQGFDQQRWWKHUHIRUHYLWLDWHWKH ZKHQ WKH RIILFHUV DSSURDFKHG PD\ UDLVH D VXVSLFLRQ WKDW KH ZDV HQJDJHG
WDLQWRIDQLOOHJDOGHWHQWLRQl LQ DQ\ RQH RI D PXOWLWXGH RI LPSURSHU DFWLYLWLHVl :KLOH WKDW PD\ EH WKH
RIILFHUV ZHUH HQWLWOHG WR LQIHU WKDW KH ZDV ZDONLQJ DZD\ EHFDXVH KH NQHZ
KH ZDV QRW SULYLOHJHG WR EH WKHUH 7KH\ ZHUH QRW UHTXLUHG WR HOLPLQDWH DOO
,QVXPPDU\WKHFLUFXPVWDQFHVSUHVHQWHGE\WKLVFDVHJDYH RWKHU UHDVRQDEOH LQIHUHQFHV 6HH 6WULFNODQG )G WK &LU
WKH RIILFHUV QRWKLQJ PRUH WKDQ D UHDVRQDEOH VXVSLFLRQ WR VWDWLQJ m>W@R ILQG SUREDEOH FDXVH WKH ODZ GRHV QRW UHTXLUH WKDW ZH
EHOLHYH WKDW 5HHG ZDV WUHVSDVVLQJ 7KLV LV IDU VKRUW RI UXOH RXW HYHU\ FRQFHLYDEOH H[SODQDWLRQ RWKHU WKDQ D VXVSHFWjV LOOHJDO
FRQGXFWl
8QLWHG6WDWHVY5HHG 1R 1R 8QLWHG6WDWHVY5HHG
WUHVSDVV7KLV&LUFXLWGRHVQRWUHTXLUHVXFKDQDGGHGLQTXLU\ 4 $OOULJKW6R\RXKDGDSSURDFKHGDORQJZLWK2IILFHU
WRWKHSUREDEOHFDXVHGHWHUPLQDWLRQ 7KRPSVRQWRSDWGRZQVRPHLQGLYLGXDOVWKDW\RX
VDZVWDQGLQJRQ%0+$SURSHUW\ LVWKDWFRUUHFW"
,WLVDUJXHGWKDWWKH6XSUHPH&RXUWjVGHFLVLRQRI)ORULGDY $ ,JUDEEHGP\SDUW\WRSDWKLPGRZQ
s/BB86BB6&W ZKLFKKHOGWKDWDQ
DQRQ\PRXVWLSZLWKRXWPRUHLVLQVXIILFLHQWWRMXVWLI\DVWRS 4 $QG QRZ KRZ PDQ\ SHRSOH DOWRJHWKHU ZHUH WKHUH
DQGIULVNE\DQRIILFHUZDUUDQWVUHYHUVDORIWKHGLVWULFWFRXUWjV ZKHQ\RXDSSURDFKHGWKDWVFHQH"
GHQLDORIWKHPRWLRQWRVXSSUHVV:HGLVDJUHH $ ,QLWLDOO\ WKHUH ZHUH DSSUR[LPDWHO\ IRXU , EHOLHYH
IRXURWKHUSDUWLHV
7KHRIILFHUVjGHFLVLRQWRVWRSWKHGHIHQGDQWLQs/DQGIULVN 4 $QGZKHQ\RXDSSURDFKHGWKDWVFHQHZDVLW\RXU
KLPIRUDFRQFHDOHGZHDSRQZDVEDVHGmVROHO\RQDFDOOPDGH LQWHQWLRQWRVHDUFKDOOIRXURIWKRVHSHRSOH"
IURP DQ XQNQRZQ ORFDWLRQ E\ DQ XQNQRZQ FDOOHUl ,G DW $ :H ZHUH JRLQJ WR SLFN XS 0U 5HHG IRU VXUH ,
+RZHYHU WKH GHFLVLRQ E\ 2IILFHUV 7KRPSVRQ DQG FRXOGQRWVWDWHZKDWZHZHUHJRLQJWRGRZLWKWKH
+RUWRQ WR VWRS 5HHGIRUWUHVSDVVLQJZDVEDVHGRQWKHILYH RWKHUV 7KH\ VWDUWHG WR ZDON DZD\ DV ZH
IDFWRUV LGHQWLILHG DERYH 7KHVH ILYH IDFWRUV XQOLNH DQ DSSURDFKHG
DQRQ\PRXVWLSODFNLQJDQ\LQGLFLDRIUHOLDELOLW\SURYLGHGWKH 4 6RLIWKH\KDGQjWZDONHGDZD\\RXZRXOGKDYHZHQW
RIILFHUVZLWKSUREDEOHFDXVHWRVWRSDQGSDWGRZQ5HHG)RU DKHDGDQGGRQHDSDWGRZQRQWKRVHSHRSOHDOVR LV
WKHVHUHDVRQV)ORULGDYs/LVGLVWLQJXLVKDEOHIURPWKHIDFWV WKDWULJKW"
RIWKHFDVHVXEMXGLFH $ 3UREDEO\DIWHUZHJRW0U5HHGLQWRFXVWRG\\HV
4 $QG WKDWjV HYHQ WKRXJK \RX KDG QR LGHD ZKHWKHU
,,,&RQFOXVLRQ WKRVHRWKHUWZRSHRSOHZHUHDFWXDOO\WUHVSDVVLQJRU
QRW LVWKDWULJKW"
7KHUHLVQRLQGLFDWLRQWKDWWKHGLVWULFWFRXUWjVILQGLQJVRI
IDFW DUH HUURQHRXV $ UHYLHZ RI WKH ODZ DSSOLHG WR VDLG $ ,GLGQjWJHWWRVHHZKRWKH\ZHUHVR,jPQRWVXUH
ILQGLQJVRIIDFWOHDGVWRDGHWHUPLQDWLRQWKDWWKHGLVWULFWFRXUW 4 6R\RXKDGQRLGHDZKHWKHUWKH\ZRXOGKDYHEHHQ
GLGQRWHUULQUHIXVLQJWRVXSSUHVVWKHFUDFNFRFDLQHSRVVHVVHG WUHVSDVVLQJRUQRWLVWKDWULJKWo
E\ 5HHG RQ WKH QLJKW RI KLV DUUHVW 6DLG HYLGHQFH ZDV $ 7KHWZRSHRSOH
VXEVHTXHQWO\ REWDLQHG E\ 2IILFHUV 7KRPSVRQ DQG +RUWRQ 4 oEHFDXVHWKH\FRXOGKDYHEHHQUHVLGHQWV"
LQFLGHQWDO WR 5HHGjV DUUHVW $FFRUGLQJO\ ZH $)),50 $ 7KDWjVIDLUWRVD\
5HHGjVFRQYLFWLRQDQGVHQWHQFH
7KH DERYH WHVWLPRQ\ IURP WKH DUUHVWLQJ RIILFHUV FOHDUO\
GHPRQVWUDWHVWKDWWKH\WKRXJKWLWLUUHOHYDQWZKHWKHURUQRW
5HHGZDVSULYLOHJHGWREHRQWKHSURSHUW\,QRWKHUZRUGV
WKHRIILFHUVDGPLWWKDWDWWKHWLPHRIWKHDUUHVWWKH\GLGQRW
NQRZ ZKHWKHU 5HHG KDG UHFHQWO\ PRYHG LQWR WKH %0+$
SURSHUW\RUKDGEHHQLQYLWHGWKHUHE\RWKHUV7KH\GHFLGHGWR
DUUHVWKLPIRUFULPLQDOWUHVSDVVDVVRRQDVWKH\VSRWWHGKLP
QRTXHVWLRQVDVNHG8QGHUWKHVHFLUFXPVWDQFHVWKHZLVGRP
RI %ODLU sRQHV DQG sDVRQ $OOHQ ' FULHV RXW IRU D UHVXOW
FRQWUDU\WRWKDWUHDFKHGE\WKHPDMRULW\
8QLWHG6WDWHVY5HHG 1R 1R 8QLWHG6WDWHVY5HHG
DGPLWWHGWKDWHYHQEHIRUHWKH\VDZ5HHGVWDUWWRZDONDZD\ BBBBBBBBBBBBBBBBB
WKH\KDGDOUHDG\GHFLGHGWRDUUHVWKLPIRUFULPLQDOWUHVSDVV
',66(17
(YHQLIDOOILYHIDFWRUVDUHFRQVLGHUHGFROOHFWLYHO\WKH\DW BBBBBBBBBBBBBBBBB
PRVWJDYHWKHRIILFHUVDUHDVRQDEOHVXVSLFLRQWKDW5HHGKDG
QR OHJLWLPDWH SXUSRVH IRU EHLQJ WKHUH 7KLV ZRXOG KDYH 521$/' /(( *,/0$1 &LUFXLW sXGJH GLVVHQWLQJ ,Q
MXVWLILHGVWRSSLQJ5HHGWRLQTXLUHDVWRZKHWKHUKHOLYHGRQ DIILUPLQJ WKH GLVWULFW FRXUWjV GHQLDO RI 5HHGjV PRWLRQ WR
%0+$jVSURSHUW\RUZDVWKHUHE\LQYLWDWLRQ6HH7HUU\Y VXSSUHVVWKHPDMRULW\KROGVWKDWKHZDVOHJDOO\DUUHVWHGIRU
2KLR 86 :DVKLQJWRQY%ODLU3G FULPLQDO WUHVSDVV HYHQ WKRXJK WKH SROLFH IDLOHG WR ILUVW
:DVK&W$SS 7KHRIILFHUVKRZHYHUPDGHQR DVFHUWDLQZKHWKHU5HHGKDGDOHJLWLPDWHUHDVRQIRUEHLQJRQ
VXFKLQTXLU\ WKHSURSHUW\,UHVSHFWIXOO\GLVVHQWEHFDXVHLQP\YLHZWKH
SROLFHRIILFHUVDUUHVWHG5HHGZLWKRXWKDYLQJSUREDEOHFDXVH
$W WKH VXSSUHVVLRQ KHDULQJ 2IILFHU 7KRPSVRQ JDYH WKH WRGRVR
IROORZLQJUHVSRQVHWRWKHJRYHUQPHQWjVTXHVWLRQ
$OWKRXJKQRWFLWHGE\5HHG,KDYHIRXQGWKUHHFDVHVZLWK
4 $QGGR\RXKDYHLQIRUPDWLRQDVWRZKHWKHURUQRW IDFWVYHU\VLPLODUWRWKRVHEHIRUHXVWKDWDGGUHVVWKHLVVXHRI
0U 5HHG KDG SHUPLVVLRQ IURP WKH +RXVLQJ SUREDEOHFDXVHLQUHODWLRQWRFULPLQDOWUHVSDVV,QHDFKFDVH
$XWKRULW\WREHRQWKDWSURSHUW\" WKHFRXUWFRQFOXGHGWKDWWKHRIILFHUVPXVWKDYHSUREDEOHFDXVH
$ 1R,GLGQRW WR EHOLHYH WKDW WKH GHIHQGDQW ZDV RQ WKH SURSHUW\ ZLWKRXW
SULYLOHJHEHIRUHPDNLQJDQDUUHVW
7KRPSVRQ DOVR PDGH WKH IROORZLQJ VWDWHPHQWV RQ FURVV
H[DPLQDWLRQ 7KH HDUOLHVW FDVH LV :DVKLQJWRQ Y %ODLU 3G
:DVK&W$SS )DFHGZLWKDQDOPRVWLGHQWLFDOIDFW
4 'LG \RX ILQG RXW GXULQJ WKH FRXUVH RI \RXU SDWWHUQWKH:DVKLQJWRQ&RXUWRI$SSHDOVKHOGDVIROORZV
LQYHVWLJDWLRQWKRXJKWKDWKHGLGKDYHDJLUOIULHQG
WKHUHZKRKDGoKHKDGDFKLOGE\" 2IILFHU:LOOLDPVVLPSO\GURYHXSWR%ODLUDQGRUGHUHG
$ ,GRQjWUHFDOO,PHDQ,GRQjWUHPHPEHUKLPVD\LQJ KLPLQWRWKHSROLFHFUXLVHUZKHUHKHDUUHVWHGKLP+DG
WKDW EXW LWjV SRVVLEOH EXW LW ZRXOG KDYH EHHQ 2IILFHU:LOOLDPVWDNHQDPRPHQWWRDVN%ODLUZKHUHKH
LUUHOHYDQW ZDV JRLQJ DQG IRU ZKDW SXUSRVH KH FRXOG KDYH
4 ,jPVRUU\" GHWHUPLQHGZKHWKHU%ODLUZDVLQIDFWYLVLWLQJDIULHQGRU
$ ,WZRXOGKDYHEHHQLUUHOHYDQWZKHWKHUKHZDVoKDG ZDVWUHVSDVVLQJ%HFDXVHKHNQHZ%ODLUGLGQRWOLYHLQ
DJLUOIULHQGRQWKHSURSHUW\ 5R[EXU\9LOODJHKDGDGPRQLVKHG%ODLUQRWWRUHWXUQDQG
4 1RZ\RXZRXOGKDYHVWRSSHGKLPDQ\ZD\ LVWKDW KDGDUUHVWHGKLPQHDUE\IRUDGUXJWUDQVDFWLRQ2IILFHU
ULJKW" :LOOLDPVKDGDQDUWLFXODEOHVXVSLFLRQWKDW%ODLUPLJKWEH
$ 7KDWjVFRUUHFW+HZDVQjWZLWKKHUDWWKHWLPH WUHVSDVVLQJRQ6HSWHPEHU%DVHGRQWKLVLQIRUPDWLRQ
2IILFHU:LOOLDPVFRXOGSURSHUO\VWRS%ODLUDVNKLPZK\
,QDGGLWLRQ2IILFHU+RUWRQWHVWLILHGDVIROORZVLQUHVSRQVH KH ZDV RQ WKH SUHPLVHV DQG LQYHVWLJDWH WR VHH LI KLV
WRTXHVWLRQVIURPWKHJRYHUQPHQWjVDWWRUQH\ SXUSRVHIRUEHLQJWKHUHZDVLQIDFWOHJLWLPDWH+RZHYHU
WKHIDFWWKDWWKHRIILFHUKDGWROG%ODLUQRWWRUHWXUQWRWKH
SUHPLVHV GRHV QRW LQ LWVHOI FUHDWH SUREDEOH FDXVH IRU
DUUHVWLQJKLPRQWKHFKDUJHRIFULPLQDOWUHVSDVV
8QLWHG6WDWHVY5HHG 1R 1R 8QLWHG6WDWHVY5HHG
,GDW FLWDWLRQRPLWWHG )LUVWRIDOOWKHIDFWWKDWRQRQHSULRURFFDVLRQ5HHGKDG
EHHQRUGHUHGRIIRI%0+$jVSURSHUW\E\2IILFHU7KRPSVRQ
7KHPDMRULW\DWWHPSWVWRGLVWLQJXLVK%ODLURQWKHIROORZLQJ LQGLFDWHVDWPRVWWKDW5HHGPD\QRWKDYHEHHQRQWKHSURSHUW\
EDVLV E\LQYLWDWLRQRQWKDWSDUWLFXODURFFDVLRQ2QWKHRWKHUKDQG
EHFDXVH 2IILFHU 7KRPSVRQ FRXOG QRW UHFDOO ZKHWKHU KLV
%ODLU ILQGV SUREDEOH FDXVH WR EH ODFNLQJ LQ SUHYLRXVHQFRXQWHUZLWK5HHGZDVZHHNVRUPRQWKVHDUOLHU
FLUFXPVWDQFHVLQZKLFKDQRIILFHUKDVQRNQRZOHGJHRI 5HHGFRXOGKDYHEHFDPHDUHVLGHQWLQWKHLQWHULP0RUHRYHU
WKHH[LVWHQFHRISULYLOHJHSULRUWRDQDUUHVWIRUFULPLQDO 7KRPSVRQjVSDVWHQFRXQWHUZLWK5HHGSURYLGHVQRDQVZHUWR
WUHVSDVV +RZHYHU ZH EHOLHYH WKH :DVKLQJWRQ VWDWH WKHTXHVWLRQRIZKHWKHU5HHGKDGEHHQLQYLWHGRQWR%0+$jV
FRXUWGHFLVLRQZDVEDVHGXSRQDUHTXLUHPHQWQHJDWLQJ SURSHUW\RQWKHGD\KHZDVDUUHVWHG
WKHDIILUPDWLYHGHIHQVHRISULYLOHJHSULRUWRDUUHVWLQJD
SHUVRQIRUWUHVSDVV7KLV&LUFXLWGRHVQRWUHTXLUHVXFKDQ 6HFRQGWKHPDMRULW\FLWHVWKHXQFRQWHVWHGIDFWWKDW5HHG
DGGHGLQTXLU\WRWKHSUREDEOHFDXVHGHWHUPLQDWLRQ ZDVRQ%0+$jVSURSHUW\7KLVKRZHYHUKDVQREHDULQJRQ
WKHLVVXHRIZKHWKHUWKHRIILFHUVKDGSUREDEOHFDXVHWREHOLHYH
, GR QRW EHOLHYH KRZHYHU WKDW %ODLU FDQ EH VR HDVLO\ WKDW5HHGZDVRQWKHSURSHUW\ZLWKRXWSULYLOHJH7KHFDVH
GLVWLQJXLVKHG7KHRUGLQDQFHLQ%ODLUPDGHLWLOOHJDOIRUD ZRXOGEHGLIIHUHQWLIWKHDSDUWPHQWPDQDJHUKDGFRPSODLQHG
SHUVRQZKRLVQRWOLFHQVHGLQYLWHGRURWKHUZLVHSULYLOHJHGWR DERXW 5HHG RU KDG UHTXHVWHG WKH RIILFHUV WR UHPRYH KLP
HQWHURUUHPDLQRQSULYDWHSURSHUW\6HH%ODLU3GDW EHFDXVHWKHQWKHRIILFHUVZRXOGKDYHKDGSUREDEOHFDXVHWR
'HFLGLQJ LI 2IILFHU :LOOLDPV KDG SUREDEOH FDXVH WR EHOLHYHWKDWKHZDVQRWSULYLOHJHGWREHWKHUH
EHOLHYHWKDW%ODLUZDVFRPPLWWLQJDFULPHWKXVGHSHQGHGmRQ
ZKHWKHUWKHFLUFXPVWDQFHVNQRZQWRWKHRIILFHULQGLFDWHGWKDW 7KLUGWKHUHLVQRLQGLFDWLRQLQWKHUHFRUGWKDWDWWKHWLPHRI
%ODLUZDVQRWRQWKHSURSHUW\IRUOHJLWLPDWHSXUSRVHVl,GDW 5HHGjVDUUHVWWKHRIILFHUVNQHZWKDW5HHGZDVQRWDUHVLGHQW
,QIDFWWKHGLVWULFWFRXUWGLGQRWHYHQPDNHVXFKDILQGLQJ
7KHWHVWLPRQ\DWWKHVXSSUHVVLRQKHDULQJLQGLFDWHVWKDWWKH
$OWKRXJKWKH6WDWHRI:DVKLQJWRQSURYLGHVDQDIILUPDWLYH EDVLVIRU2IILFHUV7KRPSVRQDQG+RUWRQEHOLHYLQJWKDW5HHG
GHIHQVHWRFULPLQDOWUHVSDVVLIm>W@KHDFWRUUHDVRQDEO\EHOLHYHG ZDV QRW D UHVLGHQW RI WKH %0+$ SURSHUW\ ZDV VROHO\
WKDWWKHRZQHURIWKHSUHPLVHVZRXOGKDYHOLFHQVHGKLP 7KRPSVRQjV SDVW HQFRXQWHU ZLWK 5HHG , WKXV ILQG WKH
RUKHUWRHQWHURUUHPDLQlVHH%ODLU3GDW WKDWZDV PDMRULW\jVUHOLDQFHRQWKLVIDFWRUWREHPLVSODFHG
QRWWKHIRFXVRIWKH%ODLUFRXUWjVLQTXLU\,QVWHDGWKHFRXUW
IRFXVHGRQWKHRIILFHUjVUHDVRQDEOHEHOLHIVQRWWKHDFWRUjV )RXUWK WKH IDFW WKDW WKHUH ZHUH WZHQW\VL[ m1R
&RQWUDU\WRWKH PDMRULW\jVDQDO\VLVWKH%ODLUFRXUWGLGQRW 7UHVSDVVLQJlVLJQVSRVWHGRQ%0+$jVSURSHUW\LVVLPLODUO\
UHTXLUHWKHVWDWHWRQHJDWHDQDIILUPDWLYHGHIHQVH:KDWLWGLG LUUHOHYDQW DV WR ZKHWKHU WKH RIILFHUV KDG SUREDEOH FDXVH WR
UHTXLUHZDVDVKRZLQJWKDWWKHRIILFHUKDGSUREDEOHFDXVHWR EHOLHYH WKDW 5HHG ZDV QRW D UHVLGHQW RU GLG QRW KDYH DQ
EHOLHYH WKDW WKH GHIHQGDQW ZDV RQ WKH SURSHUW\ ZLWKRXW D LQYLWDWLRQWREHRQWKHSURSHUW\7KHJRYHUQPHQWFRQFHGHG
OHJLWLPDWHSXUSRVHDWWKHWLPHRIKLVDUUHVW WKLVSRLQWDWRUDODUJXPHQW
7KHQH[WFDVHZLWKIDFWVYHU\VLPLODUWRWKRVHEHIRUHXVLV )LIWK WKH IDFW WKDW 5HHG VWDUWHG WR ZDON DZD\ ZKHQ WKH
sRQHVY&RPPRQZHDOWK6(G 9D&W$SS RIILFHUV DSSURDFKHG PD\ UDLVH D VXVSLFLRQ WKDW KH ZDV
,QsRQHVDQRZQHURIDQDSDUWPHQWFRPSOH[ZKRKDGSRVWHG HQJDJHGLQDQ\RQHRIDPXOWLWXGHRILPSURSHUDFWLYLWLHVEXW
m1R 7UHVSDVVLQJl VLJQV FRPSODLQHG WR WKH &LW\ RI LV QRW SDUWLFXODUO\ SUREDWLYH DV WR ZKHWKHU 5HHG ZDV
5LFKPRQGjVSROLFHGHSDUWPHQWWKDWKHZDVKDYLQJSUREOHPV SULYLOHJHGWREHRQWKHSURSHUW\,QDQ\HYHQWERWKRIILFHUV
8QLWHG6WDWHVY5HHG 1R 1R 8QLWHG6WDWHVY5HHG
WKHRYHUZKHOPLQJHYLGHQFHLQ6WULFNODQGWKHGHWHFWLYHVKDG ZLWK WUHVSDVVHUV DQG GUXJ GHDOHUV LQ WKH SDUNLQJ DUHD +H
SUREDEOHFDXVHWREHOLHYHWKDW6WULFNODQGKDGHQJDJHGLQD DVNHGIRUSROLFHDVVLVWDQFH6KRUWO\WKHUHDIWHUDPDQQDPHG
GUXJWUDQVDFWLRQ%HFDXVHRIWKDWWKH\GLGQRWQHHGWRGLVSHO sRQHV ZDV VHHQ mKDQJLQJ RXWl LQ WKH SDUNLQJ ORW DQG ZDV
DOOLQQRFHQWH[SODQDWLRQVIRUWKHPHHWLQJEHWZHHQ6WULFNODQG DUUHVWHGE\WKH5LFKPRQGSROLFHIRUFULPLQDOWUHVSDVV7KH
DQG+DJJDUGEHIRUHDUUHVWLQJ6WULFNODQG7KHRIILFHUVLQWKH VHDUFKLQFLGHQWWRWKHDUUHVWXQFRYHUHGKHURLQ,QRUGHULQJWKH
FDVH DW KDQG KRZHYHU QHYHU KDG SUREDEOH FDXVH WR DUUHVW KHURLQ VXSSUHVVHG WKH 9LUJLQLD &RXUW RI $SSHDOV KHOG DV
5HHGIRUFULPLQDOWUHVSDVVLQWKHILUVWSODFH IROORZV
7RH[SODLQWKHGLIIHUHQFHDQRWKHUZD\OHWXVDVVXPHWKDW sRQHVjVPHUHSUHVHQFHZLWKDQRWKHUPDQRQWKHSUHPLVHV
%0+$jVDSDUWPHQWPDQDJHUKDGLQIRUPHGWKHRIILFHUVWKDW DW IRXU RjFORFN LQ WKH DIWHUQRRQ QHDU DQ DXWRPRELOH
5HHG ZDV WUHVSDVVLQJ 7KH RIILFHUV ZRXOG WKHQ KDYH KDG SDUNHG RQ D VWUHHW E\ DQ DSDUWPHQW FRPSOH[ ZDV
SUREDEOHFDXVHWRDUUHVW5HHGIRUFULPLQDOWUHVSDVV,IDIWHU LQVXIILFLHQW WR HVWDEOLVK SUREDEOH FDXVH WR EHOLHYH WKDW
DUUHVW 5HHG KDG DUJXHG WKDW WKH RIILFHUV ODFNHG SUREDEOH sRQHVZDVQHLWKHUDUHVLGHQWRIWKHDSDUWPHQWFRPSOH[
FDXVHWRDUUHVWEHFDXVHWKH\IDLOHGWRLQTXLUHDVWRZKHWKHUKH QRUOHJLWLPDWHO\XSRQWKHSUHPLVHVDWWKHLQYLWDWLRQRID
ZDVLQYLWHGRQWRWKHSURSHUW\E\DWHQDQWKLVDUJXPHQWZRXOG UHVLGHQW7KHRIILFHUjVREVHUYDWLRQSHUPLWWHGRQO\DEDUH
IDLO$WWKDWSRLQWOLNHLQ6WULFNODQGWKHRIILFHUVZRXOGKDYH VXVSLFLRQ,QGHHGWKHRIILFHUjVDVVHUWLRQWKDWsRQHVDQG
KDGSUREDEOHFDXVHWRDUUHVWDQGZRXOGQRWKDYHKDGWRGLVSHO WKHRWKHUPDQZHUHmKDQJLQJRXWlGLGQRWDGGVXIILFLHQW
HYHU\LQQRFHQWH[SODQDWLRQ7KRVHKRZHYHUDUHQRWWKHIDFWV LQIRUPDWLRQ WR UDLVH KLV VXVSLFLRQ RI WUHVSDVVLQJ WR
RIWKHSUHVHQWFDVH SUREDEOHFDXVH
7KHWUHVSDVVRUGLQDQFHLQWKHFDVHEHIRUHXVOLNHWKHRQHV ,GDW
LQ %ODLU sRQHV DQG ,Q UH sDVRQ $OOHQ ' SURYLGHV WKDW D
SHUVRQPXVWHQWHURUUHPDLQRQDQRWKHUjVSURSHUW\ZLWKRXW )LQDOO\ LQ D FDVH ZKHUH WKH IDFWV ZHUH PXFK PRUH
SULYLOHJH6HH2KLRY&OHOODQG1(G 2KLR FRPSHOOLQJIRUWKHVWDWHWKDQWKHRQHVDWEDUWKH0DU\ODQG
&W$SS m7KHFRQFHSWRISULYLOHJHKDVEHHQEURDGO\ &RXUW RI 6SHFLDO $SSHDOV UHYHUVHG WKH DSSHOODQWjV WUHVSDVV
FRQVWUXHGDQGWKHVWDWHKDVEHHQUHTXLUHGWRSURYHODFNRI FRQYLFWLRQKROGLQJDVIROORZV
SULYLOHJHl 7KHPDMRULW\FRQFOXGHVWKDWWKHIROORZLQJIDFWV
HVWDEOLVK SUREDEOH FDXVH IRU 5HHGjV DUUHVW IRU FULPLQDO 2IILFHU&XVWHDGjVPHUHREVHUYDWLRQRIsDVRQmKDQJLQJ
WUHVSDVV 5HHGKDGEHHQJLYHQ D SULRUZDUQLQJQRWWR RXWlRQWKHVLGHZDONDWWKHKRXVLQJSURMHFWWZRKRXUV
HQWHUWKH%0+$SURSHUW\E\2IILFHU7KRPSVRQ 5HHGZDV DIWHUDQHDUOLHUDQGDUJXDEO\LQYDOLGDUUHVWIRUWUHVSDVVLQJ
REVHUYHGRQWKH%0+$SURSHUW\ 5HHGZDVQRWDUHVLGHQW ZDVLQVXIILFLHQWWRHVWDEOLVKSUREDEOHFDXVHWKDWsDVRQ
RIWKH%0+$KRXVLQJSURMHFW WKHUHZHUHWZHQW\VL[m1R ZDV D FULPLQDO WUHVSDVVHU :H UHLWHUDWH WKDW LQ
7UHVSDVVLQJlVLJQVSRVWHGWKURXJKRXWWKH%0+$SURSHUW\ HYDOXDWLQJ SUREDEOH FDXVH ZH PXVW UHODWH ZKDW WKH
DQG 5HHGZDONHGDZD\ZKHQWKHRIILFHUVDSSURDFKHG)RU RIILFHUNQHZDERXWWKHFLUFXPVWDQFHVRIWKHDUUHVWWRWKH
WKHUHDVRQVVHWIRUWKEHORZ,GRQRWEHOLHYHWKDWDQ\RIWKH HOHPHQWV RI WKH RIIHQVH WKDW WKH RIILFHU EHOLHYHG ZDV
ILYHIDFWRUVWKDWWKHPDMRULW\UHOLHVXSRQMXVWLI\WKHFRQFOXVLRQ EHLQJ RU KDG EHHQ FRPPLWWHG +HUH DSSHOODQW ZDV
WKDWWKHRIILFHUVKDGSUREDEOHFDXVHWREHOLHYHWKDW5HHGZDV DUUHVWHGIRUWUHVSDVVLQJQRWIRUORLWHULQJ7KXVWKHIDFW
RQ %0+$jV SURSHUW\ ZLWKRXW SULYLOHJH DW WKH WLPH RI KLV WKDW DSSHOODQW ZDV mKDQJLQJ RXWl RQ WKH SURSHUW\
DUUHVW SURYLGHV YHU\ OLWWOH JXLGDQFH DV WR ZKHWKHU 2IILFHU
&XVWHDGKDGSUREDEOHFDXVHWREHOLHYHDSSHOODQWZDVD
WUHVSDVVHU)RUWKHSXUSRVHRIDQDO\]LQJSUREDEOH
8QLWHG6WDWHVY5HHG 1R 1R 8QLWHG6WDWHVY5HHG
FDXVHZHUHYLHZZKDW2IILFHU&XVWHDGNQHZZKHQKH KDQG WKH PDMRULW\ FLWHV DQG UHOLHV KHDYLO\ XSRQ JHQHUDO
VRXJKWWRDUUHVWsDVRQIRUWUHVSDVVLQJ sDVRQZDVRQ ODQJXDJHIURP8QLWHG6WDWHVY6WULFNODQG)G WK
6DJQHUSURSHUW\ sDVRQZDVQRWDUHVLGHQW sDVRQ &LU ,Q 6WULFNODQG WKH SROLFH XVHG D PDQ QDPHG
KDGUHFHLYHGDQRWUHVSDVVLQJQRWLFH sDVRQKDGEHHQ +DJJDUGDQLQGLFWHG GUXJRIIHQGHUZKRZDVZRUNLQJDVD
DUUHVWHG OHVV WKDQ WZR KRXUV HDUOLHU IRU WUHVSDVVLQJ DW SROLFHLQIRUPDQWWRVHWXSDGUXJWUDQVDFWLRQZLWKDVXVSHFWHG
6DJQHUDOWKRXJKsDVRQZDVQRWRQ6DJQHUSURSHUW\ZKHQ GHDOHUQDPHG6WULFNODQG+DJJDUGWHOHSKRQHG6WULFNODQGLQ
WKH ILUVW DUUHVW RFFXUUHG <HW 2IILFHU &XVWHDGjV RZQ WKH SUHVHQFH RI SROLFH GHWHFWLYHV 7KH GHWHFWLYHV KHDUG
NQRZOHGJHDERXWWKHTXHVWLRQDEOHYDOLGLW\RIWKHHDUOLHU +DJJDUGDJUHHWRDPHHWLQJZLWK6WULFNODQGDW SPWKDW
DUUHVWGLIIXVHVWKHLPSRUWRIsDVRQjVODWHUUHDSSHDUDQFHRQ HYHQLQJ DW D FRQYHQLHQFH VWRUH FDOOHG WKH &RUQHU 0DUNHW
WKHSURSHUW\)XUWKHUDOWKRXJKWKHRIILFHUVDZDSSHOODQW 8SRQILQLVKLQJKLVFDOOZLWK6WULFNODQG+DJJDUGLQIRUPHGWKH
ZLWK D JURXS RI SHRSOH KH FRQFHGHG WKDW KH KDG QR GHWHFWLYHV WKDW KH KDG DUUDQJHG WR SXUFKDVH FRFDLQH IURP
LQIRUPDWLRQ DERXW sDVRQjV UHODWLRQVKLS WR WKH SHUVRQV 6WULFNODQGIRU+DJJDUGDOVRH[SODLQHGWKDWKHDQG
ZKRZHUHZLWKKLPQRNQRZOHGJHDVWRZKHWKHUDQ\RI 6WULFNODQGKDGDFRXUVHRI GHDOLQJZKHUHWKH\ZRXOGPHHW
WKH SHUVRQV ZLWK sDVRQ UHVLGHG DW 6DJQHU QRU GLG WKH LQVLGH DQ DXWRPRELOH WDON IRU D IHZ PRPHQWV DQG WKHQ
RIILFHU LQTXLUH RI sDVRQ RU WKH RWKHUV DERXW sDVRQjV H[FKDQJHPRQH\IRUGUXJV2QHRIWKHGHWHFWLYHVWKHQJDYH
SUHVHQFH DW 6DJQHU $V LQ %ODLU DQG sRQHV 2IILFHU +DJJDUG LQ PDUNHG ELOOV 6KRUWO\ WKHUHDIWHU WKH
&XVWHDG LJQRUHG WKH SRVVLELOLW\ WKDW DSSHOODQW ZDV DW GHWHFWLYHVZKRKDGWKH&RUQHU0DUNHWXQGHUVXUYHLOODQFH
6DJQHUDWWKHLQYLWDWLRQRIDQDXWKRUL]HGUHVLGHQW/LNH REVHUYHG +DJJDUG PHHWLQJ 6WULFNODQG DW SP DW WKH
%ODLUDQGsRQHVZHFRQFOXGHWKDWRQWKHVHIDFWV2IILFHU &RUQHU0DUNHW6WULFNODQGJHWWLQJLQWR+DJJDUGjVFDUWKHWZR
&XVWHDGGLGQRWKDYHSUREDEOHFDXVHWRPDNHDQDUUHVW PHQFKDWWLQJDQG6WULFNODQGOHDYLQJ+DJJDUGjVYHKLFOHDIHZ
PLQXWHV ODWHU 6WULFNODQG ZDV WKHQ DUUHVWHG DQG VHDUFKHG
,QUHsDVRQ$OOHQ'$G 0G&W6SHF XQFRYHULQJWKHRIPDUNHGELOOV
$SS FLWDWLRQVDQGLQWHUQDOTXRWDWLRQPDUNVRPLWWHG
HPSKDVLVDGGHG &ODLPLQJ D ODFN RI SUREDEOH FDXVH 6WULFNODQG ILOHG D
PRWLRQWRVXSSUHVVWKHHYLGHQFH7KHLVVXHEHIRUHWKLVFRXUW
$OO WKUHH RI WKH DERYH FDVHV UHTXLUH WKDW DQ RIILFHU KDYH ZDVZKHWKHUWKHSROLFHKDGSUREDEOHFDXVHWRDUUHVW6WULFNODQG
SUREDEOHFDXVHWREHOLHYHWKDWDSHUVRQLVRQSULYDWHSURSHUW\ IRUSRVVHVVLRQRIFRFDLQHZLWKWKHLQWHQWWRGLVWULEXWHZKHQ
ZLWKRXW SULYLOHJH EHIRUH PDNLQJ DQ DUUHVW IRU FULPLQDO WKH\KDGQRWDFWXDOO\VHHQWKHWUDQVDFWLRQWDNHSODFHLQWKHFDU
WUHVSDVV7KLVLVDQDSSURSULDWHUHTXLUHPHQWEHFDXVHWKHUHDUH ,QRWKHUZRUGV6WULFNODQGDUJXHGWKDWWKHGHWHFWLYHVGLGQRW
RQO\WZRHOHPHQWVWRFULPLQDOWUHVSDVV DSHUVRQKDVWREH mNQRZl WKDW KH KDG VROG GUXJV WR +DJJDUG DQG WKDW WKHUH
RQSULYDWHSURSHUW\DQG KHRUVKHKDVWREHWKHUHZLWKRXW FRXOGEHRWKHULQQRFHQWH[SODQDWLRQVIRUKLVPHHWLQJ+DJJDUG
SULYLOHJH6HH&LW\RI+DPLOWRQ2KLR2UGLQDQFH DWWKH&RUQHU0DUNHW%DVHGRQWKHFRPSHOOLQJFLUFXPVWDQWLDO
,ISROLFHRIILFHUVGRQRWQHHGSUREDEOHFDXVHWREHOLHYHWKDWD HYLGHQFH VXPPDUL]HG DERYH WKLV FRXUW KHOG WKDW WKH
VXVSHFWODFNVDOHJLWLPDWHUHDVRQIRUEHLQJRQSULYDWHSURSHUW\ GHWHFWLYHVKDGSUREDEOHFDXVHWREHOLHYHWKDW6WULFNODQGKDG
EHIRUHPDNLQJDQDUUHVWIRUFULPLQDOWUHVSDVVWKHQWKH\FRXOG VROG FRFDLQH WR +DJJDUG GHVSLWH WKH SRVVLELOLW\ WKDW WKHUH
OHJDOO\DUUHVWDQGVHDUFKDQ\RQHWKH\VHHRQSULYDWHSURSHUW\ FRXOG KDYH EHHQ DQ LQQRFHQW H[SODQDWLRQ IRU WKH PHHWLQJ
6XFKLVFOHDUO\QRWWKHODZ EHWZHHQWKHP
,QVWHDGRIDGGUHVVLQJRUDWWHPSWLQJWRGLVWLQJXLVKsRQHVDQG ,IXOO\DJUHHZLWKWKHUHVXOWLQ6WULFNODQGEXWILQGLWVIDFW
,QUHsDVRQ$OOHQ'ZKLFKGHDOVSHFLILFDOO\ZLWKWKHLVVXHDW VLWXDWLRQDZRUOGDSDUWIURPWKDWLQWKHSUHVHQWFDVH%DVHGRQ
|
IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
COMMONWEALTH OF PENNSYLVANIA, : No. 883 MAL 2014
:
Respondent :
: Petition for Allowance of Appeal from the
: Order of the Superior Court
v. :
:
:
MARC E. ROTHSTEIN, :
:
Petitioner :
ORDER
PER CURIAM
AND NOW, this 3rd day of March, 2015, the Petition for Allowance of Appeal is
DENIED.
|
548 U.S. 926 (2006)
BRITO
v.
UNITED STATES.
No. 05-8766.
Supreme Court of United States.
June 30, 2006.
Certiorari denied.
|
228 F.3d 1043 (9th Cir. 2000)
NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF PSYCHOANALYSIS, a Delaware corporation; CEDRUS MONTE; ALLAN D. SOWERS; LIONEL CORBETT, Plaintiffs-Appellants,v.CALIFORNIA BOARD OF PSYCHOLOGY, a state board (Board); BILL LOCKYER, California State Attorney General; STATE OF CALIFORNIA; THOMAS O'CONNOR, the Board's executive officerin his official capacity only; BRUCE EBERT; JUDITH JANARO FABIAN; LILLI FRIEDLAND; MARTIN GREENBERG; LINDA HEE; MARY MCMILLAN; MARILYN PALAREA; MARY ELLEN EARLY; EMIL RODOLFA, PhD, Defendants-Appellees.
No. 99-15243
United States Court of Appeals for the Ninth Circuit
Argued and Submitted April 13, 2000Filed September 29, 2000
[Copyrighted Material Omitted]
Jeffrey S. Love, Lane Powell Spears Lubersky LLP, Portland, Oregon, for the plaintiffs-appellants.
Kerry Weisel, Deputy Attorney General, Oakland, California, for the defendants-appellees.
Appeal from the United States District Court for the Northern District of California; William H. Orrick, District Judge, Presiding. D.C. No. CV 97-3913 WHO.
Before: A. Wallace Tashima and Susan P. Graber, Circuit Judges, and Robert J. Kelleher,* Senior district Judge.
TASHIMA, Circuit Judge:
1
Plaintiff psychoanalysts Lionel Corbett, Cedrus Monte, and Allan Sowers, and the National Association for the Advancement of Psychoanalysis ("NAAP") (collectively "plaintiffs") sued defendants, members of the California Board of Psychology ("Board"), and the Attorney General of California, for declaratory and injunctive relief under 42 U.S.C. 1983. Plaintiffs allege that California's mental health licensing laws, which regulate the practice of psychology and other professions, restrict their First and Fourteenth Amendment rights. Specifically, they assert that the licensing scheme prohibits them from practicing psychoanalysis in California. The district court held that plaintiffs failed to state a claim under Federal Rule of Civil Procedure 12(b)(6), and dismissed their complaint and the action. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Psychoanalysis and Psychology
2
Psychoanalysis and Psychology "Psychoanalysis" is defined in Stedman's Medical Dictionary (25th ed. 1990) as:
3
[A] method of psychotherapy, originated by Freud, designed to bring preconscious and unconscious material to consciousness primarily though the analysis of transference and resistance. . . . A method of investigating the human mind and psychological functioning, especially through free association and dream analysis in the psychoanalytic situation.
4
Id. at 1284; see also American Medical Association Encyclopedia of Medicine 831 (1989) ("The psychoanalyst is usually a doctor of medicine.").1
5
"Psychology" has been defined as:
6
The scientific study of mental processes. Psychology deals with all internal aspects of the mind, such as memory, feelings, thought, and perception, as well as external manifestations, such as speech and behavior. It also addresses intelligence, learning and the development of personality. Methods employed in psychology include direct experiments, observations, surveys, study of personal histories, and special tests (such as intelligence tests and personality tests).
7
Id. at 832 (emphasis omitted). Psychology includes various approaches, including "psychoanalytic psychology, " which "stresses the role of the unconscious and childhood experiences." Id.
B. Licensing Scheme
8
The profession of psychology has been regulated in California since 1958, when the Legislature enacted the Psychology Certification Act, Cal. Bus. & Prof. Code ' 2900-2980 (1958), which "served only to protect the title `psychologist,' " but did not define the practice of psychology. Executive Summary, California Board of Psychology, Sunset Review Report , at 1 (October 1, 1997) ("Sunset Report"). In 1967, the Legislature "recognized the actual and potential consumer harm that can result from the unlicensed, unqualified or incompetent practice of psychology" and enacted the Psychology Licensing Law, Cal. Bus. & Prof. Code ' 2900 2996.6 (1968). Sunset Report at 1. That law includes a legislative finding that the "practice of psychology in California affects the public health, safety, and welfare and is to be subject to regulation and control in the public interest to protect the public from the unauthorized and unqualified practice of psychology." Cal. Bus. & Prof. Code 2900.
9
The California Business and Professions Code defines a "psychologist" as a person so representing himself or herself "to the public by any title or description," including "psychoanalysis" and "psychoanalyst." Cal. Bus. & Prof. Code 2902(c). The practice of psychology in California requires a license and is defined as rendering any psychological ser vice to the public "for a fee." Id. 2903 (stating that "[n]o person may engage in the practice of psychology, or represent himself to be a psychologist, without a license" unless other wise specified by statute).
10
To qualify for a license to practice psychology in California, an applicant must possess a doctorate, or a degree deemed 12505 equivalent, in psychology or a related field such as education psychology. See id. 2914(b). An applicant must have at least two years of supervised professional experience under the direction of a licensed psychologist. See id. 2914 (c). In addition, an applicant must pass the Board's examination, complete training in substance dependency, and fulfill course work requirements in partner abuse and human sexuality. See id. 2914 (d)-(f). Any violation of the laws regulating psychologists can be punished as a misdemeanor.
11
Section 2529 of the Business and Professions Code, relating to research psychoanalysts, is the only part of the statute that specifically addresses the qualifications of psychoanalysts. Under 2529, graduates of four, specific, California psychoanalytic institutes, or institutes deemed equivalent, "may engage in psychoanalysis as an adjunct to teaching, training, or research and hold themselves out to the public as psychoanalysts . . . ." Id. 2529. Under the regulations, a research psychoanalyst may render psychoanalytic services for a fee for only a third (or less) of his or her professional time. See Cal. Code Regs. ("C.C.R."), tit. 16 1371. If they register with the state, students and graduates also "may engage in psychoanalysis under supervision, provided " that they do not imply in any way that they are licensed to practice psychology. Cal. Bus. & Prof. Code 2529."Physicians and surgeons, psychologists, clinical social workers, and marriage, family and child counselors, licensed in this state " need not register to engage in research psychoanalysis. See 16 C.C.R. 1369.
12
The licensing laws do not prevent "qualified members of other recognized professional groups," including physicians, clinical social workers, family and child counselors, attorneys and ordained members of recognized clergy, from doing work of a psychological nature consistent with the laws governing their respective professions, provided that they do not hold themselves out to the public as psychologists or use terms that 12506 imply they are licensed to practice psychology. Cal. Bus. & Prof. Code 2908.
C. Plaintiffs
13
The NAAP is a membership association of professional psychoanalysts dedicated to encouraging the study of, and improving the practice of, psychoanalysis in the United States and other countries. Its membership includes more than 1,000 certified psychoanalysts and more than 400 psychoanalyst candidates-in-training. The NAAP alleges that it has lost income from membership dues as a result of California's licensing scheme. According to the complaint, the NAAP filed suit "on its own behalf, as a representative of its members whose practice of psychoanalysis in California allegedly has been unreasonably restricted by California law, and on behalf of California residents who are prevented from retaining those NAAP members for professional psychoanalysis."
14
Plaintiff Corbett is a physician licensed to practice in three states and England, but not in California, because he lacks a one-year medical residency in the United States or Canada. He has been certified as a Diplomate Jungian Analyst by the C.G. Jung Institute of Chicago, which does not award a doctorate degree.2 Dr. Corbett is currently a professor at the Pacifica Graduate Institute in Santa Barbara, California, where he trains psychology Ph.D. candidates in the theory and practice of psychoanalytic psychotherapy. He has held academic appointments in departments of psychiatry at four United States medical schools.
15
Plaintiff Monte, who lives in California, has a master's degree in psychology from California State University at Sonoma and a diploma in analytical psychology from the C.G. Jung Institute in Zurich, Switzerland. Monte undertook clinical training in psychoanalysis in Switzerland, where she paid her supervisors and saw clients at a different site from her supervisors. Monte has been ordained as a Diplomate Jungian Analyst by the Association for the Integration of the Whole Person, a religious organization chartered in California. Monte would be eligible for a psychology license in California only if she completed additional courses and acquired supervised professional experience.
16
Plaintiff Sowers holds a master's degree in divinity and a certificate in psychoanalysis from the National Psychological Association for Psychoanalysis in New York City. Sowers is certified as a pastoral counselor in the Presbyterian Church and certified as a psychoanalyst in the State of Vermont. He is a resident of New York, but intends to travel to California to establish a psychoanalytic practice. He wishes to hold him self out professionally to the public, using the title "psychoanalyst."
D. Procedural History
17
The district court dismissed plaintiffs' first amended com plaint under Federal Rule of Civil Procedure 12(b)(1) because no plaintiff had properly alleged standing. Also, based on Eleventh Amendment immunity, the court dismissed with prejudice two defendants, the State of California and the Board. Plaintiffs were granted further leave to amend "to allege further facts" demonstrating standing. The district court thereafter dismissed the second amended complaint, ruling that plaintiffs lacked standing because the complaint was "conclusory" on standing issues. Plaintiffs, however, were granted leave to amend "one more time."
18
Plaintiffs then filed their third amended and supplemental complaint ("complaint"), which was dismissed with prejudice for failure to state a claim. The district court concluded that, although standing was adequately alleged, the complaint 12508 failed to state claims under the First or Fourteenth Amendment. Plaintiffs filed a timely notice of appeal.
II. JURISDICTION
19
The district court had jurisdiction pursuant to 28 U.S.C. 1331. We have jurisdiction pursuant to 28 U.S.C. 1291.
III. STANDARD OF REVIEW
20
We review de novo the district court's dismissal for failure to state a claim pursuant to Rule 12(b)(6). See Two Rivers v. Lewis , 174 F.3d 987, 991 (9th Cir. 1999). We must "accept all factual allegations of the complaint as true and draw all reasonable inferences in favor of the nonmoving party." Id. "Conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim." Halkin v. VeriFone, Inc. (In re VeriFone Sec. Litig. ), 11 F.3d 865, 868 (9th Cir. 1993). In determining whether plaintiffs can prove facts in support of their claim that would entitle them to relief, we may consider facts contained in documents attached to the complaint. See Roth v. Garcia Marquez , 942 F.2d 617, 625 n.1 (9th Cir. 1991) (citing Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987)).
IV. DISCUSSION
21
Plaintiffs allege that California's mental health licensing laws abridge their Fourteenth Amendment substantive due process and equal protection rights and their First Amendment rights of speech and association.3 We affirm the district court's dismissal because we hold that plaintiffs have failed to state any claim for constitutional relief.4
A. Fourteenth Amendment
22
To withstand Fourteenth Amendment scrutiny, a statute is required to bear only a rational relationship to a legitimate state interest, unless it makes a suspect classification or implicates a fundamental right. See City of New Orleans v. Dukes, 427 U.S. 297, 303 (1976) (per curiam) (equal protection); Richardson v. City & County of Honolulu, 124 F.3d 1150, 1162 (9th Cir. 1997), cert. denied, 119 S. Ct. 168 (1998) (substantive due process).
1. Fundamental Right
23
Because psychoanalysts are not a suspect class entitled to heightened scrutiny, we must examine whether the licensing scheme implicates any fundamental right. We hold that it does not.
24
Plaintiffs contend that California's mental health licensing laws are subject to strict scrutiny under the Due Process Clause of the Fourteenth Amendment because they implicate the fundamental rights associated with the close-knit relation ships between analysts and analysands. It is true that the Fourteenth Amendment protects some personal relationships, such as "those that attend the creation and sustenance of a family" and other "highly personal relationships." IDK, Inc. v. Clark County , 836 F.2d 1185, 1193 (9th Cir. 1988) (internal quotation marks and citation omitted).
25
At the other end of the relationship spectrum, we have held that the relationship between an escort and a client paying for escort services is not an intimate association implicating substantive due process rights. See id. Although we do not imply that the relationship between a client and an escort is similar in nature to the relationship between a patient and a psychoanalyst, we do find some of our analysis in IDK to be instructive. The relationship between a client and a psychoanalyst lasts "only as long as the client is willing to pay the fee." Id. Even if analysts and clients meet regularly and clients reveal secrets and emotional thoughts to their analysts, these relationships simply do not rise to the level of a fundamental right. See Zablocki v. Redhail, 434 U.S. 374, 383-86 (1978) (right to marry); Moore v. City of East Cleveland, 431 U.S. 494, 503-06 (1977) (right to live with family); Griswold v. Connecticut , 381 U.S. 479, 482-86 (1965) (right to marital privacy); Pierce v. Society of Sisters, 268 U.S. 510, 534-35 (1925) (right of parents to direct children's upbringing and education). "These are not the ties that `have played a critical role in the culture and traditions of the Nation by cultivating and transmitting shared ideals and beliefs.' " IDK, 836 F.2d at 1193 (quoting Roberts v. United States Jaycees, 468 U.S. 609, 618-19 (1984)).
26
We further conclude that substantive due process rights do not extend to the choice of type of treatment or of a particular health care provider. The Seventh Circuit has noted that 12511 "most federal courts have held that a patient does not have a constitutional right to obtain a particular type of treatment or to obtain treatment from a particular provider if the government has reasonably prohibited that type of treatment or provider." Mitchell v. Clayton, 995 F.2d 772, 775 (7th Cir. 1993) (citations omitted). We agree, and hold that there is no fundamental right to choose a mental health professional with specific training.
2. Rational Basis
27
Because we conclude that the licensing scheme neither utilizes a suspect classification nor implicates a fundamental right, we now examine whether it is "rationally related to a legitimate state interest." Dukes, 427 U.S. at 303. In applying the rational basis test, we presume the constitutionality of the classification. See id. "[T]hose challenging the legislative judgment must convince the court that the legislative facts on which the classification is apparently based could not reason ably be conceived to be true by the governmental decision maker." Vance v. Bradley, 440 U.S. 93, 111 (1979); see also Williamson v. Lee Optical, 348 U.S. 483, 488 (1955) (holding under a Fifth Amendment due process analysis that a statute should be upheld if "it might be thought that the particular legislative measure was a rational way to correct " a problem). "[W]e do not require that the government's action actually advance its stated purposes, but merely look to see whether the government could have had a legitimate reason for acting as it did." Dittman v. California, 191 F.3d 1020, 1031 (9th Cir. 1999) (quoting Halverson v. Skagit County , 42 F.3d 1257, 1262 (9th Cir. 1995) (citation and internal quotation marks omitted)), cert. denied, 120 S. Ct. 2717 (2000). We need only determine whether the licensing scheme has a "conceivable basis" on which it might survive rational basis scrutiny. Id. (quoting Lupert v. California State Bar, 761 F.2d 1325, 1328 (9th Cir. 1985)).
28
Plaintiffs advance numerous arguments about why the licensing scheme should fail rational basis review. Primarily, 12512 they contend that: (a) there is no rational basis for requiring professionals who already are trained in psychoanalysis to obtain additional training in order to qualify for a license; (b) the licensing scheme irrationally exempts research psychoanalysts from its requirements; (c) the licensing scheme is irrational because it is unnecessary and ineffective; and (d) the licensing scheme is irrational because it is more stringent than similar schemes regulating other counseling professions. We do not find any of those arguments persuasive and conclude that the licensing scheme is rationally related to California's interest in protecting the mental health and safety of its citizens.
29
First, plaintiffs argue that there is no rational basis for requiring professionals already trained in psychoanalysis to have certain other training in order to obtain a license. Because the Lochner5 era has long passed, this argument must fail. See Armendariz v. Penman, 75 F.3d 1311, 1318 (9th Cir. 1996) (stating that Lochner "symbolizes an era in which the Court, invalidating economic legislation, engaged in a level of judicial activism which was unprecedented in its time and unmatched since"). As the Supreme Court stated in Williamson:
30
It is enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it.
31
The day is gone when this Court uses the Due Process Clause of the Fourteenth Amendment to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought.
32
348 U.S. at 488 (citation omitted).
33
This case is nearly identical to Maguire v. Thompson, 957 F.2d 374 (7th Cir. 1992), in which the Seventh Circuit held that the Illinois General Assembly had a rational basis for requiring certain training for health care professionals to obtain a medical license, even though naprapaths, who treat human ailments through manipulation of tissue, were excluded from practicing. The Maguire court observed that:
34
[T]he General Assembly could have concluded that [certain] level[s] of education provide[ ] better training in theories of disease. Logically, better training leads to better diagnosis and better treatment. . . . [I]t is within the legislative prerogative to limit the practice of medicine to those who provide the safest service.
35
. . . It would even be rational for a legislature to conclude that the training offered in a school of naprapathy would in fact be inadequate for proper medical diagnosis and treatment and therefore people seeking treatment from those who hold only a degree in naprapathy run a serious risk of either misdiagnosis or non-diagnosis of their ailment.
36
Id. at 377-78 (citation omitted). The Seventh Circuit again utilized the reasoning of Maguire in holding that the Illinois legislature could regulate acupuncture by requiring a degree from a chiropractic school. See Mitchell, 995 F.2d at 774-76. We agree with the reasoning of these cases.
37
Based on the health and welfare of its citizens, California certainly has a "conceivable rational basis " for regulating the licensing of psychologists, and therefore, psychoanalysts. Dittman, 191 F.3d at 1031. According to the Supreme Court, "health . . . includes psychological as well as physical well being." United States v. Vuitch, 402 U.S. 62, 72 (1971). The California Legislature first regulated psychology because it "recognized the actual and potential consumer harm that can result from the unlicensed, unqualified or incompetent practice of psychology." Sunset Report at 1. The Psychology Licensing Law includes a legislative finding that the "practice of psychology in California affects the public health, safety, and welfare and is to be subject to regulation and control in the public interest to protect the public from the unauthorized and unqualified practice of psychology." Cal. Bus. & Prof. Code 2900. Plaintiffs Monte and Corbett even concede in their declarations that psychoanalytic methods cannot effectively be used to treat people with major mental illness. According to Dr. Corbett, the adverse effects of incompetent psychotherapy could include sexual activity between a client and therapist, deteriorating mental health, family, job, and relationships of the patient, and even suicide. Regulating psychology, and through it psychoanalysis, is rational because it is within the state's police power to regulate mental health treatment. See Maguire, 957 F.2d at 377.
38
Next, plaintiffs assert that the licensing scheme is irrational because it exempts research psychoanalysts from its requirements. As the district court noted, the exemption for research psychoanalyst is valid because it is not unusual or irrational to provide exemptions in a licensure statute. See Cal. Bus. & Prof. Code 2529 (allowing the practice of psychoanalysis "as an adjunct to teaching, training or research"). The licensing scheme also contains exemptions for employees of schools and governmental agencies, psychologists licensed in other jurisdictions, and graduate students. See id. ' 2909 12. Certainly it is rational for the Legislature to allow academics to engage in psychoanalysis on a limited basis to enhance teaching and research. Further, it is not improper for the Legislature to single out research psychoanalysts. The Supreme Court has held that a state legislature addressing health and safety reform "may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind. The legislature may select 12515 one phase of one field and apply a remedy there, neglecting the others." Williamson, 348 U.S. at 489 (citations omitted). The California Legislature enacted a certification law regulating psychology in the 1950s, substituted a licensing scheme in the 1960s, and enacted a limited exception for academic research psychoanalysis in the 1970s.
39
Plaintiffs argue additionally that the licensing scheme is not rationally related to a legitimate state interest because it is ineffective and unnecessary. In support of their argument, they observe that a committee had recommended to the California Medical Board that the laws regulating psychoanalysts were unnecessary and ineffective. As additional evidence that the scheme is unnecessary, plaintiffs point to the facts that research psychoanalysts are allowed to practice without meeting all of the requirements of the licensing scheme and that, in four years, only one complaint has been filed against a research psychoanalyst. Research psychoanalysts, however, are a small and discrete group. That they appear to be able to practice satisfactorily without having met all licensing requirements does not compel the Legislature to infer that all psychoanalysts could practice satisfactorily without having met the educational and experience requirements of the licensing scheme. We thus perceive no legal basis for interfering with the Legislature's judgment regarding the training needed for mental health professionals.
40
Plaintiffs next argue that the psychology licensing laws have no rational basis because the California licensing schemes for other, similar counseling professions are less stringent. Plaintiffs highlight the differences between the licensing schemes for family counselors and social workers, as opposed to psychologists, in an attempt to show that the exclusion of psychoanalysts is irrational, when other professionals are permitted to engage in counseling. See Cal. Bus. & Prof. Code ' 4996, 4996.12, 4980, 4980.02. To qualify for a license, a social worker must have a master's degree from an accredited school of social work, two years of supervised 12516 experience, and chemical dependency training. See id. 4996.2. For licensure, a marriage, family, and child counselor must have a master's or doctorate degree from an accredited school, certain course work, a supervised clinical placement, and two years of supervised experience. See id. 4980.40. The stated purpose of the marriage and family therapy law is to regulate the provision of "wise, competent, caring, compassionate, and effective counseling in order to enable [people] to improve and maintain healthy family relationships. Healthy individuals and healthy families and healthy relationships are inherently beneficial and crucial to a healthy society, and are our most precious and valuable natural resource." See id. 4980(a). The question is not whether we would choose to implement the same scheme, but whether it was rational for the California Legislature to implement different licensing schemes for psychologists, and for social workers and family counselors. It is not irrational for the Legislature to progress one step, or one profession, at a time. See Williamson , 348 U.S. at 489.
41
Finally, plaintiffs attack the psychologist licensing scheme on several other grounds, all of which we reject. They suggest that the scheme is irrational because other states, such as Vermont, Washington and Colorado, have less restrictive licensing schemes for psychoanalysts. This does not mean, however, that it is irrational for California to have its existing scheme. It simply is not the function of the courts to tell California how to craft its legislation.
42
Plaintiffs also argue that there is no rational basis for the Legislature to require two years of supervised on-site training and to credit only non-paid supervision for psychologists. See 16 C.C.R. 1387(r). Plaintiffs claim that psychoanalysts practice at sites separate from their supervisors' locations and sometimes pay for this supervision. See 16 C.C.R. 1387. Specifically, Dr. Corbett paid for her supervision in England. It is certainly rational, however, for the Legislature to require on-site supervision for the training of mental health professionals. See Maguire , 957 F.2d at 377 (holding that it is rational for a legislature to require certain levels of education for health care professionals). It is also rational to be suspicious of paid-for supervision.
43
We conclude that the psychologist licensing scheme is rationally related to legitimate government interests; there fore, the district court properly dismissed plaintiffs' Fourteenth Amendment claims.
B. First Amendment
44
Plaintiffs further contend that California's psychologist licensing laws violate their First Amendment rights to freedom of speech.6 The First Amendment applies to state laws and regulations through the Due Process Clause of the Fourteenth Amendment. See 44 Liquormart, Inc. v. Rhode Island , 517 U.S. 484, 489 n.1 (1996). We conclude that, even if a speech interest is implicated, California's licensing scheme passes First Amendment scrutiny.
1. Extent to Which Speech is Implicated
45
The Supreme Court has held that "it has never been deemed an abridgement of freedom of speech or press to make a course of conduct illegal merely because the conduct was in part initiated, evidenced, or carried out by means of language, either spoken, written, or printed." Giboney v. Empire Storage & Ice Co., 336 U.S. 490, 502 (1949); see also Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447, 456 (1978) (holding that "the State does not lose its power to regulate commercial activity deemed harmful to the public whenever speech is a component of that activity").
46
Plaintiffs contend that, because psychoanalysis is the "talking cure," it deserves special First Amendment protection because it is "pure speech." As the district court noted, how ever, "the key component of psychoanalysis is the treatment of emotional suffering and depression, not speech . . . . That psychoanalysts employ speech to treat their clients does not entitle them, or their profession, to special First Amendment protection."7 The Supreme Court has noted that "[w]hile it is possible to find some kernel of expression in almost every activity a person undertakes . . . such a kernel is not sufficient to bring the activity within the protection of the First Amend ment." City of Dallas v. Stanglin, 490 U.S. 19, 25 (1989), quoted in Las Vegas Nightlife, Inc. v. Clark County , 38 F.3d 1100, 1102 (9th Cir. 1994). The communication that occurs during psychoanalysis is entitled to constitutional protection, but it is not immune from regulation. See IDK , 836 F.2d at 1191 (noting that simply because speech may be implicated, an activity is not "excluded from the safeguards of the first amendment").
47
The Supreme Court noted that an attorney's in-person solicitation of clients is "entitled to some constitutional protection," but "is subject to regulation in furtherance of important state interests." Ohralik, 436 U.S. at 459. The Ohralik Court also noted "numerous" examples of communications "that are regulated without offending the First Amendment." Id. at 456 (highlighting the exchange of securities information, corporate proxy statements, exchange of price and production information among competitors, and employers' threats of retaliation for the labor activities of employees). The Supreme Court held that the regulation of solicitation within the legal profession "falls within the State's proper sphere of economic and professional regulation." Id. at 459.
48
It is properly within the state's police power to regulate and license professions, especially when public health concerns are affected. See Watson v. Maryland , 218 U.S. 173, 176 (1910) ("It is too well settled to require discussion at this day that the police power of the states extends to the regulation of certain trades and callings, particularly those which closely concern the public health."). Justice Jackson eloquently summarized the state's interest in licensing certain professions:
49
The modern state owes and attempts to perform a duty to protect the public from those who seek for one purpose or another to obtain its money. When one does so through the practice of a calling, the state may have an interest in shielding the public from the untrustworthy, the incompetent, or the irresponsible, or against unauthorized representation of agency. A usual method of performing this function is through a licensing system.
50
Thomas v. Collins , 323 U.S. 516, 544 (1945) (Jackson, J., concurring). Given the health and safety implications, California's interest in regulating mental health is even more com pelling than a state's interest in regulating in-person solicitation by attorneys. We conclude that the licensing scheme is a valid exercise of California's police power.
2. Content and Viewpoint Neutrality
51
We further conclude that California's licensing scheme is content and viewpoint neutral; therefore, it does not trigger strict scrutiny. We have held that " `[t]he appropriate 12520 level of scrutiny is tied to whether the statute distinguishes between prohibited and permitted speech on the basis of con tent.' " Black v. Arthur, 201 F.3d 1120, 1123 (9th Cir. 2000) (quoting Foti v. City of Menlo Park, 146 F.3d 629, 635 (9th Cir. 1998)). "The `principal inquiry' in determining whether a regulation is content-neutral or content-based`is whether the government has adopted [the] regulation . . . because of [agreement or] disagreement with the message it conveys.' " Crawford v. Lungren, 96 F.3d 380, 384 (9th Cir. 1996) (quoting Turner Broad. Sys., Inc. v. FCC, 512 U.S. 622, 641 (1994)).
52
California's mental health licensing laws are content neutral; they do not dictate what can be said between psychologists and patients during treatment. Nothing in the statutes prevents licensed therapists from utilizing psychoanalytical methods or prevents unlicensed people from engaging in psychoanalysis if no fee is charged.8 This reasoning mirrors Justice Jackson's concurrence in Thomas, 323 U.S. at 545, in which he stated:
53
A state may forbid one without its license to practice law as a vocation, but I think it could not stop an unlicensed person making a speech about the rights of man or the rights of labor . . . . Likewise, the state may prohibit the pursuit of medicine as an occupation without its license, but I do not think it could make it a crime publicly or privately to speak urging persons to follow or reject any school of medical thought.
54
Id. (Jackson, J., concurring).
55
Although the California laws and regulations may require certain training, speech is not being suppressed based on its message. Plaintiffs argue that the licensing scheme regulates the content of speech because the Board's psychological examination tests only certain areas, including the biological bases of behavior, research methods, and assessment and diagnosis. Plaintiffs contend that psychoanalysts, on the other hand, are trained in such areas as Jungian under standing of personality, techniques for the activation and interpretation of the unconscious, and archetypal material, including mythology and fairy tales. Plaintiffs also allege that the Board uses the content of an institution's curriculum to determine which institutions provide "equivalent " training under California Business and Professions Code ' 2914 and 2529. The licensing scheme, however, was not adopted because of any disagreement with psychoanalytical theories. See Crawford , 96 F.3d at 384. It was adopted for the important purpose of protecting "public health, safety, and welfare." Cal. Bus. & Prof. Code 2900.
56
This case is different from Riley v. National Fed'n of the Blind , 487 U.S. 781 (1988). In Riley, the Supreme Court held that North Carolina's licensing laws for professional fund raisers violated the First Amendment because the state had "the power directly and substantially to affect the speech they utter." Id. at 801. California does not dictate the content of what is said in therapy; the state merely determines who is qualified as a mental health professional. Mental health professionals, unlike fundraisers, safeguard public health interests by monitoring the care and safety of their patients.9
57
Although some speech interest may be implicated, California's content-neutral mental health licensing scheme is a valid exercise of its police power to protect the health and safety of its citizens and does not offend the First Amendment.10
3. Prior Restraint
58
In addition, we hold that the psychology licensing laws are not a prior restraint on speech. See Baby Tam & Co., Inc. v. City of Las Vegas, 154 F.3d 1097, 1100 (9th Cir. 1998) ("A prior restraint exists when the enjoyment of protected expression is contingent upon the approval of government officials."). Because this is a valid licensing scheme designed to protect the mental health of Californians, the state "may exercise some discretion in granting licenses." IDK, 836 F.2d at 1196. Because there is no allegation that the state is revoking or denying licenses "for arbitrary or constitutionally suspect reasons," there is no problem of prior restraint. Id.; see also City of Lakewood v. Plain Dealer Publ'g Co., 486 U.S. 750, 755-56 (1988) (fearing "unbridled discretion" in state officials could result in censorship); Young v. City of Simi Valley, 216 F.3d 807, 819 (9th Cir. 2000) ("When an approval process . . . is completely discretionary, there is a danger that protected speech will be suppressed impermissibly because of the government official's . . . distaste for the content of the speech.") (citation omitted).
V. CONCLUSION
59
In sum, we hold that California's psychology licensing laws do not violate either the First or the Fourteenth Amendment. We thus affirm the district court's dismissal of this action. As the district court noted, plaintiffs' concerns about the licensing of psychoanalysts are "best addressed to the state legislature."
60
AFFIRMED.
Notes:
*
The Honorable Robert J. Kelleher, Senior United States District Judge for the Central district of California, sitting by designation.
1
Plaintiffs allege that psychoanalysis:
is a treatment based on verbal communication between the analyst and client. Its aim is to promote emotional growth through insight, character change, personal integration, and a lessening of symptoms that originate in the client's mind or emotions. It is based on extensive scientific research into human behavior and inner experience. The term psychoanalyst identifies practitioners from various schools of thought including Adlerian, Existential, Eclectic, Ego-Psychology, Freudian, Jungian, Modern Freudian, Object Relations, and Self-Psychology institutes.
Plaintiffs further claim that "[t]he association between the analyst and the analysand is deep, intimate, personal and lengthy. The analysand typically sees the analyst two to five hours a week for two to five years or more. . . . Strong emotional bonds develop between the analysand and analyst, and are an expected part of the therapeutic process."
2
The research psychoanalyst laws do not recognize the psychoanalytic institute from which he graduated as substantially equivalent to California institutes.
3
Plaintiffs alleged right to travel and freedom of religion claims below, but on appeal made no arguments relating to them. Plaintiffs also do not challenge the Eleventh Amendment dismissal of the State and the Board. We deem all of these arguments waived. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999). There is some hint in plaintiffs' briefs of an overbreadth challenge; however, it is never explicitly argued, and thus is also waived. See Retlaw Broad. Co. v. NLRB, 53 F.3d 1002, 1005 n.1 (9th Cir. 1995) (holding that an issue is waived if the briefs fail to contain appellant's contentions, and citations to authorities, statutes, and the record).
4
We agree with the district court that there is no problem of standing for either the individual plaintiffs or the NAAP, as an organization. See Lujan v. Defenders of Wildlife , 504 U.S. 555, 560-61 (1992) (holding that to satisfy constitutional standing, plaintiffs must show that: (1) they suffered an "injury in fact;" (2) the injury is fairly traceable to the challenged action of defendants; and (3) it is "likely," as opposed to " speculative," that the injury will be redressed by a favorable decision) (citations and internal quotation marks omitted); Hunt v. Washington State Apple Adver. Comm'n , 432 U.S. 333, 343 (1977) (holding that an organization has standing to sue on behalf of its members where: (1) the individual members would otherwise have standing to sue on their own; (2) the interests the organization seeks to protect are germane to the organization's purpose; and (3) the lawsuit does not require the participation of individual members).
5
Lochner v. New York, 198 U.S. 45 (1905).
6
Our discussion of highly personal relationships under Fourteenth Amendment substantive due process, see Part IV.A.1, supra , also disposes of plaintiffs' freedom of association claims under the First Amendment. See IDK , 836 F.2d at 1192-96.
7
This discussion relates as well to plaintiffs' claim that the First Amendment extends to the rights of clients to receive information from their psychoanalysts. See Monteiro v. Tempe Union High Sch. Dist., 158 F.3d 1022, 1027 n.5 (9th Cir. 1998) (acknowledging "the well-established rule that the right to receive information is an inherent corollary of the rights of free speech and press, because the right to distribute information necessarily protects the right to receive it . . . the right to receive ideas is a necessary predicate to the recipient's meaningful exercise of his own rights of speech, press, and political freedom") (internal quotation marks and citation omitted).
8
We agree with the district court that the statutory scheme does not pre vent plaintiffs from engaging in psychoanalysis if they do not charge a fee. Under the "psychologists" licensing law, the practice of psychology explicitly includes charging a fee. See Cal. Bus. & Prof. Code 2903. Under the "medicine" licensing law, however, a physician's or surgeon's certificate is needed for someone to treat any disease, including mental conditions, regardless of whether a fee is charged. See id. 2051. "Any person who practices or attempts to practice, or who advertises or holds himself or herself out as practicing, any system or mode of treating the sick or afflicted in this state . . . is guilty of a misdemeanor." Id. 2052. In 1941, however, then California Attorney General Earl Warren interpreted the "medicine" licensing law to prohibit the unlicensed practice of psychoanalysis regardless of whether any fee was charged. See Cal. Op. Atty. Gen. N835334 (May 22, 1941).
Under the most logical reading of California's current statutory scheme, however, psychoanalysis is no longer included in the medical licensing scheme because it is explicitly referenced in the psychology licensing statute. "Psychoanalyst" is included as an inappropriate title for an unlicensed person under Cal. Bus. & Prof. Code 2902(c), which was amended as recently as 1989. The Legislature could have made clear that psychoanalysis was prohibited by the medical licensing laws, but it did not do so; instead, it explicitly referenced psychoanalysis in the psychology licensing laws. Cf. Russello v. United States, 464 U.S. 16, 23-24 (1983) ("[W]here Congress includes language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." ) (citation and internal quotation marks omitted).
9
This case is also different from Spiritual Psychic Science Church of Truth, Inc. v. City of Azusa, 703 P.2d 1119, 1123-29 (Cal. 1985), in which the California Supreme Court relied on federal case law to invalidate, under Article I, Section 2 of the California Constitution, a city ordinance that completely prohibited the practice of fortune telling and palm reading for a fee. Here, California's licensing scheme does not prohibit psychoanalysis, but merely regulates who can engage in it for a fee.
10
Plaintiffs concede that, if the licensing scheme is otherwise valid, they have no viable commercial speech claim for the right to use professional titles, such as "psychoanalyst" and "analytical psychologist."
|
145 F.2d 620 (1944)
MEREDITH
v.
SMITH et al.
No. 10657.
Circuit Court of Appeals, Ninth Circuit.
November 13, 1944.
Joseph F. Westall, of Los Angeles, Cal., for appellant.
J. Calvin Brown, of Los Angeles, Cal. (Louis E. Swarts and Ralph Wilson, both of Los Angeles, Cal., of counsel), for appellees.
Before WILBUR, DENMAN, and STEPHENS, Circuit Judges.
DENMAN, Circuit Judge.
Appellant, co-owner with appellee Fricke of a copyright in a publication entitled "1000 Police Questions," filed a complaint which, as amended to conform to the evidence, claimed damages against O. W. Smith for the reproduction and sale of the books in violation of the copyright, and sought an accounting. The amended complaint also alleged a contract between the two copyright owners that neither would license the reproduction and sale of the book without the permission of the other; that Fricke had violated his agreement in granting Smith a permit to print and sell the book; and that Smith had knowledge of the agreement. Appellant claimed damages for infringement against both Fricke and Smith.
Fricke moved to be dismissed on the ground that the cause of action against him was not for violation of a copyright but for a mere agreement as to the exercise of the common copyright interest and hence presented no federal question. There were no allegations of diversity of citizenship or of the amount of damages. The motion was granted and judgment of dismissal as to Fricke was entered, from which judgment appellant appeals.
The District Court committed no error in dismissing as to Fricke. Such a contract relation as to the use of a joint copyright, admittedly valid, is not a federal question. Wade v. Lawder, 165 U.S. 624, 626, 17 S.Ct. 425, 41 L.Ed. 851; Dale Tile Mfg. Co. v. Hyatt, 125 U.S. 46, 52, 8 S.Ct. 756, 31 L.Ed. 683.
Smith filed an answer which, as amended, set up the permit from Fricke and denied any agreement between the two copyright owners at the time of the granting of the permit to him relative to a joint permission *621 for the use of the copyright, and asserted that, if such an agreement existed, he, Smith, had no notice thereof and was not bound thereby. It is not questioned that Fricke as co-owner of the copyright would have had the right to give permission to Smith to publish the book. Piantadosi v. Loew's Inc., 9 Cir., 137 F.2d 534. The contention is that Fricke had given up that right by the contract and that Smith, having notice thereof, could receive from Fricke no valid permit to use the copyright.
Upon the trial the District Court found that there was an agreement between appellant and Fricke that neither of the copyright owners would give a permit to a third person to use the copyright without the permission of the other, but that it had terminated prior to the alleged infringing publication of the book by Smith. Appellant contends there is no evidence to support this finding. We do not agree. In 1937, appellant, under the name "Publisher," and Fricke, under the name "Author," entered into an agreement of which the following paragraphs are pertinent:
"Wherefor; In consideration of these facts, the Author does hereby agree to grant and extend first to the Publisher, and before all others, and also under the same contract terms as described herein, the right to publish and sell in printed form, any and all similar manuscripts or works that the Author may produce in the future and which shall contain mainly, as text matter: questions and answers pertaining to police problems, either with or without the same or similar title of `1000 Police Questions.'
"Provided: That if the Author so submits such a manuscript and the Publisher declines to promptly accept it, or otherwise unreasonably delays the publishing of same; then the Author shall be free to publish and sell such book in any manner that the Author shall desire, and without any restraint from, or obligation to, the Publisher."
Concerning this agreement Fricke testified that appellant said to him that he was through with the contract. Smith testified that appellant said to him "I am through with them," referring to what he called "the darned books," meaning those under the copyright. Also that appellant said "I am glad to get rid of them" and "I am through with the printing business." This was corroborated by the testimony of the witness Jackson. Such testimony abundantly supports the District Court's finding that the restrictive contract had terminated.
The books sold by Smith had printed on them the following statements:
"(All Rights Reserved Including Radio) Warning: The right to reproduce or use any of the questions or answers contained in this book, either in whole, or in part, or in any other form, is hereby forbidden without the written permission of both copyright owners. Any similar works or titles will be considered as infringements and those responsible will be vigorously prosecuted.
"Civil service examiners and police instructors are exempt from the provisions of this warning and permission is hereby granted to them to use any or all of the material contained herein for the purpose of conducting examinations."
Smith admitted he read this warning. Appellant claims this warning was inserted in the book pursuant to a verbal agreement between appellant and Fricke. Fricke testified that it was inserted after the written agreement. Appellant testified that it was the written agreement which he read to Smith in discussing the warning to put him on notice of terms of the contract. So far as concerns appellee Smith, the verbal agreement is irrelevant to the controversy. The only warning Smith had was as to the written contract. The District Court found that there was no verbal or written contract between the two copyright owners regarding the warning.
This finding had reference to the pertinent time of Smith's alleged infringement. We find sufficient evidence to sustain this finding of the District Court. The appellee Smith was duly authorized to publish the book and committed no infringement of the copyright.
Smith's answer was amended after the trial to conform with the facts proved upon which the above findings were based. Appellant contends that the amendment should not have been permitted because the facts are not those found. What we have said above disposes of this contention.
The judgment appealed from is affirmed.
|
154 A.2d 354 (1959)
Otis AVANT, Appellant,
v.
UNITED STATES, Appellee.
Fleet S. HUGHLETT, Appellant,
v.
UNITED STATES, Appellee.
Nos. 2365, 2366.
Municipal Court of Appeals for the District of Columbia.
Argued April 20, 1959.
Decided September 18, 1959.
*355 Kenneth D. Wood, Washington, D. C., with whom John T. Bonner, Washington, D. C., was on the brief, for appellants.
Frank Q. Nebeker, Asst. U. S. Atty., Washington, D. C., with whom Oliver Gasch, U. S. Atty., and Carl W. Belcher, Asst. U. S. Atty., Washington, D. C., were on the brief, for appellee.
Before ROVER, Chief Judge, and HOOD and QUINN, Associate Judges.
QUINN, Associate Judge.
Appellants were convicted by a jury of obtaining money from the complaining witness, one Fletcher, by falsely representing to him that certain repairs had been made and certain parts replaced in his automobile.[1]
We will limit our comments on the evidence for it is our conclusion that the case must be retried. In September 1958 Fletcher took his automobile to the Credit Auto Repair Service to have specific repairs made. He conversed with appellant Avant concerning the work. The following day Avant called Fletcher and recommended additional work he considered necessary, to which Fletcher consented. A few days later, Fletcher returned to the garage, and after disagreement as to the amount of the charges, received oral representations from both appellants concerning the repair work. In early October, Fletcher went to the garage and, after receiving from appellants both oral and written representations as to the work performed upon his vehicle, paid the bill after it was adjusted. Fletcher discovered later that some of the represented repairs had not been made. There was testimony that Avant was the foreman of the shop and Hughlett his superior.
In the finding of guilt, the jury necessarily found the representations to be false. That finding was not contrary to the evidence. But, for conviction, it was also necessary to determine that appellants had knowledge of this falsity, and the instructions, which the jury received, relating to this specific aspect of the crime are assigned as error.
In instructing the jury the trial court stated:
"* * * there must be a guilty knowledge. That is to say, the person must know, who makes the false representation, that it is false, but that doesn't mean that he has to know it affirmatively * * *. If, without knowledge of whether the statement is true or false, the person nevertheless makes it recklessly and not caring whether it is true or false * * * [that] may very well impute knowledge of falsity even though this affirmative, subjective knowledge is not present * * *."
Our problem, then, is can a man be held criminally responsible for a statement recklessly made regardless of whether he had subjective knowledge of its falsity? In brief, what standard does this word "knowledge" require?
The government's brief, in conceding there are no cases in this jurisdiction on the point, places strong reliance upon the law of California. However, it is first necessary to determine the position of our courts before discussing California cases. Although our statute[2] does not specify the word "knowledge," it is very clearly one of the elements of this offense.[3] Even the information alleged that appellants knowingly committed these acts. Moreover, in the case of Nelson v. United *356 States,[4] the element of "knowledge," along with a false representation intentionally made, and relied upon, causing complainant to be defrauded, is said to constitute this crime. The Nelson case also states, inter alia: "* * * The intent to injure or defraud is presumed when the unlawful act, which results in loss or injury, is proved to have been knowingly committed. * * *"[5] That case has considerable relevance to our problem but stops just short of solving it.[6] The problem with which we are confronted is when a statement is knowingly made, not the criminal intent in its utterance. The government's position, when viewed in the light of Nelson, would seem to be that a conviction may be sustained on the basis of a false representation recklessly made, for this would be tantamount to knowledge of its falsity, from which the intent to defraud may be presumed. Therefore, two criminal elements knowledge and intent could be satisfied by a reckless statement. This would place an unwarranted significance upon a reckless statement, and we will not go so far.
The government, in its brief, argues that three California cases are controlling here.[7] However, the precise question in this case seems to have been decided in another California case,[8] and, because that case decided the point contrary to our opinion, we will further discuss these cases.
The defendant in the Schmitt case argued, among other things, that the trial court's instruction, which was substantially the same as the one given in this case, permitted the jury to base its conclusion upon defendant's negligence rather than knowledge. It should be noted, however, that defendant appears to have appealed the very instruction he requested in the trial court. In finding no merit in the defendant's contention, the California appellate court relied, as have other California courts, upon the case of People v. Cummings.
It seems to have been the Cummings[9] case that first enunciated in California the proposition that a reckless disregard of fact will be sufficient for knowledge of that fact in the criminal proceeding of false pretenses. Yet upon examination it appears the proposition came into that case by way of dictum, and we feel the comments of the Supreme Court of South Dakota were appropriately made when, referring to Cummings, it said:
"* * * It does not appear that this declaration was in any manner essential to the decision or a turning point in the case. * * * The California court appears to have had no appreciation of the fact that it was announcing a rule that had not previously been declared in the criminal law of false pretenses. * * *"[10]
Although California decisions are entitled to great weight and consideration, we conclude that the rule does not apply here.
Reversed with instructions to grant a new trial.
NOTES
[1] Code 1951, § 22-1301 (Supp. VII).
[2] Section 1301 reads as follows: "Whoever, by any false pretense, with intent to defraud, obtains from any person anything of value, * * * shall [be guilty of a crime]."
[3] Robinson v. United States, 1914, 42 App. D.C. 186.
[4] 1955, 97 U.S.App.D.C. 6, 227 F.2d 21, certiorari denied 1956, 351 U.S. 910, 76 S.Ct. 700, 100 L.Ed. 1445, Annotation, 1957, 53 A.L.R.2d 1206.
[5] Id., 97 U.S.App.D.C. at page 10, 227 F.2d at page 25. (Emphasis supplied.) Cf. Morissette v. United States, 1952, 342 U.S. 246, 72 S.Ct. 240, 96 L.Ed. 288.
[6] Nor do we feel the language of Mr. Chief Justice Shepard in Partridge v. United States, 1913, 39 App.D.C. 571, 583-584, controlling here. His comments concerning five acres of land went to the falsity of the representation, not the knowledge of it.
[7] People v. Cummings, 1899, 123 Cal. 269, 55 P. 898; People v. Davis, 1952, 112 Cal.App.2d 286, 246 P.2d 160; People v. Daener, 1950, 96 Cal.App.2d 827, 216 P. 2d 511. Compare People v. Burgess, 1927, 244 N.Y. 472, 155 N.E. 745 and Rand v. Commonwealth, 1917, 176 Ky. 343, 195 S.W. 802, with State v. Pickus, 1934, 63 S.D. 209, 257 N.W. 284.
[8] People v. Schmitt, 1957, 155 Cal.App.2d 87, 317 P.2d 673, 689.
[9] Supra, note 7.
[10] State v. Pickus, supra, note 7, 257 N.W. at pages 290-291.
|
590 S.W.2d 35 (1979)
ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Appellant,
v.
Jim PROTHRO, Appellee.
No. CA 79-133.
Court of Appeals of Arkansas.
October 24, 1979.
Petition for Review Denied December 3, 1979.
Released for Publication December 5, 1979.
*36 Shackleford, Shackleford & Phillips, El Dorado, for appellant.
Brown, Compton & Prewett, El Dorado, for appellee.
Released for Publication by the Court of Appeals December 5, 1979.
PILKINTON, Judge.
Appellee Jim Prothro, a 76 year old man, was a patient in Warner-Brown Hospital at El Dorado, Arkansas, with a fractured hip. Following surgery on October 21, 1974, to implant a prosthesis or metal ball into the right hip, Mr. Prothro developed an infection of staphylococcus aureus, commonly known as a staph infection. He alleges this infection was acquired as the result of an incident during physical therapy when the patient's surgical wound was reopened.
This appeal is from a judgment of the circuit court entered on a jury verdict for appellee in the sum of $75,000.00.[1]
Appellant contends there is no substantial evidence to support the verdict.
The tests to be used in reviewing the findings of a jury on appeal are well established in Arkansas. As to the substantiality of the evidence, we will not disturb the jury's conclusion on appeal unless we can say there is no reasonable probability in favor of appellee's version, and then only after giving legitimate effect to the presumption in favor of the jury findings. Beard v. Coggins, 249 Ark. 518, 459 S.W.2d 791 (1970); Fanning v. Hembree Oil Co., 245 Ark. 825, 434 S.W.2d 822 (1968), and Lumbermens Mutual Ins. Co. v. Cooper, 245 Ark. 81, 431 S.W.2d 256 (1968). Further, in testing the sufficiency of the evidence as being substantial on appellate review, we need only consider the testimony of the appellee and that part of the evidence which is most favorable to the appellee. Love v. H. F. Construction Company, 261 Ark. 831, 552 S.W.2d 15, 17 (1977).
The evidence, viewed in the light most favorable to appellee, shows that following the surgery Mr. Prothro was in the hospital and was making a normal recovery. Part of the post-operative treatment involved physical therapy in a whirlpool bath, known as a Hubbard bath. A hospital attendant was lowering Mr. Prothro in a basket swing over the Hubbard bath when a chain attached to the basket came apart allowing Mr. Prothro to fall. The attendant caught the patient, and broke his fall somewhat, but a part of the metal basket struck Mr. Prothro on the right hip reopening his surgical wound. As a result, the wound began to bleed and was exposed to the unsterilized bath water. Subsequently, an unsterilized bath towel was placed over the wound by the orderly to stop the blood; and the patient *37 was returned to his hospital room. The incident was reported to the duty nurse, but the nurses treating Mr. Prothro did not examine or cleanse the wound but only reclosed it with surgical tape. The hospital should have made a record of the incident but did not. Dr. Joseph B. Wharton, who was Mr. Prothro's doctor, inspected the wound the next day and discontinued any further whirlpool baths. Prior to the accident in the bath, none of the doctors or nurses treating Mr. Prothro had informed him that he was suffering from an infection. He testified no symptoms of infection were evident to him.
Mr. Prothro first noticed that he was having problems several days after the incident in the Hubbard bath. He experienced rigor and began to ache all over his body. He had a fever and was told for the first time he had an infection. These problems continued after appellee was released from the hospital, and the area around the surgical wound was red and inflamed. Additional surgery on Mr. Prothro's hip was necessary and the infection required the removal of the artificial prosthesis that had been placed in the hip. The second operation was performed on February 18,1975, by Dr. William S. Bundrick, an orthopedic surgeon, of Shreveport, Louisiana. Appellee attributes the staph infection of his hip to the incident in the Hubbard bath.
It is admitted by all that Mr. Prothro suffered a severe infection.
Appellee now has no ball or joint in his hip. He has what is known as a "flail" hip, and there is several inches difference in the length of his right leg as compared with the left. He walks with a limp, and it is undisputed that there is considerable and serious permanent damage to Mr. Prothro's body.
Appellant also admits, for the purpose of appeal, that the occurrence in the Hubbard bath constituted negligence. The main issue, therefore, is whether there is sufficient evidence that such negligence the incident during physical therapy caused the staph infection.
Appellant contends there is no substantial evidence that appellee's staph infection was proximately caused by hospital negligence. Mr. Prothro's testimony, as a layman, standing alone leads to a reasonable conclusion that the staph infection did not exist prior to the reopening of the surgical wound and was the result of the occurrence in the bath. Appellant contends, however, that if the origin of the injury is subjective or obscure and not readily apparent to a layman, or there are several probable causes of the condition, medical testimony is essential to establish causation. Appellant says this is such a case, and claims appellee is lacking substantial expert testimony necessary for this issue to have been properly submitted to the jury.
As pointed out in Davis v. Kemp, 252 Ark. 925, 481 S.W.2d 712 (1972) the applicable rule in malpractice cases is well settled in Arkansas. Quoting Graham v. Sisco, 248 Ark. 6, 449 S.W.2d 949 (1970), our Supreme Court said:
The necessity for the introduction of expert medical testimony in malpractice cases was exhaustively considered in Lanier v. Trammell, 207 Ark. 372, 180 S.W.2d 818 (1944). There we held that expert testimony is not required when the asserted negligence lies within the comprehension of the jury of laymen, such as a surgeon's failure to sterilize his instruments or to remove a sponge from the incision before closing it. On the other hand, when the applicable standard of care is not a matter of common knowledge the jury must have the assistance of expert witnesses in coming to a conclusion upon the issue of negligence.
This is an action for damages based upon negligence, not malpractice. However, appellant says the same rule should be applied to an issue of causation such as we have before us. In other words, appellant contends the cause of the hospital staph infection in the case before us would not be a matter of common knowledge to the jury, and therefore some expert testimony is required *38 [2] It is not necessary for us to decide that specific question, and we do not do so, because there is some expert testimony favorable to appellee in this case. There is also proof that an unsterilized towel was placed over the reopened wound.
Dr. Bundrick said the presence of staph bacteria is noted in hospitals, the reason being you have sick people there. He said you can't explain staph infection, and it is a serious danger to open wounds. Both doctors testified that the medical profession, under present conditions, does not fully understand all the causes of staph infections, and does not know how to control it entirely
As to whether or not the fall and reopening of the wound in the bath is relevant as a factor in determining transmission of the "staph" to Mr. Prothro, the following testimony by Dr. Bundrick, the orthopedic surgeon who performed the second operation and removed the metal ball from the hip, is applicable:
Q. And then doctor, if we didn't know anything about medicine, if we were a lay jury, and we were just using our own reasoning capacities and if he didn't have the staph infection and he had hip surgery that went all the way to the joint and then he broke the wound open and got a staph infection at that site, we would almost of reason necessarily relate the two, would we not?
A. Yes, you would if you know he had a staph infection at the site.
Q. As a matter of fact, he did have a staph infection at the site, did he not?
A. I can't say that because I don't know of any culture of that wound.
Q. But, doctor, the only place this staph infection manifested itself was at the site of the hip surgery, was it not?
A. Yes, deep in the hip.
Q. He didn't have any manifestation of staph infection anywhere else in his body, did he? A. Not at the time I saw him. Q. And your entire treatment was for staph infection of that right hip at the site of that surgery? A. That's correct.
Q. And that's where his trouble was? A. That's correct.
At another point in his testimony, Dr. Bundrick was asked the following questions:
Q. Assuming what Mr. Prothro said to be true that in the physical therapy situation and the device used to lift him in the tub collapsed and fell on him and broke open this wound, would that breaking open of that wound make that wound in the hospital a source of bacterial infection? That is, an opening for bacterial infection?
A. Yes, I think anything that opened the wound back up would make it susceptible to infection.
Q. Would it be more susceptible to infection than it was after it was sutured?
A. Yes.
Q. Considerably more, would it not? A. Yes.
Q. Isn't it not true that the opening of a wound in the hospital away from the operating room where bacteria is fought out, is it true that the opening in the hospital away from the operating room is very dangerous?
A. Yes, unless you are talking about like letting it drain out.
Q. I am talking about accidental opening of a wound after a surgical procedure.
A. Yes, it would be a danger of infection.
*39 There is other medical testimony favorable to appellee, and we cannot agree with the appellant that there is no medical testimony in the record supporting plaintiff-appellee's theory that the staph infection was caused by the incident in the Hubbard bath. And upon this point, the testimony of Mr. Prothro is entitled to some probative weight. He states that the pain which attended the staph infection did not develop or exist until after the fall in the bath which reopened his surgical wound. While his testimony was that of a layman, he could properly testify to those things or facts in connection with his bodily injuries or conditions which a layman as distinguished from a man of science is capable of observing.
In Lanier v. Trammell, supra, the Supreme Court quoted with approval the following principle of law:
Dr. Herzog, in his "Medical Jurisprudence", discussing the quantum of proof necessary to sustain a recovery for malpractice, lays down this rule (pp. 161, 162, Sec. 186): "It is not necessary to prove beyond a shadow of a doubt that an injury was caused by negligence preceding it, but a showing of strong probability of the causal relation is sufficient. Where negligence and injury are proved, a causal connection between them may be established by circumstantial evidence, by inferences from physical facts."
Though the evidence is circumstantial, this does not mean it must be conclusive beyond a reasonable doubt. Kapuschinsky v. United States, 248 F.Supp. 732 (1966). T'ie legal burden upon appellee does not become onerous because the evidence is circumstantial, though as pointed out in Kapuschinsky the "burden of persuasion" is necessarily more difficult. In cases of this nature, direct evidence is difficult to obtain.[3] The court in Lanier v. Trammell, supra, also quoted with approval from Helland v. Bridenstine, 55 Wash. 470, 104 P. 626, where the Supreme Court of Washington said: "Respondent was not required to prove her case beyond a reasonable doubt, nor by direct or positive evidence. It was only necessary that she show a chain of circumstances from which the ultimate fact required to be established is reasonably and naturally inferable."
In Longfellow v. Vernon, 57 Ind. App. 611, 105 N.E. 178, at 185, it is stated:
When facts having some testimony to prove them are stated hypothetically to a witness having the requisite scientific knowledge to form and express an opinion thereon, and he gives his expert opinion based thereon, such evidence is to be considered by the jury along with other testimony in the case, and should be given such weight as the jury, under proper instructions from the court, may deem it to merit. The fact that all or a part of the statements in such hypothetical question may depend entirely for proof upon the evidence of the nonexpert witnesses who have testified to them will not deprive such testimony of probative value, but the expert testimony based thereon will be weighed and considered by the rules governing the weight of such testimony generally; and, if a fact supported by such proof be found by the jury, it cannot be said to be the result of a mere guess, or to be wholly unsupported by evidence.
We think this is a sound rule, and is applicable to the case before us.
The Arkansas law on the use of hypothetical questions is well settled. New Empire Insurance Co. v. Taylor, 235 Ark. 758, 362 S.W.2d 4 (1962), Shaver v. Parsons Feed & Supply Co., Inc., 230 Ark. 357, 322 S.W.2d 690, see also Taylor v. McClintock, 87 Ark. 243 at 294, 112 S.W. 405. No objection was made to any of the hypothetical questions asked in the case before us and counsel for defense had the opportunity to put additional facts, not included in the original question(s), before the medical witnesses on cross-examination.
*40 In the case of Robertson v. LaCroix, Okl. App., 534 P.2d 17 (1975), after stating the principle that some expert testimony is required, the court said:
However, testimony of a medical expert witness that an injury could have been caused by a certain event, together with the corroborating evidence of a layman as to those facts concerning the injury which a layman is capable of observing may be sufficient to allow the issue of causation to be submitted to the jury.
The mere fact of infection in a hospital is not enough to open the door to awarding of damages. See Bartlett v. Argonaut Insurance Companies, 258 Ark. 221, 523 S.W.2d 385 (1975), Aetna Casualty & Surety Co. v. Pilcher, 244 Ark. 11, 424 S.W.2d 181 (1968). However, these cases can be distinguished on their facts from the present litigation.
The evidence here is in sharp dispute, and every issue or important fact involved was hotly contested in the trial below. For example, Mr. Prothro testified that his wound "burst" open, and his testimony is to the effect that the surgical site was broken open deeply and in a material way. Dr. Wharton on the other hand did not think so although the doctor had no personal recollection of the incident and had made no record concerning this phase of the matter. Dr. Wharton could not even remember when Mr. Prothro first reported the occurrence in the Hubbard bath to him. The doctor thought it was after Mr. Prothro was discharged from the hospital but could not be certain. He admitted that he stopped the baths in early November about the time Mr. Prothro says he told Dr. Wharton. Doctors are busy people, and are in most cases over worked. It is understandable that Dr. Wharton could not remember all of the details after a material lapse of time. Then too, Dr. Wharton was dependent to some degree on records made by the people in the hospital which records, the evidence indicates, were not very reliable or complete in many respects.
Although Dr. Bundrick and Dr. Wharton were of the opinion the fall and reopening of the wound in the bath did not cause Mr. Prothro's staph infection, a part of Dr. Bundrick's testimony does support appellee's theory of the case. This together with the testimony of Jim Prothro and Richard James was sufficient to justify the trial court in overruling the defendant's motion for a directed verdict, submitting this issue to the jury, and in denying the prayer of defendant for a judgment notwithstanding the verdict.
Even though we feel that the strongest evidence on the issue of causation was offered by appellant, this fact, of course, would not justify a reversal. We are only permitted under the law to determine whether there was any substantial evidence to support the view of the prevailing litigant. Mallett v. Brannon, 246 Ark. 541,439 S.W.2d 32 (1969). The evidence is in sharp dispute, and every issue involved was hotly contested in the trial below. Each issue was submitted to the jury under proper instructions which are not questioned on appeal. The jury has decided the fact issues in favor of the appellee, and we cannot conscientiously say there is no substantial evidence to support the verdict.
Appellant also argues that the verdict is excessive because the amount awarded by the jury included the consequences of staph infection. We need not consider this argument since we find the issue involving staph infection was properly submitted to the jury.
AFFIRMED.
PENIX, J., dissents.
PENIX, Judge, dissenting.
I would reverse. Although I have great reluctance to overturn a jury verdict, it is unsupported by the evidence. Harmon v. Ward, 202 Ark. 54, 149 S.W.2d 575 (1941); A. S. Barboro & Co. v. James, 205 Ark. 53, 168 S.W.2d 202 (1943); Nuckols v. Flynn, 228 Ark. 1106, 312 S.W.2d 444 (1958). The verdict reflects sympathy felt by the jury for the injured plaintiff. I, too, feel compassion for the 76 year old appellee who has obviously suffered greatly. However, I do *41 not feel there is evidence this suffering was proximately caused by the negligent act of the appellant.
The majority finds the answer to the "hypothetical question" propounded to Dr. Bundrick upon redirect examination to be substantial evidence. Here they have enlarged the importance of this exchange between appellee's attorney and Dr. Bundrick.
Q. And then, doctor, if we didn't know anything about medicine, if we were a lay jury, and we were just using our own reasoning capacities and if he didn't have the staph infection and he had the hip surgery that went all the way to the joint and then he broke the wound open and got a staph infection at that site, we would almost of reason necessarily relate the two, would we not?
A. Yes, you would if you know he had a staph infection at the site.
Q. And as a matter of fact, he did have a staph infection at the site, did he not?
A. I can't say that because I don't know of any culture of that wound.
This "hypothetical question" is deficient for two reasons:
1. Hypothetical questions can only be posed to experts. It is their design to make use of the expert's special knowledge and expertiseknowledge and expertise not possessed by a lay jury. The question asked of Dr. Bundrick asked the expert to abdicate as an expert. His answer is thus lay opinion. ". . . if we didn't know anything about medicine, if we were a lay jury . ." Bartlett v. Argonaut Ins. Co., 258 Ark. 221, 523 S.W.2d 385 (1975) and Aetna Casualty & Surety Co. v. Murl Pilcher et al, 2AA Ark. 11, 424 S.W.2d 181 (1968) require medical testimony in cases of this nature. This exchange is offered as expert medical testimony as to causation, when in reality it is of no more value than lay testimony. This is not enough to support the verdict.
2. ". . . then he broke the wound open and got a staph infection at that site . . ." There is no evidence in the record of staph being detected at the site of the opening of the wound. Dr. Bundrick, on cross-examination, testified there was no evidence of infection at the site of the wound:
Q. Dr. when you saw Mr. Prothro in February 1975, what was the condition of the surgical wound when you saw it?
A. Surgical wound was well-healed.
Q. Was it draining?
A. No.
Q. Based upon this finding, doctor, did you have an opinion as to whether the infection developed at the surgical site?
A. In my opinion, it would be a blood borne infection because this would be really the only way you could get the infection into the hip joint proper without having a draining sinus. If it came from without and the wound area, I would expect a draining sinus or track which goes down to the hip joint.
Q. In other words, if the staph microorganism made its entry through a portal being the surgical incision you would expect to have found infection from within the surgical incision itself down into the hip joint?
A. Right, a draining sinus track.
Q. In this particular case, you found none when you first examined him on the first occasion?
A. No, the wound was well-healed.
Q. Did you understand in the history and material that you were able to review that that was true, that the wound never drained?
A. That's correct.
The answer to the "hypothetical" question is predicated upon there being a staph infection at the site of the opening of the wound. There is absolutely no evidence in the record that the staph infection manifested itself at the opening of the wound. If there is no evidence at all, certainly there is no substantial evidence.
Although the new rules of evidence, particularly 702, permit an expert to give his *42 opinion directly, the appellee resorted to a "hypothetical" question, assuming a fact not in evidence, in order to try to get the desired answer from his own witness, Dr. Bundrick, and circumvent Dr. Bundrick's unfavorable testimony. The appellee has abused his witness' testimony.
The jury are apt, especially where there are many expert witnesses and the evidence is voluminous, to remember and accept merely the net opinion of a witness, with little or no reference to the special premises on which it was based. Thus, if a counsel were to select from the testimony the evidential circumstances most favorable to his party, or those least favorable to his opponent, and obtain an opinion thereon, it is obvious that if the jury forgets the partial nature of the opinion's premises, the opinion may count with them, when perhaps it ought not to count at all. Now the law and the judge cannot, of course be expected to reject legitimate offers of evidence simply because the jury may occasionally fail to perform its duty intelligently. But the Court may well interfere to prevent questions which are under the circumstances practically valueless, and are either intended or fairly likely to mislead the jury. Some Courts, looking at the not uncommon abuse of the hypothetical question, have properly attempted to forbid the putting of questions whenever the abuse of this sort is probable. 2 Wigmore on Evidence, § 682, at pages 808-809 (Third Edition, 1940).
Dr. Bundrick's answer to the "hypothetical" question is the only testimony by a medical expert which supports the appellee's contention of proximate cause. As a matter of law this hypothetical question posed by the appellee was deficient. The affirmance of the majority based on this "hypothetical" question demonstrates why Wigmore wants courts to abolish the use of the hypothetical question.
The hypothetical question, misused by the clumsy and abused by the clever, has in practice led to intolerable obstruction of truth. In the first place, it has artificially clamped the mouth of the expert witness, so that his answer to a complex question may not express his actual opinion on the actual case. Wigmore, supra § 686.
I find no evidence to support the jury verdict other than that of the plaintiff himself. This is not enough. In a situation where the injury or damages are beyond the normal experiences and understanding of a jury, expert testimony is required. This expert testimony does not exist.
The appellant has admitted liability for the negligent incident of the hospital. I would reverse and remand for a determination of the damages owed appellee due to the negligent incident itself. Therefore, I respectfully dissent.
NOTES
[1] This case was appealed to the Arkansas Supreme Court, and by that court assigned to the Arkansas Court of Appeals under Rule 29(3).
[2] See Whaley v. Fowler, 152 Cal.App.2d 379, 313 P.2d 97 (1957), where medical testimony was not required.
[3] In Kapuschinsky v. United States, 248 F.Supp. 732 (1966) judicial notice was taken of what that court termed a well recognized reluctance of members of the local medical profession to testify in cases where a hospital is charged with negligence.
|
181 So.2d 763 (1965)
248 La. 730
STATE of Louisiana
v.
Joshua CARTER and Lawrence Baptiste.
No. 47514.
Supreme Court of Louisiana.
June 7, 1965.
Dissenting Opinion June 21, 1965.
On Rehearing January 17, 1966.
John P. Dowling, Edward M. Baldwin, New Orleans, for appellants.
Jack P. F. Gremillion, Atty. Gen., William P. Schuler, Asst. Atty. Gen., M. E. Culligan, Asst. Atty. Gen., Jim Garrison, *764 Dist. Atty., Louise Korns, Asst. Dist. Atty., George Piazza II, Asst. Dist. Atty., for appellee.
FOURNET, Chief Justice.
Joshua Carter and Lawrence Baptiste prosecute this appeal from their conviction of a charge by indictment returned by the Orleans Parish grand jury on December 12, 1961, of the aggravated rape[1] of Mrs. Myrtle Sandifur, as well as from their death sentences thereunder, relying for the reversal thereof on numerous errors allegedly committed during the course of their trial, to which objections were timely made and perfected in Bills of Exceptions.
The record reveals Mrs. Sandifur, a married woman of the Caucasian race about 43 years of age, left her home on Soniat Street on the night of November 18, 1961, accompanied by her husband, Napoleon Sandifur, to walk their small dog, stopping to visit friends who operated a bar in the 1300 block of Lyons Street. While walking back on Upperline Street about midnight, near its dimly-lighted intersection with Coliseum Street, she and her husband were suddenly and viciously attacked.
Mr. Sandifur testified he was "grabbed from behind," knocked to the ground, and savagely beaten into unconsciousness, he was unable to "recognize anything" because the area was so dark except that his assailants were four Negroes, two of them being taller than the other two. Before he was knocked to the ground and before losing consciousness, money amounting to less than $5.00 was taken from his wallet.
Mrs. Sandifur stated that prior to the time she and her husband were "jumped" she saw no one, her first knowledge of the attack coming when she was hit in the face, told to "shut up" when she screamed, and was struck again. From that time until she was taken home by the police a few hours later, she knew nothing. However, the record shows she was knocked to the ground at the point of attack, robbed of the $19.00 in her purse, ravished there by one of the assailants, dragged by him with the assistance of another through an alleyway, where both ravished her. She was discovered under bushes on Lyons Street shortly thereafter by police officers in an undressed condition from the waist, her girdle, underpants, false teeth (broken during the attack), and several other articles of clothing being found on the ground at this spot. Her condition was so serious Patrolman Arthur Trahan, who was at the scene, stated she was not only unconscious but so white and her breath so negligible he thought she was dead.
There were no other eye witnesses testifying at the trial, although an unidentified person notified the police about 12:25 a. m. the crime was in progress, and, as a result, several units of the police department were dispatched to the scene. Sergeant Felix Palmisano and Patrolman William Buckel, first to arrive, found Mr. Sandifur in a dazed condition, bleeding profusely from multiple cuts and bruises about the face. There was much blood on the sidewalk and ground in the immediate vicinity. On the sidewalk they found a man's wallet, a lady's shoes, purse, and the contents thereof. Mr. Sandifur, in an apparent moment of consciousness, seemed to remember seeing *765 his wife being dragged away and asked of her whereabouts.
Detectives Edward O'Donnell and John J. Perrot, arriving at the scene after the victims had been taken to Charity Hospital, observed the blood on the sidewalk and were told by other officers they had managed to piece together from Mr. Sandifur's incoherent statements that four Negroes had attacked him and his wife. Perrot, recalling having seen a Negro male wearing white tennis shoes running across Upperline Street and entering the Colonial Bar as he and O'Donnell were approaching the scene, at once backed the car to this place and, with O'Donnell, entered. There they found Lawrence Baptiste, age 20, Henry Baptiste, age 19, and Richard Ruth, age 15, sitting at the bar, each with a bottle of beer. The officers, upon directing the beams of their flashlights and noticing Lawrence was wearing white shoes, took the three out of the bar and, after placing them under arrest for the crime of armed robbery, took them back to the scene of the crime, where they were questioned for a few minutes. At this time Lawrence explained the blood found on his shoes resulted from a fight in which he had engaged in the bar earlier, while Henry denied the substance discovered on his shoes was blood. The three were then taken to the Second District Precinct Station, where they arrived about 1:30 a. m. Henry and Lawrence were booked with vagrancy under investigation for armed robbery; Ruth was not, as he was a juvenile.
When told the blood on his shoes would be compared with that of the victims and his alibi thoroughly checked, Lawrence purportedly made several inculpatory remarks. This prompted Ruth, who was nearby, to also make incriminating statements. The police, learning from these statements that Joshua Carter, age 17, was also implicated, arrested him at his home about 2:00 a. m., and, shortly thereafter, he was booked at the Second District Precinct Station with armed robbery and aggravated rape. Ruth was then booked with aggravated rape. Some time thereafter, as the result of a telephone call from the Detective Bureau, Lawrence and Henry were rebooked with armed robbery and aggravated rape.
About 3:15 a. m. these four defendants were transferred to the Detective Bureau at Police Headquarters, where they were fingerprinted and "mugged," each making oral statements, including Carter and Henry, who, until then, had been adamant in protesting their innocence. These statements were later reduced to writing by Desk Sergeant Dyer, Carter signing his at 5:25 a. m., Henry at 6:55 a. m., Lawrence at 7:25 a. m., and Ruth at 7:45 a. m.
A little after 8:00 a. m. the accused were taken to the scene of the crime, where additional oral statements were purportedly made, and where they performed certain acts demonstrating the manner in which they had committed the crime, photographs being taken of them as they went through their gestures. At 8:00 o'clock the following morning (November 20, 1961), these men were taken to the "show-up room", and it was while there that Carter indicated he and Lawrence had criminally assaulted Mrs. Sandifur. All were then taken back to the Precinct Station, where they remained until taken to Parish Prison on November 27, 1961.
On December 12, 1961, the grand jury for Orleans Parish, in a Bill of Indictment prepared by the District Attorney and charging all four with aggravated rape, returned a true bill only as to Joshua Carter and Lawrence Baptiste, pretermitting the charges against Henry Baptiste and Richard Ruth. However, on February 23, 1962, they were also charged by indictment with the aggravated rape of Mrs. Sandifur. On November 26, 1962, all four were brought to trial, and, after a hearing lasting 15 days, Joshua Carter and Lawrence Baptiste were convicted and sentenced to death. Richard Ruth and Henry Baptiste, who received a qualified verdict of guilty without capital punishment, did not appeal, *766 and are presently serving their sentences under these convictions.
The transcript recording this lengthy trial is voluminous, consisting, in addition to exhibits, of 12 volumes totalling 2,737 pages that are devoted to the inscription of the minutes of the court, the indictments, the opening statement of the District Attorney, various documents and evidence heard on the voir dire examination of the jurors and during the trial on the merits, as well as the trial judge's charge to the jury, the Bills of Exceptions and appended Per Curiams. However, of the innumerable Bills reserved during the trial, only 40 have been perfected, and of these, 16[2] were apparently abandoned by defense counsel, who briefed and argued only 24.
The first two Bills now relied on for the reversal of the conviction and sentence of Lawrence and Carter were reserved when the trial judge refused to order the District Attorney to furnish defense counsel with copies of all oral confessions, admissions, and inculpatory statements the accused may have made to the police, the police reports themselves, and the Coroner's proces verbal in the case. Each defendant was, however, given a copy of his written confession, as well as the one made by each of his co-defendants.
Bills of Exceptions Nos. 4, 5, 8 and 23 were reserved when the trial judge refused to quash the indictments, defendants urging as grounds therefor the violation of their rights of due process and equal protection caused by the manner in which R.S. 14:42, under which they were charged, is administered and enforced since its history eloquently reflects this has resulted in a "plethora of capital punishments directed to and intended almost exclusively for Negroes," and the denial of counsel's right to establish this allegation by producing statistical data they endeavored to secure under writs of subpoena duces tecum directed to the Governor, the Secretary of State, and the Attorney General, as well as his refusal to permit defense counsel to introduce in evidence three exhibits that would purportedly further strengthen this contention, and testimony relative thereto.
Bill of Exception No. 6 was reserved when the trial judge refused to declare R.S. 14:42 unconstitutional on the ground that it had been enacted by an invalidly constituted Legislature since that body had failed to reapportion itself since 1930 despite the constitutional mandate that it must do so every ten years in the light of population growth as reflected by official federal census compilations.
Bills Nos. 9, 10, 12, 13, 14, 15, and 16 were reserved to the rulings of the trial judge refusing to excuse for cause several prospective jurors, with the result that defense counsel were compelled to exhaust their peremptory challenges and accept an obnoxious juror.
Bill of Exceptions No. 11 presents a contention somewhat similar to that raised in the grouping of the Bills mentioned immediately above, having been reserved when the trial judge maintained the State's objection to defense efforts to elicit from prospective jurors on voir dire examination what effect on their verdict the factif provedthe statute denouncing aggravated rape in Louisiana under which the accused were being tried (R.S. 14:42) was being prejudicially administered and enforced against Negroes might have.
Bill of Exceptions No. 19 was reserved when the trial judge refused to permit defense counsel, over State objection, to ask a defense witness then incarcerated if he "could lose that time," after the witness had denied anyone had told him how to testify and stated he had only five months left to serve on his sentence as he was getting "2 for 1."
The twentieth Bill was reserved when the judge refused to permit Mrs. Elizabeth *767 Fowler to testify with respect to advice she had given Carter's mother, whom she employed as a domestic, the day following the commission of the offense.
Bill of Exceptions No. 25 is levelled at the instruction given by the judge at the request of one of the jurors who sought enlightenment as to the meaning of a sentence of life imprisonment, and whether one so sentenced could be paroled.
Bill of Exceptions No. 28 was reserved when the trial judge qualified the State's witness Milton Cox as an expert "to test for the presence of blood and blood typing."
Bills Nos. 29 and 37 were reserved to the trial judge's refusal to permit defense counsel to put two of the defendants on the stand, in the presence of the jury, for the limited purpose of rebuttal on the predicate for the introduction of their confessions.
When the judge ruled the oral and written confessions of the defendants, as well as their re-enactment of the crime, had been freely and voluntarily made, defense counsel reserved Bill of Exceptions No. 31.
Bills of Exceptions No. 39 was reserved when the trial judge denied the motion for a new trial, and No. 40 when he denied the motion in arrest of judgment, both of which contain almost identical allegations. In the motion for a new trial there is contained the usual allegation that the verdict is contrary to the law and the evidence and a reiteration of all of the Bills just mentioned. However, in this motion defense counsel asserted for the first time (1) that R.S. 14:42 is unconstitutional in that the penalty of death or aggravated rape constitutes the cruel and unjust punishment denounced by the Eighth and Fourteenth Amendments to the Constitution of the United States, and (2) the method employed in selecting grand and petit juries in Orleans Parish is discriminatory inasmuch as the grand jurors are chosen by the judge, whereas in the other parishes they are selected by lot or chance, and that the members of both panels have never been impartially selected with the result that Negroes, in Orleans Parish, are either systematically excluded or a token number systematically included, thus reducing the participation of qualified Negroes in these panels to a minimum; consequently, as in the instant case, the State was able to prevent all prospective Negro jurors from serving through the exercise of its peremptory challenges.
We find that a careful study and analysis of the foregoing Bills, the alleged errors forming the basis thereof, and the Per Curiams of the trial judge appended thereto will readily disclose all of them, with the exception of Nos. 20, 31 and 39, are without merit, either because they are not supported by the law and the jurisprudence, or by the evidence. In fact, counsel concede that in briefing Bills Nos. 4, 5, 6, 8, and 28 they were unable to "find sufficient merit in them to brief them in detail;" and were constrained to admit in brief that the first two Bills were not supported by the law and jurisprudence of this State, but suggest we overrule this prior jurisprudence. No useful purpose can be served by treating each of the remaining Bills, for they are of similar import and totally lacking in merit.
As pointed out above, Bill of Exceptions No. 20 was reserved when Mrs. Fowler was denied the right to relate to the jury the advise she had given the mother of Carter when she arrived for work on the morning after the crime was committed. The note of evidence taken in connection with this Bill shows Mrs. Fowler had read about Carters' arrest in the paper and was, therefore, cognizant of the reason why Mrs. Carter was so upset; consequently, when she learned from her employee that she had been denied permission to see her son despite the fact she, her husband, and her minister had all gone to the jail for this purpose several times, Mrs. Fowler advised: "It is your right to see your son; go down to the Legal Aid Bureau and they will make arrangements for you to see your son, which she did on the following day." The trial judge, in his Per Curiam to this Bill, states this testimony of Mrs. Fowler was *768 obviously hearsay and irrelevant, having nothing to do with the case.
We are in full accord with the principle of law enunciated in State v. Murphy, 234 La. 909, 102 So.2d 61, relied upon by the trial judge in making his ruling, and which is to the effect that a trial judge must be accorded wide discretion to determine whether particular evidence sought to be introduced in a criminal prosecution is relevant to the case. However, we do not agree with his conclusion that this testimony falls into the category of hearsay evidence. The testimony sought to be elicited from Mrs. Fowler was, in our opinion, of the same tenor as that given by Judge Blair Lancaster and Attorney Joseph Hurndon. Judge Lancaster was permitted to testify that he had received a call from Reverend Singleton, the Carter family minister, and as a result, called the Second District Precinct Station and "told them I would like them to find out whether Joshua Carter needed any medical attention." Hurndon, testifying as a witness, stated that on Wednesday, November 22, 1961, he had several telephone calls from members of the Ruth family and, about 5:30 p. m., spoke to Ruth's mother, and although he advised her he handled civil cases primarily, he did, at her insistence, "go to see the boy to try to determine the basis of the facts surrounding his arrest." He further testified that when he was permitted to see the boy, after identifying himself as an attorney, he was conscious of a police officer standing nearby. Such evidence as this given by these two men, as well as that given by Mrs. Fowler, is not, in our opinion, hearsay, but instead, very material in explaining certain events, as well as for purposes of corroborating the testimony of other witnesses touching on the contention of the defendants that they were denied visits by their families and a minister.
While this error, in itself, may not be considered sufficiently prejudicial to warrant a reversal, we pass to the more serious Bills, and, more particularly, the one that has given us much concern, i. e., the Bill reserved when the trial judge permitted to be introduced in evidence the oral and written confessions of the defendants, as well as their re-enactments at the scene of the crime.
Counsel for the defendants contend, first, that all statements made by them, as well as their acts at the scene of the crime, were obtained while they were being illegally detained by the police, who did not advise them of their right to counsel, their right to remain silent, and of the fact that whatever they might say could be used against them; second, that the written statements were not dictated by them, and that none of the oral statements or written confessions attributed to them, or the re-enactments at the scene, were freely and voluntarily given; and, finally, that for several days they were not permitted to use the telephone to talk to members of their families, and that these families, as well as a church leader, had been denied the right to see or assist them in any way.
In argument, defense counsel readily conceded that the jurisprudence of this State does not support their contention that the police are under obligation to advise an accused after arrest against self-incrimination, his right to assistance of counsel, to remain silent, and the possible use of any incriminating statements before receiving his confession.
Counsel submit, however, that this jurisprudence has been completely overruled by the decisions of the United States Supreme Court, particularly in Escobedo v. State of Illinois,[3] 378 U.S. 478, 84 S.Ct. 1758, 12 L.Ed.2d 977, holding "that when the process shifts from investigatory to accusatory when its focus is on the accused and its purpose is to elicit a confessionour adversary system begins to operate, and, under the circumstances here, the accused *769 must be permitted to consult with his lawyer." (Emphasis ours.)
While we consider this statement of our land's highest courtbinding on usa rather strong pronouncement, and one that might well be stretched eventually to destroy the very rights sought to be protected, as was pointed out in one of the dissenting opinions in this case that was later followed by the Supreme Court of California in People v. Dorado, 42 Cal.Rptr. 169, 398 P. 2d 361, and more recently by the United States Court of Appeal for the Third Circuit in Russo v. New Jersey and Bisignano v. New Jersey, 351 F.2d 429, handed down May 20, 1965, we are constrained to view the Escobedo decision as applicable only to the very unusual facts of that case, as we think is clearly indicated by the above italicized portion, until this matter has been more definitely clarified and resolved by our highest court.[4]
There can be no question but that criminal law enforcement in the several states of the Union has been seriously handicapped by the recent decisions of the United States Supreme Court, rendered apparently under a zealous compulsion to give the highest and broadest possible construction to the rights guaranteed by the United States Constitution in order to protect individuals called to the bar of justice, and if this trend is further extended, as is being suggested by defense counsel in the instant case, this might well result in the complete destruction of the very rights sought to be protected, and more particularly, the rights of the vast majority of our people to be secure in their person and property from acts of violence by others, as is also guaranteed by the Constitution. However, in disposing of the case at bar, we prefer to rest our decision on the merits of the contention that the confessions and actions of the defendants at the scene of the crime were not free and voluntary.
As pointed out by the author of the instant opinion in State v. Robinson, 215 La. 974, 41 So.2d 848, on rehearing, "The rule now universally obtaining in all countries where the common law prevails, that a confession of a person accused of a crime is admissible in evidence only if freely and voluntarily made, is the result of the humanitarian principles evolved by courts during civilization's progress from the ancient harsh and continental practice of putting a person charged with a crime to the torture and breaking him piece by piece until the confession was obtained, regardless whether a crime had, in fact, been committed, or, if committed, had been committed by the person being tortured.
"It was only natural, therefore, that this humane principle found its way into our system of law when our forefathers came to this country in their quest for full liberty and that there was included in the Bill of Rights to the Constitution of the United States the provision that no one could be compelled in a criminal case to be a witness against himself.
"The delegates representing the people of this state at the Constitutional Convention of 1921 included in the Bill of Rights to this Constitution a similar provision, and, in order to insure it would be beyond the power of the legislature or the judiciary to depart from what was the then accepted jurisprudence of this court, they added as a part of this same section, Section 11 of Article I, the provision that `No person under arrest shall be subjected to any treatment designed by effect on body or mind to compel confession of crime; nor shall any confession be used against any person accused of crime unless freely and voluntarily made.'
"In conformity therewith, the legislature of 1928, in adopting a Code of Criminal Procedure, incorporated in its Articles 452 *770 and 451 (now R.S. 15:452 and 15:451) respectively, the following provisions: `No person under arrest shall be subjected to any treatment designed by effect on body or mind to compel a confession of crime,' and `Before what purposes [purports] to be a confession can be introduced in evidence, it must be affirmatively shown that it was free and voluntary, and not made under the influence of fear, duress, intimidation, menaces, threats, inducements or promises.' (Brackets ours.)"
The jurisprudence of this court will clearly show strict compliance with this legislative mandate has been universally adhered to. See, for example, State v. Honeycutt, 216 La. 610, 44 So.2d 313; and State v. Ferguson, 240 La. 593, 124 So.2d 558. Furthermore, as pointed out in the Honeycutt case, "* * * for a confession to be admissible in evidence against an accused in any criminal case, the burden of proof is on the State to show that such confession was freely and voluntarily given and not made under the influence of fear, duress, intimidation, menaces, threats, inducements, or promises. In numerous cases this court has gone so far as to hold that, before what purports to be a confession can be introduced in evidence, it must be shown, not only affirmatively but by proof beyond a reasonable doubt, that it was free and voluntary. * * *" (Emphasis ours.)
It is the contention of the State that the trial judge's rulings with respect to the confessions of the defendants in the instant case were proper. In his Per Curiams the judge states he found the confessions, whether oral or in writing, had been freely and voluntarily given, there being no evidence of any kind to establish resort to duress had been made to secure them. He pointed out that 16 police officers were called in rebuttal and each testified no brutality, threats, promises, or any form of coercion was made by them or in their presence to extort the confessions and produce the actions of the defendants. He further states that had there been brutality, "it would have shown on the photographs" introduced in evidence. He gave no credence to the testimony of the defendants, considered totally discredited the testimony of their witnesses Albert Nora and Frank Maples because they were "fellow prisoners," and concluded all of the defense evidence and testimony on this point was fully and completely rebutted by the testimony of the 16 officers above referred to. He also found as a fact the defendants had not been held incommunicado; that no law required police officers to advise them of their rights before taking their confessions; and further, that the defendants were not denied the use of the telephone.
The record reveals that all four defendants denied they had dictated the written confessions as claimed by the policemen, each testifying he signed the statement prepared by an officer only because of threats and the fear of being subjected to further brutality. In fact, Carter and Henry, as mentioned above, up until the time they were taken to the Detective Bureau had not admitted participating in the crime; it was only after being confronted repeatedly with the statements of co-defendants and being beaten that they signed their confessions. Carter related he was hit on the forehead and in the stomach with fists, and on the head with both the booking-book and a lug wrench; Henry stated he was also beat on the head with the book, and hit in the back with the wrench.
It is true, as stated by the trial judge, that each of the 16 officers connected with some phase of this case testified in rebuttal none of the defendants were struck or abused by them, that they made no promises of immunity or adjurations to tell the truth or used any form of coercion upon them to secure the confessions, and that no other person had done so in the particular officer's presence. Certainly if this comprised all the evidence in the record on the subject we would unquestionably have no alternative but to uphold the ruling of the trial judge with respect to the admission of the *771 confessions. However, after giving careful consideration to the evidence and photographs of the accused introduced at the trial, we entertain serious doubt that the confessions secured from the defendants and their re-enactment of the crime at the scene were freely and voluntarily made.
In the first place, we do not find the testimony of the various police officers to the effect that no visitation rights were denied the defendants for several days after their arrest is as reliable and convincing as found by the trial judge as the evidence to the contrary is overwhelming, nor do we think the trial judge was justified in failing to give any credence to the testimony of Albert Nora and Frank Maples simply because they were "fellow prisoners." The record fails to disclose anything upon which the trial judge could rest his conclusion in this respect. On the contrary, by appearing as witnesses, these men took the chance of losing the privileges of the prison, such as time earned because of good conduct.
Maples, who was confined at the time the crime was committed in the Second District Precinct Station, corroborated the testimony of Henry that he had been beaten with the result that he was cut above the right eye, which was swollen and bleeding. Maples testified that when Henry was thrown into the same cell with him, he was in such a dazed condition Maples first thought he was drunk. When Henry apparently began to recover, Maples noticed the cut over his right eye and helped him wash it. His testimony also corroborates in a measure Carter's testimony with respect to the bruises he had received, for Maples stated he noticed when all four were placed in the cell with him after they were returned to the Precinct Station following their reenactments at the scene, Carter had knots on his head. The latter is further corroborated by Nora's testimony that he was serving a sentence in Parish Prison when all of the defendants were brought there on November 27, 1961, and he noticed a "large bump" on Carter's head. The testimony of this witness also corroborates that of Lawrence, as he stated he saw bruises on Lawrence's chest.
Each of the defendants corroborates the testimony of the others in some respects. As an example, with reference to Carter's condition, Lawrence testified his "head looked strange * * * had a bump on it * * * and was out of shape." Henry related that Carter's "cheekbone was all swole up * * * his face was knotted up, across his forehead," while Ruth noted that Carter's "haid was one-sided. One side of his haid was high, and the other side of his haid was low." This testimony is further supported by that of Carter's mother who stated she observed signs of injury on the head, forehead, and cheek of her son when she was finally permitted to see him on November 21, 1961.
As to Henry's condition, in addition to the corroboration given by Maples at the time Henry was placed in the cell at the Precinct Station, Lawrence testified he noted Henry was cut above his eye and that it was swollen. Lawrence further corroborated Henry's testimony in that he stated while they were in the Detective Bureau, he saw Perrot strike Henry with a lug wrench. Ruth testified he saw Henry get hit in the stomach while in the Bureau of Identification and his testimony further corroborates that of Henry as to his treatment at the Second District Precinct Station, for although Henry was confined in a back room, Ruth could hear the thump sound of the fist blows being administered to Henry and could hear him groaning, moaning and hollering; while at the Detective Bureau he was sitting next to Henry and saw the condition of his eye. His testimony that he was positive Henry had no such injury when they were earlier in the Colonial Bar is fully corroborated by that of Officer William Conlin who related that when Henry, Lawrence, and Ruth were returned to the scene immediately after their arrest, he spoke to Henry because he knew him, and observed no cuts on his face.
*772 Lawrence's testimony that he was subjected to a severe beating in the booking area of the Second District Precinct Station is fully supported by that of Ruth, who, apparently prompted by the fear of being given the same, made his alleged statement to the police. Lawrence's testimony that during the time he was handcuffed and at the scene of the crime immediately after his arrest, he was repeatedly struck by officers with their fists in the stomach, kicked, and hit on the head with a flashlight, as well as being thrown up against a police car, was fully corroborated by that of Henry.
Unlike the trial judge, from our observation of the photographs of the defendants introduced during the trial of the case, we think they irrefutably corroborate their position on this subject. It is easy to detect bumps on the right cheek and forehead on the "mug shot" of Carter. These are even more apparent in the photographs taken at the re-enactment of the crime at the scene. In still another photograph of Carter taken from the left side, a large bump in the region of his lower left jaw is clearly discernible.
While the photographs taken of Henry do not clearly show the cuts and bruises he claims he received, and which Maples testified existed when Henry was thrown into the cell with him at the Second District Precinct Station early in the morning on November 19, 1961, these photographs were not taken until three days later, and the swelling had had sufficient time to subside and the cut over the eye to heal to some extent. In explaining why Henry's picture was not taken at the time the other three were "mugged," which was November 19, 1961, the photographer stated that Henry's picture had been taken on that day, but that the pictures did not come out and they did not keep defective negatives. Nevertheless, when Henry's full-face photograph and the one of the right side of his head are carefully examined, there appears to be some swelling around his right eye, and an indication of a scar along its upper eyebrow line. Further, the picture of Henry taken with Ruth at the scene at the time of the re-enactment, only a few hours later, clearly shows the swollen condition of the right eye.
As above pointed out, while each of the 16 officers denied he had personally struck any of the defendants, and stated he had not seen any other officer do so, they weakened their own testimony by not remembering receiving a call from Judge Blair Lancaster, which he stated he made, and by denying having received any demand or request to see the defendants during the first two days of their confinement.
We think the testimony of Officer Francis Burgess, the desk sergeant at the Second District Precinct Station where Lawrence, Henry, and Ruth were first taken, and at which time Lawrence is said to have voluntarily confessed to O'Donnell in the presence of several officers, is most illuminating. Although Burgess admitted having a typewriter in his office and had at other times taken statements from arrested persons that were considered confessions, he did not take down the statement attributed to Lawrence at this time or hear any questions, answers, threats, or other form of maltreatment, stating: "I didn't pay any attention to what was going on" and "All I knew was that the officers brought them in there to book them. I did my job, I booked them, I made the mugging slips, and that was the end of my job." He did not seem to remember anything that occurred on this occasion in his small office, although it was established by the records and also the testimony of Officer Thomas Daley that little was going on other than the booking of these defendants as it was a quiet night. He did not remember whether the three were brought in together; he did not remember what happened to Henry and Ruth after they were booked; he did not remember how long Lawrence stayed in the booking area. He did not remember telling Ruth he could not use the telephone; nor could he remember if anyone called to see Ruth while he was on duty. He did not remember who relieved him at 7:00 a. m. on *773 Sunday, November 19, 1961, or even whether he had worked the 11:00 p.m. to 7:00 a.m. shift, although he admitted the handwriting in the arrest book showed he had made the entries therein. He did not recall seeing any members of Carter's family or Reverend Singleton at the Precinct Station.
We find, further, that the testimony of the officers touching on the matter of the purported written confessions actually supports the contention of the defendants that they did not, in fact, dictate them. The statements themselves as typewritten reflect a strong similarity. Detective O'Donnell, the only officer who testified as to the manner in which the confessions were given when reduced to writing, stated Officer Dyer took down "substantially" what the defendants had dictated. However, when studied and analyzed, we feel this testimony strongly corroborates the fact that Dyer simply wrote out a summation of the answers given by each defendant to the questions put to him. Such procedure is certainly open to challenge, the facts of this case furnishing an excellent example of why this is true. We think the better practice is to include the questions of the officers and the answers thereto as given by the defendants, verbatim.
We think the time element involved in reducing each of the four short confessions to writing speaks eloquently in support of our conclusion. The defendants were taken to the Detective Bureau where questioning began about 3:45 a.m. and continued until about 4:45 a.m., when Carter purportedly began dictating his confession, this lasting until 5:25 a.m., a period of 40 minutes, at which time he signed the document. Henry, who, up to this time had been most adamant in his denial of any participation in the crime, is said to have followed, and it took 1 hour and 30 minutes before he signed at 6:55 a.m. Next was the purported dictation by Lawrence which lasted until 7:25 a.m., when he signed; Ruth was last, signing at 7:45 a.m.
While this is a most revolting and heinous crime, in the light of the above, we are impelled to conclude the confessions and the re-enactment of the crime were not free and voluntary.
For the reasons assigned, the convictions and sentences of Lawrence Baptiste and Joshua Carter are annulled and set aside and the case is remanded to Section "H" of the Criminal District Court for the Parish of Orleans for a new trial.
SANDERS, J., dissents, being of the opinion that the confessions were properly admitted in evidence for the reasons assigned by the trial judge.
SUMMERS, Justice (dissenting).
These defendants confessed, not once, but at least three times
I cannot understand the majority accepting the testimony of these accused persons that their confessions were compelled by force. The only evidence to corroborate their testimony that they were beaten to force the confessions is the testimony of Frank Maples and Albert Nora (these two were fellow prisoners, convicted felons with long criminal records which included aggravated rape), and Joseph Herndon, an experienced attorney, who did nothing to preserve the evidence of bruises he said he saw on the persons of the accused. This is a man with at least ten years experience as an assistant city attorney, who would have called a doctor or a photographer, but he knew this would be of no avail as all four defendants were already photographed. I have seen these photographs and I see no evidence of brutality and the trial court judge saw none.
Moreover, a total of fifteen police officers who had contact with the defendants at one time or another during the night of their arrest testified to the absence of threats, coercion, or inducements while the defendants were in their presence.
*774 The trial judge and jury heard these witnesses and they did not believe that the confessions were induced by force. And yet, the majority, by reference to the printed record, repudiates that finding.
The question of the admissibility in evidence of a confession is for the trial judge, its effect for the jury; and whether a sufficient basis was laid for the admission of a confession is an issue of fact upon which the ruling of the trial judge will not be disturbed on appeal unless that ruling is clearly against the preponderance of the evidence on that issue. State v. Bueche, 243 La. 160, 142 So.2d 381 (1962); State v. Steward, 238 La. 1036, 117 So.2d 583 (1960); State v. Weston, 232 La. 766, 95 So.2d 305 (1957).
I dissent.
ON REHEARING
McCALEB, Justice.
We granted a rehearing in this case to permit the State to demonstrate, if it could, its claim that we erred on first hearing in holding the confessions of the four participants in the heinous crime for which they have been convicted were secured in some degree by police brutality and, therefore, were admitted in evidence against them contrary to the mandate of Section 11 of Article 1 of our Constitution that "* * * No person under arrest shall be subjected to any treatment designed by effect on body or mind to compel confession of crime; nor shall any confession be used against any person accused of crime unless freely and voluntarily made".
On rehearing, counsel for the State specify:
(1) That we should not have set aside the finding of the trial judge on the issue of police brutality in obtaining the confessions inasmuch as that finding is supported by the evidence and the photographs of the accused;
(2) That it was legally incorrect to reject the confessions because they were not in the form of verbatim questions and answers and thus, in effect, deny to investigating and enforcement officers the right of securing statements dictated by accused persons to police officers who take down in writing the substance of such statements, which are subsequently signed by the accused, and
(3) In holding that the time involved in obtaining the written confessions supports the conclusion that the defendants were beaten by the police.
Considering, first, the second complaint of the State, we note from a re-examination of the record that there is a conflict between defendants' testimony and the statements of the police officers as to whether the confessions, which were placed in narrative form, were actually given in question and answer form. We find it unnecessary to resolve this conflict for, since the substance of the confessions was recorded by Officer Dyer in narrative form and the defendants signed and made them their written act, it is immaterial whether they were dictated to the officer or given by answers to questions propounded by the police. It is true that the typewritten statements reflect, as stated in the original opinion, a strong similarity. But this is a factor of no importance for, when it is considered that the defendants were jointly engaged in perpetrating the crimes for which they were charged, the various accounts of their activities (which we think they have given, whether by duress or voluntarily) must be intrinsically the same. Hence, we are now of the opinion that the circumstance of similarity does not warrant the implication that the defendants did not dictate the substance of the statements recorded by the officer.
Nor, on reflection, do we believe it is necessarily the better practice for officers, in taking down confessions of crime wherein the accused gives his answers to questions propounded by the investigator, to *775 inscribe verbatim the questions asked and answers given thereto as the confession of the accused. While this form is permitted by Article 453 of the Code of Criminal Procedure (R.S. 15:453), it is not obligatory. The jurisprudence of this Court is that written confessions need not be in the exact language of the accused; they are sufficient if the substance of the oral statement is recorded. State v. Brasseaux, 163 La. 686, 112 So. 650; State v. Kennedy, 232 La. 755, 95 So.2d 301 and State v. Domino, 234 La. 950, 102 So.2d 227.
Albeit we have no doubt that the defendants gave the confessions recorded by Officer Dyer, this finding furnishes no answer to the serious question presented in the case, i. e., whether these confessions and other oral inculpatory statements, or any one or more of them, were induced in some measure through cruel treatment administered by the police on the persons of the defendants.
Pretermitting, for the moment, discussion of the State's contention of error in our prior holding as to admissibility vel non of the confessions, we address our attention to the third complaint of the State that we erred in holding that the time element involved in reducing each of the four short confessions to writing supports our conclusion that the defendants were beaten by the police.
We find little substance in the contention. Two of the defendants, Carter and Henry Baptiste, are shown by the evidence to have been steadfastly adamant to police questioning when they were first arrested and did not admit participation in the crime until they were taken at 4:20 a. m. on the morning of November 19, 1961, to the Detective Bureau where, according to their testimony, after being confronted repeatedly with the statements of their codefendants and being beaten, they gave their confessions. The fact then that it took 40 minutes from the time Carter began dictating his confession to the time he signed it, and an hour and thirty minutes in the case of Henry Baptiste, are circumstances (when considered in connection with the fact that Ruth's confession was completed in only 20 minutes) which tend to support the conclusion on first hearing that the confessions were not entirely free and voluntary. In any event, the time element involved in the completion of these confessions was but a minor factor in the result heretofore reached. Our decision was primarily based on the defense testimony of brutal treatment which we found believable because it was corroborated by physical and other credible evidence.
On the main question in this case, i. e., whether the confessions and oral statements of the defendants emanated in any degree from corporal punishment administered by the police, we have re-examined the voluminous testimony and exhibits submitted by the State and the defendants with care. The result of our reconsideration has served only to strengthen our conviction that the State has not only failed to show by evidence which convinces us beyond a reasonable doubt that the confessions were free and voluntary but that, on the contrary, the statements of the defendants and their witnesses that they were beaten clearly preponderates over the categorical denials of the 16 officers testifying for the State. We reluctantly come to this conclusion, as stated in our original opinion, in view of the direct and circumstantial evidence which clearly establishes the guilt of all the defendants of barbarous and fiendish criminal acts upon two defenseless people. But the law respecting the use of confessions protects the guilty as well as the innocent and we are still persuaded that, in the light of the physical and other overwhelming evidence which supports the testimony of these defendants, the confessions have not been shown by the believable evidence to have been made free from influence, fear, duress, intimidation, menaces and threats. The reasons stated in our original opinion are so clearly and cogently expressed that further comment at this time would be superfluous. It suffices, we *776 think, that we dispose briefly of the argument of counsel for the State that our holding on first hearing is erroneous.
In assailing our opinion, counsel contend in essence that we have not accorded sufficient weight to the findings of the trial judge and that, since the judge saw and heard all the witnesses and was in a better position than we are to determine the credibility of their statements, we should not disturb his ruling that the State has shown beyond a reasonable doubt that the defendants were not beaten or intimidated in any degree.
The argument is not well founded. On first hearing, we did accord to the per curiams of the trial judge as much weight as was possible under the facts, but we found that the reasons given for the judge's rulings were not sustained by the preponderating believable evidence. Initially it was our viewand a re-examination of all photographs offered in evidence confirm that viewthat the Bureau of Identification pictures taken of the defendants a few hours after the crimes were committed and those taken of them during their re-enactment of the crimes at 8:00 o'clock on the same morning (including those of Henry Baptiste which were taken on November 22, 1961) clearly exhibit that Carter and Henry Baptiste had swollen lumps on their heads and faces. This in itself, in our opinion, weakens the credibility of the officers' testimony. In these circumstances, we cannot follow the argument of counsel for the State when they say that, because the judge was able to compare the pictures of the defendants with the living specimens who sat in front of him during the trial, his conclusion that the photographs showed no evidence of beating or ill treatment must be accepted.
Nor do we find substance in counsel's contention that the defense attorneys should have had the defendants photographed at or during the trial, so that the later pictures could be compared with the earlier photographs of the Bureau of Identification in support of the defendants' testimony that they were beaten. In making this argument, counsel overlook the provisions of the law that the burden is always on the State to show that a confession is free and voluntary. Hence, the shoe was on the other footthe State should have produced pictures of the defendants as of the date of trial. Moreover, it is of some significance that the judge does not state in his per curiam that the physical condition of the defendants' heads and faces at the time of trial, with relation to the bumps and swelling clearly visible in the photographs, was substantially the same and that the facial disfigurement was due to protuberance of some sort disconnected with trauma.[1]
In addition, as pointed out on first hearing, the credibility of the evidence of the police officers[2] is adversely affected by their weak and unsatisfactory denials that visitation rights were not accorded to the families and advisors of the defendants, despite the overwhelming evidence to the contrary. Indeed, we find it strange that counsel for the State have chosen on this rehearing to ignore discussion of this phase *777 of the case particularly since our holding was based in part on this circumstance.
Finally, it appears to be the main theme of counsel for the State that, since the defendants were apprehended within less than an hour after they committed their violent crimes "* * * while they still had fresh blood and/or seminal fluid on their shoes and clothing; before they had had time to think objectively about what they had done to the Sandifurs that night, get rid of the incriminating stains on their clothes, and establish credible alibis; * * *", they were not in any position to successfully maintain their innocence and, therefore, readily confessed to the police officers voluntarily. From this premise, counsel ask the question "What reason or motive, then, would the police officers have had for beating confessions of guilt out of the four arrested youths in the instant case?" and they answer the question "Absolutely none". It is then submitted that this is the logical reason for this Court to hold that defendants were not beaten.
We cannot sustain this argument. In the first place, it is founded more on speculation than fact. Furthermore, we find its logic faulty. For, while we agree with counsel that the police may have obtained voluntary confessions at some time during the investigation if restraint had been exercised, we are not so sure that the officers, after viewing the battered faces and unsightly bodies of the victims of these crimes, and having apprehended within less than an hour the culprits who had committed such inhuman acts of mayhem and rape, were not in such a mental state of revulsion and resentment that they were able to resist the administration of corporal punishment upon the guilty parties, especially so, when those accused when at first apprehended denied connection with the affair in spite of the clear physical evidence of guilt as shown by the blood stains on their persons. Under such circumstances, these officers, being normal human beings, might have done exactly what the defendants say they did. At any rate, we think the evidence suggests that the defendants were "roughed up" to some extent; it is certain and proper that they were not accorded "kid glove" treatment. Yet, because of this, as we have stated above, the confessions cannot stand the test of admissibility prescribed by law. Accordingly, the guilt of these defendants must be established by other evidence and not out of their own mouths.
For the reasons assigned, our original opinion, as herein modified, and decreed is reinstated as the final judgment on this appeal.
SANDERS, J., dissents.
ON REHEARING
FOURNET, Chief Justice (concurring).
I am in full accord with the conclusion in the majority opinion on rehearing that the state "has not only failed to show by evidence which convinces us beyond a reasonable doubt that the confessions were free and voluntary but that, on the contrary, the statements of the defendants and their witnesses that they were beaten clearly preponderates over the categorical denials of the 16 officers testifying for the State," and consequently, that the admission of these confessions in evidence constitutes reversible error.
However, I cannot understand how anyone reading the prevailing opinion on original hearing in this case could possibly eke out from any language used therein, as contended by the state, and on which the majority here apparently places reliance, that (1) it is authority for the proposition the confessions of the several defendants were rejected because "they were not in the form of verbatim questions and answers," or (2) that the length of time involved in preparing these so-called confessions for signature "supports the conclusion that the defendants were beaten by the police."
The confessions were rejected and declared inadmissible in evidence in this case *778 on original hearing for the reason stated in the majority on rehearing, as hereinabove set out, and not because the police officer failed to report the questions and answers verbatim. The original opinion merely pointed out that the testimony of Detective O'Donnell, the only officer testifying as to the manner in which the confessions were reduced to writing "when studied and analyzed, * * * strongly corroborates the fact that Dyer [the officer typing the confessions] simply wrote out a summation of the answers given by each defendant to the questions put to him," thus supporting the contention made by each defendant that he had not dictated the confessions as written, and it was with reference to this that the very next paragraph declares: "We think the time element involved in reducing each of the four short confessions to writing speaks eloquently in support of our conclusion." (The brackets have been supplied.)
I am also in full accord with the majority view here that the method of securing confessions through questions and answers is permitted by Article 453 of the Code of Criminal Procedure (R.S. 15:453),[1] but I feel it most unfortunate the author of this opinion saw fit to state it is not "necessarily the better practice" to report a confession verbatim when the accused answers questions propounded to him.
Certainly if there were a conflict as to the meaning of expressions contained in the confession, or with respect to the inclusion or exclusion of some material statement of fact, we, as a reviewing tribunal, would be in a better position to resolve such conflict if the confession is reported verbatim in case the question and answer method is used, "so that the person to be affected thereby may have the benefit of any exculpation or explanation that the whole statement may afford." R.S. 15:450.
It is the well settled jurisprudence of this state that a confession of an accused cannot be divided for or against him, hence the requirement that "Every confession, admission or declaration sought to be used against any one must be used in its entirety." R.S. 15:450. Sound reason and logic therefore dictate that whenever a confession is reduced to writing, convenience permitting, it should be reported as taken, whether dictated or in question and answer form.
ON REHEARING
HAMITER, Justice (dissenting).
Originally, I subscribed to this court's conclusion that the confessions and oral statements of the defendants were inadmissible because they were given as a result of force and coercion practiced by the police officers on duty at the time.
However, after my having reconsidered the voluminous record containing the irreconcilably conflicting testimony and the exhibits (particularly the numerous photographs on which the holdings of the majority opinions herein are largely based), and after my having given due weight to the findings of fact of the trial judge supporting his rulings which must be done, I am now convinced beyond a reasonable doubt that such confessions and oral statements were freely and voluntarily given by the defendants and were therefore properly admitted in evidence.
Accordingly, I respectfully dissent.
ON REHEARING
SUMMERS, Justice (dissenting).
Setting aside these convictions by this court is based primarily upon a finding that *779 the confessions of the accused were not free and voluntary because they were induced by cruel treatment. The evidence of cruel treatment relied upon is mainly the testimony of the accused, which this court finds to be credible in spite of the testimony of the police officers to the contrary.
The opinion on rehearing says nothing which strengthens the original opinion on this vital issue. It relies upon generalizations and broad conclusions to reach its result. It points out no evidence which would warrant upsetting the finding of fact by the trial judge.
And no reason is given for accepting the testimony of these accused as credible; whereas every compelling reason exists in the very nature of things to reject their credibility: Their interest in the outcome of the prosecutiontheir lives being at stake; the evidence of blood and semen found on their clothes considered in connection with the atrocious crime which had without doubt been committed; their presence near the scene of the crime; the testimony of the victim's husband that there were four Negro men (two tall and two short) involved, which fits the descriptions of the accused, and the numerous other circumstances pointing to them as the perpetrators of the crimes charged beyond any reasonable doubt.
Weighed against their testimony that they were compelled to confess by force is the testimony of 16 law officers to the contrary, which this court rejects. There is no reason, other than unfounded suspicion, to conclude that these law officers had any interest in the outcome of the prosecution which would affect their credibility.
It is my opinion that a great injustice has been done to the great body of law abiding citizens of this state in setting aside the convictions of these accused.
I adhere to my original dissent.
NOTES
[1] This crime is denounced by R.S. 14:42, which provides:
"Aggravated rape is a rape committed where the sexual intercourse is deemed to be without the lawful consent of the female because it is committed under any one or more of the following circumstances:
"(1) Where the female resists the act to the utmost, but her resistance is overcome by force.
"(2) Where she is prevented from resisting the act by threats of great and immediate bodily harm, accompanied by apparent power of execution.
"(3) Where she is under the age of twelve years. Lack of knowledge of the female's age shall not be a defense.
"Whoever commits the crime of aggravated rape shall be punished by death."
[2] The abandoned Bills are Nos. 3, 7, 17, 18, 21, 22, 24, 26, 27, 30, 32, 33, 34, 35, 36, 38.
[3] Four of the nine members of the court dissented in this decision.
[4] Writs have been applied for in the Dorado case in order that the United States Supreme Court may review it, and a recent news release indicates a similar procedure will be followed in the Russo and Bisignano cases from the United States Third Circuit Court of Appeal.
[1] With respect to the photographs, we note that, in a picture taken of Henry Baptiste and Ruth at 8:00 a. m. on the date of the crime, Henry's right hand is visibly swollen. This physical evidence coincides with Henry's testimony that one of the officers attempted to kick him in his "privates" and, in shielding himself, he was kicked in the hands.
[2] In connection with the testimony of the police officers, we think it apt to observe that, whereas they are consistent in their denials that any of the defendants were beaten while they were present, in some instances the officers state under cross-examination, when asked specific questions about corporal punishment, that they do not remember or recall that any threats were made or physical force used. For example, Detective O'Donnell, the main witness for the State in laying the foundation for the admission of the confessions, when asked on cross-examination if he had hit Henry Baptiste on the head with a flashlight at the scene when he was examining Henry's shoes in the police car, answered: "I don't remember hitting him, no sir."
[1] This article provides: "A confession need not be the spontaneous act of the accused and may be obtained by means of questions and answers."
|
633 F.2d 580
*Lanev.Wainwright
80-5110
UNITED STATES COURT OF APPEALS Fifth Circuit
11/25/80
1
S.D.Fla.
2
AFFIRMED***
|
[Cite as Strongsville v. Feliciano, 2011-Ohio-5394.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 96294
CITY OF STRONGSVILLE
PLAINTIFF-APPELLEE
vs.
ALNARDO FELICIANO
DEFENDANT-APPELLANT
JUDGMENT:
AFFIRMED IN PART, REVERSED IN
PART AND REMANDED
Criminal Appeal from the
Berea Municipal Court
Case No. 10 CRB 00688
BEFORE: E. Gallagher, J., Blackmon, P.J., and Sweeney, J.
RELEASED AND JOURNALIZED: October 20, 2011
ATTORNEY FOR APPELLANT
2
Tiaon Michele Lynch
13317 Madison Avenue
Lakewood, Ohio 44107
ATTORNEY FOR APPELLEE
George F. Lonjak
Strongsville City Prosecutor
614 Superior Avenue
Suite 1310
Cleveland, Ohio 44113
EILEEN A. GALLAGHER, J.:
{¶ 1} This case came to be heard upon the accelerated calendar pursuant to
App.R. 11 and Loc.R. 11.1.
{¶ 2} Defendant-appellant, Alnardo Feliciano, appeals his sentence from the
Berea Municipal Court. We affirm in part, reverse in part, and remand.
{¶ 3} Appellant was charged with domestic violence against his wife on June 11,
2010, in the city of Strongsville. The trial court issued an order of protection in favor of
appellant’s wife on June 16, 2010, and appellant, through that order, was required to
wear a GPS monitoring device during the pendency of the case.1 On October 13, 2010,
appellant pled guilty to an amended charge of disorderly conduct in violation of R.C.
1
During the pendency of this case appellant’s wife filed for divorce.
3
2917.11, a misdemeanor of the fourth degree. Appellant was sentenced on December 3,
2010, at which time he was fined $250 and sentenced to 15 days in jail with credit for
time served. The trial court also imposed one year of community control sanctions with
conditions only the following of which are relevant to the present appeal: that appellant
take and pass random drug and alcohol tests as ordered by the probation department; that
appellant complete a drug and mental health assessment and follow all
recommendations; and that appellant stay away from his wife.
{¶ 4} Appellant brought the present appeal, advancing two assignments of error
pertaining to his community control sanctions for our review. Appellant’s first
assignment of error states:
{¶ 5} “The lower court abused its discretion in ordering defendant to have a drug
and alcohol assessment performed and in ordering random drug and alcohol testing when
no alcohol or drugs were involved in the underlying crime.”
{¶ 6} A trial court is vested with broad discretion in imposing
community-control sanctions and will not be subject to reversal absent an abuse of that
discretion. State v. Talty, 103 Ohio St.3d 177, 2004-Ohio-4888, 814 N.E.2d 1201.
“The term ‘abuse of discretion’ connotes more than error of law or judgment. It implies
that the court’s attitude is unreasonable, arbitrary, or unconscionable.” Blakemore v.
Blakemore (1983), 5 Ohio St.3d 217, 219, 5 OBR 481, 450 N.E.2d 1140. A court’s
discretion in imposing such conditions is not, however, limitless. Talty at ¶11., citing
4
State v. Jones (1990), 49 Ohio St.3d 51, 52, 550 N.E.2d 469. Conditions may not be
imposed that are so overly broad as to unnecessarily impinge upon the probationer’s
liberty. Id. at 180. Further, conditions should be imposed in the interests of
rehabilitating the offender, administering justice, and ensuring the offender’s good
behavior. Id. at 181.
{¶ 7} When reviewing community control sanctions, we consider whether the
condition imposed, “(1) is reasonably related to rehabilitating the offender, (2) has some
relationship to the crime of which the offender was convicted, and (3) relates to conduct
which is criminal or reasonably related to future criminality and serves the statutory ends
of probation.” Talty, at ¶12, citing State v. Jones (1990), 49 Ohio St.3d 51, 53, 550
N.E.2d 469.
{¶ 8} In the case sub judice we cannot say that the trial court’s community
control sanctions requiring appellant to take and pass random drug and alcohol tests as
ordered by the probation department and to complete a drug and alcohol assessment bear
any relationship to the crime for which appellant was convicted. The record before us is
utterly lacking any mention of drugs or alcohol having been involved in the incident for
which appellant was convicted.
{¶ 9} A review of case law in this area reveals that instances where drug and
alcohol related probation and community control conditions have been upheld have all
involved some nexus between the offender’s conviction and drug or alcohol use. See
5
State v. Chavers, Wayne App. No. 04CA0022, 2005-Ohio-714 (Probation condition that
offender not consume alcohol or visit a bar that serves alcohol constituted an abuse of
the trial court’s discretion where nothing in the record indicated that alcohol was
involved in the crime or the offender’s past criminal history.); State v. Wooten, Franklin
App. No. 03AP-546, 2003-Ohio-7159 (Trial court abused its discretion in requiring
defendant to undergo drug assessment, possess no alcohol, and submit to random
urinalysis where record lacked evidence linking offender’s connection to drugs or
alcohol.); State v. Weimer, Trumbull App. No. 2004-T-0040, 2005-Ohio-2361
(Upholding probation conditions requiring offender convicted of driving under the
influence from consuming or possessing drugs or alcohol or being found in any
establishment where alcohol is sold or consumed by the drink.); State v. Madey,
Cuyahoga App. No. 81166, 2002-Ohio-5976 (Where offender was convicted of
misdemeanor assault involving alcohol usage, the trial court’s probation condition
barring her from consuming alcohol for two years was valid. However the trial court’s
further conditions that the offender not work in bars, get alcohol counseling, and attend
weekly AA meetings were invalid under Jones because the record lacked sufficient
evidence to support a conclusion that the offender had a drinking problem necessitating
such conditions.); State v. Hayes (July 25, 1997), Meigs App. No. 96CA23-Meigs Co.
(Upholding probation condition barring consumption of alcohol despite the fact that
offender’s crime was not directly linked to alcohol but where offender had a severe
6
alcohol problem and alcohol consumption was an underlying or motivating factor in his
crime.); State v. Harn (Aug. 20, 1987), Franklin App. No. 87AP-269 to 87AP-271.
(Upholding prohibition on alcohol consumption because there was some evidence that
alcohol was involved in the crime and the offender appeared to possess an alcohol
problem and had a past history of alcohol related arrests.)
{¶ 10} The present case is not an instance where the record reflects that appellant
has a history of drugs or alcohol problems. See Lakewood v. Hartman (1999), 86 Ohio
St.3d 275, 714 N.E.2d 902 (Upholding a trial court’s probation condition that offender’s
vehicle be equipped with an ignition device designed to detect alcohol despite the fact
that offender’s conviction did not involve alcohol. The offender’s extensive history of
four prior driving under the influence convictions and eight suspended license
convictions demonstrated her lack of appreciation for the responsibility of operating a
motor vehicle. It was reasonable for the trial court to believe that additional conditions
were necessary to rehabilitate her and protect those who may be injured by her conduct.);
State v. Curry (Feb. 21, 1991), Franklin App. No. 90AP-838 (Alcohol abstinence
condition upheld in part because of offender’s history of alcohol-related convictions.)
{¶ 11} The present record is devoid of any indication that appellant’s crime was
related to alcohol or drug use, that appellant had a history of drug or alcohol abuse, or
that appellant at any point in time engaged in the use of such substances. As such, we
find that the trial court abused its discretion in ordering defendant to have a drug and
7
alcohol assessment performed and in ordering random drug and alcohol testing.
{¶ 12} Appellant’s first assignment of error is sustained.
{¶ 13} Appellant’s second assignment of error states:
{¶ 14} “The lower court abused its discretion in ordering defendant to have an
electronic monitoring bracelet until probation determined it could be removed when
there was no evidence that defendant had any contact with his soon to be ex-wife in over
six months and there was no evidence that defendant presented a continuing danger to
his wife.”
{¶ 15} We need not address the merits of appellant’s second assignment of error
because in the trial court’s December 3, 2010 judgment of conviction the trial court
ordered appellant to “stay away” from his wife but did not order electronic monitoring.
A court speaks through its docket and its journal entries and not by oral pronouncement.
State v. Turner, Cuyahoga App. No. 88489, 2007-Ohio-3264, at ¶9; State v. Deal,
Cuyahoga App. No. 88669, 2007-Ohio-5943, at ¶54. As such, we find appellant’s
second assignment of error to be without merit.
{¶ 16} The judgment of the trial court is reversed to the extent that it imposed the
community control sanctions addressed in appellant’s first assignment of error and the
cause is remanded. As such, appellant’s sentence and the remaining conditions of his
probation remain intact.
{¶ 17} Judgment affirmed in part, reversed in part and remanded to the lower
8
court for further proceedings consistent with this opinion.
It is ordered that said appellant and appellee share the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this
judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to
Rule 27 of the Rules of Appellate Procedure.
EILEEN A. GALLAGHER, JUDGE
PATRICIA A. BLACKMON, P.J., and
JAMES J. SWEENEY, J., CONCUR
|
298 F.3d 1020
UNITED STATES of America, Appellee,v.Sam McDONALD, Appellant.
No. 02-1305.
United States Court of Appeals, Eighth Circuit.
Submitted: June 12, 2002.
Filed: August 15, 2002.
John P. Messina, Des Moines, IA, for appellant.
Robert L. Tieg, Asst. U.S. Atty., Cedar Rapids, IA, for appellee.
BEFORE: MORRIS SHEPPARD ARNOLD, HEANEY and MURPHY, Circuit Judges.
HEANEY, Circuit Judge.
1
Sam McDonald appeals the fifteen-month sentence he received following his guilty plea to manufacturing counterfeit currency in violation of 18 U.S.C. § 471. McDonald argues that the district court1 erred in denying his motion for a downward departure. We affirm.
2
On July 18, 2001, McDonald and co-defendants Mary Vandivier and Kristina Taylor were charged with several counterfeiting violations. McDonald was arraigned on August 9, 2001, and on September 26, 2001, he entered a guilty plea to manufacturing counterfeit currency. Prior to sentencing, McDonald gave notice of his intention to file a request for a downward departure under United States Sentencing Commission, Guidelines Manual (USSG) § 5K2.0. The district court found it had no authority to grant McDonald's request absent a government motion, and sentenced McDonald to serve fifteen months of imprisonment and three years of supervised release, and pay $900.00 in restitution. McDonald asserts that he was entitled to a downward departure because at the time of his arrest he disclosed information that led to the arrest and prosecution of Vandivier and Taylor.2
3
We review the district court's application of the sentencing guidelines de novo. United States v. Hetherington, 256 F.3d 788, 796 (8th Cir.2001). Under § 5K2.0, a departure may be granted where "there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines...." USSG § 5K2.0 (quoting 18 U.S.C. § 3553(b) (2000)). The Sentencing Commission, however, has considered departures based on a defendant's assistance to the government and has provided USSG § 5K1.1 as a means for implementing such departures. United States v. Baker, 4 F.3d 622, 624 (8th Cir.1993).
4
Absent a motion by the government pursuant to § 5K1.1, "a district court generally lacks the authority to grant a downward departure based on a defendant's substantial assistance." United States v. Wolf, 270 F.3d 1188, 1190 (8th Cir.2001) (citations omitted); United States v. Aslakson, 982 F.2d 283, 284 (8th Cir.1992) ("Cooperation with prosecutors simply cannot be sufficiently extraordinary to warrant a departure under § 5K2.0 absent a government motion under § 5K1.1"). "[T]he only time the district court has the authority to depart for such cooperation ... is when `the defendant makes a `substantial threshold showing' of prosecutorial discrimination or irrational conduct.'" Aslakson, 982 F.2d at 284-85 (citations omitted). In the present case, McDonald's statements to authorities constituted "assistance in the investigation or prosecution of another person who has committed an offense," USSG § 5K1.1, yet McDonald has failed to demonstrate that the prosecution acted in a discriminatory or irrational manner when it refused to file a substantial assistance motion. Accordingly, McDonald was not entitled to a downward departure. The judgment of the district court is affirmed.
Notes:
1
The Honorable Mark W. Bennett, Chief Judge, United States District Court for the Northern District of Iowa
2
When McDonald was arrested, he admitted that he produced counterfeit money, and that he gave several counterfeit bills to Vandivier. The police then interviewed Vandivier, who admitted that she and Taylor passed the bills at several businesses. Because of McDonald's admission, the district court granted him a reduction of two levels for acceptance of responsibility, pursuant to USSG § 3E1.1, at the time of sentencing
|
176 N.J. Super. 484 (1980)
423 A.2d 1002
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
MARVIN KAYE, DEFENDANT-APPELLANT.
Superior Court of New Jersey, Appellate Division.
Argued September 23, 1980.
Decided November 21, 1980.
*486 Before Judges MICHELS, ARD and FURMAN.
Robert E. Zwengler argued the cause for appellant (Hersh Kozlov, attorney).
Patrick C. Byrne, Deputy Attorney General, argued the cause for respondent (John J. Degnan, Attorney General of New Jersey, attorney).
The opinion of the court was delivered by MICHELS, P.J.A.D.
Defendant Marvin Kaye appeals from his conviction entered on a plea of guilty to causing death by automobile in violation of N.J.S.A. 2A:113-9. On appeal, defendant solely challenges the trial judge's denial of his pretrial motion to exclude the results of a blood-alcohol test on the ground that the State allegedly failed to comply with the provisions of R. 3:13-3(a)(4) by not preserving a portion of the blood sample for discovery purposes. Essentially, he claims that the failure of the State to furnish the blood sample violated his right to due process of law.
On January 8, 1977, at about 2:31 a.m., defendant was operating his automobile in the southbound lane of Route No. 168 in Runnemede, New Jersey. When defendant's automobile was at or near the entrance to the New Jersey Turnpike, it crossed the centerline and entered the northbound lane. Defendant's vehicle then collided head-on with an automobile driven by John J. Welsh IV. Welsh was taken to J.F.K. Hospital where he was pronounced dead. Defendant was taken to the West Jersey Hospital.
Patrolman Scott of the Runnemede Police went to the West Jersey Hospital to interview defendant. Patrolman Scott detected a strong odor of alcohol on defendant's breath and requested that a blood sample be taken for purposes of determining the alcoholic content of defendant's blood. Patrolman Scott also advised defendant of his right to have a second blood sample drawn at his own expense for his independent testing. *487 Defendant refused to exercise his right to have a second sample taken but signed the hospital request form in which he consented to the taking of the sample Patrolman Scott had requested. The blood was drawn under the supervision of a hospital physician, and the blood sample was sent to the New Jersey State Police Laboratory at Hammonton, New Jersey, for analysis. The analysis revealed that the alcoholic content of defendant's blood was.145%. Under N.J.S.A. 39:4-50.1(3), a defendant is presumed to be under the influence of intoxicating liquor if the weight of alcohol in his blood is .10% or more. According to established procedure, the blood sample was also tested for drugs. This test proved to be negative. The two testings consumed the entire blood sample.
Defendant was arrested and charged with careless driving and driving while under the influence of alcohol. Subsequently, he was indicted by the Camden County grand jury and charged with causing the death of Welsh by driving an automobile carelessly and heedlessly, in willful and wanton disregard of the right or safety of others, in violation of the provisions of N.J.S.A. 2A:113-9. Defendant entered a plea of not guilty and requested in pretrial discovery that the prosecutor furnish him with authorization to procure for independent laboratory testing the blood sample drawn from him. The prosecutor furnished defendant with a copy of the blood-alcohol test, but was unable to furnish defendant with the blood sample because it had been consumed during the testing by the State Police Laboratory. Defendant thereupon moved for an order "excluding all evidence relating to a blood sample drawn" from him on the ground that "the State had failed to furnish discovery of the sample despite defendant's timely written request therefor pursuant to R. 3:13-3." At the conclusion of the hearing Judge Bigley in the Law Division denied the motion and held that the results of the blood-alcohol test were admissible in evidence. The judge found that since defendant had been advised of his right to have a sample of his blood taken and chemically tested by a physician of his own choice, as required by N.J.S.A. *488 39:4-50.2(c), and had been furnished with a copy of the record of the taking of the sample, disclosing the date and time thereof as well as the result thereof, as required by N.J.S.A. 39:4-50.2(b), defendant's due process guarantees were more than adequately protected.
Defendant then entered a retraxit plea of guilty to causing death by automobile and was sentenced to State Prison for one to three years. His motion for reconsideration of the sentence was denied, and this appeal followed.
I
Preliminarily, the State argues that defendant's plea of guilty to the indictment constitutes a waiver of all nonjurisdictional objections to the State's pre-plea conduct, and therefore this challenge to his conviction is not cognizable on appeal. We agree.
It is fundamental that a guilty plea precludes a defendant from raising any nonjurisdictional claims as to deprivation of his constitutional rights before the entry of the plea. The rule was clearly stated in Tollett v. Henderson, 411 U.S. 258, 267, 93 S.Ct. 1602, 1608, 36 L.Ed.2d 235, 243 (1973), as follows:
... We thus reaffirm the principle recognized in the Brady trilogy: a guilty plea represents a break in the chain of events which has preceded it in the criminal process. When a criminal defendant has solemnly admitted in open court that he is in fact guilty of the offense with which he is charged, he may not thereafter raise independent claims relating to the deprivation of constitutional rights that occurred prior to the entry of the guilty plea. He may only attack the voluntary and intelligent character of the guilty plea by showing that the advice he received from counsel was not within the standards set forth in McMann.
The waiver effect of a guilty plea has been uniformly recognized by our courts. See, e.g., State v. Garoniak, 164 N.J. Super. 344, 349 (App.Div. 1978), certif. den. 79 N.J. 481 (1979); State v. Rosenberg, 160 N.J. Super. 78, 80 (App.Div. 1978), certif. den. 78 N.J. 332 (1978); State v. Ternaku, 156 N.J. Super. 30, 35 (App. Div. 1978), certif. den. 77 N.J. 479 (1978). See also State v. Taylor, 140 N.J. Super. 242, 244-245 (App.Div. 1976); State v. *489 Raymond, 113 N.J. Super. 222, 226-227 (App.Div. 1971), and State v. Humphreys, 89 N.J. Super. 322, 326 (App.Div. 1965), which were decided before the adoption of R. 3:5-7(d).
Since defendant knowingly and intentionally pleaded guilty in open court with the assistance of counsel, we are satisfied that he waived his right to challenge his conviction on the ground asserted here.
Contrary to defendant's claim, R. 3:5-7(d) does not apply to preserve his right to appeal from the conviction following his guilty plea. The rule which amended R. 3:5-7, dealing specifically with motions to suppress evidence based on a claim of an unlawful search and seizure, and engrafted a limited exception to the guilty plea-waiver rule in New Jersey was adopted by our Supreme Court on January 28, 1977. The rule provides:
(d) Appellate Review. Denial of a motion made pursuant to this rule may be reviewed on appeal from a judgment of conviction notwithstanding that such judgment is entered following a plea of guilty.
Paragraph (d) was added to the 1977 revision of R. 3:5-7 to permit the preservation of an appellate challenge to denial of a suppression motion despite the entry of a plea of guilty. Pressler, Current N.J. Court Rules, Comment R. 3:5-7(d) (1981). The right of appeal under this rule is limited to motions made pursuant to R. 3:5-7(a) challenging a search and seizure as unlawful. The rule does not expressly or by fair implication permit appellate review of pretrial motions in general, such as those relating to the admissibility of evidence. Here, defendant challenged the admissibility of the results of a blood-alcohol test solely on grounds that the State failed to furnish him with a blood sample, as required by R. 3:13-3(a)(4), and therefore violated his due process rights. He did not challenge the taking of the blood sample as an unlawful search and seizure.
Accordingly, we hold that defendant waived his right to challenge his conviction on due process grounds by virtue of his plea of guilty.
*490 We simply point out that in the future the proper procedure for a defendant to follow to challenge the admissibility of evidence prior to his trial on grounds other than an unlawful search and seizure (R. 3:5-7(a)), is set forth in R. 3:13-1(b), adopted on July 16, 1979. This rule provides:
(b) Pretrial Hearings. Hearings to resolve issues relating to the admissibility of statements by defendant, pretrial identifications of defendant and sound recordings may be held immediately prior to jury selection and, upon a showing of good cause, hearings as to admissibility of other evidence may also be held. (Emphasis added).
Now, under our rules, if at the conclusion of such a pretrial hearing pursuant to R. 3:13-1(b), the court determines that the challenged evidence is admissible, a defendant may, with the approval of the court and the consent of the prosecutor, enter a conditional plea of guilty reserving on the record the right to appeal from the adverse determination of such pretrial motion. If the defendant prevails on the appeal, he is afforded the opportunity to withdraw his plea. R. 3:9-3(f), adopted July 21, 1980 to be effective September 8, 1980. See Pressler, Current N.J. Court Rules, Comment R. 3:9-3(f) (1981).
II
Beyond this, even if defendant had not waived his right to challenge his conviction on appeal by pleading guilty to the indictment, we are convinced that the consumption of the blood sample during the testing procedure by the State Police Laboratory did not deny him due process within the principles discussed in United States v. Agurs, 427 U.S. 97, 96 S.Ct. 2392, 49 L.Ed.2d 342 (1976), and Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963). We hold to the view that where an entire sample of a specimen, such as blood, is, as here, in good faith, consumed or destroyed during the testing process by a recognized law enforcement or other qualified laboratory, the consumption or destruction of the specimen does not constitute an act of suppression of evidence by the State sufficient to trigger a due process violation, warranting the suppression of the test results. Thus, in State v. Teare, 135 N.J. Super. 19 (App.Div. *491 1975), we held that the destruction pursuant to State Police practices of a test ampoule utilized in a breathalyzer test did not require the suppression of the test results, stating: "the State's failure to produce the ampoule does not deny defendant due process of law." Id. at 22. See also State v. Washington, 165 N.J. Super. 149, 155-158 (App.Div. 1979). Courts in other jurisdictions have reached similar results. For example, in United States v. Sewar, 468 F.2d 236 (9 Cir.1972), cert. den. 410 U.S. 916, 93 S.Ct. 972, 35 L.Ed.2d 278 (1973), the Ninth Circuit refused to suppress a laboratory report concerning the alcohol content of a defendant's blood where, after completion of the test, a technician innocently destroyed the remaining sample. The Sewar court followed United States v. Augenblick, 393 U.S. 348, 89 S.Ct. 528, 21 L.Ed.2d 537 (1969). There, the United States Supreme Court, dealing with the loss of a critical tape recording, held that where the government acted in good faith and exercised "earnest efforts" to preserve evidence, defendant's conviction had to be upheld.
Similarly, in United States v. Love, 482 F.2d 213 (5 Cir.1973), cert. den. 414 U.S. 1026, 94 S.Ct. 453, 38 L.Ed.2d 318 (1973), the Fifth Circuit also refused to suppress the results of scientific testing in which the sample had been completely consumed in the testing process and hence, was unavailable to defendants' expert. In that case, the government caught defendants after they had thrown a firebomb onto the roof of a building. Defendants' hands were swabbed with an acetone solution for test purposes. While the government supplied defendants with all of the evidence it had in its possession, it could not supply the sample acetone swab due to its consumption during the testing. See also Edwards v. Oklahoma, 429 F. Supp. 668, 670-671 (W.D. Okl. 1976); State v. Atkins, 369 So.2d 389, 390 (Fla.D.Ct.App. 1979); State v. Herrera, 365 So.2d 399, 401 (Fla.D.Ct.App. 1978), cert. den. 373 So.2d 459 (Fla.Sup.Ct. 1979); Poole v. State, 291 So.2d 723, 725-726 (Miss.Sup.Ct. 1974), cert. den. 419 U.S. 1019, *492 95 S.Ct. 492, 42 L.Ed.2d 292 (1974); State v. Jones, 18 Or. App. 343, 345-346, 525 P.2d 194, 195-196 (Or. App. 1974); State v. Lightle, 210 Kan. 415, 416, 502 P.2d 834, 836 (Sup.Ct. 1972), cert. den. 410 U.S. 941, 93 S.Ct. 1406, 35 L.Ed.2d 607 (1973).
Furthermore, the statute pursuant to which the blood sample was taken adequately protected defendant's constitutional rights to due process. N.J.S.A. 39:4-50.2 (amended by L. 1977, C. 29, § 3), in pertinent part, provides:
(a) Any person who operates a motor vehicle on any public road, street or highway or quasi-public area in this State shall be deemed to have given his consent to the taking of samples of his breath for the purpose of making chemical tests to determine the content of alcohol in his blood; provided, however, that the taking of samples is made in accordance with the provisions of this act and at the request of a police officer who has reasonable grounds to believe that such person has been operating a motor vehicle in violation of the provisions of R.S. 39:4-50.
(b) A record of the taking of any such sample, disclosing the date and time thereof, as well as the result of any chemical test, shall be made and a copy thereof, upon his request, shall be furnished or made available to the person so tested.
(c) In addition to the samples taken and tests made at the direction of a police officer hereunder, the person tested shall be permitted to have such samples taken and chemical tests of his breath, urine or blood made by a person or physician of his own selection.
(d) The police officer shall inform the person tested of his rights under subsections (b) and (c) of this section.
The State complied with the requirements of N.J.S.A. 39:4-50.2. Patrolman Scott specifically advised defendant before he signed the hospitalization request, consent and release form that he could have a blood sample taken and tested by a physician of his own choice. Defendant did not avail himself of this opportunity and certainly he cannot complain now that he was deprived of due process by reason of the fact that the sample taken by the State was consumed. Accordingly, we have no hesitancy in concluding that the trial judge properly ruled that the results of the blood-alcohol test were admissible in evidence.
Affirmed.
|
112 T.C. No. 14
UNITED STATES TAX COURT
JOHN D. SHEA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 10841-95, 23549-96. Filed April 1, 1999.
P and his wife filed joint returns for 1990 and
1991. P submitted a delinquent return for 1992 that
was filed as a joint return. R determined that P
underreported business receipts for 1990, 1991, and
1992 based on deposits to P's bank accounts and also
disallowed business deductions claimed on P's returns.
In the notice of deficiency for 1992, R determined that
P's proper filing status for 1992 was married filing
separately.
Even though P and his wife remained married
throughout 1992, R did not allocate one-half of P's
income for 1992 to P's wife pursuant to California
community property law. Sec. 66(b), I.R.C., authorizes
R to disallow the benefits of any community property
law to P if P acted as if he were solely entitled to
the income in question and failed to notify his wife of
the nature and amount of such income. On brief, R
relies exclusively on sec. 66(b), I.R.C., as
justification for denying the benefits of community
property law to P. However, R's notice of deficiency
contained no reference to sec. 66(b), I.R.C., nor did
it refer to any facts that would support a sec. 66(b),
- 2 -
I.R.C., determination. A determination of whether or
not sec. 66(b), I.R.C., applies requires the
presentation of different evidence than that necessary
to decide the matters described in the notice of
deficiency.
Held: R's determinations of additional gross
receipts and disallowance of deductions are, with
certain modifications, upheld.
Held, further: Sec. 7522, I.R.C., requires that a
notice of deficiency contain a description of the basis
for the Commissioner's tax determination. Where R
relies on a basis that was not described in the notice
of deficiency that requires the presentation of
different evidence, it is "new matter" within the
meaning of Rule 142(a), Tax Court Rules of Practice and
Procedure. If the new matter is allowed to be raised,
Rule 142(a), Tax Court Rules of Practice and Procedure,
requires that R bear the burden of proof. The burden
of proof regarding application of sec. 66(b), I.R.C.,
is on R. R failed to meet this burden; therefore, P is
entitled to the benefits of California's community
property law for the taxable year 1992.
David M. Kirsch, for petitioner.
Dale A. Zusi, for respondent.
OPINION
RUWE, Judge: Respondent determined deficiencies in
petitioner's Federal income taxes, an addition to tax, and
accuracy-related penalties as follows:
Addition to Tax Accuracy-related Penalty
Year Deficiency Sec. 6651(a)(1) Sec. 6662(a)
1990 $155,096 -- $31,019
1991 165,529 -- 33,106
1992 138,529 $34,632 27,706
- 3 -
Respondent determined that petitioner substantially
underreported gross receipts during the years in issue based on
deposits made to petitioner's bank accounts. After concessions,
the issues for decision are whether petitioner has substantiated
business deductions claimed on his 1990, 1991, and 1992 Federal
income tax returns and whether petitioner is entitled to the
benefit of California's community property law in calculating his
1992 income tax liability.1 In order to decide the second issue,
we must determine whether respondent's reliance on section 66(b)2
to disregard the community property law of California raises a
"new matter" on which respondent bears the burden of proof and,
if so, whether respondent has met that burden.
Some of the facts have been stipulated and are so found.
The first, second, third, and fourth stipulations of fact are
incorporated herein by this reference. Petitioner's legal
residence was in Campbell, California, at the time he filed his
petitions. For convenience, we will combine our findings of fact
with our opinion.
1
Petitioner does not dispute that the addition to tax and
accuracy-related penalties apply to the deficiencies that result
from this opinion.
2
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
- 4 -
In each of the years in issue, petitioner was married to
Flor Shea. Petitioner and Mrs. Shea were divorced in 1993.
Petitioner filed timely joint returns with Mrs. Shea in 1990 and
1991. Petitioner's 1992 return was filed on March 31, 1995, as a
joint return. In the notice of deficiency for 1992, respondent
determined that petitioner's correct filing status was married
filing separately. The notice also contains various
consequential adjustments. The parties now agree that married
filing separately is the correct 1992 filing status for
petitioner.
In each of the years in issue, petitioner was the owner and
operator of an unincorporated consulting business known as Shea
Technology Group, hereafter referred to as STG. Petitioner
reported income and deductions from this business on Schedule C,
Profit or Loss From Business, in each of the years in issue. The
parties now agree that petitioner underreported STG's gross
business receipts by $216,143 in 1990, $208,134 in 1991, and
$272,902 in 1992.3
3
Respondent proposed that we find these unreported gross
receipt figures, and petitioner indicated that he did not object.
In respondent's reply brief, he states that the total amount of
unreported gross receipts for 1992 is $274,902. We will use the
lower figure to which the parties have agreed.
- 5 -
Petitioner also bought, sold, and traded military
memorabilia. Petitioner did not report this activity on his
1990, 1991, or 1992 returns.
A. Schedule C Deductions
In the notices of deficiency for the years 1990, 1991, and
1992, respondent disallowed all petitioner's Schedule C
deductions. Respondent now concedes certain of these
deductions.4 We must decide which, if any, of the remaining
deductions claimed by petitioner are allowable.
Deductions are a matter of legislative grace, and taxpayers
bear the burden of proving that they are entitled to any
deductions claimed. Rule 142(a); INDOPCO, Inc. v. Commissioner,
503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292
U.S. 435, 440 (1934). Taxpayers are required to maintain
sufficient records to enable the Commissioner to determine their
correct tax liability. Sec. 6001.
Section 162 generally allows a deduction for all the
ordinary and necessary expenses paid or incurred during the
4
Respondent concedes: Air phone charges of $89 in 1990,
$247 in 1991, and $1,808 in 1992; office rent of $25,050 in 1990
and $25,000 in 1991; postage and secretarial services of $1,880
in both 1990 and 1991; office expenses of $951.34 in 1990; and
printing expenses of $20,595 in 1990 and $5,424 in 1991. The
total deductions conceded by respondent are $48,565.34 in 1990,
$32,551.00 in 1991, and $1,808.00 in 1992.
- 6 -
taxable year in carrying on any trade or business. Such expenses
must be directly connected with or pertain to the taxpayer's
trade or business. Sec. 1.162-1(a), Income Tax Regs. The
determination of whether an expenditure satisfies the
requirements of section 162 is a question of fact. Commissioner
v. Heininger, 320 U.S. 467, 475 (1943).
Section 162(a)(2) allows a deduction for all the ordinary
and necessary traveling expenses, including meals, paid by a
taxpayer during the taxable year while traveling away from home
in the pursuit of a trade or business. A travel or entertainment
deduction is disallowed if the taxpayer does not satisfy the
substantiation requirements of section 274(d)5 through either
5
Sec. 274(d) provides:
(d)Substantiation Required.--No deduction or
credit shall be allowed--
(1) under section 162 or 212 for any
traveling expense (including meals and lodging
while away from home),
(2) for any item with respect to an activity
which is of a type generally considered to
constitute entertainment, amusement, or
recreation, or with respect to a facility used in
connection with such an activity,
(3) for any expense for gifts, or
(4) with respect to any listed property (as
defined in section 280F(d)(4)),
unless the taxpayer substantiates by adequate records
(continued...)
- 7 -
adequate records or the taxpayer's own detailed statement that is
corroborated by sufficient evidence. Section 274(d) also applies
to listed property, which includes any passenger automobile.
Secs. 274(d)(4), 280F(d)(4)(A)(i). At a minimum, the taxpayer
must substantiate: (1) The amount of the expense, (2) the time
and place such expense was incurred, (3) the business purpose of
the expense, and (4) the business relationship to the taxpayer of
persons entertained. Sec. 274(d).
The regulations further clarify the stringent substantiation
requirements of section 274. A taxpayer generally must
substantiate each expenditure by producing (1) adequate records
or (2) sufficient evidence to corroborate his or her own
statement. Sec. 1.274-5T(c)(1), Temporary Income Tax Regs., 50
Fed. Reg. 46016-46017 (Nov. 6, 1985). The "adequate records"
standard requires that a taxpayer maintain an account book,
5
(...continued)
or by sufficient evidence corroborating the taxpayer's
own statement (A) the amount of such expense or other
item, (B) the time and place of the travel,
entertainment, amusement, recreation, or use of the
facility or property, or the date and description of
the gift, (C) the business purpose of the expense or
other item, and (D) the business relationship to the
taxpayer of persons entertained, using the facility or
property, or receiving the gift. The Secretary may by
regulations provide that some or all of the
requirements of the preceding sentence shall not apply
in the case of an expense which does not exceed an
amount prescribed pursuant to such regulations. This
subsection shall not apply to any qualified nonpersonal
use vehicle (as defined in subsection (i)).
- 8 -
diary, log, statement of expense, or other similar record in
which entries of expenditures are recorded at or near the time of
the expenditure. In addition, a taxpayer must supply documentary
evidence, such as receipts or paid bills. Sec. 1.274-5T(c)(2)(i)
to (iii), Temporary Income Tax Regs., 50 Fed. Reg. 46017-46020
(Nov. 6, 1985). Alternatively, taxpayers who are unable to
satisfy the adequate records requirement are still entitled to a
deduction for expenses that they can substantiate with other
corroborative evidence. Sec. 1.274-5T(c)(3), Temporary Income
Tax Regs., 50 Fed. Reg. 46020-46021 (Nov. 6, 1985).
For expenses other than those covered by the provisions of
section 274(d), if the taxpayer failed to keep adequate records
but the Court is convinced that deductible expenditures were
incurred, the Court "should make as close an approximation as it
can, bearing heavily if it chooses upon the taxpayer whose
inexactitude is of his own making." Cohan v. Commissioner, 39
F.2d 540, 544 (2d Cir. 1930). However, we must have some
rational basis on which an estimate may be made. Vanicek v.
Commissioner, 85 T.C. 731, 742-743 (1985).
Petitioner deducted Schedule C business expenses totaling
$162,278 in 1990, $192,516 in 1991, and $211,709 in 1992.6 These
deductions fall into two categories. One category must meet the
6
See appendix.
- 9 -
substantial and stringent requirements of section 274(d). The
other category consists of all the other claimed deductions.
Regarding the deductions governed by section 274, respondent
has conceded some items of expense, and petitioner has conceded
that the air travel expenses in all the years in issue cannot be
adequately substantiated. Petitioner has put forward no
believable explanation for the absence of required records;
consequently, the burden of his inexactitude must fall on him.
Petitioner did not produce any witnesses to corroborate when and
where he traveled on business. Mrs. Shea could testify only to
the fact that petitioner was not home and that petitioner said he
was traveling on business. While it is likely that some of
petitioner's travel was business related, we have insufficient
information to allow any deductions given the strict standards
set by section 274. Petitioner's claims for deductions relating
to meals away from home and lodging expenses fail for the same
reasons that the airline travel expenses fail. The other claimed
deductions subject to section 274(d), including passenger auto
expense and entertainment, are likewise unsubstantiated.
Petitioner did not keep a contemporaneous trip diary to record
business miles traveled in his personal vehicle and did not
maintain a record of the parties entertained or the business
purpose. We, consequently, uphold respondent's disallowance of
- 10 -
these items as not complying with the statutory requirements of
section 274.
As to the remaining items, we find that petitioner paid and
is entitled to a deduction for telephone expenses in the amounts
of $7,735 for 1990 and $6,616 for 1991, in addition to the items
respondent has conceded. With respect to the other claimed
deductions, the only documents presented to substantiate
petitioner's claimed business expenses were credit card
summaries, charge slips showing various purchases, and a crude
ledger for 1990, which appears to have been prepared from
canceled checks. These credit card summaries contain personal
expenses,7 what appears to be military memorabilia-related
expenses, and what purports to be business expenses. Other than
the credit card summaries and petitioner's less then credible,
vague, and self-serving testimony, there is no corroborative
evidence of the business purpose of these expenses. As we have
stated many times before, this Court is not bound to accept a
taxpayer's self-serving, unverified, and undocumented testimony.
Tokarski v. Commissioner 87 T.C. 74, 77 (1986). While there are
undoubtedly business expenses contained within the credit card
7
For example, airfares for family members and third parties
not employees of STG, a limousine rental for petitioner's
daughter who was not an employee, items noted as apparel and
accessories, leather goods and accessories, fine art and frames,
and jewelry and gifts.
- 11 -
summaries, we cannot in most instances determine which expenses
relate to the military memorabilia activity,8 are personal
expenses, or are truly business expenses. Except as noted above,
petitioner has produced insufficient evidence to persuade us that
respondent's disallowance of the deductions reported in Schedules
C of the returns is in error. Consequently, with the exceptions
noted above, we uphold respondent's disallowance of deductions.
Based on the foregoing, we find that the net profit from
petitioner's consulting business was $336,231.66 in 1990,
$356,394.00 in 1991, and $443,172.00 in 1992.9
8
We are unable to determine the exact magnitude of
petitioner's military memorabilia activity, but it appears to be
quite extensive. During the examination, petitioner or his agent
provided a document in the form of a ledger. The ledger appears
to show six transactions in 1990 for amounts of $46,836, $4,400,
$27,755, $8,084, $64,874, and $20,100 that relate to petitioner's
military memorabilia activity.
9
The net profit was calculated as follows:
1990 1991 1992
Reported receipts $176,389.00 $187,427.00 $172,078.00
Unreported receipts 216,143.00 208,134.00 272,902.00
(continued...)
- 12 -
B. Application of Community Property Law in 1992
Petitioner's 1992 return was filed as a joint return. In
the notice of deficiency, respondent changed petitioner's filing
status from married filing jointly to married filing separately.
Nevertheless, respondent determined petitioner's unreported
income without making any adjustment for California's community
property law. The notice of deficiency does not refer to
California community property law, any exceptions to such law, or
any facts that might support such exceptions.
Married persons who reside in a community property State are
generally each required to report one-half of their community
income for Federal income tax purposes. United States v.
Mitchell, 403 U.S. 190 (1971); Drummer v. Commissioner, T.C.
Memo. 1994-214, affd. without published opinion 68 F.3d 472 (5th
Cir. 1995). Petitioner contends that under California law, the
1992 income generated by petitioner's consulting business is
community income and that he is required to report and be taxed
9
(...continued)
Less:
Conceded deductions 48,565.34 32,551.00 1,808.00
Additional allowable
deductions 7,735.00 6,616.00 0.00
Net profit 336,231.66 356,394.00 443,172.00
- 13 -
on only one-half of that community income for Federal tax
purposes.
Respondent now recognizes that all of STG's income is
community income under California law. Respondent also
stipulated that $119,204 of STG's net profit for 1992, the amount
which was transferred to petitioner's and Mrs. Shea's household
checking account in 1992, was community income reportable by each
spouse in the amount of $59,602. The parties dispute whether
STG's 1992 net profit in excess of $119,204 should all be
attributed to petitioner, regardless of community property law.
On brief, respondent relies solely on the provisions of section
66(b) to deny petitioner the income-splitting benefits of
California's community property law. Section 66(b) provides:
The Secretary may disallow the benefits of any
community property law to any taxpayer with respect to
any income if such taxpayer acted as if solely entitled
to such income and failed to notify the taxpayer's
spouse before the due date (including extensions) for
filing the return for the taxable year in which the
income was derived of the nature and amount of such
income.
Petitioner acknowledges that section 66(b) authorizes the
Commissioner to disallow the benefits of any community property
law to a taxpayer with respect to any income if (1) the taxpayer
acted as if he were solely entitled to such income, and (2) the
taxpayer failed to notify the taxpayer's spouse of the nature and
- 14 -
amount of such income before the due date for filing the return.
See Mischel v. Commissioner, T.C. Memo. 1997-350; Schramm v.
Commissioner, T.C. Memo. 1991-523, affd. without published
opinion 988 F.2d 121 (9th Cir. 1993). However, petitioner
contends that respondent made no determination in the notice of
deficiency to disallow the benefits of community property law
pursuant to section 66(b), that respondent's reliance on section
66(b) is a "new matter" within the meaning of Rule 142(a),10 and
that respondent must bear the burden of proving that section
66(b) applies.11
When the Commissioner attempts to rely on a basis that is
beyond the scope of the original deficiency determination, the
Commissioner must generally assume the burden of proof as to the
new matter. A substantial body of case law has developed in this
10
Rule 142 provides:
(a) General: The burden of proof shall be upon
the petitioner, except as otherwise provided by statute
or determined by the Court; and except that, in respect
of any new matter, increases in deficiency, and
affirmative defenses, pleaded in the answer, it shall
be upon the respondent. As to affirmative defenses,
see Rule 39.
11
Petitioner does not contend that respondent should be
precluded from relying on sec. 66(b). Petitioner was on notice
before trial that respondent would rely on sec. 66(b). The sec.
66(b) issue was tried by consent of the parties and is properly
before the Court. See Rule 41(b). Petitioner's only requested
relief is that respondent bear the burden of proof regarding this
issue.
- 15 -
Court setting forth criteria for determining when the
Commissioner is raising a "new matter". A synopsis of these
criteria is as follows:
A new theory that is presented to sustain a
deficiency is treated as a new matter when it either
alters the original deficiency or requires the
presentation of different evidence. * * * A new
theory which merely clarifies or develops the original
determination is not a new matter in respect of which
respondent bears the burden of proof. * * * [Wayne
Bolt & Nut Co. v. Commissioner, 93 T.C. 500, 507
(1989); citations omitted.12]
Here, the relevant issues raised by respondent's notice of
deficiency are the total amount of business gross receipts and
whether petitioner is entitled to deductions that he claimed were
incurred in his business during 1992. The only explanation
stated in the notice of deficiency for increasing 1992 gross
receipts is that the adjustment was based on bank deposits. All
these deposits were to the business account used for petitioner's
consulting business. The only reason for disallowing business
deductions was that petitioner had not substantiated their
deductibility.
12
See also Colonnade Condominium, Inc. v. Commissioner, 91
T.C. 793, 795 n.3 (1988); Achiro v. Commissioner, 77 T.C. 881,
890-891 (1981); Estate of Jayne v. Commissioner, 61 T.C. 744,
748-749 (1974); McSpadden v. Commissioner, 50 T.C. 478, 492-493
(1968).
- 16 -
Respondent now acknowledges that petitioner is entitled to
the benefits of community property law, unless those benefits can
be disallowed pursuant to section 66(b). Respondent argues that
invocation of section 66(b) is necessarily implicit in the notice
of deficiency. We disagree. The notice of deficiency makes
absolutely no mention of community property law, section 66(b),
or facts which would allow respondent to invoke section 66(b).
In the notice of deficiency, respondent determined that all of
Mrs. Shea's 1992 wage income was her separate income without
regard to community property law. Respondent also treated
interest on petitioner's and Mrs. Shea's joint bank account as
the separate income of petitioner without regard to community
property law. And, as previously mentioned, the notice of
deficiency contains no adjustment for the $119,204 that was
transferred from the business account to petitioner's and Mrs.
Shea's household checking account during 1992.13
Respondent failed to offer any evidence that indicated that
respondent considered the application of community property law
or section 66(b) in making his determination.14 In short, it
13
As previously noted, respondent now acknowledges that
petitioner is entitled to the benefits of community property law
with respect to $119,204 of the 1992 STG net profit, regardless
of whether sec. 66(b) is otherwise applicable.
14
Attached to petitioner's Motion to Shift Burden of Proof
is what purports to be a copy of the revenue agent's report for
(continued...)
- 17 -
appears to us that respondent gave no thought to community
property law or section 66(b) when the notice of deficiency was
prepared.15 Respondent's apparent failure to even consider
community property law, or section 66(b) in making his deficiency
determination supports our conclusion that section 66(b) was not
implicit in the notice of deficiency. However, even if
respondent's agents had considered such matters, it does not
follow that they were "necessarily implicit" in the notice of
deficiency. The objective language in the notice of deficiency
remains the controlling factor. As indicated in the preceding
paragraph, there is nothing in the notice of deficiency that
makes section 66(b) "necessarily implicit".
The factual basis required to establish whether STG's income
was understated is different from the factual basis necessary to
establish whether community property law or section 66(b)
applies. The facts necessary for a determination of income
14
(...continued)
petitioner's 1992 taxable year. Petitioner alleged, and the
attached revenue agent's report shows, that the revenue agent
computed the 1992 deficiency based on joint filing status as
opposed to the married filing separate status used in the notice
of deficiency. We also note that the notice of deficiency for
1992 was addressed to "John D. and Flora [sic] M. Shea," even
though the attached schedules reflect tax liability for only John
D. Shea.
15
At trial, respondent's counsel could not clarify this
point other than to state: "I think it was done pursuant to
66(b), although 66(b) I concede is not mentioned in the stat
notice."
- 18 -
pursuant to a bank deposits analysis would require evidence of
deposits and an identification of which deposits should be
excluded from income. Business deductions are allowed or
disallowed based on whether they can be substantiated.
Generally, the only evidence necessary to establish that
income is community income is that the income was received by
either spouse during the marriage while domiciled in a community
property State. As we have recently stated:
The term "community property", pursuant to California
law, is generally defined as "property acquired by
husband and wife, or either, during marriage, when not
acquired as the separate property of either." Under
California law, absent a contrary agreement, each
spouse has the right to one half of all community
income from the moment it is acquired and therefore is
liable for the Federal income tax on one half of such
amount.
The character of property as separate or community
is determined at the time of acquisition. Property
acquired by purchase after marriage is presumed to be
community property. Furthermore, earnings of a husband
acquired during marriage are presumed to be community
property. With respect to unearned income, where the
source property is presumed to be community property,
and no evidence is introduced to rebut such
presumption, then the income from such property is
presumed community income. Under California law, the
burden of proving that property is separate rests on
the party making such assertion. [Webb v.
Commissioner, T.C. Memo. 1996-550; citations omitted.]
On the other hand, whether respondent may apply section
66(b) and disregard community property law in determining
petitioner's income requires evidence of whether petitioner acted
- 19 -
as if he were solely entitled to the income and whether he failed
to notify his wife of the nature and amount of that income. See
Mischel v. Commissioner, T.C. Memo. 1997-350. Based on our
previously articulated test for determining whether respondent's
reliance on section 66(b) is new matter, we would hold that it is
and that the burden of proof as to that issue should be on
respondent.
However, on brief respondent relies on Abatti v.
Commissioner, 644 F.2d 1385 (9th Cir. 1981), revg. T.C. Memo.
1978-392.16 Based on Abatti, respondent argues that the proper
test for determining whether respondent has introduced a "new
matter" on which he bears the burden of proof depends on whether
the basis for the deficiency advanced at trial or in an amended
answer is "inconsistent" with the language contained in the
notice of deficiency. Based on Abatti, respondent asserts that
if a notice of deficiency is broadly worded and the Commissioner
later advances a theory that is "not inconsistent" with that
language, the theory does not constitute a new matter, and the
burden of proof remains with the taxpayer.
In Abatti v. Commissioner, supra, the Court of Appeals for
the Ninth Circuit characterized the notice of deficiency as a
notice that "informed the taxpayers that there were deficiencies
16
The Court of Appeals for the Ninth Circuit is the court to
which this case is appealable.
- 20 -
and the amount of them but contained no explanation". Id. at
1389. The Court of Appeals for the Ninth Circuit then stated:
This type of notice is sufficient to raise the
presumption of correctness and to place the burden of
proof on the taxpayer. Barnes v. CIR, 408 F.2d 65 (7th
Cir.), cert. denied, 396 U.S. 836, 90 S.Ct. 94, 24
L.Ed.2d 86 (1969). Judge Hand, in Olsen v. Helvering,
supra, stated, "the notice is only to advise the person
who is to pay the deficiency that the Commissioner
means to assess him; anything that does this
unequivocally is good enough." [Id. at 1389-1390
citation omitted.]
The court went on to state:
In fact, if a deficiency notice is broadly worded and
the Commissioner later advances a theory not
inconsistent with that language, the theory does not
constitute new matter, and the burden of proof remains
with the taxpayer. [Id. at 1390.]
We have recognized that the above-quoted language from Abatti v.
Commissioner, supra, may represent a standard for determining
what constitutes a "new matter" that is at variance with the
current standard articulated by this Court. See Achiro v.
Commissioner, 77 T.C. 881, 890-891 (1981);17 Yamaha Motor Corp.,
17
In Achiro v. Commissioner, 77 T.C. at 891, we stated:
if respondent does not indicate in the notice of
deficiency that he is relying on section 482, but
alerts the taxpayer of his reliance on section 482
formally in pleadings far enough in advance of trial so
as not to prejudice the taxpayer or take him by
surprise at trial, then the burden of proof shifts to
(continued...)
- 21 -
U.S.A. v. Commissioner, T.C. Memo. 1992-110; National
Semiconductor Corp. & Consol. Subs. v. Commissioner, T.C. Memo.
1991-81; Perryman v. Commissioner, T.C. Memo. 1988-378, affd.
without published opinion 920 F.2d 936 (9th Cir. 1990).18
Petitioner acknowledges that the Court of Appeals' opinion
in Abatti v. Commissioner, supra, contains broad language but
argues that the subsequent enactment of section 7522 abrogated
that broad language by requiring specificity in respondent's
notices of deficiency. Section 7522, which was applicable to the
notice of deficiency in this case,19 provides:
SEC. 7522. CONTENT OF TAX DUE, DEFICIENCY, AND OTHER
NOTICES.
17
(...continued)
respondent to establish all the elements necessary to
support his allocation under section 482. See Rubin v.
Commissioner, 56 T.C. 1155, 1162-1164 (1971), affd. 460
F.2d 1216 (2d Cir. 1972); Rule 142(a), Tax Court Rules
of Practice and Procedure. But see Abatti v.
Commissioner, 644 F.2d 1385 (9th Cir. 1981), revg. a
Memorandum Opinion of this Court.
18
In Perryman v. Commissioner, supra, appellate venue was in
the Ninth Circuit Court of Appeals which had decided Abatti v.
Commissioner, 644 F.2d 1385 (9th Cir. 1981), revg. T.C. Memo.
1978-392. In Perryman, we held:
Despite our holding in Achiro, however, we will follow
the precedent established in the court to which an
appeal would lie. See Golsen v. Commissioner, 54 T.C.
742 (1970), affd. 445 F.2d 985 (10th Cir. 1974).
Appeal in this case would lie in the Ninth Circuit.
19
Sec. 7522 is applicable to notices of deficiency issued
after Jan. 1, 1990.
- 22 -
(a) General Rule.--Any notice to which this
section applies shall describe the basis for, and
identify the amounts (if any) of, the tax due,
interest, additional amounts, additions to the tax, and
assessable penalties included in such notice. An
inadequate description under the preceding sentence
shall not invalidate such notice.
(b) Notices to Which Section Applies.--This
section shall apply to--
(1) any tax due notice or deficiency notice
described in section 6155, 6212, or 6303,
(2) any notice generated out of any
information return matching program, and
(3) the 1st letter of proposed deficiency
which allows the taxpayer an opportunity for
administrative review in the Internal Revenue
Service Office of Appeals. [Emphasis added.]
Congress enacted section 7522 with the expectation that the IRS
would "make every effort to improve the clarity of all notices
* * * that are sent to taxpayers." H. Conf. Rept. 100-1104, at
219 (1988), 1988-3 C.B. 473, 709. Petitioner argues that
respondent's failure to state specifically that petitioner was
being denied the benefits of community property law or to
describe a basis for denying petitioner the benefits of community
property law violates section 7522 and warrants treating the
section 66(b) issue as a new matter on which respondent bears the
burden of proof.
Respondent argues that there was no violation of section
7522 because reliance on section 66 was "implicit" in the notice
- 23 -
of deficiency. As we have previously indicated, we do not
believe that section 66(b) was implicit or even considered in
making the adjustments contained in the notice of deficiency. It
is a closer call to say whether reliance on section 66(b) is
"inconsistent" with the language in the notice of deficiency. In
the final analysis, we think that section 7522 makes the question
of whether reliance on section 66(b) is, or is not,
"inconsistent" with the notice of deficiency irrelevant, if the
basis on which respondent relies was not described in the notice
of deficiency and requires different evidence.
Section 7522, which was enacted after the Abatti decision,
requires that a notice of deficiency "describe the basis" for the
tax deficiency.20 Section 7522 makes no exception for a basis
20
Sec. 7522 does not articulate specific standards for
determining whether the description of the Commissioner's basis
is adequate, nor does it provide any statutory remedy or
sanction. The only reference in sec. 7522(a) to a failure to
abide by its provisions provides: "An inadequate description
under the preceding sentence shall not invalidate such notice."
We view this provision as referring only to the "validity" of the
notice of deficiency for jurisdictional purposes. As the Court
of Appeals for the Ninth Circuit has stated:
The Tax Court has jurisdiction only when the
Commissioner issues a valid deficiency notice, and the
taxpayer files a timely petition for redetermination.
"A valid petition is the basis of the Tax Court's
jurisdiction. To be valid, a petition must be filed
from a valid statutory notice." Stamm International
Corp. v. Commissioner, 84 T.C. 248, 252 (1985). See
Midland Mortgage Co. v. Commissioner, 73 T.C. 902, 907
(continued...)
- 24 -
that is "not inconsistent" with the language in the notice of
deficiency. Indeed, were such an exception available, the
Commissioner would be free to raise new theories that would
require different evidence so long as the new theories were not
inconsistent with the language in the notice of deficiency. Such
a result would significantly dilute the legislative mandate of
section 7522.
Generally, the Commissioner's determination in a notice of
deficiency is presumed correct. The purpose of section 7522 is
to give the taxpayer notice of the Commissioner's basis for
determining a deficiency. A taxpayer is given 90 days from the
day the notice of deficiency is mailed in which to file a
petition with the Tax Court. Sec. 6213(a). Rule 34(b) sets
forth what is required to be included in a petition. Among its
requirements are that the petition shall contain:
(4) Clear and concise assignments of each and
every error which the petitioner alleges to have been
committed by the Commissioner in the determination of
the deficiency or liability. The assignments of error
shall include issues in respect of which the burden of
proof is on the Commissioner. Any issue not raised in
the assignment of error shall be deemed to be conceded.
Each assignment of error shall be separately lettered.
20
(...continued)
(1980). [Scar v. Commissioner, 814 F.2d 1363, 1366
(9th Cir. 1987), revg. on other grounds 81 T.C. 855
(1983); emphasis added.]
- 25 -
(5) Clear and concise lettered statements of the
facts on which petitioner bases the assignments of
error, except with respect to those assignments of
error as to which the burden of proof is on the
Commissioner. [Rule 34(b).]
Without notice of the Commissioner's basis for a determination of
deficiency, it would be difficult, if not impossible, to comply
with Rule 34(b).
We have previously held that new matter is raised when the
basis or theory on which the Commissioner relies was not stated
or described in the notice of deficiency and the new theory or
basis requires the presentation of different evidence. Wayne
Bolt & Nut Co. v. Commissioner, 93 T.C. at 507. This rule for
determining whether a new matter has been raised by the
Commissioner is consistent with, and supported by, the statutory
requirement that the notice of deficiency "describe the basis"
for the Commissioner's determination. This rule also provides a
reasonable method for enforcing the requirements of section
7522.21
In the instant case, the notice of deficiency does not
describe section 66(b) as respondent's basis for disallowing the
21
On brief, respondent declined to address what the
consequences, if any, would be if we were to find that respondent
was attempting to rely on a basis that he failed to describe in
the notice of deficiency as required by sec. 7522. However, in
Straight v. Commissioner, T.C. Memo. 1997-569, respondent
conceded that placing the burden of proof on respondent may be
proper where the notice of deficiency violates sec. 7522.
- 26 -
benefits of community property law to petitioner, and different
evidence will be necessary to resolve the section 66(b) issue.
Under these circumstances, treating the section 66(b) issue as a
new matter upon which respondent has the burden of proof is both
consistent with our prior practice and supported by the statutory
requirements of section 7522.22 We, therefore, hold that where
a notice of deficiency fails to describe the basis on which the
Commissioner relies to support a deficiency determination and
that basis requires the presentation of evidence that is
different than that which would be necessary to resolve the
determinations that were described in the notice of deficiency,
the Commissioner will bear the burden of proof regarding the new
basis. To hold otherwise would ignore the mandate of section
7522 and Rule 142(a). Respondent must therefore bear the burden
of proof regarding application of section 66(b).
Respondent argues that he has met that burden and that the
following facts demonstrate that petitioner treated the income as
if he were solely entitled to it: (a) Gross receipts were
22
Placement of the burden of proof affects only the
obligation to prove facts. If a new theory or basis is
completely dependent upon the same evidence required by the basis
described in the notice of deficiency, there would normally be
little practical reason to shift the burden of proof. The
taxpayer would not suffer from lack of notice concerning what
facts must be established. Indeed, in that situation, the new
theory would be a purely legal as opposed to a factual issue.
The burden of proof does not affect the Court's determination of
what the law is.
- 27 -
separately deposited into an account styled in the business name;
(b) not all the net business income was deposited into the joint
household account; (c) Mrs. Shea did not have signing authority,
access, or knowledge of the specific transactions in the business
account; and (d) Mrs. Shea did not involve herself in the
business and did not know the extent of the gross income or the
extent of the unreported income of the business.
The facts on which respondent relies, either taken alone or
taken together, do not justify the conclusion that petitioner
acted as if he were solely entitled to business income. The fact
that business gross receipts are deposited into a business
account is in accordance with normal business practice. Mrs.
Shea was clearly aware of the existence of petitioner's business
and its bank account. The fact that not all the business income
was deposited into the household account is, of itself,
unremarkable. We would not find it at all unusual if less than
the net profit was so deposited. The fact that Mrs. Shea did not
have signing authority over the business account is likewise
unremarkable given the fact that she had little day-to-day
involvement in the operation of the business. Finally, the fact
that Mrs. Shea did not know the extent of business income is not
proof that petitioner was acting as if he were solely entitled to
the income. Without more, it does not support respondent's
allegation that the income was "hidden" from her.
- 28 -
Respondent now concedes that some of the business profits
were used to support the Shea family and that in excess of
$119,000 was deposited into the "household account". Respondent
disallowed deductions for some expenditures from the business
account because he determined that these expenditures were
personal expenses of the Shea family not properly deductible as
business expenses. But this position supports petitioner's
argument that profits were used to pay community debts.
Respondent points out in arguing for disallowance of claimed
business deductions that Mrs. Shea directly benefited from some
of these expenditures. Indeed, our findings which sustain
respondent's disallowance of claimed business deductions were in
part based on respondent's analysis indicating that some of the
expenditures from that business account, which were claimed as
business deductions, were apparently spent for personal expenses
of the Shea family. Examples of such expenditures from the
business account in 1992 include the purchase of airline tickets
for Mrs. Shea, B. Alvarez, Margreite Alvarez, and Trudy Daly.23
Also, in disallowing petitioner's claimed business deductions for
1992, we noted the possibility that some of them might have been
23
The Shea family took a vacation cruise on the Regal
Princess from Dec. 29, 1991, to Jan. 4, 1992. On Dec. 28, 1991,
petitioner stayed in Fort Lauderdale, Florida. Mrs. Shea's
airline ticket from San Jose to Fort Lauderdale purchased on Dec.
27, 1991, was deducted as a business expense.
- 29 -
business expenditures for which petitioner failed to provide
adequate substantiation. But the fact that petitioner failed to
meet his burden of proof regarding the deductibility of these
expenses is not sufficient to justify a finding that respondent
has met his burden of proving that petitioner treated the income
deposited in the business bank account as if he were solely
entitled to it.
The facts on which respondent relies establish only that
Mrs. Shea had little meaningful involvement in petitioner's
business activities and that petitioner underreported the income
of that business. These facts are insufficient to prove that
petitioner acted as if he were solely entitled to STG's 1992
income. As a result, there is no factual basis to justify
respondent's invocation of section 66(b). We, therefore, hold
that petitioner is entitled to the benefits of California
community property law with respect to the net income of his
consulting business as redetermined.
Decision will be entered
under Rule 155.
Reviewed by the Court.
COHEN, JACOBS, GERBER, PARR, WELLS, COLVIN, BEGHE, LARO,
FOLEY, VASQUEZ, and GALE, JJ., agree with this majority opinion.
THORNTON and MARVEL, JJ., concur in the result only.
- 30 -
Appendix
Expense Items Claimed on Schedule C
1990 1991 1992
Expenses subject to sec. 274(d):
Car and truck expenses $2,615 $2,870 --
1
Air travel 29,760 59,785 $104,340
2
Meals away from home 5,743 2,890 12,481
Entertainment 2,634 462 --
Lodging 15,131 12,366 --
Other expenses:
Car rental3 11,941 13,136 --
Depreciation 5,314 5,806 6,652
Insurance 9,904 9,433 --
Office expense 4,198 11,120 15,696
Legal and professional services 1,400 5,964 10,772
Rent or lease
a. vehicles, machinery, and equipment 26,200 11,200 --
b. other business property -- -- 14,325
Repairs and maintenance 2,064 4,903 --
Trade shows 841 3,460 3,690
Research 5,118 22,287 4,701
Parking 415 420 --
Telcon [sic] 9,061 7,544 19,733
Professional services (other) 8,934 9,218 --
Dues and publications 410 865 --
Software -- 759 8,678
Courier -- -- 4,041
Charity contribution -- -- 2,860
Printing 20,595 5,424 --
Commission and fees -- -- 3,740
4
Total 162,278 189,912 211,709
1
For the taxable year 1992, air travel also includes lodging.
2
For the taxable year 1992, meals away from home combined meals
and entertainment.
3
Some items in this category would have been subject to sec. 274.
Since none of the expenses were substantiated under sec. 162, it was
unnecessary to subdivide the category further.
4
For the taxable year 1991, petitioner inexplicably reported
total expenses of $192,516 on line 28 of Schedule C.
- 31 -
HALPERN, J., concurring in result: I agree with the result
reached by the majority. However, I write separately because I
disagree with the following steps taken by the majority in
reaching that result: one, incorporating a requirement of
section 7522 into the definition of the term "new matter" and,
two, suggesting that respondent's intent in drafting the notice
of deficiency is relevant to the determination of whether a new
theory is new matter with respect to such notice.
The Term “New Matter”
Rule 142(a) provides:
(a) General: The burden of proof shall be upon
the petitioner, except as otherwise provided by statute
or determined by the Court; and except that, in respect
of any new matter, increases in deficiency, and
affirmative defenses, pleaded in the answer, it shall
be upon the respondent. * * *
The majority recognizes that "[a] substantial body of case
law has developed in this Court setting forth criteria for
determining when the Commissioner is raising a 'new matter'."
Majority op. pp. 14-15. An examination of that case law reveals
a disjunctive test to determine whether a new theory raised in
respondent's answer is new matter for purposes of Rule 142(a).
In Achiro v. Commissioner, 77 T.C. 881, 890 (1981), we stated:
The assertion of a new theory which merely
clarifies or develops the original determination
without being inconsistent or increasing the amount of
the deficiency is not a new matter requiring the
shifting of the burden of proof. * * * However, if
- 32 -
the assertion in the amended answer either alters the
original deficiency or requires the presentation of
different evidence, then respondent has introduced a
new matter. * * *
A new theory may or may not constitute new matter. A new
theory in the answer is new matter if either (1) the new theory
is inconsistent with the notice (the inconsistency alternative),
or (2) it requires the presentation of different evidence, i.e.,
evidence different from that necessary to prove a well-pleaded
assignment of error (the different evidence alternative). It is
illogical, and defies common sense, to believe that, in the case
of a disjunctive test such as our test for new matter, the
failure to satisfy one alternative precludes the possibility of
satisfying the other. For instance, it does not follow from
Achiro that, if a new theory is consistent with the notice, then
it cannot be new matter. A finding that a new theory is
consistent with the notice simply leads to the conclusion that
the new theory is not new matter pursuant to the inconsistency
alternative; it does not foreclose the possibility that the new
theory could be new matter pursuant to the different evidence
alternative.
Golsen Doctrine
The majority finds, and I agree, that "[b]ased on our
previously articulated test for determining whether respondent's
reliance on section 66(b) is new matter, we would hold that it is
- 33 -
and that the burden of proof as to that issue should be on
respondent." Majority op. p. 19. The majority's hesitation to
make such a holding is based on the opinion of the Court of
Appeals for the Ninth Circuit (Ninth Circuit) in Abatti v.
Commissioner, 644 F.2d 1385 (9th Cir. 1981), revg. T.C. Memo.
1978-392. Respondent argues, and the majority appears to
believe, that Abatti holds that, if a new theory is not
inconsistent with the determination in the notice, then it is not
new matter. See majority op. pp. 19-20. Respondent’s argument
ignores the disjunctive nature of our traditional interpretation:
a new theory is new matter under either the inconsistency
alternative or the different evidence alternative. Nevertheless,
if Abatti means that the Ninth Circuit’s interpretation of the
term “new matter” is inconsistent with our interpretation, then
the doctrine established by Golsen v. Commissioner, 54 T.C. 742
(1970), affd. 445 F.2d 985 (10th Cir. 1971), comes into play.
The Golsen doctrine is that, notwithstanding that we are a
national court and have the authority to render a decision
inconsistent with any Court of Appeals, where a reversal would
appear inevitable due to the clearly established position of the
Court of Appeals to which an appeal would lie, we shall not
insist on our view, but shall follow the Court of Appeals
decision on point. Id. at 757; accord Lardas v. Commissioner, 99
T.C. 490, 494-495 (1992).
- 34 -
Jurisprudence of the Ninth Circuit
An examination of Abatti and subsequent Ninth Circuit
authority leads me to believe that the Golsen doctrine does not
bar us from applying our traditional interpretation. In Abatti,
the Ninth Circuit was reviewing our application of our Rule
142(a). The Ninth Circuit relied on our opinion in Sorin v.
Commissioner, 29 T.C. 959 (1958), affd. per curiam 271 F.2d 741
(2d Cir. 1959), for an interpretation of the term "new matter".
Abatti v. Commissioner, supra at 1390. In Sorin, we stated that,
when a:
determination is not broad enough to include the new
ground, its presumptive correctness does not then
extend to such new matter, which he [the Commissioner]
is required to raise affirmatively in his answer.
Under the Tax Court rules, the burden of proof as to it
is expressly placed upon respondent. * * *
But when the determination is made in indefinite
and general terms, and is not inconsistent with some
position necessarily implicit in the determination
itself, the situation is quite different. * * *
29 T.C. at 969. In Sorin, the different evidence alternative was
not under consideration. We held that the burden of proof should
remain on the taxpayer because, contrary to the taxpayer's
contention, the Commissioner had not taken a position
inconsistent with the notice. The Ninth Circuit reached a
similar result in Abatti. There, too, the taxpayer did not
- 35 -
raise, nor did the Ninth Circuit address, the different evidence
alternative.
Stewart v. Commissioner, 714 F.2d 977 (9th Cir. 1983), affg.
T.C. Memo. 1982-209, is a post-Abatti case that also required the
Ninth Circuit to interpret Rule 142(a)’s use of the term “new
matter”. The Ninth Circuit concluded: "It is well settled that
the assertion of a new theory that merely clarifies the original
determination, without requiring the presentation of different
evidence, does not shift the burden of proof." Id. at 990
(citing Achiro v. Commissioner, 77 T.C. at 890). Again, the
Ninth Circuit stated an interpretation of the term “new matter”
that, if considered in isolation, could be misunderstood to
exclude alternative interpretations and would imply that, in
every instance, a new theory that does not require different
evidence is not new matter. I do not believe we must infer that,
in going from Abatti to Stewart, the Ninth Circuit replaced one
singular interpretation of the term “new matter”, i.e.,
inconsistency, with another, i.e., different evidence. Clearly
the Ninth Circuit has adopted both alternatives of our
disjunctive test. Although the Ninth Circuit has stated each
alternative in exclusive terms at different times, I think that
those statements can be harmonized. If, however, either test
preempts the other in the Ninth Circuit, we must conclude that
- 36 -
the different evidence alternative preempts the inconsistency
alternative because Stewart postdates Abatti.
I agree with the majority that, pursuant to the different
evidence alternative, respondent's reliance on section 66(b) is
new matter within the meaning of Rule 142(a). Majority op. p.
19. The Golsen doctrine is no bar to that conclusion. For the
reasons stated, I do not believe that respondent’s argument, to
wit, if a new theory is not inconsistent with the determination
in the notice, then it is not new matter, would necessarily
succeed in the Ninth Circuit. Therefore, I conclude that, under
Golsen, we need not alter our disposition of the instant case on
account of the jurisprudence of the Ninth Circuit.
Why Section 7522?
Instead of holding that respondent's reliance on section
66(b) is new matter pursuant to our case law, and in accord with
the Ninth Circuit's opinion in Stewart, the majority makes
various analytical errors, which I feel compelled to address.
First, the majority incorporates the legislative mandate of
section 7522, that the notice of deficiency shall describe an
adequate basis, into the definition of “new matter”. Imposition
of the burden of proof is, in the absence of a legislative
directive, a judicial function. The majority seems to believe
that section 7522 should influence the Ninth Circuit in
determining what constitutes new matter. See majority op. p. 23.
- 37 -
Indeed, the majority's holding appears to require our
consideration of a section 7522 requirement in determining what
is new matter. I have difficulty understanding why the majority
concludes that section 7522 affects the allocation of the burden
of proof. Section 7522 makes no mention of the burden of proof.
The majority has not persuaded me that, on account of a violation
of section 7522, Congress intended a particular remedy (i.e.,
allocating the burden of proof to the Commissioner as opposed to,
for instance, extending a period of limitations, if it operates
against the taxpayer, or awarding attorney's fees).1 Further,
assume the Commissioner issues a valid but inadequately
descriptive notice, in violation of section 7522. If the
Commissioner introduces no new theory, would the majority remedy
the Commissioner's violation of section 7522 by placing the
burden of proof upon him?2
1
The only remedy that we can assuredly conclude is not
within the purview of sec. 7522 is an invalidation of such
inadequate notice. See sec. 7522.
2
In that vein, consider Judge Beghe's concern:
that a vaguely broad notice that does no more than
state an intention to assess a deficiency in a
specified amount is not just a valid notice. It's an
empty bottle that can be filled and made specific with
any theory and won't thereby be considered an
inconsistent theory or as requiring different evidence
so as to justify the shifting of the burden of proof to
the Commissioner.
(continued...)
- 38 -
The majority, however, has convinced itself that a
reasonable method for enforcing the requirement of section 7522
is to allocate the burden of proof to the Commissioner with
regard to any new theory that both (1) was not stated or
described in the notice of deficiency and (2) requires the
presentation of different evidence. Majority op. pp. 23, 25. I
do not understand the cumulative aspect of such a test. Clearly,
any new theory that requires the presentation of different
evidence, thus satisfying the second prong, could not have been
stated or described in the notice and, thus, will always satisfy
the first prong. Adding the first prong, however, is a
rhetorical device that serves only to import the section 7522
requirement into the new matter inquiry. The majority merely
couples one of our traditional disjunctive alternatives, which
has been explicitly adopted by the Ninth Circuit, to a
restatement of the section 7522 requirement, to opine on what is
2
(...continued)
Beghe, J., concurring p. 42. Witness the case at bar, where the
majority has found that, under the different evidence
alternative, respondent raised new matter relative to his vaguely
broad notice by trying, with consent, the sec. 66(b) issue. It
seems a sufficient and appropriate response to Judge Beghe’s
concern to say that, if a new theory is both not inconsistent
with a notice of deficiency and does not require different
evidence, petitioner has not been prejudiced by such new theory.
Therefore, notwithstanding that the notice may be an "empty
bottle", there is no harm requiring redress.
- 39 -
a proper means of enforcement for section 7522. Such holding is
both unnecessary and inappropriate on the facts before us.
Looking Beyond the Notice of Deficiency
My second concern with the majority's analysis is its
suggestion that there may be a case in which the Commissioner's
intent in drafting the notice of deficiency will determine
whether a new theory is new matter under either the inconsistency
or different evidence alternatives. The majority states:
“Respondent failed to offer any evidence that indicated that
respondent considered the application of community property law
or section 66(b) in making his determination." Majority op. p.
16. The majority then finds: "[R]espondent gave no thought to
community property law or section 66(b) when the notice of
deficiency was prepared." Id. at 17. That finding, the majority
continues, “supports our conclusion that section 66(b) was not
implicit in the notice of deficiency.” Id. Although the
majority makes obeisance to the determining force of the notice’s
language (“The objective language in the notice of deficiency
remains the controlling factor.” Id.), the fact that the majority
finds “support” in respondent’s failure to consider section 66(b)
suggests that intent has some role in determining whether a new
theory is a new matter. If intent plays some role, then there is
the possibility that, in a close case, intent (or lack thereof)
could tip the balance. I disagree, and think that the majority
- 40 -
should make it clear that there is no connection between the
Commissioner’s intent and whether a new theory is implicit in a
notice of deficiency.
Consider two taxpayers, each with unreported income, each
married and filing separately, and each residing in a community
property jurisdiction. Each receives an identical notice
determining a deficiency in income tax on account of the omission
of $100 in gross income. The notices do not mention section
66(b). Each taxpayer concedes receipt of the $100 and its
taxable nature. Each pleads, nevertheless, that, as the receipt
was community property, he is taxable only on one-half. In one
case, in determining the deficiency, it was the Commissioner's
intention (unexpressed in the notice) to disallow the benefits of
community property under section 66(b). In the second case, the
Commissioner was unaware that the receipt was community property.
He becomes aware only after his right to amend the answer without
leave of Court has expired. See Rule 41(a). The Commissioner’s
awareness may be a factor in determining whether, under Rule
41(a), the Court should give leave to amend the answer to
incorporate the new theory. Assuming leave to amend is given,
the question of whether the new theory constitutes new matter
under Rule 142(a) involves different considerations, viz, whether
the new theory is inconsistent with the notice or requires
different evidence. Simply stated, it would violate principles
- 41 -
of horizontal equity to place the burden of proof on the taxpayer
in the first case and on the Commissioner in the second case,
when both taxpayers have identical tax attributes and received
identical notices.
Conclusion
I fail to see what the majority's analysis adds to the
jurisprudence of this Court, when attention to Golsen v.
Commissioner, supra, would allow us to dispose of this issue
without discussing section 7522 or respondent's intent. The
Court is always free to place the burden of proof on respondent
pursuant to the first sentence of Rule 142(a), which provides:
"The burden of proof shall be upon the petitioner, except as
otherwise * * * determined by the Court".3 Placing the burden on
respondent because section 7522 makes something "new matter",
which otherwise is not, obfuscates not only our interpretation of
the Ninth Circuit's jurisprudence, but our own jurisprudence as
well. For the foregoing reasons, I respectfully concur in
result.
CHABOT, WHALEN, and CHIECHI, JJ., agree with this concurring
in result opinion.
3
That portion of the rule would support the result that
Judge Beghe would accomplish, and satisfy his pragmatic concern,
without doing violence to the term "new matter".
- 42 -
BEGHE, J., concurring: More than 4 years ago Judge Raum
made the suggestion that bears fruit today, that section 7522(a)
provides a justification for shifting the burden of proof to
respondent as a sanction for vague notices of deficiency. See
Ludwig v. Commissioner, T.C. Memo. 1994-518.
I write on to respond to some of the objections to the
majority opinion expressed in Judge Halpern's concurrence.
Judge Halpern's normative explication of the disjunctive
tests for new matter--inconsistency and different evidence--is
impeccable so far as it goes. But he pays inadequate attention
to another strand in the Tax Court's jurisprudence on this
subject, exemplified by Sorin v. Commissioner, 29 T.C. 959
(1958), affd. per curiam 271 F.2d 741 (2d Cir. 1959), that the
Court of Appeals for the Ninth Circuit relied upon, along with
Judge Learned Hand's opinion in Olsen v. Helvering, 88 F.2d 650,
651 (2d Cir. 1937), to reverse us for our shifting of the burden
of proof in Abatti v. Commissioner, 644 F.2d 1385 (9th Cir.
1981), revg. T.C. Memo. 1978-392. That strand is to the effect
that a vaguely broad notice that does no more than state an
intention to assess a deficiency in a specified amount is not
just a valid notice. It's an empty bottle that can be filled and
made specific with any theory and won't thereby be considered an
inconsistent theory or as requiring different evidence so as to
justify the shifting of the burden of proof to the Commissioner.
- 43 -
Our jurisprudence and that of the Ninth Circuit is
sufficiently murky on this issue to justify using section 7522(a)
to clarify the situation and set ourselves and our litigants on
the right path for the future.
In so using section 7522(a), I frankly am impelled by
pragmatic considerations. Commentators have suggested that the
present situation is unsatisfactory because it encourages--even
rewards--vagueness and imprecision in the Commissioner's
deficiency notices and discourages the specificity that tells
taxpayers the points they must put in issue in their petitions
and prove at trial. It's appropriate to use section 7522(a) as
the device for repudiating the line of cases represented by Sorin
v. Commissioner, supra.
There's a theoretical as well as a pragmatic justification
for so using section 7522(a) that answers the questions posed in
Judge Halpern's concurrence, pp. 36-37. Judge Halpern follows up
the general question--Just what is section 7522(a) supposed to
accomplish?--by asking what justifies our decision to sanction a
vague notice by shifting the burden of proof when the
Commissioner's theory is finally put forth, as opposed to
applying some other sanction, such as extending the period of
limitations or awarding attorney's fees. The answer, I submit,
is that shifting the burden on the ground that the theory, once
stated by the Commissioner, constitutes "new matter" is an
- 44 -
appropriate, proportionate, and specifically directed response to
the vagueness and inadequacy of the notice in failing to set
forth any matter other than to express the intent to assess a
specified amount of a particular tax.
Section 7522(a) was a signal from Congress that vague
notices would thenceforth be disfavored. Shifting the burden of
proof to the Commissioner under section 7522(a) is an appropriate
way to implement the not too clearly expressed intent of
Congress. In this regard, the "imaginative reconstruction"
applied by Judge Learned Hand in other contexts, see, e.g.,
Lehigh Valley Coal Co. v. Yensavage, 218 F. 547, 553 (2d Cir.
1914)("Such statutes are partial * * * they should be construed,
not as theorems of Euclid, but with some imagination of the
purposes which lie behind them."), and espoused by Judge Posner,
as well as by our own Judge Raum, points the direction in which
we and the courts of appeals should go. See Posner, Statutory
Interpretation--in the Classroom and in the Courtroom, 50 U. Chi.
L. Rev. 800, 817 (1983).
|
United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT April 25, 2007
Charles R. Fulbruge III
Clerk
No. 05-51635
Summary Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JACINTO CARLOS-DE LA TORRE, also known as Jacinto Carlos,
Defendant-Appellant.
--------------------
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:04-CR-555-ALL
--------------------
Before REAVLEY, WIENER and DENNIS, Circuit Judges.
PER CURIAM:*
Jacinto Carlos-De La Torre (Carlos) appeals the 46-month
sentence imposed following his conviction for illegal reentry
after deportation.
Carlos first argues that his sentence was unreasonable
because the district court imposed a term of imprisonment greater
than necessary to meet 18 U.S.C. § 3553(a)’s objectives. We
review the sentence imposed for reasonableness. United States v.
Booker, 543 U.S. 220, 261-62 (2005). As Carlos was sentenced at
the low end of the applicable guidelines range, and he identifies
*
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. 05-51635
-2-
no error in the guidelines calculations, we give great deference
to the sentence imposed. See United States v. Mares, 402 F.3d
511, 519-20 (5th Cir.), cert. denied, 126 S. Ct. 43 (2005).
Contrary to Carlos’s arguments, we find that the district court
did not improperly balance the sentencing factors and the
sentence imposed was not greater than necessary to satisfy the
purposes of § 3553(a)(2). Therefore, we conclude that the 46-
month sentence imposed was reasonable.
Carlos’s constitutional challenge to the provisions of
8 U.S.C. § 1326 is foreclosed by Almendarez-Torres v. United
States, 523 U.S. 224, 235 (1998). Although he contends that
Almendarez-Torres was incorrectly decided and that a majority of
the Supreme Court now would overrule Almendarez-Torres, we have
repeatedly rejected such arguments on the basis that Almendarez-
Torres remains binding. See United States v. Garza-Lopez,
410 F.3d 268, 276 (5th Cir.), cert. denied, 126 S. Ct. 298
(2005). Carlos properly concedes that his argument is foreclosed
in light of Almendarez-Torres and circuit precedent, but he
raises it here to preserve it for further review.
AFFIRMED.
|
466 S.W.2d 524 (1971)
Johnnie WEST, Plaintiff in Error,
v.
STATE of Tennessee, Defendant in Error.
Court of Criminal Appeals of Tennessee.
February 12, 1971.
Certiorari Denied April 5, 1971.
Phillip E. Kuhn and Bret B. Stein, Memphis, for plaintiff in error.
David M. Pack, Atty. Gen., Thomas E. Fox, Deputy Atty. Gen., Nashville, Terry L. Lafferty and William D. Hayes, Asst. Dist. Attys. Gen., Memphis, for defendant in error.
Certiorari Denied by Supreme Court, April 5, 1971.
*525 OPINION
RUSSELL, Judge.
The plaintiff-in-error, Johnnie West, has prosecuted this appeal in the nature of a writ of error from his first degree murder conviction and consequent ninety-nine (99) year penitentiary sentence. Memphis police officer Frank Bruno was shot to death on the night of October 7, 1960, while investigating a burglary in progress at the Ace Sundry Store. West, together with Red Monts and Joel Farris Olds, was convicted of the crime and sentenced to death by electrocution. Our Supreme Court reversed (Monts v. State, 214 Tenn. 171, 379 S.W.2d 34) and West was again tried with Monts, again convicted, and sentenced to one hundred fifty (150) years in the penitentiary. Our Supreme Court affirmed this conviction (218 Tenn. 31, 400 S.W.2d 722), but the conviction was later set aside by the United States Court of Appeals, Sixth Circuit (Monts v. Henderson, 409 F.2d 95) and this third trial followed.
The record is quite long, and the assignments of error numerous. We have carefully studied the record and conscientiously considered all of the assignments. Those not hereinafter discussed were found to be without merit.
The legal sufficiency of the convicting evidence is questioned. The State presented a witness, Trudy Carroll, who testified that her friends, Olds, Monts and West were overheard by her as they planned the crime earlier in the evening of its perpetration. One Clarence McCord, a fellow jail inmate with West after his incarceration, testified that West admitted the crime to him, telling him in detail how he had committed it; that he had first shot the flashlight out of Officer Bruno's hand, and had then shot him through the heart. There was considerable other evidence supporting the State's case. West himself did not testify, and his witnesses were presented mainly to cast doubt upon the credibility of the State's witnesses. It is certainly accurate to say that the evidence does not preponderate against the verdict, so the assignments going to the legal sufficiency of the convicting evidence are overruled.
Questions are raised by various assignments of error that all bear upon the proposition of discovery in criminal cases. A motion for the production of all testimony before the Shelby County Grand Jury was overruled. Defendant also had subpoenaes duces tecum issued for Inspector H. L. McAden, Captain R. A. Cochran and Captain J. D. Holt of the Memphis Police Department, requiring them to bring all memoranda, statements, tapes, and police records of State witnesses; which subpoenas were quashed upon the State's motion. The trial court also refused to compel the State to reveal the name and whereabouts of two anonymous parties who shared in the reward money for information leading to the arrest and conviction of those responsible for the slaying of Officer Bruno.
Under our law, the proceedings before a Grand Jury are secret. T.C.A. § 40-1612. This oath of secrecy can be removed to check upon the accuracy of a witness' subsequent testimony (T.C.A. § 40-1612) or whenever necessary to the attainment of truth and justice. In re Rich, 219 Tenn. 717, 413 S.W.2d 374. There is no provision in our law for the blanket discovery of Grand Jury testimony.
We do not have broad discovery as in civil cases in criminal cases in Tennessee. Our statute law provides that an accused shall be able to discover his prior confessions or admissions (T.C.A. § 40-2441). Additional statutory discovery in criminal cases in Tennessee is defined by and limited to the provisions of T.C.A. § 40-2044, which reads:
"40-2044. Copying certain books, papers and documents held by attorney for state.Upon motion of a defendant, or his attorney, at any time after the finding of an indictment or presentment, the court shall order the attorney for the state, or any law enforcement officer, to permit the attorney for the defendant to *526 inspect and copy or photograph designated books, papers, documents or tangible objects, obtained from or belonging to the defendant or obtained from others which are in possession of, or under the control of the attorney for the state or any law enforcement officer. The order may specify a reasonable time, place and manner of making the inspection, and of taking the copies or photographs and may prescribe such terms and conditions as are just. However, such inspection, copying or photographing shall not apply to any work product of any law enforcement officer or attorney for the state or his agent or to any oral or written statement given to any such officer or attorney for the state or his agent by any witness other than the defendant."
We find no error in the complained-of rulings of the trial court in the matters assigned. Plaintiff-in-error relies upon Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215, and Giles v. Maryland, 386 U.S. 66, 87 S.Ct. 793, 17 L.Ed.2d 737. The former stands for the proposition that the suppression by the prosecution of evidence favorable to and requested by an accused violates due process where the evidence is material either to the question of guilt or to the question of punishment, irrespective of the good faith or bad faith of the prosecution. This holding is premised upon a suppression which is totally unreflected in this record. The second authority relied upon also deals with a possible prosecution suppression of exculpatory evidence.
It is true that West's counsel was seeking, blanketly, to discover anything of an exculpatory nature. However, there is a total absence of a showing that any such evidence existed. The ingenious theory that the anonymity given to two of the reward-receiving informants indicates that they would have been unfavorable witnesses for the State, else they would have been revealed and used simply does not equate with more logical assumptions. Apparently this information was obtained from penitentiary inmates, one in the Nashville penitentiary and one at Brushy Mountain. Obviously, informers in such places have a very real need for remaining anonymous. Secondly, it could hardly be expected, in the abstract, that informants who were awarded reward money for information leading to the arrest and conviction of the plaintiff-in-error would be sources of exculpatory evidence for him.
We find no error in the complained of rulings of the trial court. And if the prosecution suppressed any exculpatory evidence it is not shown in the record.
The question of the discovery of prosecution evidence is dealt with in depth in 7 A.L.R.3d 8 and 7 A.L.R.3rd 181; and the question of prosecution suppression of exculpatory evidence is treated in 33 A.L.R. 2d 1421.
Error is assigned upon the admission into evidence of the testimony of one Granville Allison, then a Memphis newspaper reporter, who testified to the contents of an in-jail interview with West. The statements of West as given to Allison were exculpatory, but did conflict with another statement attributed to West and introduced later, on the subject of his whereabouts on the night Officer Bruno was slain. Allison was in no way an undercover police agent, but was merely a newsman getting material for a subsequently printed story. West voluntarily talked freely with him, knowing his identity and the purpose of the interview. This evidence was clearly admissible.
As stated at the outset, many alleged errors (a total of twenty-two) have been assigned. We have carefully examined all of them, and feel that it would simply unnecessarily lengthen this opinion to discuss them.
We are convinced that West has had a fair and legal trial, and that this, his third, conviction for this murder should be affirmed.
MITCHELL and O'BRIEN, JJ., concur.
|
MEMORANDUM OPINION
Nos. 04-11-00720-CR & 04-11-00721-CR
Michael Joseph GRIFFITH,
Appellant
v.
The STATE of Texas,
Appellee
From the 198th Judicial District Court, Mason County, Texas
Trial Court Nos. 4285-91 &
The Honorable M. Rex Emerson, Judge Presiding
PER CURIAM
Sitting: Catherine Stone, Chief Justice
Karen Angelini, Justice
Sandee Bryan Marion, Justice
Delivered and Filed: November 2, 2011
DISMISSED FOR LACK OF JURISDICTION
Appellant has filed a notice of appeal in each of these appeals seeking to appeal the trial
court’s order denying his motion for a judgment nunc pro tunc. On October 4, 2011, we ordered
appellant to show cause in writing why these appeals should not be dismissed for want of
jurisdiction. Our order noted that the denial of a motion for a judgment nunc pro tunc is not an
appealable order; instead, the proper remedy to obtain review of the denial of a motion for
judgment nunc pro tunc is by petition for writ of mandamus. See Caceras v. State, No. 04-10-
04-11-00720-CR & 04-11-00721-CR
00132-CR, 2010 WL 726884, at *1 (Tex. App.—San Antonio Mar. 3, 2010, no pet.) (not
designated for publication); Castor v. State, 205 S.W.3d 666, 667 (Tex. App.—Waco 2006, no
pet.). On October 17, 2011, appellant filed a petition for writ of mandamus in response to our
order. Because we do not have jurisdiction to consider an appeal of an order denying a motion
for a judgment nunc pro tunc, these appeals are dismissed for lack of jurisdiction.
PER CURIAM
DO NOT PUBLISH
-2-
|
F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
October 17, 2005
TENTH CIRCUIT
Clerk of Court
JAMES EARLE,
Plaintiff-Appellant,
v. No. 04-1288
CITY OF VAIL, a municipality; (D.C. No. 01-D-274 (CBS))
G. MORRISON, Police Chief of Vail, (D. Colo.)
Vail Police Department, in his official
capacity; DEBORAH ANNIBALI,
Commander Police Officer of the City
of Vail; JOE BUSCH, Officer, OFFICER
HOFFMAN; RUSTY JACOBS, Detective
Sergeant; MIKE TRINDLE, Detective,
Police Officers for the City of Vail;
TOM GRIFFIN, Colorado Bureau of
Investigation; SCOTT JANSEN, Officer,
in their individual and official capacities,
Defendants-Appellees.
ORDER AND JUDGMENT*
Before PORFILIO, ANDERSON, and BALDOCK, Circuit Judges.**
*
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.
**
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of this
appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
(continued...)
The question in this case is whether police officers investigating the scene of an
apparent suicide exceeded the scope of a homeowner’s consent to investigate, thereby
violating the Fourth Amendment. We have carefully reviewed the record, the parties’ briefs,
the district court’s written orders, and the applicable law. We affirm substantially for the
reasons set forth in the district court’s two orders, attached hereto, granting summary
judgment to Defendants.1 When the district court accurately analyzes a case and articulates
sound reasons for its decision, no useful purpose is served by us writing at length.
AFFIRMED.
Entered for the Court,
Bobby R. Baldock
Circuit Judge
(...continued)
**
ordered submitted without oral argument.
1
The district court’s first order granted summary judgment to all Defendants
except Tom Griffin. The same order denied Defendant Griffin’s motion to dismiss.
The redacted portions of that attached order address the motion to dismiss and are not
relevant to this appeal. The second order granted summary judgment to Defendant
Griffin.
2
|
541 U.S. 1055
PINTO-SANTELLANO, AKA PINTO, AKA SANTANAPINTOv.UNITED STATES.
No. 03-9799.
Supreme Court of United States.
May 17, 2004.
1
C. A. 9th Cir. Certiorari denied. Reported below: 86 Fed. Appx. 301.
|
902 F.Supp. 330 (1995)
FONAR CORPORATION, a Delaware corporation, and Dr. Raymond V. Damadian, an individual, Plaintiffs,
v.
GENERAL ELECTRIC COMPANY, a New York corporation, and Drucker & Genuth, MDS, P.C., D/B/A South Shore Imaging Associates, a New York corporation, Defendants.
No. CV 92-4196.
United States District Court, E.D. New York.
September 30, 1995.
*331 *332 *333 *334 Robins, Kaplan, Miller & Ciresi by Ronald J. Schutz, Martin R. Lueck, William L. Norine, Allison A. Johnson, Minneapolis, Minnesota, for Plaintiffs.
Morgan, Lewis & Bockius by Richard A. Mescon, Laurie E. Foster, New York City, Wyatt, Gerber, Burke & Badie by Douglas W. Wyatt, Frederick J. Dorchak, David M. McConoughey, New York City, Bracken & Margolin by John P. Bracken, Islandia, New York, for Defendants.
*335 WEXLER, District Judge.
Fonar Corporation and its founder Dr. Raymond V. Damadian ("Damadian") (collectively, "Fonar") brought the above-referenced patent infringement action, by summons and complaint dated September 1, 1992, against General Electric Corporation and Drucker & Genuth, MDs, P.C., d/b/a South Shore Imaging Associates ("South Shore") (collectively, "GE").[1] On May 19, 1995, after a thirteen-day trial on liability, a jury returned a verdict in favor of plaintiffs wherein it found that the two patents in suit were not invalid and infringed. On May 26, 1995, after hearing three days of testimony on damages, the same jury awarded plaintiffs $110,575,000. Presently before the Court is GE's motion, pursuant to Fed.R.Civ.P. 50 and 59, for judgment as a matter of law ("JMOL") and, in the alternative, for a new trial.
I. THE '832 PATENT
A. Background
Fonar Corporation is the exclusive licensee of U.S. Patent No. 3,789,832 (the "'832 patent"), entitled "Apparatus and Method for Detecting Cancer in Tissue," issued February 5, 1974 to Damadian, on application filed March 17, 1972. The method by which cancer may be detected, as claimed by the '832 patent, employs the use of nuclear magnetic resonance ("NMR" or "MR"). Some technological background is necessary.[2]
Nuclei in the body's atoms generate magnetic fields at varying energy levels. Under normal conditions, the north and south poles of the body's nuclei point in various directions. When placed in an external magnetic field, however, nuclei align with or against the direction of the external field depending on the degree of their own magnetic strength nuclei in a low-energy state align with the external field; those in a high-energy state point away from the field. Exposure to an external magnetic field also causes nuclei to wobble, or precess, as they spin on their own axes.
A radio frequency ("RF") wave, when pulsed into a body exposed to an external magnetic field, produces two effects in nuclei: first, the RF energy causes low-energy nuclei to flip into a high-energy state and align in a direction opposite to the magnetic field; second, it causes nuclei to precess in synch, or "in phase." When the RF pulse is eliminated, the effected nuclei return to their natural magnetic state. This is called "relaxation." Relaxation is quick, but not instantaneous.
During relaxation, effected nuclei emit a detectable RF signal of their own as they return to their low energy state. Their signal comprises three elements. First, the strength of the signal depends on the number of nuclei that flipped into high energy state when the RF pulse was turned on. This element is called proton density. Second, the strength of the signal depends on the rate at which the effected nuclei return to their low energy state, or, to use the proper term, the rate at which they achieve "spin-lattice" relaxation. This time is specified by "T1". The last element effecting the strength of the emitted signal is the rate at which the effected nuclei loose "phase" among their respective wobbles, or, achieve "spin-spin" relaxation. This time is specified by "T2".
Trial testimony revealed that, in 1970, Damadian conducted research to test his theory that T1 and T2 relaxation times were different in healthy and diseased tissue of the same tissue type. After obtaining encouraging results, Damadian applied for and obtained the '832 patent. Claims 1 and 2 of the '832 patent read:
*336 1. A method for detecting cancer comprising:
a. measuring and establishing standard NMR spin-lattice relaxation times and spin-spin relaxation times for both normal and cancerous tissue of the type under analysis using as an indicator nuclei at least one nuclei which exhibits deviant behavior in cancerous tissue;
b. measuring the NMR spin-lattice relaxation times and spin-spin relaxation times for the suspected tissue to determine the extent of deviant behavior of the indicator nuclei; and
c. comparing the values obtained in (b) against the standards obtained in (a).
2. The method of claim 1, wherein the indicator nuclei are cell water protons.
In the instant action, Fonar alleged that, between September 1986 and February 3, 1991, GE infringed or induced infringement of Claim 1 and dependent Claim 2 of the '832 patent by the manufacture, use, and/or sale of magnetic resonance imaging ("MRI") scanners.
MRI scanners read the RF signal emitted from nuclei during relaxation and produce an image therefrom. The image represents a view of a slice of the body at a particular point along a particular plane. The scanner selects the slice of the body to be imaged and subdivides it into tiny squares of tissue, or voxels, through the use of gradient magnetic fields. After the RF pulse is introduced, the scanner's antenna collects an RF signal emitted from each voxel during relaxation. The electric signals are then converted into values to be read by a computer. For each voxel there is a corresponding pixel on an imaging screen. The computer displays the value, or RF signal strength, for each voxel as a shade of gray on the corresponding pixel. How dark or light a pixel is depends on the strength or weakness of the RF signal emitted by its corresponding voxel.
The scanner cannot produce a useful image, however, without some assistance from the operating technician. Nuclei of a given tissue type generally emit RF signals of the same strength during relaxation. As such, that tissue type should appear in the MR image as a single shade of gray. An abnormality in that tissue, however, will produce an RF signal of a different strength and a different shade of gray on the screen. As such, a dark spot on an otherwise light image of brain tissue, for example, would indicate to a physician that there is an abnormality in the patient's brain. This being so, it is essential that the scanner obtain the maximum contrast between the varying degrees of gray. The scanner accomplishes this by repeating the gradient-RF pulse process many times. If the pulsing is done with the proper timing, the contrast will increase and the image will become sharper with every repetition. The technician sets the timing, or, pulse sequence, as it is called. This task actually involves two settings: time echo ("TE") and time to repeat ("TR"). TE and TR are called pulse protocols or timing parameters.
Fonar contended that GE infringed the '832 patent because MRI scanners manufactured and sold by GE determine whether cancer may be present in suspect tissue by comparing the T1 or T2 relaxation times of the suspect tissue with predetermined standard T1 or T2 relaxation times for normal and cancerous tissue of the same tissue type. The jury agreed, finding that GE infringed Claims 1 and 2 of the '832 patent. As to validity, the jury found that "Damadian invent[ed] the subject matter claimed by the ['832] patent." The jury awarded Fonar $35 million in damages. The Court reserved decision on GE's post-trial motion for JMOL. The instant motion for JMOL is made on renewal.
B. Claim Construction and Infringement
On a motion for JMOL, a district court may not disregard a jury verdict unless it is convinced that the trial record contains no evidence "`upon which a jury might properly have returned a verdict in [the non-movant's] favor when the correct legal standard is applied.'" Markman v. Westview Instruments, Inc., 52 F.3d 967, 975 (Fed.Cir. 1995) (en banc) (quoting Jamesbury Corp. v. Litton Indus. Prods., Inc., 756 F.2d 1556, 1560 (Fed.Cir.1985)) (emphasis omitted). "Factual findings made by the jury in arriving *337 at its verdict are to be upheld unless the party moving for JMOL shows that (when the correct legal standard is applied) there is not substantial evidence to support a finding in favor of the nonmovant." Id. (citing Read Corp. v. Portec, Inc., 970 F.2d 816, 821 (Fed. Cir.1992)). Whether the correct legal standards have been applied by the jury, either expressly or by implication, is a question considered by the district court de novo. Id. (citations omitted).
"Substantial" evidence is such relevant evidence, taken from the record as a whole, as might be accepted by a reasonable mind as adequate to support the finding under review. Dana Corp. v. IPC Ltd. Partnership, 860 F.2d 415, 417 (Fed.Cir.1988), cert. denied, 490 U.S. 1067, 109 S.Ct. 2068, 104 L.Ed.2d 633 (1989). In determining whether substantial evidence is present, "a court must: (1) consider all the evidence, (2) in a light most favorable to the non-mover; (3) drawing all reasonable inferences favorable to the non-mover; (4) without determining credibility of witnesses, and (5) without substituting its choice for that of the jury between conflicting elements in the evidence." Id. (quoting Connell v. Sears, Roebuck & Co., 722 F.2d 1542, 1546 (Fed.Cir. 1983)) (other citations omitted).
A jury's infringement verdict must stand where a court finds substantial evidence supporting the finding that the accused process or product performs each element of at least one of the properly construed patent claims. See Read Corp. v. Portec, Inc., 970 F.2d 816, 821 (Fed.Cir. 1992). The analysis comprises two determinations: the court must define, as a matter of law, the meaning and scope of language used in the patent claims, and must also decide whether the jury's infringement verdict is supported by substantial evidence in light of the properly construed claims. Markman, 52 F.3d at 976, 979.[3]
It is well settled that "`[a] patent covers the invention or inventions which the court, in construing its provisions, decides that it describes and claims.'" Id. at 979 (quoting 3 William C. Robinson, A Treatise on the Law of Patents for Useful Inventions § 1019, at 247 (1890)). In defining the meaning and scope of patent claims, a district court must consider: the language of the claims; the patent's specification; and the patent's prosecution history. Id.; Unique Concepts, Inc. v. Brown, 939 F.2d 1558, 1561 (Fed.Cir.1991). A court in its discretion may also consider extrinsic evidence, such as expert and inventor testimony, dictionaries, and learned treatises. Markman, 52 F.3d at 980. It is the language of the claims, however, that defines the scope of the invention; other evidence should be considered only insofar as it informs the court as to the meaning of those words. The words of the claims should be given their ordinary meaning; for a word to take on some special meaning, it must be defined as such in the specification. See id. at 979-80 (citing Intellicall, Inc. v. Phonometrics, Inc., 952 F.2d 1384, 1388 (Fed.Cir. 1992)). In this sense, the specification serves *338 as "a sort of dictionary, which explains the invention." Id.
Element (a) of Claim 1 of the '832 patent identifies the first step for cancer detection as the "measuring and establishing [of] standard NMR [T1] relaxation times and [T2] relaxation times for both normal and cancerous tissue." Element (a) claims not merely the measurement and establishment of any data for T1 and T2, but limits the invention to the measurement and establishment of data suitable for serving as a "standard." Given the comparison required by element (c), the word "standard" in (a) is a significant limitation. Having read the claims, specification, and prosecution history of the '832 patent, and having heard the testimony of Damadian, the inventor, and Reuben Mezrich, GE's claim interpretation expert, the Court interprets "standard" to mean NMR relaxation time data against which other data may be compared in order to detect cancer. Element (b) defines what the "other" data must be. Element (c) requires that the detection of cancer be performed by a comparison of "the values obtained in (b) against the standards obtained in (a)." As the specification aptly summarizes, at column 2, lines 22-26, Claim 1 of the '832 patent disclose a process for determining whether cancer is present "[b]y comparing the relaxation times for [suspect] tissue with relaxation times obtained for known normal tissue and known cancerous tissue."
GE's principal argument on its motion for JMOL is that the properly construed claims of the '832 patent do not read on the process of imaging. GE contends that its scanners do not infringe the '832 patent because they merely produce images that can be analyzed by physicians in order to determine whether internal tissues contain abnormalities. If cancer can be detected, GE argues, the detection is performed by the physician, not the scanner. Even under a broad reading of the claims, GE insists, the '832 patent does not contemplate the process of imaging. Indeed, the words "image" or "imaging" appear nowhere in the claim language or specification.
Fonar would agree that, under GE's understanding of the process, the claims of the '832 patent do not read on imaging. But Fonar offers a different explanation for how cancer is detected by MRI scanners made and sold by GE. Under Fonar's theory, the scanner does the detection, and it does so by comparing the relaxation times of suspect tissue against standard relaxation times for normal and cancerous tissue. This process, Fonar argues, comes squarely within the scope of the properly construed claims.
In order to establish that GE performed element (a) of the '832 patent, Fonar had to prove that GE measured and established standards that is, T1 and T2 relaxation time data for normal and cancerous tissue against which other data could be compared in order to achieve cancer detection. Fonar's theory, as presented mainly through the testimony of Damadian, is as follows. GE's scanners are able to detect cancer in a given tissue type only when they are properly calibrated for that tissue type. Proper calibration is achieved only by using an optimal pulse sequence that is, the pulse protocol settings (TE and TR) that provide maximum differential in pixel brightness. Proper TE and TR settings for a given tissue type can be determined only by way of mathematical formulae, within which the only variables are "standard" T1 and T2 relaxation times for normal and cancerous tissue. The standards numerical values vary depending on the type of tissue under examination. In sum, Fonar contends that a useful image cannot be obtained without an optimal pulse sequence, and that an optimal pulse sequence cannot be obtained without knowing the "standard" values for that tissue type.
Fonar identifies several documents in evidence in support of the proposition that GE measured and established standards, and, thereby, performed step (a) of Claim 1. The first is the back cover of a scientific journal, which contained an article written by GE's Manager of NMR Applications, Felix W. Wehrli. The article contains the following language: "Once detailed knowledge of T1 and T2 data exists for various tissue types (primarily normal and diseased), pathology-specific scan protocols can be established. This is one goal of General Electric's extensive applications development program." Pl. Exh. 612. The second is a 1987 article detailing *339 the results of five years of GE research. Authored by GE scientists Paul A. Bottomley ("Bottomley") et al., the article includes a table of "relaxation times for different pathologies and their dependence on NMR frequency, tissue of origin, temperature, and species." Pl. Exh. 599, at 2. The article states: "Such information can be used for optimizing image contrast between normal and pathological tissue via appropriate adjustment of pulse sequence timing parameters, and may be of diagnostic value." Id. The article also referred to a precursor work, co-authored by Bottomley in 1984, which reviewed "normal tissue relaxation." Id. at 1. Fonar contends, based on this evidence, that GE measured and established standards.
The evidence strongly supports the proposition that Bottomley's findings constitute essential ingredients in the process of optimizing pulse sequences. The evidence also suggests that optimal TE and TR settings are essential to the production of a useful MR image, an image that undeniably helps physicians determine whether cancer is present in tissue. But, in order for Bottomley's figures to constitute "standards," as the Court has construed that term, his data must be suitable for comparison against other data so as to form a basis for cancer detection. Comparisons occur during the course of an MR scan. In a T2-weighted image of brain tissue, for example, there is the comparison on the screen between light gray, indicating normal tissue, and dark gray, indicating diseased tissue. In a sense, the scanner's computer compares the RF signal it receives from a particular voxel against its internal programming in order to determine the signal's strength and set the appropriate brightness for the corresponding pixel. It cannot be said, however, that the scanner compares T1 and T2 relaxation times for the tissue under examination against "standard" T1 and T2 relaxation times for normal and cancerous tissue in order to produce an image useful for cancer detection. The image is a reflection, nearly a direct reflection, of T1 and T2 relaxation times for the tissue under examination. It is an indication, not a comparison. Bottomley's research provides for a more precise indication; it does not, however, provide the basis for a comparison.
A similar, but not the same, conclusion was reached several years ago in Fonar Corp. v. Johnson & Johnson, 630 F.Supp. 581 (D.Mass.1986), aff'd, 821 F.2d 627 (Fed.Cir. 1987), cert. denied, 484 U.S. 1027, 108 S.Ct. 751, 98 L.Ed.2d 764 (1988). In Johnson & Johnson, a jury verdict of infringement of Claims 1 and 2 of the '832 patent was disregarded by the district court on the defendants' motion for JMOL because "the revealing comparison [was] not between T1 and T2 values for suspected tissue of a particular type ..., on the one hand, and standard values, on the other hand." Id. at 585. The district court found Fonar's argument that the requisite comparison existed between imaged values presented on a screen and "standard" imaged values stored in a physician's memory to be "wholly beyond the scope of any permissible interpretation." Id. at 586-87. The district court noted, however, that although the evidence had not supported the proposition that "accumulated scientific knowledge about T1 and T2 values for various types of tissue [was] sufficient ... to enable anyone ... to prepare a set of standards" as contemplated by the '832 patent, "[a]n optimist may hope that it will yet be possible." Id. at 587-88. Fonar's theory in the instant case, therefore, was that Bottomley and GE had turned that possibility into a reality.
Because its theory of infringement was different, the evidence presented by Fonar in the instant case differed significantly from that presented in Johnson & Johnson. Although tempting, it would have been improper under these circumstances for the Court to grant GE's pre-trial motions on collateral estoppel grounds. In retrospect, however, it is fair to categorize Fonar's argument to the Court in the instant case as a valiant effort to fit a different square peg into the same round hole. Again, it failed to establish the existence of standard T1 and T2 values as contemplated by Damadian. As such, the Court determines, as a matter of law, that the infringement verdict returned by the jury is not supported by substantial evidence. GE's scanners do not detect cancer by the comparison method disclosed by Claims 1 and 2 of the '832 patent. The motion for JMOL is granted on the ground that GE's *340 scanners do not infringe Claims 1 and 2 of the '832 patent as construed by the Court. In doing so, the Court must disregard the jury's answers to question I.A. on the Verdict Sheet.[4]
C. Invalidity
Pursuant to 35 U.S.C. § 282, a patent is presumed valid. A party challenging this presumption, must prove by clear and convincing evidence that the patent is invalid. North Am. Vaccine v. American Cyanamid Co., 7 F.3d 1571, 1579 (Fed.Cir. 1993), cert. denied, ___ U.S. ___, 114 S.Ct. 1645, 128 L.Ed.2d 365 (1994). On motion for JMOL, the Court analyzes invalidity issues submitted to the jury by the same standards used for infringement that is, (1) whether there is substantial evidence supporting the jury's express or implied findings of fact and (2) whether those findings are legally sufficient to support the legal conclusion drawn by the jury in reaching its verdict. See Dana Corp., 860 F.2d at 417.
The Court concludes that there is substantial evidence in the record supporting the jury's finding that the '832 patent was not procured through inequitable conduct. In addition, the Court determines that, based on the evidence presented by GE, a reasonable jury could find no set of facts upon which an obviousness determination could be based. As such, GE failed to sustain its burden of proving, by clear and convincing evidence, that Claims 1 and 2 of the '832 are invalid. Accordingly, the motion for JMOL is denied in this respect.
II. THE '966 PATENT
A. Background
Fonar Corporation is the exclusive licensee of U.S. Patent No. 4,871,966 (the "'966 patent"), entitled "Apparatus and Method for Multiple Angle Oblique Magnetic Resonance Imaging," issued October 3, 1989 to Stanton D. Smith ("Smith"), David Hertz ("Hertz"), Robert Wolf ("Wolf"), and Robert H. Olsen ("Olsen"), on application filed November 16, 1988. The '966 patent discloses a method and apparatus for obtaining, in the course of a single MR scan, a number of images at different angles to each other.
The imaging technique claimed by the '966 patent, called multi-angle oblique ("MAO"), is particularly useful for scanning the spine. In order to analyze spinal tissue, a physician needs images representing an axial view of each disc that is, a picture of what each disc would look like if it were cut in half along its east-west axis. Because vertebrae join each other at a variety of angles to constitute the snake-like spine, the proper angle from which to produce an image of one disc will differ from the next. In the past, each disc was scanned separately, resetting the scanner for the appropriate angle each time. Using MAO, the scanner can produce images of all the discs, at desired angles, in one scan. MAO, as claimed by the '966 patent, involves the use of a "scout image." The scout image is a preliminary sagittal-slice image of the spine that is, what the spine would look like if it were cut in half along its north-south axis. By placing cursor lines across the scout image, at each disc, the technician selects the angle from which each disc will be imaged. With the push of a button, the scanner generates axial pictures of each disc and a scout picture identifying the angles from which each axial picture was taken.
In the instant action, Fonar alleged that GE infringes or induces infringement of Claims 1, 2, 4, 5, and 12 of the '966 patent by the manufacture, use, sale, and maintenance of MRI scanners. At trial, GE defended on the following grounds: (1) that the '966 patent was invalid, pursuant to 35 U.S.C. § 112, ¶ 1, for failure to disclose "the best mode contemplated by the inventor[s] of carrying out [their] invention" and information sufficient to enable one skilled in the art to make and use the claimed invention without the necessity of undue experiment; (2) that the '966 patent was invalid, pursuant to 35 U.S.C. § 102(f), for failure to disclose all the *341 inventors; (3) that the '966 patent was invalid, pursuant to 35 U.S.C. § 102(b), because its subject matter was in public use more than one year prior to the filing date; (4) that the '966 patent was invalid, pursuant to 35 U.S.C. § 103, because its subject matter would have been obvious to one skilled in the prior art; (5) that the '966 patent was invalid, pursuant to 35 U.S.C. § 102(g), because its subject matter was anticipated by the prior invention of another; and (6) that GE did not infringe or induce infringement of the '966 patent.
The jury found that GE infringed Claims 1, 2, 4, 5, and 12 of the '966 patent, and, in response to interrogatories submitted, pursuant to Fed.R.Civ.P. 49(a), on each invalidity defense, that the claims were not invalid. As to damages, the jury awarded Fonar $27,825,000 in lost profits for GE's sales of 75 MRI scanners, and $34,125,000 in reasonable royalties for GE's sales of 525 scanners. The jury also awarded Fonar $13,625,000 in damages for inducement of infringement. This last award was given in response to an interrogatory, which the Court gave based on Fonar's theory that GE's performance of maintenance and repair after notice of infringement on scanners sold prior to notice of infringement constituted inducement of infringement.
GE moved for JMOL on numerous grounds at the close of the proceedings. The Court denied the motions on all grounds except failure to prove inducement of infringement, a ground upon which the Court reserved decision. GE has renewed its motion on every ground twenty-three to be exact. The motion is summarily denied as to all grounds not specifically addressed by the Court in this Memorandum & Order.
B. Claim Construction
As stated above, it is the obligation of the Court to render an interpretation of the claims of the patent-in-suit. The full text of the claims at issue are set forth in the Appendix to this Memorandum & Order.
Claim 4 and dependent Claim 5 contain "means-plus-function" language. Claims with means-plus-function language "cover the corresponding structure, material, or acts described in the specification and equivalents thereof." 35 U.S.C. § 112; King Instruments Corp. v. Perego, 65 F.3d 941, 945 (Fed.Cir.1995). This rule of construction applies whether the claim language is being construed in the context of an infringement or invalidity determination. In re Donaldson, 16 F.3d 1189, 1193 (Fed.Cir.1994).
Element (a) of Claim 4 covers: "positioning an object in an NMR imaging apparatus which includes ... means for producing an image from said NMR imaging data." Element (b) covers: "operating said NMR imaging apparatus to obtain NMR scout image for a portion of said object." Element (c) covers: "using said scout image to select a first plane and a second plane of said object for which NMR imaging data is to be obtained." Read in conjunction with its preceding elements, element (c) limits the invention in the following respect: each of the multiple angles at which images are to be obtained must be "select[ed]" by "using" a "scout image."
The specification of the '966 patent makes two references to the phrase "scout image." It states in column 3, lines 29-35, that a scout image is an image of a "portion of the object of the examination.... used to select" planes from which "NMR image data is to be obtained." It also states, in column 16, lines 53-57:
Referring to FIG. 10, a particular medical use of the apparatus of the present invention is depicted. A patient is disposed in an NMR imaging apparatus, and a scout scan is taken of the patient's spine, which is displayed on a screen 130.
The Court construes the phrase "scout image" to mean a preliminary NMR image of a portion of the object of the examination used for the purpose of "select[ing]" desired imaging planes. In so construing, the Court declines to limit the phrase "scout image" to preliminary images of the spine. See Electro Med. Sys. S.A. v. Cooper Life Sciences, 34 F.3d 1048, 1054 (Fed.Cir.1994) (cautioning that "although the specification may well indicate that certain embodiments are preferred, particular embodiments appearing in the specification will not be read into the *342 claims when the claim language is broader than such embodiments").
The limitation also requires that the desired imaging planes be "select[ed]," by "using" the scout image. These words identify the method by which the imaging angles must be selected. Figures 5 and 10, and corresponding text in the specification, show quite clearly that the manual use of cursor lines on the scout image are the method for selecting imaging planes. The specification does indicate that "direct input" of desired imaging planes "suffices for the purposes of the present invention," see '966 patent, col. 15, lines 39-42, but because Claim 4 is limited by its own language to use of a "scout image," direct input of desired imaging planes is not covered by Claim 4. See In re Donaldson, 16 F.3d at 1195. The Court determines that Claim 4 covers the manual use of cursor lines on a scout image to select desired imaging angles.
Claim 1 and dependent Claim 2, however, are not limited to use of a "scout image." As such, the Court determines that direct input of desired imaging planes is covered by Claim 1.
C. Invalidity
As indicated above, a party challenging the presumption that a patent is valid, must prove by clear and convincing evidence that the patent is invalid. North Am. Vaccine, 7 F.3d at 1579. Based on its responses to interrogatories, the jury found that GE failed to prove that the '966 patent was invalid. GE moves for JMOL on several grounds. The verdict must stand, however, unless GE establishes that the jury's express or implied findings of fact are not supported by substantial evidence or that those findings are insufficient to support the legal conclusion drawn by the jury in reaching its verdict. See Dana Corp., 860 F.2d at 417.
1. Best Mode
GE argues that the '966 patent is invalid because its inventors contemplated a best mode for carrying out Claims 1, 2, 4, 5, and 12 which they did not adequately disclose. The first paragraph of 35 U.S.C. § 112 sets forth the requirement that the patent specification "set forth the best mode contemplated by the inventor of carrying out his invention." Best mode analysis has two components. In re Hayes Microcomputer Prods. Patent Litig., 982 F.2d 1527, 1536 (Fed.Cir.1992) (citing Chemcast Corp. v. Arco Indus. Corp., 913 F.2d 923, 927 (Fed.Cir. 1990)).
The first inquiry focuses on whether the inventor knew of a mode of practicing his invention at the time he filed his patent application which he considered to be better than any other. This determination is subjective, focusing on the inventor's state of mind at the time he filed his application. If he did have a best mode, the next question is whether he disclosed it and did so adequately to enable one of ordinary skill in the art to practice the best mode. This is an objective determination. There must be no concealment of a mode known by the inventor to be better than that which is disclosed.
Id. (citing Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1384-85 (Fed. Cir.1986), cert. denied, 480 U.S. 947, 107 S.Ct. 1606, 94 L.Ed.2d 792 (1987)). Whether the best mode requirement has been met is a question of fact. Id.
GE asserts that, at the time the inventors filed the patent application, the inventors knew that certain computer hardware and software were better than any other for implementing MAO, as claimed by the '966 patent. GE argues that the inventors' bare functional disclosure in the '966 patent effectively concealed their best mode. Fonar acknowledges that the inventors contemplated particular hardware and software as part of their best mode for implementing MAO, but contends that the jury verdict is supported by substantial evidence because this mode was adequately disclosed in the '966 patent.[5]
*343 In discussing the best mode requirement in a case where the patent-in-suit did not disclose a specific computer program used to implement a system for converting a seismic time section, the United States Court of Customs and Patent Appeals stated:
In general, writing a computer program may be a task requiring the most sublime of the inventive faculty or it may require the droning use of clerical skill. The difference between the two extremes lies in the creation of mathematical methodology to bridge the gap between the information one starts with (the "input") and the information that is desired (the "output")....
In re Sherwood, 613 F.2d 809, 817 (C.C.P.A. 1980), cert. denied, 450 U.S. 994, 101 S.Ct. 1694, 68 L.Ed.2d 193 (1981). Continuing, the court in Sherwood held:
[Because the] specification provides the general mathematical equations used and teaches the further "trick" of chopping the physical input seismic traces into segments via a mathematical manipulation,.... [it] delineates the best mode in a manner sufficient to require only the application of routine skill to produce a workable digital computer program.
Id. In fact, disclosure of merely the general function of hardware and software necessary for implementation of an invention can satisfy the best mode requirement. See In re Hayes, 982 F.2d at 1537.
In order to perform MAO that is, to generate multiple images at different orientations during the course of a single scan an MRI scanner must have the capacity, among other things, to simultaneously launch two gradient waveforms towards each other from transverse angles. It must also be able to assign each gradient a different frequency. When the gradients collide, a new, hybrid gradient is created along a new, oblique-angle plane. The strength chosen for each of the initial gradients determines the exact angle of the hybrid gradient. As Wolf, one of the inventors on the '966 patent, explained at trial, it is "like turning on the hot and cold water at the same time to get the warm water, [only] now we're mixing the two power supplies." Trial Tr. at 484. This process is called rotating gradients.
The inventors on the '966 patent believed that gradient rotation could best be accomplished with hardware that they called a "gradient multiplier board" ("GMB"). The GMB was engineered by Hertz. On his direct examination, the following colloquy took place between Hertz and Fonar's counsel:
Q. Now was this board disclosed in the ['966] patent?
A. Yes, it was.
Q. And is it called the gradient multiplier board on Fonar (sic)?
A. That's correct.
....
Q. And would you show the ladies and gentlemen of the jury where ... on figure seven [of the '966 patent], there is a blocked diagram of the gradient multiplier board?
A. The area on the dotted line.
Q. And in the within that dotted line and in the description of the patent does it tell the person of ordinary skill in the art everything they need to know in order to build a gradient multiplier board that will operate on a general MRI system?
A. Yes, it does. It is black dark art (sic) that will include all the functions that will be needed.
Q. And is there then a written description ... in the body of the patent that goes along with those functions?
A. Yes, there is.
Trial Tr. at 640-41.
The specification discloses that the GMB comprises six principal components an arithmetic unit, a multiplier and offset parameter RAM, a slice pointer, a level pointer, and two terminals, see '966 Patent, fig. 7 and describes how they interact during the course of a MAO scan. For example, it states that: "[t]he slice pointer 31, in response to a pulse from the pulse programmer 24, outputs a signal to the RAM 28," id. at *344 col. 13, lines 1-3; "[t]he waveform data and the axis signal are conveyed to the arithmetic unit 25, and the axis signal is conveyed to the multiplier and offset parameter RAM 28," id. at col. 13, lines 25-28; "the RAM 28 outputs the above-described multiplier and offset terms," id. at col. 13, lines 35-36. More specifically, the specification describes how the GMB generates a gradient waveform at the desired strength:
[f]or an input from the slice pointer 31 indicating the second slice, and an input from the generator 20 indicating the Z axis, the RAM 28 outputs the multiplier [COS(d) + SIN(d)]Css, and outputs the offset A[COS(d) - SIN(d)]Css. The arithmetic unit 25 multiplies the digital data representing the generic waveform G(t) by the multiplier term and to this expression adds the offset term. The sum, which represents the waveform segment to be applied to the Z coil, is output in digital form from terminal 41, and a signal indicating the corresponding Z axis is output from the terminal 32.
Id. at col. 13, lines 37-47.
The testimony of Smith, the lead inventor on the '966 patent, supports the sufficiency of the disclosure. After identifying one of the "benefits" of the GMB as its capacity to allow "the scanner to go through the entire data acquisition process without ever talking to the host computer for that purpose," the following colloquy took place between Smith and counsel for GE:
Q. Does [the '966 patent] tell you how to do it?
A. I think it shows essentially how these parameters are stored in the multiplier and offset parameter RAM, and it shows there is an arithmetic you want which does the calculations and there is some reference to that whole process there.
There [are] some equations that show, for example, how two gradients may be combined arithmetically. That particular equation describes [the] kind of calculation that leads to rotation of a plane.
....
... I think I would say yes to your question.
Trial Tr. at 1264-66. Smith's testimony is particularly probative given the fact that he was the only inventor not employed by Fonar at the time of trial, and that he was called as GE's witness. That and other evidence supports the conclusion that a person of ordinary skill in the relevant art could engineer a GMB based on the information provided in the '966 patent. See In re Hayes, 982 F.2d at 1537-39.
GE, nonetheless, argues that the best mode was not disclosed because the '966 patent makes no reference to the existence or appropriate function of "comparators," which, according to Hertz, exist on the GMB for interaction with power supplies. Indeed, Hertz testified on cross-examination that the comparators were "very important"; he referred to them, in fact, as the "trick" of the invention. See Trial Tr. at 677-78. On redirect, however, he testified as follows:
Q. Are [comparators] necessary on every MRI machine?
A. No, they are not.
....
Q. If someone is using an MRI machine that requires a comparator, will they be able to find out that they have to put a comparator in when they build the multiangle oblique invention from reading the patent?
A. I believe that a skilled engineer will have the ability to understand it.
Id. at 689. Even if the cross-examination testimony of Hertz establishes that the inventors contemplated the use of comparators as part of the best mode of practicing their invention, his testimony on redirect makes clear that best mode was adequately disclosed without reference to comparators. As such, the Court determines that substantial evidence supports the jury's implied finding that the GMB board was adequately disclosed in the '966 patent.
GE also contends that the inventors failed to adequately disclose information necessary to write the software for the MAO invention. MAO requires two types of software. One type, which is generally referred to as a "device driver," allows the host computer to exercise and operate hardware that is external *345 to the computer that is, the GMB. Wolf, after reviewing a stack of GMB specifications given to him by Hertz, developed two device driver subroutines. The other type of software, written by Olsen, allows the scanner technician to choose imaging slices on the scout image. Based on the chosen slices, his program calculates and communicates the appropriate parameters to Wolf's device drivers, which, in turn, run the GMB. This type of software is called a "user interface" or "graphic prescription." GE contends that the inventors failed to meet the best mode requirement because the '966 patent disclosed neither the specifications for the software itself nor the GMB specifications necessary to write the device driver subroutines.
The flaw in GE's argument is apparent from the following testimony given by Wolf:
Q. From that written description [of the GMB in the '966 patent], is there sufficient description to a software engineer, such as yourself, of what software needs to be written in order to perform the multi-angle oblique invention?
A. Yes.
....
Q. In any event, the software, itself, as we see in the hundred pages of Exhibit 816, is not reproduced in the patent.
Is that right?
A. That is correct.
Q. Why is that?
A. For a few reasons.
First of all, it's large....
What's much more important is to have a description of what the software has to do, and that is what you will find in the patent.
Id. at 508-10. As an example, Wolf explained that the specification teaches "how the computer can calculate the various frequencies for each slice for each angle based on the strength of the slice of the gradient when its rotated to the angle of the slice." Id. at 628 (referring to '966 patent, col. 12, lines 16-23[6]). The language identified, according to Wolf's testimony, "tells someone what to base the calculations on for the RF frequencies." Id. at 629.
The evidence supports the conclusion that a software engineer of ordinary skill could design software sufficient to run hardware capable of performing the invention claimed by the '966 patent. See In re Hayes, 982 F.2d at 1537-39.
The Court determines that there is substantial evidence supporting the jury's finding that GE failed to prove, by clear and convincing evidence, that the best mode requirement was not violated.[7]
2. Enablement
GE also contends that the Claims 1, 2, 4, 5, and 12 are invalid because the disclosure in the '966 patent was insufficient to enable one skilled in the art to make and use the invention. The first paragraph of 35 U.S.C. § 112 contains a second disclosure requirement that is separate and distinct from best mode. It mandates that the specification contain a written description of the claimed invention sufficient to enable any person skilled in the art to which the invention pertains to make and use that invention. Although not explicitly stated in § 112, to be enabling, the specification must teach those skilled in the art how to make and use the full scope of the claimed invention without "undue experimentation." In re Wright, 999 F.2d 1557, 1561 (Fed.Cir.1993). Nothing more than an objective enablement is required, however; it is irrelevant whether the *346 teaching is provided through broad terminology or illustrative examples. Id. (citing In re Marzocchi, 439 F.2d 220, 223 (C.C.P.A. 1971)).
Enablement is a question of law, supported by underlying factual determinations. See Quaker City Gear Works, Inc. v. Skil Corp., 747 F.2d 1446, 1453-54 (Fed.Cir. 1984), cert. denied, 471 U.S. 1136, 105 S.Ct. 2676, 86 L.Ed.2d 694 (1985). A court may submit legal issues such as enablement to the jury, pursuant to Fed.R.Civ.P. 49(a), but if it does, "the court may not make subsequent findings which overrule an implicit and inherent finding of the jury." Id.
The jury responded in the affirmative to an interrogatory asking whether the description in the '966 patent was sufficient to enable one skilled in the art to make and use the subject matter of Claims 1, 2, 4, 5, and 12. Implicit therein is the jury's factual determination that skilled engineers could make and use the full scope of the invention without unreasonable experimentation. GE asserts that, given the disclosure in the '966 patent, a skilled engineer would not be able to build the MAO invention in less than one to three years. GE's assertion, however, is supported by no more than its witnesses' conclusory oral testimony that the hardware and software specifications were insufficiently disclosed. As discussed above, ample evidence supports the conclusion that the inventors disclosure was adequate in this regard.
The record supports the jury's implied conclusion that one skilled in the art could build the invention without undue experimentation. The Court determines, as a matter of law, that the description of the invention in the '966 patent is enabling.
3. Anticipation: The Work of Hattes
A patent may be invalid as anticipated pursuant to 35 U.S.C. § 102(g) where there is prior conception and reduction to practice by another of the patentee's invention. See Texas Instruments, Inc. v. United States Int'l Trade Comm'n, 988 F.2d 1165, 1177 (Fed.Cir.1993). Although anticipation is a question of fact, conception and reduction to practice are questions of law. See Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1376, 1379 (Fed.Cir.1986), cert. denied, 480 U.S. 947, 107 S.Ct. 1606, 94 L.Ed.2d 792 (1987).
GE argues that its scientists were first to invent the subject matter of Claims 1, 2, 4, 5, and 12 of the '966 patent. "Priority goes to the first party to reduce the invention to practice unless the other party can show that it was the first to conceive the invention and that it exercised reasonable diligence in later reducing that invention to practice." Price v. Symsek, 988 F.2d 1187, 1190 (Fed.Cir.1993). Conception is the "`formulation in the mind of the inventor, of a definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice.'" Id. (quoting 1 Robinson on Patents 532 (1890)). Reduction to practice requires that the claimed invention work for its intended purpose. Id. It is undisputed that the inventors on the '966 patent reduced their invention to practice in November 1985. GE acknowledges that it did not reduce MAO to practice before Fonar. Therefore, in order to establish invalidity by anticipation, GE had to prove, by clear and convincing evidence, that it conceived the subject matter of the '966 patent prior to November 1985, and, if so, that it exercised reasonable diligence until the time when it ultimately reduced the process to practice.
GE contends that, in April 1983, scientist Neil Hattes ("Hattes") conceived GE's MAO technique the process upon which Fonar's infringement charge is based. On direct examination, Hattes described a March 1983 entry in his notebook, which he had labeled "problem of oblique planes," as his "initial statement of proposals, of ways that oblique plane imaging could be accomplished in a scan." Trial Tr. at 1376. Next, he described a January 1984 entry in the same notebook, labeled "oblique plane musings," as representing his "continuing thinking about more details about how we would build, what type of hardware would it take to perform the rotation." Id. at 1382. Clearly such "proposals" and "musings" fall short of establishing conception.
*347 Hattes also explained how he learned of a Texas Instruments microprocessor that could perform arithmetic at a high rate of speed, and how, in August 1984, he assigned to a GE engineer named Steven Deutsch ("Deutsch") the task of "flushing out the design concept" for a board capable of performing a scan at an oblique angle. Id. at 1386-87. In November 1984, Deutsch finished an unpublished work, entitled "Microprocessing Implementation of MR Oblique Plane Imaging," Def't Exh. 366. The Deutsch paper advised that certain software would be necessary "to accommodate multi-slice imaging where each slice may have a different orientation." Id. It also found it necessary for such software "to provide an operator interface so that image rotation can be conveniently specified," but indicated that the "details" of changes to GE's existing MRI software were "beyond the scope of this report." Id. Both Hattes and Deutsch testified that the Deutsch paper describes in detail a device for doing MAO. Trial Tr. at 1397-98, 1418-19.
Continuing on direct examination, Hattes testified that he assigned another GE engineer the task of designing hardware based on the Deutsch paper. What GE calls an Oblique Plane Imaging ("OPI") board was completed January 1985. Id. at 1399. By February 1985, according to Hattes's testimony, GE had the capacity to perform MAO by using the OPI board in conjunction with a dipswitch, a device used by the operator to select multiple imaging angles during the course of a single. Id. at 1403.
Evidence clearly establishes, however, that GE had not reduced MAO to practice in February 1985; in fact, it had yet to begin work on either the device driver or user interface software. An internal memorandum, entitled "Oblique Plane Imaging: An Initial Report," which was prepared by Hattes for GE management in August 1985, listed "objectives" of GE's "oblique plane imaging plan" followed by this text:
Future improvements may include:
...
Multi-Angle, multi-slice (spine tracking) Pl.Exh. 83. Indeed, Hattes's use of the word "may" raises serious doubt as to whether he, or anyone else at GE, possessed in August 1985 a "definite and permanent idea of the complete and operative" MAO invention, as it would later be reduced to practice.
Nonetheless, GE insists that its scientists had conceived the MAO invention before August 1985. It proclaims that the Deutsch paper "set out a complete conception of GE's multislice, multiangle imaging technique in November 1984." Def't Mem. in Supp. of JMOL, at 16. "[A]ll that remained for GE's commercial product was ... the routine software for interfacing with the hardware and to integrate it into the machine." Id. at 17. Other than the oral testimony of GE's own employees, GE did not present evidence supporting the notion that it had undertaken even preliminary work on the necessary software before November 1985, the date Fonar undeniably reduced to practice. Indeed, the outline of a presentation given by the lead software designer on February 17, 1986 indicates that GE still considered it an "objective" at that time to:
Acheive (sic) Parity with Competitors
Seimens has single angle about primary axis.
Technicare has three angles prescription.
Fonar allows each slice in a multi-slice to have its own angle.
Pl.Exh. 65.
Moreover, the evidence falls short of establishing that GE's OPI board was in fact a complete embodiment of the hardware necessary to perform MAO. Hattes acknowledged, on cross examination, that OPI modification would be necessary once the software was complete. Trial Tr. at 1472.
The Court determines that an inventor must have done at least some of the preliminary calculations necessary to design the proper software before he can claim to have "conceived" the subject matter of Claims 1, 2, 4, 5, or 12. For Claims 4 and 5, work must have been commenced on both the device driver and the user interface; for Claims 1 and 2, work must have been commenced on the device driver. The proof falls short of establishing that any software work was performed before November 1985.
*348 The Court notes, however, that even if MAO was conceived by Hattes/Deutsch, GE failed to exercise reasonable diligence between the time of conception and the time of reduction to practice. GE suggests that MAO was conceived in November 1984, the time of the Deutsch paper, but GE admittedly did not reduce the invention to practice until September of 1986. GE should have been able to write the "routine" software "all that remained for GE's commercial product" in less than twenty-two months.
The Court determines, as a matter of law, that GE was not the first to conceive the MAO technique, and that, even if it was, it failed to exercise reasonable diligence between conception and reduction to practice. There is substantial evidence in the record supporting the jury's conclusion that GE failed to prove, by clear and convincing evidence, that the claims of the '966 patent were anticipated by the work of Hattes et al.[8]
4. Anticipation: The Work of Glover
GE asserts that Claims 4 and 5 of the '966 patent are invalid because they were anticipated by the work of GE scientist Gary Glover, as memorialized by his report, published by GE in October 1984 (the "Glover reference"). See Def't Exh. 1222. A patent can be invalid as "anticipated" pursuant to 35 U.S.C. § 102(b) where the subject matter claimed by the patent was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention by the patentee.
Glover gave the following testimony at trial. See Trial Tr. at 1127-1151. One of his responsibilities at GE was to perform magnet shimming. Magnet shimming is the process by which magnetic strength is maintained in a uniform fashion throughout an MRI scanner's magnetic field. The tube-shaped magnet creates a magnetic field in the area inside the tube. At one time, shimming was performed by inserting wedge-shaped materials between the outside edge of the tube and its encasing. The shims would adjust the shape of the tube, and, thereby, adjust the balance of the magnetic field inside the tube. By trial and error the field could be balanced. Glover found this process to be entirely inefficient. He devised a process to collect MR data from scans taken at four different rotations in order to compute and measure the field strength for any given point in the field. The process produced images usually of a bottle of water placed in the exact center of the field the varying brightness of which would indicate strength of the field at a given point. Using the images, Glover could readily determine proper shim settings. Glover memorialized the process which he called Chemical Shift Imaging ("CSI") in the Glover reference.
GE argues that the Glover reference anticipates Claim 4 of the '966 patent. Anticipation, as indicated above, is a question of fact. As asserted here, it requires "the presence of a single prior art disclosure of each and every element of the claimed invention." Electro Med. Sys. S.A. v. Cooper Life Sciences, 34 F.3d 1048, 1052 (Fed.Cir.1994). "The mere fact that a certain thing may result from a given set of circumstances is insufficient to prove anticipation." Id. (emphasis in original). Rather, each claim limitation in the patent must necessarily be present in the prior art disclosure. Id.
As noted above, Claim 4 and dependent Claim 5 cover the use of manual cursor lines on a scout image to select desired imaging planes. The Glover reference neither contains the phrase scout image, nor discusses the concept of using a scout image as envisioned by Claim 4. See Def't Exh. 1222; Trial Tr. at 1176. On direct examination, Glover admitted that in performing CSI he "often took what we would call a scout image *349 of what we called the bottle water to make sure it was in the right place to make sure before we did anything substantively." Trial Tr. at 1151. He also stated that he used cursor lines. The evidence establishes that the scout image used by Glover and the scout image claimed by the '966 patent are both to be used in a preliminary fashion. GE, however, did not establish that Glover used his scout scan as a means of selecting desired imaging planes. The evidence is insufficient to support the conclusion that Claims 4 and 5 of the '966 patent are anticipated by the Glover reference, or Glover's knowledge or use of CSI. There being no evidence upon which a reasonable jury could find that GE met its burden of proof, the Court determines, as a matter of law, that the '966 patent is not invalid as anticipated by the work of Glover.
5. Obviousness
Even where the patented invention is not "anticipated" pursuant to § 102, it may be deemed invalid pursuant to 35 U.S.C. § 103 if the differences between the subject matter of the claimed invention and the prior art are such that the subject matter as a whole would have been "obvious" to a person of ordinary skill in the art at the time the invention was made.
Obviousness is a question of law, based on underlying factual inquiry. Panduit Corp. v. Dennison Mfg. Co., 810 F.2d 1561, 1566-68 (Fed.Cir.), cert. denied, 481 U.S. 1052, 107 S.Ct. 2187, 95 L.Ed.2d 843 (1987). The ultimate legal conclusion is whether the subject matter of a claimed invention would have been obvious to one skilled in the prior art. Id. at 1568. The factual inquiry involves consideration of the following factors set forth in Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 693-694, 15 L.Ed.2d 545 (1966): (1) the scope and content of the prior art; (2) the differences between the prior art and the claims; (3) the level of ordinary skill in the art at the time of the invention; and (4) objective evidence of nonobviousness, such as long-felt but unsatisfied need, commercial success, and copying. The degree to which the obviousness question is one of fact is the "degree required to erect a foundation of facts capable of supporting the conclusion." Panduit, 810 F.2d at 1568. The conclusion is the legal question the court must answer: "whether the patent challenger carried its burden of establishing invalidity." See id. at 1569.
The jury returned negative answers as to Claims 1, 2, 4, 5, and 12 in response to an interrogatory asking whether the subject matter '966 patent would have been "obvious, in light of the prior art, to one skilled in the art at the time the invention was made." On GE's motion, the Court must determine whether there was substantial evidence upon which a reasonable jury could have found facts consistent with its conclusion of nonobviousness.
Fonar contends that only those references disclosed to the United States Patent and Trademark Office qualify as prior art for the purpose of the obviousness determination. GE insists, however, that the knowledge, work and/or devices of Hattes and Glover should be included, as well. See Trial Tr. at 1807. As explained below, the subject matter of the '966 patent would not have been "obvious," even if the prior art included the work of Hattes and Glover.
With the exception of the Deutsch paper, GE's evidence supporting the proposition that the Hattes conception was prior art is a collection of oral testimony from various GE personnel. Because "oral testimony to establish the existence of allegedly anticipatory devices has long been viewed with skepticism," Sjolund v. Musland, 847 F.2d 1573, 1578 (Fed.Cir.1988), a reasonable jury could certainly have found that with the exception of the Deutsch paper the subject matter allegedly conceived by Hattes was not prior art. Assuming, arguendo, that the jury did consider the Deutsch paper prior art, differences between the prior art and the claims of the '966 patent would have been the software necessary to perform MAO.
As stated above, two types of software are necessary to perform MAO device drivers and graphic prescription. As to graphic prescription, the evidence is conflicting. In support of its contention that graphic prescription was an obvious leap from the hardware, *350 GE points to the testimony of Smith. He was questioned, as follows, about an MRI scanner that he used prior to the invention of MAO, the various capacities of which had been disclosed in the '966 patent as prior art:
Q. As far as using that cursor then to do multiple slices at different angles, say two slices at different angles, was that an obvious change to what you had on the machine that was there in the summer of '85, just have the cursor move from one angle to another and it would record those two angles?
A. I think that was a pretty clear extension of what we were doing. That is not something we labored long over.
....
THE COURT: Was it obvious to someone skilled in the art to go from one to various lines?
A. I think in terms of the means of how to set up the positioning of the different slices it's a pretty obvious extension of how we did it.
Trial Tr. at 1270-71. Fonar, however, identifies the following testimony of Hattes in support of the contrary view:
Q. [Graphic prescription is] a user interface. Would that be the correct way to describe it?
A. It is a user interface.
Q. And as used here on the image on the screen, it's the user interface that tells the computer its the software that tells the computer which planes are to be imaged and at what angles, correct?
A. Well, I think it's the start of a very complex process from the drawing to some resultant information that would lead to the scan that would then be requested.
Q. Why did you call that a complex process?
A. Well, I think that the interpretation of where the lines are, what that might mean in terms of what the system has to follow, those directions, in my mind, was not an easy follow from one to the other.
Id. at 1469-70. Although Hattes's expertise is not software design, a reasonable jury could have found him to represent one skilled in the art at the time of the invention. The same holds true for Smith, although his testimony is particularly compelling because he is an inventor on the '966 patent.
Despite Smith's testimony, the Court determines that, even if the jury considered the Deutsch reference prior art, there is substantial evidence to support factual findings that could serve as a basis for a conclusion of nonobviousness. This determination is based, not only on the testimony of Hattes, but also on GE's failure to produce evidence supporting the obviousness of device driver software. In addition, the substance of GE's best mode and enablement arguments undermine the force of its obviousness assertions. For example, GE's "patent" expert, Joseph Colaianni ("Colaianni"), testified that "the disclosure in the ['966] patent with regard to the software" was insufficient because it did not contain "a complete description of the invention so as to enable a person skilled in the art to make and use it." Id. at 1784. On the one hand, GE contends that one skilled in the art could not have written the necessary software because the '966 patent did not sufficiently disclose how to write it; yet, on the other hand, GE insists that to one skilled in the prior art designing the software would be "obvious." The former contention diminishes the viability of the latter. If one cannot design the necessary software based on the prior art and the '966 patent disclosure, it cannot then be an "obvious" task for one to design the same software based on the prior art without the '966 patent disclosure.
GE also makes an obviousness argument in light of Glover's work. The Glover reference, however, adds little to GE's position. Based on the jury's implied factual findings which are supported by substantial evidence even if both the Deutsch and the Glover references were considered prior art the Court determines, as a matter of law, that GE failed to prove, by clear and convincing evidence, that the subject matter of Claims 1, 2, 4, 5, and 12 would have been obvious at the time of the invention to one skilled in prior art.
D. Inducement of Infringement
The jury found that GE infringed Claims 1, 2, 4, 5, and 12 of the '966 patent, *351 and the Court determines, without need for discussion, that the jury's finding is supported by substantial evidence. Separate from direct infringement under 35 U.S.C. § 271(a), a party's acts in connection with sale of equipment may constitute active inducement of infringement under § 271(b). See Joy Technologies., Inc. v. Flakt, Inc., 6 F.3d 770, 774 (Fed.Cir.1993). "Proof of actual intent to cause the acts which constitute infringement is a necessary prerequisite to finding active inducement." Hewlett-Packard Co. v. Bausch & Lomb Inc., 909 F.2d 1464, 1469 (Fed.Cir.1990). In addition, liability for active inducement is dependent on and "cannot occur without an act of direct infringement." Joy Technologies, 6 F.3d at 774.
One cannot infringe without notice of infringement. Fonar concedes that GE is not liable for direct infringement on MRI sales occurring before September 1992, the date when Fonar gave GE notice of infringement. Fonar seeks lost profit damages, however, for sales made prior to September 1992 on the theory that GE's service and repair after September 1992, of scanners sold prior to September 1992, constitutes active inducement. Even though the Court did not charge the jury on active inducement, it asked the jury to determine damages for active inducement. The jury awarded $13,625,000.
Fonar asserts that its active inducement theory finds support in Aro Mfg. Co v. Convertible Top Replacement Co., 377 U.S. 476, 484, 84 S.Ct. 1526, 1531, 12 L.Ed.2d 457 (1963), wherein the Supreme Court instructed that "[w]here use infringes, repair does also, for it perpetuates the infringing use." As the quoted language implies, however, and as the law of active inducement clearly states, there must be an underlying act of direct infringement before there can be an act of inducement of infringement. Indeed, the Supreme Court's next sentence leaves little room for doubt. It explained: "`a patented article may be repaired without making the repairer an infringer[].... where the device in patented form has come lawfully into the hands of the person for whom it is repaired.'" Id. (quoting Union Special Mach. Co. v. Maimin, 161 F. 748, 750 (C.C.E.D.Pa.), aff'd, 165 F. 440 (C.A. 3d Cir. 1908)). GE was not liable for direct infringement on sales occurring prior to September 1992. With no underlying direct infringement as to those scanners, there can be no active inducement.
In retrospect, the jury should not have received an interrogatory on active inducement. The interrogatory was given at Fonar's request and over GE's objection. Having reviewed the law, however, the Court is convinced that Fonar's theory has no basis. Nevertheless, even if it did, no reasonable jury could have concluded that Fonar proved GE's actual intent to induce infringement. As such, the Court must disregard the jury's answer to question 5 on Special Verdict Sheet # 2.
E. Damages
A patentee can recover damages for infringement, pursuant to 35 U.S.C. § 284, under two theories: lost profits and reasonable royalty. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1544 (Fed.Cir.1995) (en banc). Lost profits are available where the record permits an accurate determination of the patentee's loss of sales and profits because of the infringement. Reasonable royalties are always available. An award may be split between lost profits, as actual damages to the extent they are proved, and reasonable royalties for the remainder. State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1577 (Fed.Cir.1989), cert. denied, 493 U.S. 1022, 110 S.Ct. 725, 107 L.Ed.2d 744 (1990). Determining the nature and amount of damages is a question of fact on which the patentee has the burden of proof. BIC Leisure Prods. v. Windsurfing Int'l, 1 F.3d 1214, 1217 (Fed.Cir.1993).
1. Lost Profits
GE moves the Court to disregard the jury's finding of $27,825,000 in lost profits, based on 75 "lost" sales, as not supported by substantial evidence. Fonar contends that there is evidence in the record upon which a reasonable jury could base such a conclusion.
*352 In order to recover lost profits, "the patentee must show a reasonable probability that, `but for' the infringement, it would have made the sales that were made by the infringer." Rite-Hite, 56 F.3d at 1545 (quoting Del Mar Avionics, Inc. v. Quinton Instrument Co., 836 F.2d 1320, 1326 (Fed.Cir. 1987)). The patentee must prove its claim to lost profits by a preponderance of the evidence. Yarway Corp. v. Eur-Control USA, Inc., 775 F.2d 268, 275 (Fed.Cir.1985). This burden includes the presentation of proper evidence for the computation of the lost profits. Standard Havens Prods. v. Gencor Industs., 953 F.2d 1360, 1372 (Fed.Cir.1991) (citing King Instrument Corp. v. Otari Corp., 767 F.2d 853, 863 (Fed.Cir.1985), cert. denied, 475 U.S. 1016, 106 S.Ct. 1197, 89 L.Ed.2d 312 (1986)), cert. denied, ___ U.S. ___, 113 S.Ct. 60, 121 L.Ed.2d 28 (1992).
Because the determination of damages "is not an exact science, ... `the amount need not be proven with unerring precision.'" Del Mar Avionics, Inc. v. Quinton Instrument Co., 836 F.2d 1320, 1327 (Fed.Cir.1987) (quoting Bio-Rad Labs., Inc. v. Nicolet Instrument Corp., 739 F.2d 604, 616 (Fed.Cir.), cert. denied, 469 U.S. 1038, 105 S.Ct. 516, 83 L.Ed.2d 405 (1984)). In addition, "[w]hen the amount of the damages cannot be ascertained with precision, all doubts are resolved against the infringer." Id.
A useful test for determining whether a patentee met the "but for" requirement was enunciated in Panduit Corp. v. Stahlin Bros., 575 F.2d 1152 (6th Cir.1978). This test requires the patentee to establish the following four factors: (1) demand for the patented product; (2) an absence of acceptable noninfringing substitutes; (3) the patentee's ability to exploit the demand; and (4) the amount of profits the patentee would have made. Id. at 1156. The patentee's burden, however, is to prove no more than a reasonable possibility that the sales would have been made; the patentee need not negate "every possibility" that the purchaser might have bought another noninfringing product. Rite-Hite, 56 F.3d at 1545. The Court determined that it was unnecessary to charge the jury on the Panduit test.
According to the cross-examination testimony of Jay D. Miller ("Miller"), whom GE employs as the Americas Marketing Manager for MRI systems, Fonar and GE directly competed in the market for MRI scanners with magnetic field strengths of .3 to .5 Tesla. Trial Tr. at 2189. In that particular market, Miller testified that GE sold 21 Vectra scanners and "about" 50 Spectra scanners after September 1992. Id. Fonar acknowledges that there were at least four other manufacturers competing in the market. Id. at 2116. The testimony of economics expert Laurits Christensen ("Christensen") indicated, however, that Fonar considered all manufacturers in the market to be infringers of the '966 patent and, therefore, considered every sale in the market to be a lost sale. Id.
Fonar presented evidence that it would have been able to meet demand for scanners equipped with MAO. Damadian testified that on the average Fonar could manufacture three scanners a month, and that, in 1988, at its peak rate of production, it was capable of manufacturing eight per month. Id. at 2049. Taking into account the corporation's growth rate, he added that Fonar would have been able in 1992 to manufacture 500 MRI scanners a year. Id. at 2050.
Viewing the record as a whole and drawing all inferences in favor of Fonar, the Court determines that there is substantial evidence supporting the jury's conclusion that Fonar had reasonable possibility of selling 75 scanners but for GE's infringement. GE's motion is denied in this respect. Because the record also supports the jury's determination as to the amount of lost profit damage, the Court denies GE's request to reduce the amount of the award.
2. Reasonable Royalties
Where, as in the instant case, there is no established royalty between the parties, a reasonable royalty should be based upon "the supposed result of hypothetical negotiations between the plaintiff and defendant." Rite-Hite, 56 F.3d at 1554. "The hypothetical negotiation requires the [jury] to envision the terms of a licensing agreement reached ... at the time of infringement." Id. A *353 defendant challenging a jury's determination, must show that, in view of all the evidence, the award is "`so outrageously high ... as to be unsupportable as an estimation of a reasonable royalty.'" Id. (quoting Lindemann Maschinenfabrik GmbH v. American Hoist & Derrick Co., 895 F.2d 1403, 1406 (Fed.Cir. 1990)).
After awarding Fonar lost profits on 75 of the 600 infringing scanner sales, the jury added $34,125,000 as a reasonable royalty on the remaining 525 infringing units. GE contends that the award is outrageously high. Fonar supports the award as reasonable in light of the evidence, particularly the testimony of Christensen.
Christensen testified that a reasonable royalty could be a percentage of GE's total revenues from the sales of infringing scanners. Trial Tr. at 2079. Christensen stated that a known "rule of thumb" for determining an appropriate royalty rate was one-quarter to one-third of anticipated profits on the sale of infringing scanners. Id. Christensen then stated that, according to GE's records, GE earned a 25 percent operating profit on infringing sales. Id. at 2079-80. Given that, he determined that 7.25 percent "the midpoint" would be a reasonable royalty rate. Id. at 2080. Christensen then calculated a $54 million reasonable royalty for the 525 infringing sales.
Raymond S. Sims ("Sims"), an economist, and George R. Clark ("Clark"), a patent licensing specialist, testified on GE's behalf. Sims indicated that a reasonable royalty would be between $1,000 and $3,500 per unit. Id. at 2214-19. Clark indicated that $1,000 per unit would be appropriate. Id. at 2285. The decisive factor underlying both experts' conclusions was Fonar's acknowledgment that it had sold MAO as a separate and distinct MRI feature for $1,000 to $1,500, and as part of an upgrade package worth $15,000. GE, therefore, suggests that a reasonable royalty on the remaining 525 infringing sales would be in the $525,000 to $1,837,500 range.
The gap between the experts' evaluations raises the issue of whether Fonar is entitled to a royalty based on the entire value of an MRI scanner, or merely the value of MAO as but one feature of the scanner. Under the "entire market value" rule, damages are recoverable on the value a patentee's entire apparatus containing several unpatented features where "the patent-related feature is the `basis for customer demand.'" Rite-Hite, 56 F.3d at 1549-50 (quoting State Indus., 883 F.2d at 1580)). Where the patented and unpatented components of the device are physically part of the same machine, the patentee can typically recover compensation based on the value of the entire apparatus. See id. (citing Western Elec. Co. v. Stewart-Warner Corp., 631 F.2d 333 (4th Cir.1980), cert. denied, 450 U.S. 971, 101 S.Ct. 1492, 67 L.Ed.2d 622 (1981)). Nonetheless, the Court instructed the jury that it could "consider whether it is appropriate to base compensation on the entire apparatus normally anticipated to be sold, even though only one feature is patented." Trial Tr. at 2448. The size of the jury's reasonable royalty award indicates that it chose not to accept GE's theory of valuation. Based on Rite-Hite, that choice was a reasonable one.
The jury was also instructed that, in determining a reasonable royalty, it should consider "how much profit or cost savings the infringer expected to realize from his practice of the [patented] invention" at the time of infringement. Id. at 2449-50. Miller, GE's MRI marketing specialist, testified on direct examination as to the decline in demand for MAO since 1992. He stated that "[t]hese days, multi-slice multi-angle is not as an important feature as it was at one time." Id. at 2168. He explained that "before 1992,.... [y]ou wanted to image as many patients per day as possible and there was actually a waiting list of patients to come in and scan if you had an extra hour or two per day." Id. at 2169. Miller's testimony indicates, quite clearly, that demand for MAO was high at the time when "hypothetical negotiations" would have taken place. Based on the testimony of its own marketing expert, the jury could have reasonably concluded that GE would have paid a royalty reflecting the high demand for MAO at the time of infringement.
The Court determines that substantial evidence supports the reasonableness of the *354 jury's royalty award. GE's motion is denied in this regard. For the same reason, the Court denies GE's request for remittitur.
3. Injunction
Based on the foregoing, GE and South Shore and their officers, agents, servants, and employees, and those persons in active concert or participation with them, are restrained and enjoined, from and after the date of this Memorandum & Order and until the expiration of the '966 patent or the date upon which any court enters an order (1) vacating the jury's finding of infringement of the claims of the '966 patent or (2) finding the claims of the '966 patent invalid, from infringing, directly, indirectly, contributorily, or by inducement, the '966 patent by making, using, or selling, or causing to be made, used, or sold any MRI scanners.
Further, GE and South Shore and their officers, agents, servants, and employees, and those persons in active concert or participation with them, are restrained and enjoined from and after the date of this Memorandum & Order and until the expiration of the '966 patent or the date upon which any court enters an order (1) vacating the jury's finding of infringement of the '966 patent or (2) finding the claims of the '966 patent invalid from infringing, directly, indirectly, contributorily, or by inducement, the '966 patent by making, using, or selling, or causing to be made, used, or sold any upgrade of software and/or hardware to any MRI scanner that would give such MRI scanner the capability of obtaining in the course of a single scan NMR image data from a plurality of differently oriented selected planes in an object using magnetic resonance techniques in accordance with the claims of the '966 patent.
Nothing in this order shall preclude GE or South Shore and their officers, agents, servants, and employees, and those persons in active concert or participation with them from using, servicing, or upgrading in any manner whatsoever any MRI scanner delivered by GE before May 26, 1995, and such using, servicing, or upgrading shall not create additional liability under the '966 patent.
4. Interest
Under 35 U.S.C. § 284, a judgment may be accompanied by "interest and costs as fixed by the court." The Supreme Court has stated that "prejudgment interest should be awarded under § 284 absent some justification for withholding such an award." General Motors Corp. v. Devex Corp., 461 U.S. 648, 657, 103 S.Ct. 2058, 2063, 76 L.Ed.2d 211 (1983). Prejudgment interest serves to compensate the patentee because, in addition to lost profits and royalties payments, he also lost the use of that money between the time of infringement and the date of judgment. Id. A court has substantial discretion to determine the interest rate in patent cases. Gyromat Corp. v. Champion Spark Plug Corp., 735 F.2d 549, 556-57 (Fed.Cir.1984).
The parties each presented intricate arguments, supported by detailed expert affidavits, and somehow reached starkly different results. The Court finds that the record lacks support for many of the contentions advanced.
The Court determines that fair and adequate compensation includes an award of prejudgment interest. The rate of interest should be based on the average 52-week United States Treasury bill rate for the period of September 1992 to the date of this Memorandum & Order. Prejudgment interest shall be computed daily and compounded annually.
III. CONCLUSION
For the above reasons, GE's motion is granted in part and denied in part. The motion is granted insofar as it seeks entry of JMOL in favor of GE on grounds that it did not directly infringe the '832 patent and did not induce infringement of the '966 patent. The balance of the motion for JMOL, like GE's motion for a new trial, is denied in all respects. Insofar as this Memorandum & Order grants injunctive relief, however, it is stayed pending appeal, subject to a bond.
Counts II, IV, V, VI, VII, and VIII of the complaint having been withdrawn, and the Hitachi defendants having been released from this action, the Clerk of the Court is *355 directed to enter judgment consistent with this Memorandum & Order and as follows:
(1) as to Court I of the complaint, defendants GE and South Shore have not directly infringed or induced infringement of Claims 1 and 2 of the United States Patent No. 3,789,832;
(2) defendants GE and South Shore have failed to establish any of their defenses as to United States Patent No. 3,789,832;
(3) Count I of the Complaint is dismissed;
(4) as to Count III of the complaint defendants GE and South Shore, by jury verdict, have directly infringed Claims 1, 2, 4, 5, and 12 of United States Patent No. 4,871,966;
(5) as to Count III of the complaint, defendant GE has not induced infringement of Claims 1, 2, 4, 5, and 12 of United States Patent No. 4,871,966;
(6) defendants GE and South Shore have failed to establish any of their defenses as to United States Patent No. 4,871,966; and
(7) as to Count III of the complaint, by jury verdict, plaintiffs Fonar and Raymond V. Damadian are awarded and defendants GE and South Shore must pay a sum of $61,950,000, plus prejudgment interest as set forth above.
SO ORDERED.
APPENDIX
The claims of the '966 patent are as follows:
1. A method for obtaining in the course of a single scan NMR image date for a plurality of differently oriented selected planes in an object using nuclear magnetic resonance techniques, said method comprising the steps of:
(a) positioning an object in a static homogeneous magnetic field;
(b) determining first and second selected planes in said object for which NMR image data is to be obtained, said first selected plane being located at a first portion of said object and having a first orientation with respect to a predetermined direction and said second selected plane being located at a second portion of said object and having a second orientation with respect to said predetermined direction, said first and second orientations being different from one another;
(c) subjecting said object to a plurality of repetitions of a first repetition sequence composed of NMR excitation and magnetic gradient field pulses, each of said repetitions of said first repetition sequence including the steps of applying an excitation pulse and reading out of an NMR signal produced by said excitation pulse, said excitation pulse for said first repetition sequence being applied at a first predetermined frequency in the presence of a first predetermined slice selector magnetic field gradient having a gradient direction extending perpendicular to said first selected plane, said first predetermined frequency being chosen to that said application of said excitation pulse at said first predetermined frequency only excites selected nuclei in said first selected plane, and said plurality of repetitions of said first repetition sequence being carried out in a manner to encode spatial information into a first collection of said NMR signals, said first collection of NMR signals being representative of NMR image data for said first selected plane; and
(d) subjecting said object to a plurality of repetitions of a second repetition sequence composed of NMR excitation and magnetic field gradient pulses, each of said repetitions of said second repetition sequence including the steps of applying an excitation pulse and reading out of an NMR signal produced, by said excitation pulse, said excitation pulse for said second repetition sequence being applied at a second predetermined frequency in the presence of a second predetermined slice selector magnetic field gradient having a gradient direction extending perpendicular to said second selected plane, said second predetermined frequency being chosen so that said application of *356 said excitation pulse at said second predetermined frequency only excites selected nuclei in said second selected plane, and said second predetermined slice selector magnetic field gradient and said second predetermined frequency being different from said first predetermined slice selector magnetic field gradient and said first predetermined frequency, respectively, and said plurality of repetitions of said second repetition sequence being carried out in a manner to encode spatial information into a second collection of NMR signals, said second collection of NMR signals being representative of NMR image data for said second selected plane; said plurality of repetitions of said first and second repetition sequences each being carried out during the course of a single scan of said object and each being continued substantially throughout said single scan, the repetition time interval for repeating each of said first and second repetition sequences being substantially the same and said steps of applying an excitation pulse and reading out of an NMR signal for each repetition of said second repetition sequence being performed at a different time during said repetition time interval than each of said steps of applying an excitation pulse and reading out of an NMR signal for said first repetition sequence.
2. The method of claim 1, wherein step (c) comprises generating said magnetic gradient field pulses of said first repetition sequence via a first and a second wave-form, corresponding to said first orientation of said first selected plane, which produce said first predetermined slice selector magnetic field gradient, and a first predetermined read out magnetic field gradient having a direction orthogonal to that of said first predetermined slice selector magnetic field gradient; and
wherein step (d) comprises generating said magnetic field
gradient pulses of said second repetition sequence via a third and a fourth waveform, corresponding to said second orientation of said second plane, which produce said second predetermined slice selector magnetic field gradient, and a second predetermined read out magnetic field gradient having a direction orthogonal to that of said second predetermined slice selector magnetic field gradient.
4. A method for conducting an examination of an object along two different selected planes using nuclear magnetic resonance techniques, said method comprising the steps of:
(a) positioning an object in an NMR imaging apparatus which includes means for generating a magnetic field, means for exciting selected nuclei to generate NMR signals and for reading of such NMR signals to provide a collection of NMR signals from selected regions of an object placed in said NMR imaging apparatus, means for applying gradient magnetic fields, means for obtaining NMR imaging date from said collection of NMR signals and means for producing an image from said NMR imaging date;
(b) operating said NMR imaging apparatus to obtain an NMR scout image for a portion of said object of said examination:
(c) while said object remains positioned in said NMR imaging apparatus, using said scout image to select a first plane and a second plane of said object for which NMR image data is to be obtained, said first plane and said second plane each being transverse to said scout plane, and said first plane having a first orientation relative to said scout plane and said second plane having a second orientation relative to said scout plane, said first orientation being different from said second orientation;
(d) conducting a plurality of NMR sampling operations to obtain NMR imaging date from said first selected plane of said object, said step of conducting said sampling operations for said first plane being commenced at a first time during the course of a single scan and being continued substantially throughout *357 said single scan so as to obtain NMR imaging date for said first-selected plane of said object;
(e) conducting a plurality of NMR sampling operations to obtain NMR imaging data from said second selected plane of said object which is different from said first selected plane, said step of conducting said sampling operations for said second selected plane being commenced at a second time during the course of said single scan which is later than said first time, but prior to completion of said step of conducting said sampling operations for said first selected plane, and said step of conducting said NMR sampling operations for said second selected plane being continued substantially throughout said single scan to obtain NMR imaging data for said second selected plane; each of said plurality of NMR sampling operations
including an NMR excitation operation and an NMR reading operation, said NMR excitation operations for each of said selected planes being carried out in a manner so as to excite selected nuclei in said each of said selected planes, and said NMR imaging data, each of said NMR excitation and NMR reading operations being performed at a different time during the course of said single scan than each other of said excitation and reading operations.
5. The method of claim 4, wherein step (d) comprises applying a first and a second waveform, corresponding to said first orientation of said first plane, to said means for applying gradient magnetic fields, to produce a first predetermined slice selector magnetic field gradient having a direction orthogonal to said first plane, and wherein;
step (e) comprises applying a third and a fourth waveform,
corresponding to said second orientation of said second plane, to said means for applying gradient magnetic fields, to produce a second predetermined slice selector magnetic field gradient having a direction orthogonal to said second plane.
12. Apparatus for obtaining NMR image data from a plurality of selected planes in an object comprising:
(a) means for applying magnetic fields to the object;
(b) means for applying radio frequency excitation pulses to the object;
(c) means for actuating and controlling said magnetic field applying means and said radio frequency applying means to:
(1) apply a first sequence including a first slice selector magnetic field gradient in a first direction concomitantly with a first RF excitation pulse at a first frequency to thereby excite nucleii only in a first plane perpendicular to said first direction, whereby a first NMR signal will be emitted only by nucleii in said first plane, said first sequence further including at least one encoding magnetic field gradient operative to encode spatial information into said NMR signal;
(2) apply a second sequence including a second slice selector magnetic field gradient in a second direction different from said first direction concomitantly with a second RF excitation pulse at a second frequency different from said first frequency to thereby excite nucleii only in a second plane perpendicular to said second direction whereby a second NMR signal will be emitted only by nucleii in said second plane, said second sequence further including at least one encoding magnetic field gradient operative to encode spatial information into said second NMR signal; and
(3) a repeat said first and second sequences a plurality of times during the course of a single scan so as to excite nucleii in said first and second planes alternatively and produce said first and second NMR signals alternately while varying said at least one encoding gradient in each said sequence on each repetition; and
*358 (d) means for receiving said first and second NMR signals and recovering NMR image data therefrom.
NOTES
[1] The complaint also named as defendants Hitachi LTD, Hitachi Medical Corporation, Hitachi Medical Systems America, Inc., Summit World Trade Corporation, Hitachi Medical Corporation of America, and Brookhaven Magnetic Resonance Imaging, Inc. (the "Hitachi defendants"). Upon settlement of the claims asserted against them, the Hitachi defendants were released from the action prior to trial, pursuant to Stipulation and Order of Dismissal with Prejudice dated May 18, 1995.
[2] The following discussion on NMR technology is based on the testimony of Robert G. Peyster, M.D. ("Peyster"), an independent expert appointed by the Court with the parties' consent. Also with the parties' consent, Peyster's testimony was evidence in the instant case.
[3] Although it is permissible under Markman to construe the claims on a post-verdict motion for JMOL, the Court acknowledges that the course it has taken in this case cannot be preferred. Indeed, providing jurors with the proper interpretation before they deliberate makes more sense. In a perfect world, the Court would have included a definition of the claims in its charge.
The subject matter underlying this case, however, was exceedingly complex. The Court endeavored for months to enlist the assistance of an independent expert. The parties would not consent because, by their estimation, nearly every expert in the field was linked in some capacity to one of the parties. On the eve of trial the parties did consent to having Peyster read a pre-approved, joint statement to the jury regarding MRI technology and United States Patent and Trademark Office procedure.
Also on the eve of trial, the Markman decision came down from the United States Court of Appeals for the Federal Circuit. If the Markman decision had been rendered earlier, the Court would have insisted on having expert assistance from the outset. Only then would it have been possible for the Court to acquire a complete understanding of the technologies involved in time to charge the jury with a construction of the claims.
As much as it might have seemed the more logical course, it would neither have been wise nor proper for the Court to instruct the jury as to the meaning of the claims on short notice. A task of such grave importance must be undertaken after long and careful review. The Court determined that it was best to reserve claim construction until that time.
[4] Indeed, the Court could have granted GE's motion for JMOL at the close of Fonar's case on the ground that the properly construed claims did not read on imaging as performed by GE's scanners, but the Court determined that the safer course was to allow all evidence to be presented and all arguments to be made before rendering an interpretation of the claims.
[5] Even though, having reviewed the evidence, the Court does not find strong support for the proposition that GE proved, by clear and convincing evidence, that the inventors on the '966 patent did, in fact, contemplate a best mode for carrying out their invention at the time of filing, the Court treats the following language from Fonar's memorandum of law submitted in opposition to GE's motion for JMOL as an acknowledgement that a best mode was contemplated. The language is: "[t]he evidence makes clear that at the time the application for the MAO patent was filed, Fonar went to great lengths to disclose the best mode it knew." Pl.Mem., at 23.
[6] The full text to which Wolf refers reads: "Further, in response to the coordinate and angle data associated with each slice output by the system 70, the computer 71 calculates for each slice an RF excitation frequency for the plane orthogonal to the direction of the slice selector gradient rotated by the angle of the slice, which passes through the selected portion of the object, and a frequency required to demodulate the corresponding NMR signal during the read out period."
[7] GE's claim that the best mode requirement is violated merely because Fonar maintains as trade secrets certain aspects of the hardware and software has no merit. See, e.g., In re Hayes, 982 F.2d at 1538 (holding that best mode was adequately disclosed even where a patentee held as a trade secret the fact that a particular implementation of his invention was in firmware).
[8] The jury was instructed that it could find a patent invalid where the "inventor did not himself invent the subject matter sought to be patented." Trial Tr. at 1969. In addition, the jury was instructed: [i]n determining priority of invention there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was the first to conceive and the last to reduce to practice." Id. In light of this instruction, the jury's affirmative response to interrogatory II.C., which asked whether "Drs. Smith, Hertz, Wolf, and Olsen, by themselves, invent[ed] the subject matter claimed," was a finding that the '966 patent was not anticipated by prior invention.
|
694 S.E.2d 698 (2010)
LOTT
v.
The STATE.
Watson
v.
The State.
Nos. A10A0558, A10A0559.
Court of Appeals of Georgia.
March 31, 2010.
*700 Clark & Towne, Jessica R. Towne, Lawrenceville, for appellant (case no. A10A0558).
Donn M. Peevy, Lawrenceville, for appellant (case no. A10A0559).
Daniel J. Porter, Dist. Atty., Stephen A. Fern, Asst. Dist. Atty., for appellee.
BLACKBURN, Presiding Judge.
Following a jury trial, co-defendants Henry Kelvin Lott and Linda Watson were convicted on one count of trafficking in cocaine[1] and one count of possession of marijuana with intent to distribute.[2] Lott was also convicted by the same jury on one count of possession of hydrocodone.[3] Both appeal their convictions and the denial of their respective motions for new trial, arguing that the evidence was insufficient to support their convictions and that the trial court erred in denying their motions to suppress evidence seized by means of an allegedly unlawful search warrant. In addition, Lott contends that the trial court erred in failing to find that his trial counsel rendered ineffective assistance, and Watson argues that the court erred in allowing hearsay testimony. Because the charges arose from the same incident and the appellants were tried together, we have consolidated their separate appeals for review. For the reasons set forth below, we affirm in both cases.
1. We first address Lott's and Watson's challenge to the sufficiency of the evidence supporting their convictions. "On appeal from a criminal conviction, the evidence must be construed in a light most favorable to the verdict and [appellants] no *701 longer enjoy[ ] a presumption of innocence." (Punctuation omitted.) Dennis v. State.[4] In evaluating the sufficiency of the evidence to support a conviction, we do not weigh the evidence or determine witness credibility, but only determine whether a rational trier of fact could have found the defendants guilty of the charged offenses beyond a reasonable doubt. Jackson v. Virginia.[5] Additionally, "[o]n appeal, the standard of review for denial of a motion for directed verdict is the same as that for determining the sufficiency of the evidence to support a conviction." (Punctuation omitted.) Terry v. State.[6]
So viewed, the record shows that in March 2006, an undercover officer with the Gwinnett County Police Department had a confidential informant set up a drug deal between the officer and a drug dealer named Jesus Motta. On March 9, 2006, the undercover officer met Motta and Motta's girlfriend at a local gas station and told Motta that he wanted to buy an ounce of cocaine. Motta told the undercover officer that he did not have that amount of cocaine in his possession but that if the officer gave him $1,400, he would go and get it for him. Ultimately, the undercover officer agreed to give Motta $700 for half an ounce of cocaine, and Motta told the officer that he would meet him back at the gas station in about an hour.
As Motta and his girlfriend left the gas station in Motta's vehicle, an undercover police surveillance team followed them. The surveillance team followed Motta to the Carver Circle neighborhood and observed him as he parked his vehicle and approached a group of people who were in front of a house at 161 Carver Circle. However, based on their knowledge that the neighborhood was one known for illegal drug sales, the officers in the undercover surveillance team feared that they would be recognized as police officers if they stopped their vehicle to maintain constant surveillance of Motta. Consequently, the surveillance officers did not stop but drove past the house that Motta had approached. Eventually, they parked off a main road, not far from where Carver Circle emptied into that road, and waited. About 15 minutes later, the surveillance team observed Motta's vehicle exit Carver Circle onto the main road and proceed back toward the gas station.
Upon Motta's return to the gas station, he and the undercover officer got into the officer's vehicle, where Motta produced the cocaine. At that point, officers in the surveillance team arrested Motta. After being read Miranda warnings, Motta informed the officers that he bought the cocaine from a man known as "Boogie." He also agreed to show the police where he bought the cocaine and in doing so, directed them back to the house at 161 Carver Circle, where the surveillance team had previously followed him. Motta again told the officers that Boogie and Boogie's wife sold drugs out of the property and that he had bought marijuana there on several occasions. Motta's girlfriend also independently confirmed that 161 Carver Circle was where Motta bought the cocaine.
Based on the information provided by Motta and the surveillance of him, the day after Motta's arrest, the police obtained a "no-knock" warrant to search the house at 161 Carver Circle for cocaine and the money given to Motta by the undercover officer. In the early evening hours of March 16, 2006, a team of police officers executed the search warrant, forcing their way through the front entrance of the house by using a battering ram. Upon entering the house, the police observed Lott and several other individuals sitting in the living room, and observed Watson running toward one of the back bedrooms while screaming to ask why the house was being raided. All the individuals found inside the house were initially detained. In searching Lott, the officers found a key to the house and a bottle containing hydrocodone pills, which had been prescribed to someone else. Additionally, after everyone had been detained, a man in the crowd of onlookers that had gathered in the street in *702 front of the house asked one of the officers to "tell Boogie to call his brother." When the officer subsequently yelled, "Boogie, call your brother" to those who had been detained, only Lott responded, "Okay."
Thereafter, the officers began searching the entire house. In the right back bedroom, the officers found an air mattress and men's clothing. In the left back bedroom, to which Watson had been running when the police entered the house, the police found a black gym bag, containing large amounts of marijuana and crack cocaine and over $700 in cash. The bag also contained keys to the house and keys to a Jeep Cherokee, which was parked at the house and registered to Watson's son. For several days before the warrant was executed, an officer had seen the vehicle parked at the house and had also seen Watson driving it. In the same bedroom, the officers found women's beauty products, Watson's wallet, which was on the bed and which contained over $1,300 in cash, and photographs, which appeared to have been taken inside the house and which depicted Lott and Watson posing with large amounts of fanned out cash. Additionally, the officers found a yellow notebook, which had writing indicating that it was owned by an individual named "Black" and which appeared to contain records of numerous drug sales. At the same time, an officer, who had confiscated Watson's cell phone while she was being detained, noticed that there was a photograph of Lott with the name "Black" next to it in the cell phone's contacts list.
Lott and Watson were jointly indicted on one count of trafficking in cocaine and one count of possession of marijuana with intent to distribute. In the same indictment, Lott was also charged with one count of illegal possession of hydrocodone. Both Lott and Watson filed motions to suppress the evidence that the police found during their search of the house at 161 Carver Circle on the ground that the search warrant was invalid. After a hearing in which only the officer who completed the supporting affidavit testified, the trial court denied the motions.
At trial, several of the officers involved in the case testified regarding their investigation and arrest of Lott and Watson. In addition, GBI forensic chemists testified that the contraband found by the police at 161 Carver Circle included 28.3 grams of marijuana packaged in 16 separate bags and 54.15 grams of cocaine with a purity level of 85 percent. Another GBI forensic chemist testified that the pills in the prescription bottle found in Lott's pocket tested positive as hydrocodone. At the close of the State's case, Lott and Watson moved for a directed verdict of acquittal, which the trial court denied.
During the defense's case, the owner of the home at 161 Carver Circle testified that he had leased the property to a woman named Iris Cody but that she had not paid rent or been seen since the police executed the search warrant. The defense also called Motta as a witness, who testified that Lott was not the person he knew as Boogie and that Lott did not sell him the cocaine on the day that Motta was arrested by the undercover officers. Nevertheless, at the trial's conclusion, the jury found both Lott and Watson guilty on all counts of the indictment. Subsequently, both Lott and Watson filed motions for new trial, which the trial court denied after a hearing. These appeals followed.
Lott and Watson contend that the evidence was insufficient to support their convictions of trafficking in cocaine and possession of marijuana with intent to distribute. Specifically, they argue that the evidence was insufficient to prove that they knowingly possessed the cocaine and marijuana, as required by OCGA §§ 16-13-31(a) and 16-13-30(j)(1). We disagree.
"Constructive possession exists where a person though not in actual possession, knowingly has both the power and the intention at a given time to exercise dominion or control over a thing." (Citation and punctuation omitted.) Jackson v. State.[7] We note that
it is general law in this [S]tate that merely finding contraband on premises occupied by defendant is not sufficient to support a *703 conviction if it affirmatively appears from the evidence that persons other than the defendant had equal opportunity to commit the crime. Presence at the scene of a crime and nothing more will not support a conviction.
(Punctuation omitted.) Riley v. State.[8] However, "[b]oth knowledge and possession may be proved, like any other fact, by circumstantial evidence." (Punctuation omitted.) Abernathy v. State.[9] "It has long been the law that knowledge may be proved by facts and circumstances from which a jury could reasonably infer that a defendant knowingly possessed contraband." Fernandez v. State.[10] See also Larochelle v. State.[11] Indeed, OCGA § 16-2-6 provides that a jury may find criminal intention "upon consideration of the words, conduct, demeanor, motive, and all other circumstances connected with the act for which the accused is prosecuted." "As long as there is slight evidence of access, power, and intention to exercise control or dominion over an instrumentality, the question of fact regarding constructive possession remains within the domain of the trier of fact." (Punctuation omitted.) Wright v. State.[12]
Here, although neither Lott nor Watson owned or rented the house at 161 Carver Circle, there was evidence suggesting that they were staying there in that both had keys to the house, and both were depicted in photographs that appeared to have been taken inside the house. When the police forced their way into the home to execute the search warrant, they observed Watson running back toward the bedroom where the cocaine and marijuana was found, while screaming at the police for raiding the house. In the bedroom where the drugs were located, the police found Watson's wallet, which contained over $1,300, keys to the vehicle that Watson had been seen driving, and women's beauty products. The officers also found a notebook containing records of drug transactions in that same bedroom and evidence in Watson's cell phone contacts list indicating that the notebook belonged to Lott. Furthermore, Motta told the police that he bought the cocaine from a man named Boogie, and Lott answered to that name at the time of his arrest. Based on this circumstantial evidence, the jury could infer that Lott and Watson had constructive possession of the drugs found in the house. See Riley, supra, 292 Ga.App. at 206(2), 663 S.E.2d 835 (evidence supported possession for trafficking conviction even where defendant did not own residence where drugs were found); Sherrer v. State[13] (same).
Lott and Watson further argue that the evidence did not support the jury's finding that they possessed the drugs found in the bedroom of the house because others in the residence had equal access. However,
[w]hile the fact that others had equal access to the drugs may inculpate them, such evidence does not automatically exculpate [Lott and Watson]. Instead whether the evidence that others had access to the contraband was sufficient to rebut the evidence that [Lott and Watson were] in possession of the drugs was properly reserved for the jury.
(Punctuation omitted.) Riley, supra, 292 Ga. App. at 207(3), 663 S.E.2d 835. See Castillo v. State.[14] Accordingly, there was sufficient evidence for the jury to find Lott and Watson guilty of the charged offenses beyond a reasonable doubt.
2. Lott and Watson contend that the trial court erred in denying their motions to suppress the evidence seized by police during their search of the house, arguing that the search warrant should not have been issued *704 because the police officer's affidavit supporting the warrant did not provide probable cause. We disagree.
"When a defendant moves to suppress evidence based on an illegal search, the State bears the burden of proving that the search was lawful." State v. Brantley.[15] "In reviewing a trial court's decision on a motion to suppress, the evidence is construed most favorably to uphold the court's findings and judgment." Walthall v. State.[16] Where "the evidence is uncontroverted and no question regarding the credibility of witnesses is presented, the trial court's application of the law to undisputed facts is subject to de novo appellate review." Vansant v. State.[17] See Brantley, supra, 264 Ga.App. at 152, 589 S.E.2d 716.
"In determining whether an affidavit provided probable cause for the issuance of a search warrant, the Supreme Court in Illinois v. Gates[18] adopted the totality of the circumstances test, which was subsequently adopted by the Supreme Court of Georgia in State v. Stephens."[19]Roberson v. State.[20] Under this analysis,
the issuing magistrate or judge must make a practical, common-sense decision whether, given all the circumstances set forth in the affidavit before him, including the veracity and basis of knowledge of persons supplying hearsay information, there is a fair probability that contraband or evidence of a crime will be found in a particular place. And the duty of a reviewing court is simply to ensure that the magistrate had a substantial basis for concluding that probable cause existed.
(Punctuation omitted.) Evans v. State.[21] "A magistrate's decision to issue a search warrant based on a finding of probable cause is entitled to substantial deference by a reviewing court." DeYoung v. State.[22]
In this matter, the investigating officer, who obtained the search warrant, provided the magistrate with an affidavit describing the undercover officer's interaction with Jesus Motta, in which the officer gave Motta money to buy cocaine for him, and describing the police's surveillance of Motta driving to 161 Carver Circle and meeting with people in front of the house at that address. The affidavit, in pertinent part, stated:
While still being followed Motta then drove to 161 Carver Circle, Lawrenceville, GA 30045 (Gwinnett County). Sgt. J. Fetner observed Motta pull into the driveway to the left of 160 Carver Circle. Motta got out and was met in the front yard by several other subjects. Due to the area being an area known for illegal drug sales there was a lot of people walking around and it was impossible for Sgt. J. Fetner to keep constant surveillance on Motta who was in possession of the Gwinnett County Funds.
Approximately thirty minutes later Motta was observed driving on Neal Blvd. out to Scenic Hwy. The surveillance team again followed Motta to the original location (Chevron gas station). Inv. Brandle (still wearing a monitoring device) was observed walking into the gas station and so did Motta. Inv. Brandle and Motta walked out to the parking lot and both got into the rear of the vehicle that Inv. Brandle was in. Motta and Inv. Brandle engaged in a conversation about the cocaine and the price. Members of the GCDTF arrived and arrested Motta and detained Walker [Motta's girlfriend]....
... Motta stated he would show Inv. Boone where the house was that he bought the cocaine. Motta rode with Inv. Boone *705 and Cpl. C. Marion and Motta showed the Investigators which house it was that he purchased the cocaine. Motta showed the Investigators the same location that Sgt. Fetner observed Motta go to while under surveillance.
... Walker stated she could show Investigators where Motta got the cocaine and marijuana.... Walker rode with affiant and Sgt. J. Fetner and directed the affiant to a house on Carver Circle. The house is yellow with black trim and the numbers 161 are on the right side of the house. There is a white Jeep Cherokee backed into the driveway. The affiant asked Walker if Motta went to any other location and she stated, "No." Walker was returned to the vehicle and was not charged. Motta was charged with VGCSASale of Cocaine and VGCSAPossession of less than an ounce of marijuana.
Motta is currently facing the previously mentioned charges and is seeking consideration in his case. Motta stated there is more cocaine and marijuana inside the residence on Carver Circle. Motta stated the subject he bought cocaine and marijuana from was "Boogie." "Boogie" is described as a black male approximately 5' 10" with brown eyes and black hair. Motta stated "Boogie's" wife also sells drugs from the location. Motta states that he has purchased marijuana on numerous occasions from the same location.
Lott and Watson argue that the affidavit was not sufficient to establish probable cause because the only link between the residence and illegal drugs was through the hearsay statements made by Motta. They further argue that the magistrate was not justified in relying on Motta's statements because he was not shown to be a trustworthy informant and his statements were not sufficiently corroborated. However, in this matter, Motta was identified by name in the affidavit, and thus, contrary to defendants' argument, "he does not fit the model of the anonymous or confidential informant whose motives in coming forward are unknown, or whose basis of knowledge is not shown, or whose story may be stalecommon sense requires that information from such informants be strongly corroborated to be considered reliable." Evans, supra, 263 Ga.App. at 575(2), 588 S.E.2d 764(b). In fact, Motta's information was received under circumstances showing some indicia of reliability in that he made an inculpatory statement to police during a post-arrest interview. See id. "[W]hen a named informant makes a declaration against penal interest and based on personal observation, that in itself provides a substantial basis for the magistrate to credit that statement." (Punctuation omitted; emphasis in original.) Graddy v. State.[23] Furthermore, the police surveillance team's observation of Motta meeting with subjects in front of the house at 161 Carver Circle provides some corroboration of Motta's statements. See State v. Ballew.[24] Thus, the magistrate was authorized to conclude that Motta had purchased drugs at 161 Carver Circle and that proof of the crime might reasonably still be found at that location. See id. (probable cause for search warrant existed where named informant arrested for drug offense told police that he had purchased drugs at a specific address and police had observed informant leaving that address); Swan v. State[25] (probable cause for search warrant where person arrested for drug offense told police that two days earlier he had purchased drugs at a certain house); Tomlinson v. State[26] (probable cause for search warrant where named informant made statement that he had bought drugs within last seven days from a couple at their residence).
3. Lott contends that the trial court erred in failing to find that his trial counsel rendered ineffective assistance. Specifically, he argues that his trial counsel performed deficiently by not moving to sever his case from that of his co-defendant Watson. We disagree.
*706 To demonstrate ineffective assistance of counsel under Strickland v. Washington,[27] "a criminal defendant must prove (1) that his trial counsel's performance was deficient, and (2) that counsel's deficiency so prejudiced his defense that a reasonable probability exists that the result of the trial would have been different but for that deficiency." Kurtz v. State.[28] "Making that showing requires that [Lott] rebut the strong presumption that [his] lawyer's conduct falls within the wide range of reasonable professional assistance." Simpson v. State.[29] "As a general rule, matters of reasonable trial tactics and strategy, whether wise or unwise, do not amount to ineffective assistance of counsel." (Punctuation omitted.) Abernathy v. State.[30] "We will not reverse a trial court's findings regarding either the deficiency or prejudice prong of the Strickland test unless clearly erroneous." Kurtz, supra, 287 Ga.App. at 825, 652 S.E.2d 858.
In this matter, during the hearing on Lott's and Watson's motions for new trial, Lott's trial counsel testified that he did not move to sever his former client's case from Watson's case because he believed that if the two defendants were tried together, the jury would find that Watson had much more of a connection to the drugs that were found than Lott and thus would only find Watson guilty on the trafficking and possession with intent to distribute charges.
The failure to file a motion to sever does not require a finding of ineffective assistance where the decision whether to seek severance is a matter of trial tactics or strategy, and a decision amounting to reasonable trial strategy does not constitute deficient performance.
(Punctuation omitted.) Jackson v. State.[31] Accordingly, Lott's trial counsel's decision on this issue cannot support a claim of ineffective assistance. See id. (trial counsel's decision to not seek severance so that jury's focus would be on co-defendant instead of counsel's client was reasonable trial strategy).
4. Watson contends that the trial court erred in allowing inadmissible hearsay testimony into evidence over her objection. We disagree.
"The admission of evidence is committed to the sound legal discretion of the presiding judge, whose determinations will not be disturbed on appeal unless they constitute an abuse of that discretion." (Punctuation omitted.) Jennings v. State.[32] As previously noted, at trial, one of the investigating officers testified that during the search of the house at 161 Carver Circle, the officers found a yellow notebook, which had writing indicating that it was owned by an individual named "Black" and which appeared to contain records of numerous drug sales. The same officer further testified that she had confiscated Watson's cell phone while the police were searching the house and that she had noticed that there was a photograph of Lott with the name "Black" next to it in the cell phone's contacts list. Watson objected to this testimony, which linked Lott to the notebook, but the trial court denied her objection. On appeal, Watson argues that the trial court erred in denying her objection because the officer's testimony constituted hearsay. This argument is without merit.
OCGA § 24-3-1 defines hearsay as evidence that "does not derive its value solely from the credit of the witness but rests mainly on the veracity and competency of other persons." Here, the officer's testimony that the contacts list for Watson's cell phone indicated that "Black" was a nickname for Lott is not hearsay but is a statement of fact based on her own investigation. See Troutman *707 v. State.[33] "Because the value of the officer's testimony rested on [her] own veracity and competence, the testimony was not hearsay, and the trial court did not abuse its discretion in admitting it." Id. See also Diaz v. State.[34]
Judgments affirmed.
BARNES and BERNES, JJ., concur.
NOTES
[1] OCGA § 16-13-31(a).
[2] OCGA § 16-13-30(j)(1).
[3] OCGA § 16-13-30(a).
[4] Dennis v. State, 294 Ga.App. 171, 669 S.E.2d 187 (2008).
[5] Jackson v. Virginia, 443 U.S. 307, 319(III)(B), 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979).
[6] Terry v. State, 293 Ga.App. 455, 667 S.E.2d 109 (2008).
[7] Jackson v. State, 284 Ga.App. 619, 620(1), 644 S.E.2d 491 (2007).
[8] Riley v. State, 292 Ga.App. 202, 205(2), 663 S.E.2d 835 (2008).
[9] Abernathy v. State, 278 Ga.App. 574, 578(1), 630 S.E.2d 421 (2006).
[10] Fernandez v. State, 275 Ga.App. 151, 154(2), 619 S.E.2d 821 (2005).
[11] Larochelle v. State, 219 Ga.App. 792, 797(6), 466 S.E.2d 672 (1996).
[12] Wright v. State, 279 Ga.App. 299(1), 630 S.E.2d 774 (2006).
[13] Sherrer v. State, 289 Ga.App. 156, 159-160(2), 656 S.E.2d 258 (2008).
[14] Castillo v. State, 288 Ga.App. 828, 830, 655 S.E.2d 695 (2007).
[15] State v. Brantley, 264 Ga.App. 152, 589 S.E.2d 716 (2003).
[16] Walthall v. State, 281 Ga.App. 434, 437(2)(a), 636 S.E.2d 126 (2006).
[17] Vansant v. State, 264 Ga. 319, 320(1), 443 S.E.2d 474 (1994).
[18] Illinois v. Gates, 462 U.S. 213, 238(III), 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983).
[19] State v. Stephens, 252 Ga. 181, 182, 311 S.E.2d 823 (1984).
[20] Roberson v. State, 246 Ga.App. 534, 536(1), 540 S.E.2d 688 (2000).
[21] Evans v. State, 263 Ga.App. 572(2), 588 S.E.2d 764 (2003).
[22] DeYoung v. State, 268 Ga. 780, 787(7), 493 S.E.2d 157 (1997).
[23] Graddy v. State, 277 Ga. 765, 766(1), 596 S.E.2d 109 (2004).
[24] State v. Ballew, 290 Ga.App. 751, 753-754(1), 660 S.E.2d 732 (2008).
[25] Swan v. State, 257 Ga.App. 704, 705-706(1), 572 S.E.2d 64 (2002).
[26] Tomlinson v. State, 242 Ga.App. 117, 118-119, 527 S.E.2d 626 (2000).
[27] Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984).
[28] Kurtz v. State, 287 Ga.App. 823, 825, 652 S.E.2d 858 (2007).
[29] Simpson v. State, 278 Ga. 336, 337(2), 602 S.E.2d 617 (2004).
[30] Abernathy v. State, 299 Ga.App. 897, 903(3), 685 S.E.2d 734 (2009).
[31] Jackson v. State, 281 Ga. 705, 707(6), 642 S.E.2d 656 (2007).
[32] Jennings v. State, 292 Ga.App. 149, 152(2), 664 S.E.2d 248 (2008).
[33] Troutman v. State, 297 Ga.App. 196, 198(2), 676 S.E.2d 836 (2009).
[34] Diaz v. State, 275 Ga.App. 557, 559, 621 S.E.2d 543 (2005).
|
908 F.2d 965
U.S.v.Valdner (Anthony)
NO. 89-5933
United States Court of Appeals,Third Circuit.
JUN 26, 1990
Appeal From: D.N.J.,
Sarokin, J.
1
AFFIRMED.
|
Case: 18-40655 Document: 00514812252 Page: 1 Date Filed: 01/28/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 18-40655 United States Court of Appeals
Conference Calendar
Fifth Circuit
FILED
January 28, 2019
UNITED STATES OF AMERICA, Lyle W. Cayce
Clerk
Plaintiff-Appellee
v.
ANTONIO GARCIA-ALBA,
Defendant-Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 5:17-CR-817-1
Before KING, ELROD, and WILLETT, Circuit Judges.
PER CURIAM: *
The Federal Public Defender appointed to represent Antonio Garcia-
Alba has moved for leave to withdraw and has filed a brief in accordance with
Anders v. California, 386 U.S. 738 (1967), and United States v. Flores, 632 F.3d
229 (5th Cir. 2011). Garcia-Alba has not filed a response. We have reviewed
counsel’s brief and the relevant portions of the record reflected therein. We
concur with counsel’s assessment that the appeal presents no nonfrivolous
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 18-40655 Document: 00514812252 Page: 2 Date Filed: 01/28/2019
No. 18-40655
issue for appellate review. Accordingly, counsel’s motion for leave to withdraw
is GRANTED, counsel is excused from further responsibilities herein, and the
APPEAL IS DISMISSED. See 5TH CIR. R. 42.2.
2
|
In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 16‐1319
UNITED STATES OF AMERICA,
Plaintiff‐Appellee,
v.
TYRAN PATTON,
Defendant‐Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 13‐CR‐239 — Elaine E. Bucklo, Judge.
____________________
ARGUED DECEMBER 8, 2016 — DECIDED FEBRUARY 9, 2017
____________________
Before MANION, KANNE, and HAMILTON, Circuit Judges.
MANION, Circuit Judge. Tyran Patton was a high‐level drug
dealer who, after being arrested for an unrelated firearms of‐
fense, agreed to cooperate with the government. Patton acted
as an informant in the government’s investigation of illegal
firearm sales but then disappeared for several months. After
he reemerged, he pleaded guilty to the drug charges and was
sentenced. At sentencing the government refused to move for
2 No. 16‐1319
a sentencing reduction for substantial cooperation. The dis‐
trict court then sentenced Patton to a below‐guidelines prison
sentence of 244 months’ imprisonment. Patton appeals, claim‐
ing the district court should have forced the government to
file a motion for a sentencing reduction. We affirm.
I.
Tyran Patton was a major cocaine and heroin dealer in the
Chicago area. In April 2010, law enforcement agents arrested
Patton’s courier with 8 kilograms of cocaine and 3 kilograms
of heroin. Agents for the Bureau of Alcohol, Tobacco, Fire‐
arms and Explosives (“ATF”) later arrested Patton pursuant
to an arrest warrant in an unrelated firearms investigation.
After he was arrested, Patton confessed to his use of firearms
and his drug‐trafficking activities. He then agreed to cooper‐
ate with the ATF. Patton assisted the ATF for about a year and
made several controlled purchases of firearms. However, the
government agent working with Patton was inexperienced
and allowed Patton to pick his own targets. As a result, ac‐
cording to the government, Patton only delivered street‐level
dealers, protecting higher‐level sources as well as family and
friends. Nonetheless, Patton’s efforts resulted in several con‐
victions and the government removing 60 guns off the streets.
In late August 2012, the ATF informed Patton that the gov‐
ernment was about to appear before a grand jury and needed
him to testify. The government also informed Patton that he
would be indicted soon on the drug charges. Soon thereafter,
Patton disappeared, reemerging in February 2013 only after
the government had finished several trials and word was out
on the street that Patton was an informant. The government
claims Patton only came forward then because he needed the
government’s protection.
No. 16‐1319 3
Patton attempted to negotiate a plea agreement with the
government, but because he had been AWOL for over six
months, his efforts were unsuccessful. Patton eventually
pleaded guilty to the drug charges without a plea agreement.
At sentencing, Patton asked the district court to force the pros‐
ecutor to file a motion for a reduction in the statutory manda‐
tory sentence and sentencing range for substantial assistance
under 18 U.S.C. § 3553(e) and U.S.S.G. § 5K1.1. The district
court stated that it didn’t think it had the authority to do so,
but even if it did, it would not require the government to file
such a motion under the circumstances. Nonetheless, in
weighing the § 3553(a) factors, the district court took into con‐
sideration Patton’s cooperation with the government and sen‐
tenced him to a below‐guideline sentence of 244 months’ im‐
prisonment.1 Patton appeals his sentence.
II.
On appeal, Patton argues that the district court erred in
denying his request to force the government to file a motion
pursuant to § 3553(e) and U.S.S.G. § 5K1.1 for a reduced sen‐
tence for substantial assistance. Section 3553(e) provides that
district courts, “[u]pon motion of the Government,” may im‐
pose a sentence below the statutory minimum to reflect a de‐
fendant’s “substantial assistance in the investigation or pros‐
ecution of another person who has committed an offense.” 18
U.S.C. § 3553(e). And Section 5K1.1 provides: “Upon motion
of the government stating that the defendant has provided
1 The advisory guidelines sentencing range was 262 to 327 months’
imprisonment.
4 No. 16‐1319
substantial assistance in the investigation or prosecution of
another person who has committed an offense, the court may
depart from the guidelines.”
“[F]ederal district courts have authority to review a pros‐
ecutor’s refusal to file a substantial‐assistance motion and to
grant a remedy if they find that the refusal was based on an
unconstitutional motive” or if it “was not rationally related to
any legitimate Government end.” Wade v. United States, 504
U.S. 181, 185–86 (1992). The burden is on the defendant, how‐
ever, to make a “substantial threshold showing” that the gov‐
ernment improperly withheld a substantial‐assistance motion
before he can receive a remedy. Id. at 186.
Patton does not argue that the government withheld the
motion based on unconstitutional motives; rather, he claims
the government’s decision not to move for a reduction for
substantial assistance “was not rationally related to any legit‐
imate Government end.” However, contrary to Patton’s argu‐
ment, the government presented two legitimate justifications
for its decision to withhold a substantial‐assistance motion on
Patton’s behalf. First, the government explained to the district
court that Patton did not fully cooperate in its investigation
into illegal guns sales, but instead purposely chose targets to
avoid ensnaring family members, friends, and higher‐level
gun dealers. Second, the government stressed that Patton dis‐
appeared for over six months, right after being told he was
going to be indicted and needed to testify at a grand jury hear‐
ing. While Patton claims he had to have an operation during
that time and that his wife turned off his cell‐phone, even his
own attorney acknowledged that Patton could have acted
more promptly in getting in touch with the government fol‐
lowing his surgery. Both rationales support the government’s
No. 16‐1319 5
decision not to move for a reduced sentence. See United States
v. Miller, 458 F.3d 603, 605 (7th Cir. 2006) (holding that prose‐
cutor’s refusal to file a substantial‐assistance motion was ra‐
tionally related to a law enforcement end when “the govern‐
ment declined to file the motion because it believed that [the
defendant] was not forthcoming in reference to his cocaine
source”); United States v. Davis, 247 F.3d 322, 328 (1st Cir. 2001)
(noting the defendants’ “failure to cooperate in the murder
investigation provides a basis for the [government withhold‐
ing a motion], whatever [the defendant]’s view that he had
given enough already and should not be forced to go that
far”).
Patton argues in response that he is entitled to remand to
allow for more discovery and a hearing to allow him to show
that the government’s actual motive in withholding a motion
for substantial assistance was impermissible. But, as the Su‐
preme Court held in Wade, a defendant has no right to discov‐
ery or an evidentiary hearing unless he makes a “substantial
threshold showing” of an improper motive. Patton failed to
make such a showing. In fact, Patton did not even argue to the
district court that the government’s rationale for refusing to
move for a substantial‐assistance reduction was unrelated to
a legitimate government end. Instead, Patton merely argued
that he deserved the reduction because he provided the gov‐
ernment with substantial assistance which led to the prosecu‐
tion of seven individuals and taking 60 guns off the street. Be‐
cause Patton did not argue that the government’s motive was
6 No. 16‐1319
not rationally related to any legitimate government end, our
review is for plain error only.2 Billings, 546 F.3d at 475.
In response, Patton claims that he met the “substantial
threshold showing” because the government stated at sen‐
tencing that “the government was embarrassed” and “looked
terrible.” Patton argues that “[p]rotecting the personal feel‐
ings of members of the United States Attorney’s office is not
a legitimate government interest ….” However, a review of
the transcript from the sentencing hearing shows that Patton
is taking the government’s comments completely out of con‐
text. For instance, in response to the district court’s inquiry of
why the indictment of other individuals would prompt Pat‐
ton to get back in touch with the government, the prosecutor
explained:
Word is out on the street that Tyran Patton is coop‐
erating. He is a snitch. He needs to get himself back in
the good graces of ATF … basically for some protec‐
tion. This is not a guy who doesn’t think two steps
ahead of the game. And, certainly, in this case, the de‐
fendant ran circles around a new ATF agent. It’s some‐
what embarrassing what happened in this particular
case.
2 Because Patton did not argue to the district court that the govern‐
ment’s decision to withhold a substantial‐assistance motion was unre‐
lated to a legitimate government end, the district court correctly stated
that it did not have the power to force the government to file such a mo‐
tion. United States v. Billings, 546 F.3d 472, 475 (2008). And in any event,
the district court considered Patton’s argument and rejected it.
No. 16‐1319 7
Contrary to Patton’s portrayal, the government did not ex‐
press a motive to deny Patton a reduction for substantial as‐
sistance because it was embarrassed. To the contrary: the gov‐
ernment was detailing how Patton disappeared and only re‐
appeared when it benefitted him to do so, to illustrate why in
the government’s view Patton was not entitled to a motion for
a substantial‐assistance reduction.
Similarly, the prosecutor’s statement that Patton had
made “the government look terrible” was not an explanation
for its motive in refusing to move for a substantial‐assistance
reduction, but a passing comment made in detailing Patton’s
lack of full cooperation:
So the higher‐level targets we weren’t able to get
because the defendant did all of that offline. Instead,
we got the lower‐level guy who the defendant can go
and have—pick up the guns and deliver them to the
defendant. That’s what happened. It’s what makes the
government look terrible. We missed those bigger
guys. We missed them because of the way the defend‐
ant cooperated. And that’s what happened.
This exchange shows that the government concluded that
Patton had not fully cooperated because he caused the gov‐
ernment to miss the “bigger guys”; not because the govern‐
ment looked terrible for missing the bigger guys. While Pat‐
ton now wishes to question the government further on its mo‐
tive, the district court did not commit plain error in denying
Patton’s request without further inquiry.
8 No. 16‐1319
III.
Patton clearly cooperated with the government in its gun
investigation. But because he disappeared for over six months
and, in the government’s view, only fingered low‐level tar‐
gets, protecting higher‐level sources and families and friends,
the government acted within its discretion to refuse to file a
substantial‐assistance motion. We AFFIRM.
|
104 N.H. 146 (1962)
AMERICAN FIDELITY COMPANY, Ap't
v.
CHARLES H. BARNARD, Trustee & a., Ap'ees.
AMERICAN FIDELITY COMPANY, Ap't
v.
CHARLES H. BARNARD, Executor & a., Ap'ees.
HARTFORD ACCIDENT & INDEMNITY COMPANY, Ap't
v.
CHARLES H. BARNARD, Conservator, Ap'ee.
No. 5004.
Supreme Court of New Hampshire.
Argued March 6, 1962.
Decided June 5, 1962.
*148 Wiggin, Nourie, Sundeen, Nassikas & Pingree and Dort S. Bigg, Jr. (Mr. Bigg orally), for the American Fidelity Company.
Devine, Millimet & McDonough (Mr. Murray Devine orally), for the Hartford Accident & Indemnity Company.
Booth, Wadleigh, Langdell, Starr & Peters (Mr. Theodore Wadleigh orally), for Winthrop Wadleigh, succeeding trustee of the estate of Frank E. Heald and administrator d.b.n., w.w.a.
WHEELER, J.
Charles H. Barnard was appointed conservator of Frank E. Heald by the Hillsborough county probate court on September 30, 1948. He gave bond with the Hartford Accident & Indemnity Company as surety in the penal sum of fifty thousand dollars. No inventory of this estate was ever filed and no account as conservator was filed until October 1, 1956, which was never allowed in the probate court.
Heald died testate July 9, 1951, and Barnard was appointed executor on July 13, 1951, and gave bond with the American Fidelity Company as surety in the penal sum of one hundred thousand dollars. An inventory of this estate was filed on November 5, 1951, showing assets of $284,092.31. No account was filed by the executor until October 1, 1956, which was disallowed by the probate court.
Barnard was appointed trustee under the will of the late Frank E. Heald on August 19, 1952, and gave bond with the American *149 Fidelity Company as surety in the penal sum of one hundred thousand dollars. A trust inventory was filed July 30, 1953, showing real estate only. This was not accepted by the probate court because not filed within the statutory period. No account was filed by Barnard as trustee until October 1, 1956, which was disallowed. In January 1957, the judge of probate for Hillsborough county, with the consent of all parties, appointed a certified public accountant to conduct an audit of the accounts and records of Barnard as conservator, executor and trustee. As a result of this audit, a deficit was found in the amount of $225,359.78. Based on the manner in which Barnard handled his accounts, the accountant allocated this deficit to Barnard in his respective capacities as follows: conservator $12,087.41; executor $208,722.68; trustee $4,549.77. Thereafter on April 16, 1957, Barnard was removed as executor and trustee by the probate court and Winthrop Wadleigh was appointed administrator d.b.n., w.w.a. and trustee under the will of said Frank E. Heald and qualified in both capacities.
On April 14, 1960, the American Fidelity Company paid to Winthrop Wadleigh in his aforesaid capacities the sum of one hundred thousand dollars, being the full principal of its executor's bond, with the express stipulation that it was made without prejudice and not to be considered as an admission of liability.
The Court below found that the failure of the conservator to file an inventory or an accounting until October 1, 1956, was a breach of the bond which enabled Barnard to fraudulently take control of the assets of the estate and divert them to his own use. It is contended that Hartford bonded Barnard as conservator only during the life of his ward and he had no further authority to act as such thereafter; that Barnard's action in transferring the assets of the conservator to himself as executor and receipting for the same terminated the liability of the bond and operated to transfer any future liability to the sureties of his bond as executor.
In allocating the liability of the sureties of Barnard in his tripartite capacity as conservator, executor and trustee, it is necessary to examine his conduct in the light of established law governing those who act in a fiduciary capacity. A conservator shall "be subject to all provisions of law now in force as to guardians, so far as they apply to estates of their wards" and as such is required to give bond to the judge of probate in a reasonable sum with sufficient sureties upon condition that, among other things, he return an inventory and "render, upon oath, a true and just *150 account of his guardianship, when thereto required, and . . . faithfully discharge his trust." RSA 464:18; 462:3; Yeaton v. Skillings, 103 N. H. 352, 355. As has been noted, Barnard was appointed conservator September 30, 1948. His ward died July 9, 1951. No inventory was ever filed and no account of his conservatorship was filed until October 1, 1956, which was disallowed by the judge of probate.
Barnard continued to pay the premiums on his conservator's bond for some four to five years after his ward's death and while he was at the same time paying the premiums on his executor's and trustee's bonds. He never informed the bonding company of the death of his ward, and when the company learned of this fact, certain reimbursements for premiums were made.
He qualified as executor on July 13, 1951, and filed no inventory of estate until November 5, 1951, contrary to the provisions of the statute. RSA 554:1. No account as executor was filed until October 1, 1956, contrary to the provisions of RSA 554:26, which provides that every executor shall file in probate court an annual account unless excused by the judge of probate, but in no event shall he be excused for a longer period than three years. In his capacity as trustee, Barnard gave bond with sufficient surety, conditioned upon performing the following duties: That he would file a "true inventory"; that he would annually account to the judge of probate for the income and profits of the estate; and that at the expiration of the trust he would settle and adjust his account and pay over all moneys and property with which he has been entrusted and he would "faithfully execute the trust according to the true intent of the devisor." RSA 564:1. An inventory of the trust was not filed until July 30, 1953. No account was filed until October 1, 1956. In all respects, whether as conservator, executor or trustee, Barnard failed to comply with the statutory requirements.
Auditor Drayton faced a complicated task in attempting to reconstruct Barnard's accounts and allocate the defalcations to the proper estate. He testified that Barnard's books and records were kept in a very "haphazard manner." He contacted Barnard many times seeking information that had not been furnished and finally went to his office and took what records he felt were necessary. He further testified: "I feel I have never in my life examined such a sloppy mess of records, and I feel in examining his records and reconciling his accounts, I feel Mr. Barnard made deposits in *151 accounts that were needed for the benefit of making his expenditures. He had no system whereby he kept one account in control as against the other. The estate and trust accounts were mixed. The attorney account was used for the benefit of both. The attorney account also had other estates included, and I feel that Mr. Barnard disbursed the receipts from the various sources as he needed to. I further had the feeling that the shortage in these accounts were used for covering of other accounts through his attorney account."
Auditor Drayton broke down the defalcations by periods, beginning in July 13, 1951, when Barnard qualified as executor, in the following amounts: July 13, 1951 to August 19, 1952, when Barnard qualified as trustee, the sum of $55,085.00; August 19, 1952 to December 31, 1952, $27,974.07; January 1, 1953 to March 31, 1953, $4,465.05; April 1, 1953 to June 30, 1953, $40,597.00; October 1, 1953 to December 1, 1953, $10,058.49; July 1, 1954 to December 31, 1956, $77,836.87. For the period of July 1, 1953 to September 30, 1953, a credit of $4,822.62 was allowed, together with an unallocated credit of $3,628.88. From the time that Barnard qualified as trustee on August 19, 1952, the defalcations amounted to the total sum of $152,479.98; and between August 19, 1952 and December 31, 1952 they amounted to $27,974.07.
It is contended by Hartford Accident & Indemnity Company (hereinafter called Hartford) that as Barnard's surety as conservator it cannot be held for his actions as executor or trustee. In support of this argument, Hartford points out that the audit of the conservatorship showed personal estate of the ward at the outset of $274,037.33 and that the Court found that during the conservatorship there were no sales of any assets of the ward and that such sales were carried out by Barnard acting in the subsequent capacity of either executor or trustee. It is further pointed out that the final audit of the conservatorship showed a deficit of only $12,087.41, which gave no credit for compensation and expense of Barnard during the thirty-three months he served as such.
Pursuant to requests of Hartford the Trial Court made the following findings: "Charles H. Barnard, during the period of his conservatorship, held numerous bank accounts in three (3) Manchester Banks for the benefit of his ward, and the evidence shows that all of the accounts were either transferred to Barnard as Executor after the death of Frank E. Heald, as shown on the bank books themselves, or were inventoried and receipted for by *152 Barnard as Executor, shortly after Mr. Heald's death. The evidence is undisputed that from and after the death of Frank Heald, Barnard never purported to deal with any of these accounts in his capacity as Conservator. All of the evidence is to the effect that upon the death of his ward, Charles H. Barnard, as Conservator, effected both a physical and technical transfer of all of the assets in the estate to himself as Executor . . . and, further, that Barnard never thereafter purported to act in his capacity as Conservator." In view of these findings Hartford could not properly be held liable for defalcations from the estate beyond the amount of $12,087.41, which the accountant found to be the deficit of the conservatorship. In re Johnston, 230 Iowa 891; McManus v. Sears, (Iowa) 109 N. W. 2d 630. See also, Annot. 111 A. L. R. 267, 273.
There is no dispute as to the liability of American Fidelity Company as surety on the executor's bond except as to interest. Appellant American Fidelity Company contends generally that the trustee's bond is chargeable only to the extent of losses from those assets which Barnard held as trustee.
As has been noted, Barnard violated the condition of his bond as executor, and subsequently as trustee by misappropriating the assets and by failing to conform to the statutory requirements in filing an inventory and an account. By thus being enabled to serve in his dual capacity as conservator, executor and as trustee, an opportunity was afforded to violate the statutory requirements for such capacities and thus successfully conceal his defalcations from these estates. While it is true that the auditor allocated specific sums which were embezzled by Barnard to the several estates, it is difficult from the record to find where the embezzlement of one estate ended and the other began.
If two individuals had been serving in the respective capacities as did Barnard, the individual trustee would have been charged with the duty to see that his predecessor executor complied with the statutes in administering the estate and to expeditiously secure possession of the particular estate to which he was entitled, and thus prevent any defalcations or losses.
It was Barnard's duty as trustee to secure control of the trust estate as soon as the executor should have filed his final account in conformity with the statutory requirements. The obligation of a trustee has been succinctly stated in the following language: "The trustee is under a duty to take such steps as are reasonable to secure control of the trust property and to keep control of it. Thus *153 in the case of a testamentary trust where one person is named as executor and another as trustee, it is the duty of the trustee to obtain possession of the trust property from the executor, and if he does not within a reasonable time take such steps as are reasonable to obtain possession of the property and the executor thereafter makes away with the property, the trustee is liable to the beneficiaries for the loss." 2 Scott on Trusts (2d ed.) ss. 175, 177. See also, Restatement, Trusts, ss. 175, 177; Tuttle v. Robinson, 33 N. H. 104, 120; Butler v. Legro, 62 N. H. 350, 352; Heaton v. Bartlett, 87 N. H. 357; McInnes v. Goldthwaite, 94 N. H. 331.
It was the duty of Barnard as trustee to demand from Barnard as executor the amount due the trust estate, and where the trustee has failed to receive the sum due and the executor has likewise failed to account for the sum due the trust estate, it is no answer on the part of the surety in an attempt to escape liability to say that the default occurred in Barnard's capacity as executor. 111 A. L. R. 267, 294.
The Court found that while acting as trustee Barnard "wrongfully and fraudulently" diverted from the trust estate for his own use not less than $4,549.77 of trust assets as shown by the auditor's report, the sum of $5,250 representing the proceeds for the sale of the Lancaster property and the further sum of $20,207.89 representing the rental income from the Salter property, making a total of $30,007.66.
The Court also found that Barnard, as trustee, was chargeable with and accountable for the loss which resulted after his appointment as trustee, by diversion of funds to his own use in his capacities of executor and trustee, amounting to $152,479.98. While as we have indicated, he was chargeable as trustee with misappropriations made by him as executor which were made possible by his failure as trustee to obtain control of the assets, he could not reasonably have required a transfer of the assets on the date of his appointment as trustee. State and federal estate taxes were then unpaid, and by statute the state inheritance taxes were not due and payable until fifteen months from July 9, 1951. RSA 86:54.
It was found that after January 1, 1953, amounts totaling $124,505.91 were misappropriated. This was the latest date by which it could reasonably be found that Barnard as trustee should have obtained control of the assets, and thus prevented further defalcations. Under principles previously set forth, he became chargeable as trustee for the embezzlement of $124,505.91 after January 1, 1953.
*154 As surety for the executor, American has paid $100,000 to the administrator and successor trustee. This repays the amount of $83,059.07 which Barnard as executor misappropriated, between July 13, 1951 and January 1, 1953. After payment by Hartford of $12,087.41 due on the conservatorship account, there will remain a balance of $16,940.93 of $100,000 paid by American to be credited against the joint liability of the executor and trustee for the period after January 1, 1953. Since the liability of the trustee exceeds $116,940.93, American as surety for the trustee is liable for the principal amount of the trustee's bond.
The decree of the Superior Court on the appeals from the probate court should be modified consistently with this opinion, to provide that Hartford was liable in the principal sum of $12,087.41, and American in the sum of $200,000. Both were liable for interest in addition thereto, and the expenses of the accountant. See Century Indemnity Co. v. Casualty Co., 89 N. H. 121; Miller v. Pender, 93 N. H. 1. The Trial Court has found that the latter expenses should be allocated $855 to the conservatorship (Hartford) and $2,127.50 each to the executorship and trusteeship (American). These findings are sustained.
As previously stated, American is liable for interest in addition to the penal amount of its bond for the executor, and the first question transferred without ruling is answered in the affirmative. Such interest should run from August 19, 1959, the date of the probate court decrees. Judge of Probate v. Heydock, 8 N. H. 491; Wyman v. Robinson, 73 Me. 384. From and after that date, American is liable for interest in its dual capacity as surety for the executor and the trustee, and the second question transferred is so answered. In answer to question three it is our opinion that in the circumstances of this case interest should be compounded annually.
It is contended that during the trial it was error for the Superior Court to disregard the various probate accounts which Barnard filed which were the subject of this appeal.
The Court granted appellee Wadleigh's request number 1, which excluded the account filed by Barnard as conservator, the amended account filed as conservator, the executor's account and the trustee's account, as well as an affidavit by Barnard.
During the trial when these records were offered, counsel for Wadleigh said he would have no objections to showing that Barnard filed such accounts but that if they were offered as proof of the *155 facts stated therein, he would object. The Court ordered them marked and, in response to a request for a ruling that they could not be considered for their probative value, the Court replied that it did not propose to rule until they had been examined and that counsel could file specific requests for rulings on this point.
Later, at a hearing to set aside the verdict, the Court entertained some doubts as to the correctness of this ruling. It seems clear that when the records were introduced it was intended that they should not be considered for their probative value but only that such accounts were filed by Barnard. The Drayton audit established that there were defalcations in all three accounts, the total amount of which is accepted by all parties. Moreover, all accounts were disallowed by the probate court. In its findings, the Court took notice of the fact that these accounts had been filed and had been disallowed by the probate court.
If Barnard's accounts had been admitted without limitation, it is not clear how they could have been used as a basis to reconstruct the true picture in the absence of the Drayton audit. The auditor used the inventory of the estate as a starting point in establishing the various defalcations. In granting Wadleigh's request to reject the accounts, we find no error.
It is suggested by appellant Hartford that no credit has been given Barnard for his services as conservator. In this connection the Court found that his services as conservator, executor and trustee were of no value, and ruled that an embezzler may not be compensated for his services during the period of his embezzlement. We think this is a correct statement of the law. McInnes v. Goldthwaite, 94 N. H. 331, 338; Stevens v. Stevens, 97 N. H. 135.
Remanded.
All concurred.
On Rehearing. After the foregoing opinion was filed Hartford Accident & Indemnity Company moved that its liability for interest be limited to the period commencing August 19, 1959, the date of the probate court's decree. This is a matter not previously argued by counsel or considered in the opinion.
Devine, Millimet & McDonough (Mr. Murray Devine orally), for Hartford Accident & Indemnity Company, for the motion.
*156 Booth, Wadleigh, Langdell, Starr & Peters (Mr. Theodore Wadleigh orally), for Winthrop Wadleigh, succeeding trustee, and administrator d.b.n., w.w.a., opposed.
WHEELER, J.
The administrator contends that the surety for the conservator should be liable for interest from the dates when assets of the ward's estate were wrongfully appropriated to the conservator's own use. Knowlton v. Bradley, 17 N. H. 458; Society v. Pelham, 58 N. H. 566. Hartford contends that the shortages were due to "advances" reasonably made by the conservator to himself for compensation expectably due, and that no liability should attach for interest before the date of the probate decree. Wendell v. French, 19 N. H. 205; See Chagnon v. Insurance Co., 96 N. H. 256, 260.
We are of the opinion that the contention of the administrator is essentially correct. Miller v. Pender, 93 N. H. 1; Yeaton v. Skillings, 103 N. H. 352. However, the dates of appropriation by the conservator during the thirty-three-month period of the conservatorship cannot be fixed with any degree of certainty. Accordingly, the surety's liability for interest in this case should be determined for the period commencing July 9, 1951, the date of death of the ward, by which date the total principal amount of the shortage had occurred. Consistently with the original opinion, the interest payable by Hartford should be compounded annually.
Former result affirmed.
All concurred.
June 29, 1962.
|
NOT RECOMMENDED FOR PUBLICATION
File Name: 14a0276n.06
No. 13-3799
UNITED STATES COURTS OF APPEALS
FOR THE SIXTH CIRCUIT
LINDA CLARK; JOHN W. WHITEMAN; ) FILED
MICHAEL C. RYSH; DOROTHY L. RYSH, )
Apr 14, 2014
)
DEBORAH S. HUNT, Clerk
Plaintiffs-Appellants, )
)
and )
)
LAURA YEAGER; MICHAEL YEAGER )
)
Plaintiffs, )
)
ON APPEAL FROM THE
v. )
UNITED STATES DISTRICT
)
COURT FOR THE
LENDER PROCESSING SERVICES; LPS )
NORTHERN DISTRICT OF
DEFAULT SOLUTIONS; DOCX, LLC; LERNER, )
OHIO
SAMPSON & ROTHFUSS; MANLEY, DEAS )
KOCHALSKI, LLC, )
)
Defendants-Appellees, )
)
and )
)
REIMER, ARNOVITZ, CHERNEK & JEFFREY )
CO., )
)
Defendant. )
BEFORE: COLE and ROGERS, Circuit Judges; HOOD, District Judge.*
ROGERS, Circuit Judge. The plaintiffs are Ohio homeowners who were defendants in
foreclosure suits filed during the financial crisis. Their underlying challenge is to the
effectiveness of the series of assignments of mortgage documents, which plaintiffs say led to
*
The Honorable Joseph M. Hood, United States District Judge for the Eastern District of Kentucky, sitting by
designation.
No. 13-3799, Clark v. Lender Processing Servs.
violations of federal and state law. However, statements made by the defendants in this case that
they had a right to foreclose under Ohio law were not materially misleading so as to violate
federal fair debt collection law (at least as to the two appellants in this case who brought such
federal law claims), because the foreclosing parties did have standing to foreclose, despite any
irregularities in the assignments. The plaintiffs’ state law claims moreover cannot succeed
because the defendants—a vendor that provides services to mortgage servicers and lenders, its
subsidiaries, and two law firms—are not suppliers involved in consumer transactions for
purposes of the Ohio Consumer Sales Practices Act. For these reasons, the district court
properly granted summary judgment to the defendants.
The background, facts, and procedural history of this suit are well set out by the district
court as follows:
[T]he named Plaintiffs are individuals whose homes were foreclosed in
cases where it appears beyond dispute that the mortgage assignments, affidavits,
and transfers were fabricated by one or more of the loan processing Defendants,
and the financial institutions bringing the foreclosure actions were represented by
one of the law firm Defendants. Plaintiffs bring a putative class action claiming
that Defendants violated the FDCPA and OCSPA by filing state court foreclosure
lawsuits on behalf of trustees of securitized trusts. Plaintiffs’ theory of the case is
that the foreclosing trusts lacked standing to bring foreclosure actions against
Plaintiffs because (1) the transfer of their mortgages to non-party securitized
trusts did not comply with the alleged deadlines in the applicable Pooling and
Servicing Agreements (“PSAs”), and (2) Defendants conspired to create the
appearance of standing, after the trusts had lost standing, by using allonges to
notes, mortgage assignments, and other mortgage documents that were
defectively executed, thereby breaking the chain of title. Plaintiffs bring this
action on behalf of a proposed class consisting of:
All Ohio homeowners who were (a) defendants in judicial
foreclosure actions on first lien mortgages that were purportedly
held by securitization trusts, and that were knowingly initiated and
prosecuted by Defendants on behalf of parties that lacked legal
standing to do so, and (b) who were damaged by Defendants'
abusive debt collection practices, including: (i) preparing,
executing, and notarizing fraudulent court documents and
assignments of mortgages and other property records that were
-2-
No. 13-3799, Clark v. Lender Processing Servs.
used to initiate and prosecute such foreclosures, and (ii) imposing
inflated, unfair, unreasonable and/or fabricated fees for “default
management services” (the “Class”).
[Compl. ¶ 1].
Plaintiffs allege that “[t]wo categories of defendants acted in concert and
conspired in furtherance of the fraudulent scheme to generate enormous profits
from default servicing fees by knowingly initiating foreclosure actions on behalf
of entities that lacked standing to bring such actions.” [Compl. ¶ 2]. The first
category of Defendants is the loan processing Defendants, [Lender Processing
Services]. Plaintiffs allege that the loan processing defendants are “vendors or
sub-servicers to the vast majority of national mortgage services to manage all
default servicing for those servicers.” (Id.) The second category of Defendants is
an alleged network of law firms, here [Manley, Deas Kochalski, LLC] and
[Lerner, Sampson & Rothfuss]. Plaintiffs allege that law firm Defendants
“specialize in prosecuting a high volume of foreclosure cases, and are commonly
known as ‘foreclosure mills.’” (Id.) Plaintiffs allege that the law firm Defendants
entered into a “Network Agreement” with [Lender Processing] which “requires
these law firms to pay quid pro quo consideration to [Lender Processing] for
referrals of foreclosure cases and other default related matters . . .” (Id.) Plaintiffs
further allege that law firm Defendants “were not only retained by defendant
[Lender Processing], they were also supervised and directed by [Lender
Processing], and knowingly used forged and fabricated documents created by or
at the direction of [Lender Processing] and/or its subsidiaries.” (Id.)
The [complaint] describes the national housing collapse, the mortgage
foreclosure crisis, and the role of the [Lender Processing] Defendants who
allegedly fabricated mortgage assignments, fraudulently endorsed affidavits,
backdated mortgage transfers and did whatever was necessary to support standing
for its clients (i.e., the financial institutions bringing foreclosure actions against
defaulting mortgagors). The [complaint] also describes the role of the law firm
Defendants who allegedly paid the [Lender Processing] Defendants for
foreclosure referrals and allegedly knew or should have known these standing-
supporting documents were fabricated and their clients lacked standing. The crux
of Plaintiffs’ allegations is as follows:
The Defendants have engaged in a widespread conspiracy
to deceive the Ohio courts and borrowers by engaging in unfair
and deceptive debt collection practices, including fabricating
thousands of mortgage assignments and affidavits. These
fraudulent documents purported to establish the required
intervening note endorsement and transfers of the mortgages
to the trusts, thereby giving the illusion of “standing”. If these
transfers had actually occurred on the dates the documents were
fabricated, they would have been void inasmuch as they were not
-3-
No. 13-3799, Clark v. Lender Processing Servs.
made pursuant to the terms of the governing documents and the
Trustees were not permitted to accept late and out of time
assignments.
In furtherance of this deceptive scheme, from at least 2006
until the present, Defendants have knowingly and intentionally
prepared and filed or caused to be filed these fabricated mortgage
assignments and other mortgage documents with courts and county
recorder of deed's office across the country, including in Ohio, and
have produced them to borrowers across the nation, including in
Ohio.
From at least 2006 to the present, [Lender Processing] and
its network of law firms have used these fabricated note
indorsements, mortgage assignments and affidavits to conceal the
fact that the trusts, which purport to hold the notes and mortgages,
are missing critical documents, namely, properly endorsed notes
and valid mortgage assignments that were supposed to have been
delivered to the trusts within 90 days of the closing of the trust.
These note endorsements and mortgage assignments were
materially false and misrepresented that Defendants' clients had
standing to foreclose when they did not. Defendants knew or
should have known of the falsity of the representations in these
documents, yet Defendants used these fabricated documents to
foreclose on Ohio homeowners, with the intent to deceive
borrowers and the courts who justifiably believed that these
fabricated and forged documents were valid.
[Compl. ¶¶ 11–14] (emphasis in original, footnote omitted).
Plaintiffs allege that many of the Ohio homeowners who comprise the
Class were unaware that the documents were forged and that the foreclosing
parties lacked standing. Plaintiffs allege that, as a result, homeowners have lost
their homes in foreclosures initiated and prosecuted by Defendants. Further,
Plaintiffs allege that “thousands of Ohio homeowners have been wrongfully
required to defend frivolous foreclosure actions and have incurred substantial
legal fees and inflated and/or fabricated foreclosure-related fees charged by
Defendants when the plaintiff lacked the standing to institute the foreclosure
proceedings against them in the first instance.” [Compl. ¶¶ 15–16]. In sum,
Plaintiffs claim that the above-described “unfair and deceptive debt collection
practices violate the FDCPA and the OCSPA and have been perpetrated on an
institutionalized basis through the knowing participation and coordination of each
Defendant.” [Compl. ¶ 17].
Clark v. Lender Processing Servs., Inc., 949 F. Supp. 2d 763, 767–69 (N.D. Ohio 2013).
-4-
No. 13-3799, Clark v. Lender Processing Servs.
The plaintiffs originally filed this lawsuit as a putative class action in Ohio state court.
Their complaint asserted a claim under the Ohio Consumer Sales Practices Act (OCSPA) and
other state law causes of action. The defendants removed to federal court under the Class Action
Fairness Act, 28 U.S.C. § 1332(d). The plaintiffs then amended their complaint to add a claim
under the federal Fair Debt Collection Practices Act (FDCPA). After the plaintiffs voluntarily
dismissed certain claims against some of the defendants, the Ryshes had claims under the
FDCPA, and all of the present plaintiff-appellants had claims under the OCSPA. The district
court granted the defendants’ motion to dismiss these claims based on several alternative
arguments. The district court first reasoned that the plaintiffs did not have standing to challenge
the transfer of the mortgages to the trusts. This holding was based on the rule that a person that
is not a party to an assignment may not challenge that transfer. By way of example, the final
transfer involving Clark’s mortgage was between JP Morgan and Bank of New York. Because
Clark had no involvement in that transaction, she lacked standing to challenge it. The district
court next held that Whiteman and the Ryshes’ claims were impermissible collateral attacks on
the state foreclosure cases, and that their claims were barred by res judicata because Whiteman
and the Ryshes had already challenged Deutsche Bank’s standing to foreclose in their state
foreclosure cases, and doing so again in the guise of a consumer protection claim was
impermissible. Next, the court concluded that the Ryshes had failed to state an FDCPA claim
because Lender Processing was not a “debt collector” because its business is too far removed
from the business of debt collection and because it did not make any materially misleading
statements. Finally, the court reasoned that the plaintiffs’ OCSPA claims failed because the
OSCPA excludes transactions between “financial institutions” and their customers and because
-5-
No. 13-3799, Clark v. Lender Processing Servs.
the defendants were not “suppliers” of consumer goods because they do not offer services to
consumers. The plaintiffs appeal.
First, notwithstanding plaintiffs’ arguments on appeal, the district court had jurisdiction
over the plaintiffs’ state-law claims under the Class Action Fairness Act, 28 U.S.C. § 1332(d).
The plaintiffs argue that the district court only had federal-question jurisdiction over the FDCPA
claims and supplemental jurisdiction over the OCSPA claims. According to the plaintiffs, the
district court should have remanded the case back to state court after the district court dismissed
the plaintiffs’ FDCPA claim because “a federal court that has dismissed a plaintiff’s federal-law
claims should not ordinarily reach the plaintiff’s state-law claims. . . . Residual jurisdiction
should be exercised only in cases where the interests of judicial economy and the avoidance of
multiplicity of litigation outweigh our concern over needlessly deciding state law issues.” Moon
v. Harrison Piping Supply, 465 F.3d 719, 728 (6th Cir. 2006) (internal quotation marks and
citations omitted). But that argument fails because the district court had original jurisdiction
under the Class Action Fairness Act. That act provides that “[t]he district courts shall have
original jurisdiction of any civil action in which the matter in controversy exceeds the sum or
value of $5,000,000 . . . and is a class action in which [there is minimal diversity].” 28 U.S.C. §
1332(d)(2).
The plaintiffs do not dispute that this case met the requirements of § 1332(d)(1), but
rather argue that the Class Action Fairness Act could not have provided jurisdiction because the
“home state” and “local controversy” exceptions found in § 1332(d)(4) apply. Those exceptions
require a court to decline jurisdiction when “greater than two-thirds of the members of all
proposed plaintiff classes in the aggregate are citizens of the State in which the action was
originally filed” and certain other requirements are met or when “two-thirds or more of the
-6-
No. 13-3799, Clark v. Lender Processing Servs.
members of all proposed plaintiff classes in the aggregate, and the primary defendants, are
citizens of the State in which the action was originally filed.” Id. § 1332(d)(4). However, the
local-controversy and home-state exceptions do not deprive a court of jurisdiction. See Graphic
Commc’ns Local 1B Health & Welfare Fund A v. CVS Caremark Corp., 636 F.3d 971, 973 (8th
Cir. 2011); Visendi v. Bank of Am., N.A., 733 F.3d 863, 869–70 (9th Cir. 2013). The statute
speaks only of a district court’s declining jurisdiction if the exceptions apply. This language
clearly indicates that the exceptions do not deprive the court of jurisdiction it otherwise possesses
because a court could not “decline” jurisdiction that it never had in the first place. While perhaps
the exceptions may have applied, the plaintiffs did not make that argument to the district court.
Because the exceptions are not jurisdictional and the plaintiffs did not alert the district court of
their potential applicability, this court will not consider whether they should have applied on
appeal. See Visendi, 733 F.3d at 869–70. Because the applicability of the home-state or local-
controversy did not deprive the district court of jurisdiction under the Class Action Fairness Act,
it had federal jurisdiction and did not need to rely on supplemental jurisdiction to consider the
plaintiffs’ OCSPA claims.
The Ryshes are the only plaintiffs still parties on appeal raising FDCPA claims, and their
claims are without merit. Because Deutsche Bank held the Ryshes’ note, the defendants did not
make materially misleading statements about the bank’s right to foreclose. At bottom, the
Ryshes’ consumer protection claims are premised on the argument that the defendants lied and
cheated to establish their bank-client’s standing to foreclose. The Ryshes argue that defendants
forged signatures on assignments of mortgages and lied about complying with the terms of the
pooling agreements. But if Deutsche Bank had standing to foreclose in spite of those alleged
misrepresentations, then the defendants’ statements were not materially misleading.
-7-
No. 13-3799, Clark v. Lender Processing Servs.
To state a claim under the FDCPA, a plaintiff must show that a defendant violated one of
the substantive provisions of the FDCPA while engaging in debt collection activity. Glazer v.
Chase Home Fin. LLC, 704 F.3d 453, 459–60 (6th Cir. 2013). Section 1692e forbids “false,
deceptive, or misleading representation[s] or means in connection with the collection of any
debt.” Furthermore, this court has held that a statement must be more than just misleading—it
“must be materially false or misleading to violate Section 1692e.” Wallace v. Wash. Mut. Bank,
F.A., 683 F.3d 323, 326 (6th Cir. 2012). “The materiality standard . . . means that in addition to
being technically false, a statement would tend to mislead or confuse the reasonable
unsophisticated consumer.” Id. at 326–27.
Here the statements made by the defendants were not false (much less materially
misleading) because the complaint makes clear that Deutsche Bank had the right to foreclose
against the Ryshes. When a homeowner has to borrow money to purchase a home, that borrower
typically executes a promissory note and a mortgage. “The promissory note is a contract by
which the [borrower] promises to repay the loan to the [lender]. The security instrument [or
mortgage] gives that [lender] the right to foreclose on the property if the [borrower] defaults on
the loan obligation.” Zachary A. Kisber, Reevaluating MERS in the Wake of the Foreclosure
Crisis, 42 Real Es. L.J. 183, 186 (2013). Under Ohio law, possession of either the note or the
mortgage gives a party standing to foreclose. CitiMortgage, Inc. v. Patterson, 984 N.E.2d 392,
397–98 (Ohio Ct. App. 2012) (citing Fed. Home Loan Mortg. Co. v. Schwartzwald, 979 N.E.2d
1214, 1220 (Ohio 2012)). In other words, if Deutsche Bank owned or held the Ryshes’ note or
mortgage, and the Ryshes defaulted, then it was perfectly justified in filing a foreclosure suit.
Deutsche Bank appears to have been the holder of the Ryshes’ note because it was
endorsed in blank. “Under R.C. 1303.31(A), the ‘holder’ of a negotiable instrument is a
-8-
No. 13-3799, Clark v. Lender Processing Servs.
‘[p]erson entitled to enforce’ the instrument. A ‘holder’ includes a person who is in possession
of an instrument payable to bearer. R.C. 1301.01(T)(1)(a). When an instrument is endorsed in
blank, the instrument becomes payable to bearer and may be negotiated by transfer of possession
alone until specially endorsed [made payable to a particular person].” Deutsche Bank Nat’l Trust
Co. v. Najar, No. 98502, 2013-Ohio-1657, 2013 WL 1791372 at *6 (Ohio Ct. App. April. 25,
2013) (internal quotations marks, citations, and footnotes omitted). In other words, the person in
physical possession of a note endorsed in blank may enforce it. Here there appears to be no
dispute that the Ryshes’ note was endorsed in blank and that Deutsche Bank had physical
possession of the note at the time it initiated foreclosure proceedings. Tellingly, the allegations
in the complaint focus on shenanigans that arose during the transfer of the Ryshes’ mortgage, but
only generally assert that the note was improperly transferred. See, e.g., Compl. ¶¶ 212–16,
217–22.
On these facts, the defendant did not make materially misleading statements. In similar
cases, courts in this circuit have held that an FDCPA complaint will survive a motion to dismiss
“where a plaintiff alleges that the plaintiff in an underlying debt collection says that it was the
owner of a debt, all the while knowing that [it] did not have the means of proving that debt.”
Turner v. Lerner, Sampson & Rothfuss, 776 F. Supp. 2d 498, 506 (N.D. Ohio 2011) (internal
quotation marks omitted). Conversely, an FDCPA claim should be dismissed if the plaintiff in
the underlying debt collection action could in fact prove that it owned the debt. Based on its
possession of the Ryshes’ note, Deutsche Bank appears to have been able to prove debt
ownership.
The Ryshes could not have been misled by anything the defendants said or did in this
case. In Wallace, this court held that an FDCPA claim could proceed when a misstatement could
-9-
No. 13-3799, Clark v. Lender Processing Servs.
mislead or confuse a consumer. 683 F.3d at 327. The plaintiff in that case alleged that a
statement misrepresenting which party held her note “caused her confusion and delay in trying to
contact the proper party concerning payment of her loan and resolution of her problem.” Id. No
similar allegations appear in this complaint. Wallace went on to explain that whether a lender
has “standing to bring a foreclosure action” is not “dispositive of whether a statement was
materially misleading.” Id. at 327 n.2. But here, the Ryshes contend that defendants’ statements
were misleading solely because those statements implied that Deutsche Bank had standing when
it did not. The complaint says:
Defendants’ communications were deceptive . . . as they misrepresented who held
and/or owned plaintiffs’ notes and mortgages at the time the underlying
foreclosure actions were filed, thus concealing the fact that their clients lacked the
legal capacity to bring the suits. Indeed, the plaintiffs in the underlying
foreclosure actions (i.e., Defendants’ clients) stated that they were the owners of,
holders of, and/or entitled to enforce the Plaintiffs’ debts, all the while knowing
that they did not have the means of proving their ownership, holder status, or
entitlement to enforce the debt. In fact, Defendants knowingly created and
executed false and misleading assignments of the notes to their clients in
furtherance of this scheme.
Compl. ¶ 270. As the Wallace court explained, a lender could have standing to foreclose but
nevertheless make a misleading statement in the course of trying to collect a debt. But here,
where the only misleading aspect of a communication or statement is that the statement implies
that the lender has standing to foreclose when it did not, whether or not the lender does in fact
have the right to foreclose appears to settle the matter.
For similar reasons, the plaintiffs claim under § 1692f claim fails. Section 1692f is a
catchall provision that forbids a debt collector from using “unfair or unconscionable means to
collect or attempt to collect any debt.” Other courts have held that “false but non-material
representations are not likely to mislead the least sophisticated consumer and therefore are not
-10-
No. 13-3799, Clark v. Lender Processing Servs.
actionable under §§ 1692e or 1692f.” Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1033 (9th
Cir. 2010). In other words, if a 1692f claim is premised on a false or misleading representation,
the misrepresentation must be material. See Lembach v. Bierman, 528 F. App’x 297, 303–04
(4th Cir. 2013). As discussed above, there appears to be no dispute that Deutsche Bank was in
possession of the Ryshes’ note and that note was endorsed in blank, and so any misrepresentation
was not material. Therefore, summary judgment was proper with respect to the Ryshes’ FDCPA
claims.
The plaintiffs moreover cannot bring an OCSPA claim because the defendants were not
suppliers engaged in consumer transactions. The OCSPA forbids a “supplier” from committing
an “unfair or deceptive act or practice in connection with a consumer transaction.” O.R.C. §
1345.02. Supplier is in turn defined as “a seller, lessor, assignor, franchisor, or other person
engaged in the business of effecting or soliciting consumer transactions.” Id. § 1345.01(C).
Consumer transaction “means a sale, lease, assignment, award by chance, or other transfer of an
item of goods, a service, a franchise, or an intangible, to an individual for purposes that are
primarily personal, family, or household.” Id. § 1345.01(A).
In Anderson v. Barclay’s Capital Real Estate, Inc., 989 N.E.2d 997 (Ohio 2013), the
Ohio Supreme Court held that a mortgage servicer is not a supplier involved in consumer
transactions under the OCSPA. The court explained that mortgage servicers do not engage in
consumer transactions because they contract with financial institutions to provide those
institutions services rather than to “transfer a service to the borrower.” Id. at 1001. “[A]
mortgage servicer neither sells nor gives the borrower the services it provides to the owner of the
mortgage and note.” Id. Furthermore, mortgage servicers are not suppliers because they do not
-11-
No. 13-3799, Clark v. Lender Processing Servs.
“cause a consumer transaction to happen or . . . seek to enter into a consumer transaction.” Id. at
1003.
Although Anderson does not directly control this case because Lender Processing and its
subsidiaries are not mortgage servicers, the reasoning in Anderson applies by analogy to
companies like Lender Processing. When a homeowner defaults on a mortgage, a mortgage
servicer or lender can hire Lender Processing to manage the foreclosure process. The Anderson
court’s opinion limited its discussion to traditional mortgage servicers (i.e., businesses that
collect monthly mortgage payments on behalf of lenders), and so the opinion does not directly
address companies like Lender Processing (i.e., vendors that help lenders manage the foreclosure
process). But Anderson teaches that the plain language of the OSCPA should be taken seriously:
companies not in the business of “effecting or soliciting consumer transactions” are not suppliers
engaging in consumer transactions. Like a traditional mortgage servicer, Lender Processing falls
into a category of businesses that do not seek to provide consumers with services. Rather, both
mortgage servicers and companies like Lender Processing offer their services to lenders. As is
the case when a mortgage servicer collects a monthly mortgage payment on behalf of a financial
institution, Lender Processing helps initiate and manage foreclosure proceedings on behalf of a
financial institution. In fact, mortgage servicers offer at least some marginal service to
consumers because they collect money from those consumers on behalf of a lender. Consumers
would only interact with Lender Processing because its lender-client had hired the company to
help initiate and manage a foreclosure. Managing a process that ends with a consumer losing her
home could scarcely be considered a “service” for the consumer.
The plaintiffs do cite pre-Anderson decisions that indicated that companies involved in
the collection of consumer debts are suppliers. See, e.g., Celebrezze v. United Research, Inc.,
-12-
No. 13-3799, Clark v. Lender Processing Servs.
482 N.E.2d 1260 (Ohio Ct. App. 1984). Traditional mortgage servicing, which involves the
collection of monthly payments, is also a type of debt collection. Nevertheless, the debt-
collection cases cited by the plaintiffs did not play a role in the Anderson court’s reasoning, and a
dissent criticized the court for failing to consider those cases. See Anderson, 989 N.E.2d at 1005
(O’Neill, J, dissenting). If a mortgage servicer’s involvement in debt collection was not relevant
in Anderson, there is no reason to believe that the Ohio Supreme Court would treat a company
like Lender Processing any differently. This reasoning applies not just to Lender Processing, but
also to its subsidiaries and the defendant law firms. In Glazer v. Chase Home Fin. L.L.C., No.
99875, 2013-Ohio-5589, 2013 WL 7869273, at *11 (Ohio Ct. App. Dec. 19, 2013), an Ohio
court held that an OCSPA claim fails against a defendant law firm when that law firm acted
solely as the agent of a company not involved in a consumer transaction. Because the defendants
were not suppliers engaged in consumer transactions, plaintiffs’ OCSPA claim fails.
We need not reach the other bases relied upon by the district court for denying relief. For
the foregoing reasons, we AFFIRM the judgment of the district court.
-13-
|
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-5296
UNITED STATES OF AMERICA,
Plaintiff – Appellee,
v.
THOMAS ROYAL,
Defendant – Appellant.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Richard D. Bennett, District Judge.
(1:09-cr-00439-RDB-1)
Argued: October 26, 2012 Decided: October 1, 2013
Before TRAXLER, Chief Judge, DIAZ, Circuit Judge, and Catherine
C. EAGLES, United States District Judge for the Middle District
of North Carolina, sitting by designation.
Affirmed in part, vacated in part, and remanded by published
opinion. Judge Diaz wrote the opinion, in which Chief Judge
Traxler and Judge Eagles joined.
ARGUED: James Christopher Fraser, VENABLE, LLP, Baltimore,
Maryland, for Appellant. John Walter Sippel, Jr., OFFICE OF THE
UNITED STATES ATTORNEY, Baltimore, Maryland, for Appellee. ON
BRIEF: James Wyda, Federal Public Defender, Baltimore, Maryland,
Paresh S. Patel, OFFICE OF THE FEDERAL PUBLIC DEFENDER,
Greenbelt, Maryland, for Appellant. Rod J. Rosenstein, United
States Attorney, Baltimore, Maryland, for Appellee.
DIAZ, Circuit Judge:
Thomas Royal was convicted by a jury of unlawfully
possessing ammunition after being previously convicted of a
crime punishable by imprisonment for a term exceeding one year,
in violation of 18 U.S.C. § 922(g)(1). At sentencing, the
district court determined that Royal was an armed career
criminal under the Armed Career Criminal Act (“ACCA”), 18 U.S.C.
§ 924(e), triggering a fifteen-year mandatory minimum sentence.
The court sentenced him to 188 months’ imprisonment.
Royal advances three arguments on appeal. First, he
contends the government failed to present sufficient evidence to
convict him of knowingly possessing “ammunition,” arguing that
since the rounds he possessed were loaded in an antique firearm,
the government had a burden to show that the rounds were
actually designed for use in a non-antique firearm. Second,
Royal asserts that the district court committed plain error when
it instructed the jury that the phrase “knowingly possessed
ammunition” meant that Royal knew the rounds were “ammunition as
we commonly use the word.” Finally, Royal argues that the
district court reversibly erred by using the modified
categorical approach to determine that his prior conviction
under Maryland’s second-degree assault statute constituted a
predicate conviction under the ACCA. We conclude that
sufficient evidence supported the jury’s verdict and that the
2
district court did not err in its jury instructions. However,
in light of the Supreme Court’s recent holding in Descamps v.
United States, 133 S. Ct. 2276 (2013), we sustain Royal’s
challenge to the district court’s application of the modified
categorical approach and its imposition of the ACCA sentencing
enhancement. Accordingly, we affirm in part, vacate in part,
and remand for resentencing.
I.
On appeal from a criminal conviction, we view the evidence
in the light most favorable to the government. United States v.
Herder, 594 F.3d 352, 358 (4th Cir. 2010).
A.
On January 8, 2009, Sergeant Jones and Detective Rayam of
the Baltimore, Maryland Police Department stopped Thomas Royal
for driving with an expired registration plate. During the
stop, Detective Rayam observed Royal place his hand in his front
left jacket pocket, where Rayam noticed a bulge. Suspecting
criminal activity, the officers asked if they could search the
car. After initially consenting to the search, Royal grew
agitated and attempted to push his way past Detective Rayam.
Sergeant Jones used his Taser device to subdue him, and a
subsequent search of Royal’s person revealed an antique Iver
Johnson revolver loaded with five .32 caliber rounds.
3
Since Royal had previously been convicted of second-degree
assault, “a crime punishable by imprisonment for a term
exceeding one year,” the federal Gun Control Act (“GCA”)
prohibited him from knowingly possessing “any firearm or
ammunition” that has traveled in interstate commerce. 18
U.S.C. § 922(g)(1). “Firearm” and “ammunition” are defined
terms under the GCA. As is relevant here, the term “firearm”
explicitly “does not include an antique firearm,” which is any
firearm “manufactured in or before 1898.” Id. § 921(a)(3),
(a)(16)(A). “The term ‘ammunition’ means
ammunition . . . designed for use in any firearm.” Id.
§ 921(a)(17)(A).
Royal was charged in a one-count indictment for possession
of ammunition by a prohibited person, in violation of GCA
§ 922(g)(1). At trial, the government called Special Agent
David Collier of the Bureau of Alcohol, Tobacco, Firearms, and
Explosives (“ATF”) as “an expert in identification of firearms
and ammunition” and the “interstate nexus of firearms and
ammunition.”
Collier testified that Royal’s revolver had been
manufactured in 1895 and therefore, for the purposes of the GCA,
was an “antique firearm,” which is not a “firearm.” Collier
also testified that the rounds had been manufactured outside
Maryland and had traveled in interstate commerce. He gave no
4
testimony about whether Royal’s rounds had been “designed for
use in any firearm” such that they technically fell within the
statute’s definition of “ammunition,” but conceded on cross-
examination that he did not know the dates of the rounds’
manufacture.
The evidence showed that the rounds were .32 caliber, and
manufactured by the arms companies Remington and Winchester.
The rounds themselves were also entered into evidence and
published to the jury. The government presented no specific
evidence as to the rounds’ design. Nor, aside from cross-
examining Collier about the rounds’ manufacture dates, did Royal
himself raise any issues concerning the design of the
ammunition.
At the close of the government’s case, Royal moved under
Fed. R. Crim. P. 29 for a judgment of acquittal, arguing that
the government had presented insufficient evidence to support a
guilty verdict. The district court denied the motion. Royal
advanced no defense but renewed his Rule 29 motion, which the
court again denied.
After closing arguments, the district court instructed the
jury that the government needed to prove that Royal knowingly
possessed one or more pieces of ammunition. It read them the
GCA’s statutory definition of ammunition: “‘Ammunition’ is
ammunition or cartridge cases, primers, bullets, or propellant
5
powder designed for use in any firearm,” J.A. 148. With respect
to the mens rea component, the district court instructed the
jury, without objection from Royal, that “whether the defendant
acted knowingly . . . means [whether] he knew that the
ammunition was ammunition as we commonly use the word.” The
jury returned a guilty verdict on the sole count.
A conviction for being a felon in possession of a firearm
or ammunition normally carries a maximum penalty of ten years in
prison. 18 U.S.C. § 924(a)(2). However, at Royal’s sentencing,
the government argued that he was subject to a fifteen-year
mandatory minimum sentence because he had three prior
convictions “for a violent felony or serious drug offense,” id.
§ 924(e)(1), including a 2007 guilty plea to Maryland second-
degree assault. Royal argued that under the categorical
approach, this conviction did not qualify as a “violent felony”
because “violent force” is not categorically required for a
conviction under Maryland’s second-degree assault statute. The
district court rejected this argument and, following our
decision in United States v. Alston, 611 F.3d 219 (4th Cir.
2010), applied the so-called modified categorical approach to
conclude that, based on facts admitted in his plea colloquy,
Royal’s 2007 second-degree assault conviction was indeed a
violent felony. The district court thus applied the ACCA
§ 924(e)(1) enhancement and sentenced Royal to fifteen years and
6
eight months in prison. Royal timely appealed. Following oral
argument, we placed the case in abeyance pending the Supreme
Court’s decision in Descamps, which issued in June 2013.
II.
The issues before us are (1) whether Royal was entitled to
a Rule 29 judgment of acquittal due to insufficient evidence;
(2) whether the district court committed plain error when it
instructed the jury that the phrase “knowingly possessed
ammunition” meant “[Royal] knew the ammunition was ammunition as
we commonly use the word”; and (3) whether the district court
erred in applying the modified categorical approach to determine
that Royal’s 2007 Maryland second-degree assault conviction
qualified as a predicate “violent felony” under the ACCA.
A.
We first consider Royal’s argument that he was entitled to
a judgment of acquittal because the government offered
insufficient evidence to support his conviction. We review de
novo the district court’s decision to deny a defendant’s Rule 29
motion for judgment of acquittal. United States v. Smith, 451
F.3d 209, 216 (4th Cir. 2006). On an appeal challenging the
sufficiency of evidence, we assess the evidence in the light
most favorable to the government, and the jury’s verdict must
stand unless we determine that no rational trier of fact could
7
have found the essential elements of the crime beyond a
reasonable doubt. United States v. Young, 609 F.3d 348, 355
(4th Cir. 2010).
In order to prove that Royal possessed ammunition in
violation of the GCA, the government was required to prove
beyond a reasonable doubt that (1) Royal was a convicted felon;
(2) he knowingly possessed ammunition; and (3) the ammunition
had traveled in interstate commerce. See United States v. Moye,
454 F.3d 390, 395 (4th Cir. 2006). Royal challenges the
sufficiency of the government’s evidence as to only the second
prong, insisting that the government failed to show that the
five rounds found in his revolver were “ammunition” within the
statute’s definition. Specifically, he argues that the
government never met its burden of proving beyond a reasonable
doubt that the rounds were “designed for use in any firearm”;
that is, the government never showed that the rounds were
designed for use in any non-antique firearm. One of our sister
circuits has helpfully articulated this distinction:
Bullets are “ammunition” if they are “designed for use
in any firearm.” 18 U.S.C. § 921(a)(17)([A])
(emphasis added). If these bullets had been designed
exclusively for use in [defendant’s antique] revolver,
they would not be “ammunition” because by definition
this antique revolver is not a “firearm.” On the
other hand, if the bullets were designed for use, not
just in this antique revolver, but in other guns
manufactured after 1898, then it would appear, given
the literal language of the definition, that they are
8
“ammunition” because they would be designed for any
firearm.
United States v. Mixon, 457 F.3d 615, 618 (7th Cir. 2006).
The government does not contest this literal reading of the
statute. Rather, it posits that its burden of proof did not
entail a need to demonstrate that the rounds were designed for
use in a non-antique firearm. Instead, it argues that whether
the ammunition was designed exclusively for use in an antique
firearm is an affirmative defense that must be raised by the
defendant and supported by evidence before the government must
disprove its application.
To support this theory, the government cites numerous cases
holding that the “antique firearm exception” in 18
U.S.C. § 921(a)(3) is an affirmative defense that the defendant
bears the burden of raising. Because the antique firearm
exception is an affirmative defense to a § 922(g) firearm
charge, the government insists, it follows that a claim that
ammunition was designed for use in a non-antique firearm is also
an affirmative defense, which Royal failed to raise.
We accept Royal’s literal reading of the statute and agree
that rounds designed for use exclusively in antique firearms do
not meet the GCA’s definition of “ammunition.” However, we also
agree with the government that the antique firearms exception is
an affirmative defense, which Royal failed to raise.
9
It is well established that the antique firearm exception
is an affirmative defense to a firearm charge under § 922(g).
See, e.g., United States v. McMillan, 346 F. App’x 945, 947 (4th
Cir. 2009) (unpublished); United States v. Lawrence, 349 F.3d
109, 122 (3d Cir. 2003) (“Every circuit court of appeals that
has considered this issue has agreed that [the antique firearm
exception] is an affirmative defense that must initially be
raised by sufficient evidence to justify shifting a burden of
proof to the government.”); United States v. Mayo, 705 F.2d 62,
75 (2d Cir. 1983) (“We find no indication in the language of the
statute that Congress intended the government to prove in all
criminal prosecutions under 18 U.S.C. § 922 that the illegal
firearms transactions involved weapons that were not
antiques.”). This owes to the longstanding principle that “an
indictment or other pleading founded on a general provision
defining the elements of an offense . . . need not negative the
matter of an exception made by a proviso or other distinct
clause . . . . [I]t is incumbent on one who relies on such an
exception to set it up and establish it.” McKelvey v. United
States, 260 U.S. 353, 357 (1922). Accordingly, since
§ 921(a)(3) clearly sets apart the antique firearm exception as
a distinct proviso to the general definition of “firearm,”
courts have not hesitated to place the burden on defendants to
10
raise it as an affirmative defense. We agree with this broadly
held view.
Unlike § 921(a)(3)’s antique firearm exception, which
stands alone as a separate sentence untethered to the general
definition of “firearm,” the “designed for use in any firearm”
language of § 921(a)(17)(A)’s definition of “ammunition” is part
and parcel of the definitional sentence. Consequently, it is
the government’s initial burden to prove as an element of the
offense that the rounds were “designed for use in any firearm.”
We are not persuaded, however, that that burden somehow
incorporates the antique firearms exception, thereby requiring
the government to initially come forth with proof that the
ammunition was not designed exclusively for use in antique
firearms. Instead, if a defendant seeks the shelter of the
antique firearms exception as it relates to § 921(a)(17)(A)’s
“designed for use” clause, it remains incumbent on him to raise
the exception as an affirmative defense at trial.
This Royal failed to do. Although he is correct that a
defendant need only produce “more than a scintilla of evidence”
to raise an affirmative defense, United States v. Sligh, 142
F.3d 761, 762 (4th Cir. 1998), and that an affirmative defense
may be raised by the testimony of the government’s own
witnesses, see Sherman v. United States, 356 U.S. 369, 373
(1958), Royal fails to satisfy even this minimal burden.
11
Special Agent Collier’s testimony that the rounds were
found in an antique revolver and that he did not know the dates
of their manufacture constituted the full extent of the evidence
on this issue. This evidence, we conclude, was too attenuated
to sufficiently raise the defense. Although the ammunition was
found loaded in an antique revolver, the mere fact that the
ammunition happened to fit in an antique firearm does not mean
it was designed for antique firearms. Cf. Mixon, 457 F.3d at
618 (“It is true that the bullets were in the cylinder [of an
antique revolver], but that simple fact hardly establishes as a
matter of law that they were designed for, and could be safely
used, in this weapon.”). Royal, meanwhile, offered no testimony
or evidence on the rounds’ design and never asserted at trial
that the ammunition was not designed for use in a modern
firearm. Accordingly, because the jury ultimately did not hear
even a scintilla of evidence to suggest that the rounds were
designed for use exclusively in an antique firearm, Royal was
not entitled to have it consider the issue as an affirmative
defense.
Meanwhile, although the government did not present evidence
specifically going to the ammunition’s design, the evidence was
still sufficient to establish that the ammunition was “designed
for use in any firearm.” The evidence showed that the
ammunition was .32 caliber, manufactured by Remington and
12
Winchester, and the ammunition itself was shown to the jury.
Since most people are familiar with the appearance of modern
ammunition, we find that the jury could reasonably have
concluded that .32 caliber rounds manufactured by well-known
firearms companies were “designed for use in any firearm.”
As the district court correctly noted, the government’s
evidence satisfied all three elements of the § 922(g)(1)
violation. We therefore hold that sufficient evidence supported
Royal’s conviction.
B.
We next address Royal’s challenge to the district court’s
jury instructions. Since Royal did not object to the
instructions, we review for plain error. United States v.
Robinson, 627 F.3d 941, 953-54 (4th Cir. 2010). Under this
standard, Royal “must establish that the district court erred,
that the error was plain, and that it affected his substantial
rights.” Id. at 954 (internal quotation marks omitted).
Royal asserts that the district court plainly erred when it
instructed the jury that the phrase “knowingly possessed
ammunition” meant that Royal “knew the ammunition was ammunition
as we commonly use the word.” He relies on United States v.
Tomlinson, where we held that to sustain a conviction, a
district court must instruct the jury that the defendant must
have had “knowledge of those facts that bring the firearm within
13
[the] legal definition” prohibited by the GCA. 67 F.3d 508, 514
(4th Cir. 1995). Here, Royal insists the district court ran
afoul of Tomlinson when it failed to instruct the jury that the
government needed to prove that Royal knew the rounds were
“ammunition” within the GCA’s definition, and specifically that
Royal knew the rounds were designed for use in a non-antique
firearm.
We disagree. In light of our first holding, we find no
error, plain or otherwise, in the district court’s instructions
on the “knowing possession of ammunition” element of the
offense. The district court properly instructed the jury as to
the statutory definition of the word ammunition. And we are
satisfied that the instructions adequately informed the jury
that, to sustain a conviction, Royal needed to have knowledge of
those facts that brought the rounds in this case within that
legal definition. See United States v. Frazier-El, 204 F.3d
553, 561 (4th Cir. 2000) (“The conventional mens rea of criminal
statutes . . . requires not that a defendant know that his
conduct was illegal, but only that he ‘know the facts that make
his conduct illegal.’” (quoting Staples v. United States, 511
U.S. 600, 605 (1994))). As we have already explained, evidence
that the rounds were designed exclusively for use in an antique
firearm is not required to prove an element of the offense, but
rather provides an affirmative defense. Because the matter of
14
the rounds’ design was not in issue on the facts presented, the
district court did not err, plainly or otherwise, by failing to
mention it in its jury instructions.
C.
Finally, we address Royal’s challenge to the district
court’s use of the modified categorical approach and its
determination that his 2007 Maryland second-degree assault
conviction qualified as a violent felony under the ACCA, 18
U.S.C. § 924(e)(1). We review this determination de novo.
United States v. Harcum, 587 F.3d 219, 222 (4th Cir. 2009).
In Descamps, the Supreme Court recently clarified whether
courts may apply the modified categorical approach to assess,
for ACCA sentencing enhancement purposes, the violent nature of
a defendant’s prior conviction under an indivisible criminal
statute (i.e., one that does not set out elements of the offense
in the alternative, but which may nevertheless broadly
criminalize qualitatively different categories of conduct).
Answering that question in the negative, the Court explained
that the modified categorical approach “serves a limited
function: It helps effectuate the categorical analysis when a
divisible statute, listing potential offense elements in the
alternative, renders opaque which element played a part in the
defendant's conviction.” Descamps, 133 S. Ct. at 2283.
15
In this case, Royal’s 2007 Maryland second-degree assault
conviction is predicated on a facially indivisible statute. 1
Nevertheless, the government has argued elsewhere that
authoritative judicial decisions have, in effect, converted
Maryland’s second-degree assault statute from indivisible to
divisible, because the Maryland courts have held that the
completed battery form of second-degree assault may consist of
either “offensive physical contact” or infliction of “physical
harm.” Supp. Br. of Appellee at 18-19, United States v.
Barillas, No. 11-5141 (4th Cir. Aug. 28, 2013), ECF No. 42
(quoting Nicolas v. State, 44 A.3d 396, 402 (Md. 2012)).
Because an assault involving “physical harm” would qualify as a
violent felony for sentencing purposes, the argument goes,
courts may continue to apply the modified categorical approach
to Maryland second-degree assault convictions, in order to
determine whether the defendant’s conviction was in fact for the
“physical harm” variety of the offense. Id. at 21.
In addressing this argument, we acknowledge that the
Supreme Court in Descamps “reserve[d] the question whether, in
determining a crime’s elements, a sentencing court should take
1
Maryland’s statute prohibiting second-degree assault
provides simply that “[a] person may not commit an assault.”
Md. Code, Crim. Law § 3-203(a). "Assault" encompasses “the
crimes of assault, battery, and assault and battery, which
retain their judicially determined meanings.” Id. § 3-201(b).
16
account not only of the relevant statute’s text, but of judicial
rulings interpreting it.” 133 S. Ct. at 2291. We need not
resolve that question here, however, because regardless of
whether judicial decisions might in theory turn an indivisible
statute into a divisible one, that is simply not what the
Maryland courts have done with respect to the completed battery
form of second-degree assault.
As the Court explained in Descamps, offenses are divisible
when they consist of alternative elements through which the
offense may be proved. Id. at 2283. By “elements,” the Court
meant factual circumstances of the offense that the jury must
find “unanimously and beyond a reasonable doubt.” Id. at 2288
(citing Richardson v. United States, 526 U.S. 813, 817 (1999)).
Thus, to decide whether “offensive physical contact” and
“physical harm” are alternative elements of the completed
battery form of second-degree assault, we consider how Maryland
courts generally instruct juries with respect to that offense.
To convict a defendant of an assault of the battery
variety under Maryland law, “the State must prove that: (1) the
defendant caused offensive physical contact with, or harm to,
the victim; (2) the contact was the result of an intentional or
reckless act of the defendant and was not accidental; and (3)
the contact was not consented to by the victim or was not
legally justified.” Nicolas, 44 A.3d at 407 (quoting,
17
favorably, trial court jury instructions). Maryland juries are
not instructed that they must agree “unanimously and beyond a
reasonable doubt” on whether the defendant caused “offensive
physical contact” or “physical harm” to the victim; rather, it
is enough that each juror agree only that one of the two
occurred, without settling on which. See also Robinson v.
State, 58 A.3d 514, 528, 531 (Md. Ct. Spec. App. 2012) (quoting
instruction requiring jury to find, among other elements, “that
the defendant caused offensive physical contact with or physical
harm to [the victim],” and describing that instruction as
“mirror[ing] the pattern jury instruction for second degree
assault”).
Rather than alternative elements, then, “offensive physical
contact” and “physical harm” are merely alternative means of
satisfying a single element of the Maryland offense.
Consequently, because “[t]he dispute here does not concern any
list of alternative elements,” the modified approach “has no
role to play.” Descamps, 133 S. Ct. at 2285.
Instead, we must apply the traditional categorical
approach, under which we look “only to the statutory definition
of the state crime and the fact of conviction to determine
whether the conduct criminalized by the statute, including the
most innocent conduct, qualifies as a ‘crime of violence.’”
United States v. Torres–Miguel, 701 F.3d 165, 167 (4th Cir.
18
2012) (internal quotation marks omitted). And because, “as we
have repeatedly observed,” Maryland’s second-degree assault
statute reaches any unlawful touching, whether violent or
nonviolent and no matter how slight, “convictions under the
statute, including [Royal’s], cannot categorically be crimes of
violence.” Karimi v. Holder, 715 F.3d 561, 568 (4th Cir. 2013).
Accordingly, Royal’s 2007 Maryland second-degree assault
conviction does not constitute a predicate “violent felony”
supporting a sentencing enhancement under ACCA § 924(e)(1). Cf.
Johnson v. United States, 559 U.S. 133, 140-42 (2010) (holding
that a violent felony under the ACCA necessarily involves the
use of “violent force”).
III.
For the foregoing reasons, we conclude that sufficient
evidence supported Royal’s conviction and that the district
court did not err in its jury instructions. However, in light
of Descamps, the district court’s application of the modified
categorical approach to support Royal’s ACCA sentencing
19
enhancement was in error. Accordingly, we affirm Royal’s
conviction, vacate his sentence, and remand for resentencing. 2
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
2
We deny Royal’s motion for leave to file a supplemental
brief.
20
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-7967
MARK CORRIGAN,
Plaintiff - Appellant,
v.
DANNY TUCKER, Case Manager FCC Petersburg Camp, Virginia;
PATRICIA R. STANSBERRY, Warden FCI Petersburg, Virginia,
Defendants - Appellees.
Appeal from the United States District Court for the Eastern
District of Virginia, at Norfolk. Raymond A. Jackson, District
Judge. (2:11-cv-00178-RAJ-TEM)
Submitted: March 28, 2013 Decided: April 26, 2013
Before DAVIS, KEENAN, and DIAZ, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Mark Corrigan, Appellant Pro Se. Kent Pendleton Porter,
Assistant United States Attorney, Daniel Patrick Shean, OFFICE
OF THE UNITED STATES ATTORNEY, Norfolk, Virginia, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Mark Corrigan appeals the district court’s order
denying relief on his complaint filed pursuant to Bivens v. Six
Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388
(1971). We have reviewed the record and find no reversible
error. Accordingly, we affirm for the reasons stated by the
district court. Corrigan v. Tucker, No. 2:11-cv-00178-RAJ-TEM
(E.D. Va. Sept. 11, 2012). We dispense with oral argument
because the facts and legal contentions are adequately presented
in the materials before this court and argument would not aid
the decisional process.
AFFIRMED
2
|
Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit
4-2-1997
Wagner v. Pennwest Farm Credit
Precedential or Non-Precedential:
Docket 96-3197,96-3198,96-3199
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1997
Recommended Citation
"Wagner v. Pennwest Farm Credit" (1997). 1997 Decisions. Paper 74.
http://digitalcommons.law.villanova.edu/thirdcircuit_1997/74
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 1997 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact [email protected].
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 96-3197
DEWEY A. WAGNER,
Appellant
v.
PENNWEST FARM CREDIT, ACA; A CORPORATION
No. 96-3198
DEWEY A. WAGNER,
Appellant
v.
PENNWEST FARM CREDIT, ACA; A CORPORATION;
GARY J. GAERTNER, Trustee; JAMES L. WITHERUP;
KATHY L. WEAVER
No. 96-3199
DEWEY A. WAGNER,
Appellant
v.
PENNWEST FARM CREDIT, ACA; A CORPORATION
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Nos. 95-cv-00006E, 95-cv-00007E, 95-cv-00008E)
Submitted Pursuant to Third Circuit LAR 34.1(a)
March 24, 1997
Before: SLOVITER, Chief Judge,
STAPLETON and ALDISERT, Circuit Judges
(Opinion filed April 2, 1997)
1
Stephen H. Hutzelman
Shapira, Hutzelman, Berlin & May
Erie, PA l6507
Attorney for Appellant
Louis J. Stack
Shafer, Swick, Bailey, Irwin,
Stack & Millin
Meadville, PA 16335
Attorney for Appellee
Pennwest Farm Credit
Henry W. Gent, III
Gent, Gent & Snyder
Franklin, PA l6323
Attorney for Appellees
James L. Witherup and
Kathy L. Weaver
OPINION OF THE COURT
2
SLOVITER, Chief Judge.
This appeal comes before us on the contention of
appellant Dewey A. Wagner that the bankruptcy court, in an order
affirmed by the district court, erred in holding that debtor
Wagner's statutory right of first refusal under the Agricultural
Credit Act (“ACA” or "Act"), 12 U.S.C. § 2001--2279aa-14 (1988),
was not property of the bankruptcy estate. In order to decide
that issue we confront the underlying question whether there is
an implied private right of action under the Agricultural Credit
Act, an issue this court has not yet decided.
I.
Most of the facts in this case relevant to that issue
are not in dispute. On April 4, 1980, Wagner signed a loan
agreement with PennWest Farm Credit, ACA, ("PennWest"), secured
by a mortgage on a nineteen acre piece of property in Venango
County, Pennsylvania. PennWest is a corporation organized and
existing under the federal Farm Credit System. See 12 U.S.C. §
2091. After Wagner defaulted on the payments due, PennWest
obtained judgment against Wagner in the Venango County Court of
Common Pleas and took title to the property following a sheriff's
sale.
The ACA requires an institution of the Farm Credit
System that acquires agricultural real estate as a result of a
loan foreclosure to provide the previous owner a right of first
refusal. See 12 U.S.C. § 2219a(a). This is effected by
requiring an institution that elects to sell acquired real estate
to notify the previous owner within fifteen days of such election
3
of that owner's right to purchase the property at its fair market
value as established by an accredited appraiser or to offer to
purchase it at a lesser price. See 12 U.S.C. § 2219a(b)(1). If
the previous owner offers to purchase the property at the
appraised value within thirty days after receiving the notice of
first refusal, the Act requires that the institution "shall,
within 15 days after the receipt of such offer, accept such offer
and sell the property to the previous owner." 12 U.S.C. §
2219a(b)(3). If the previous owner's offer is for less than the
appraised value, the institution must notify the previous owner
within fifteen days whether it is accepting or rejecting that
bid. See 12 U.S.C. § 2219a(b)(4).
PennWest’s certified appraiser valued the property at
$65,000. By letter dated November 16, 1993, PennWest offered to
sell back the property to Wagner at $65,000. The terms set forth
in PennWest’s letter were cash sale, with the sale to be closed
within fifteen days of PennWest’s receipt of Wagner’s offer.
Wagner did submit an offer to purchase the property at the
appraised price, but he did not close within the fifteen days nor
within the two deadline extensions ending on March 3, 1994.
PennWest then began a competitive bidding process, and
advertised in several newspapers that it was accepting a minimum
$65,000 bid on the property. There were approximately fifty
inquirers and information packets were sent to each of them.
Because there were no bids at that price, PennWest eliminated the
minimum bid requirement entirely and sent a second bid packet to
the same fifty inquirers, requesting them to submit bids by May
4
4, 1994. The highest bid received was from James Witherup and
Kathy Weaver (“the Buyers”) in the amount of $44,000.
By letter of May 9, 1994, PennWest advised Wagner that
it had accepted a bid for $44,000 and that he had a statutory
right of first refusal under the same terms and conditions, which
included a cash sale to be closed within fifteen days of receipt
of the offer. Wagner exercised his right of first refusal and
made a timely offer to purchase the property for $44,000. The
closing date was fixed for June 29, 1994. However, Wagner did
not tender the sales price on that day. Upon inquiry, Jeffrey
Trotten, Wagner’s agent, told PennWest's representative that
Wagner had withdrawn his application for financing the day
before.
Instead, Wagner followed a different course. On June
29, the day fixed for the closing, Wagner filed a quiet title
action in Venango County which prevented PennWest from selling
the property to the Buyers. Then, on July 12, 1994 Wagner filed
a petition under Chapter 12 of the Bankruptcy Code. Wagner also
filed a determination of property rights in the bankruptcy court,
stating a claim almost identical to that in his quiet title
action. His quiet title action was removed to the bankruptcy
court as an adversary proceeding.
On September 14, 1994, a hearing was held in the
bankruptcy court in which three matters were raised: the removed
quiet title action, the action for determination of property
rights, and PennWest's request for relief from the automatic
stay. The bankruptcy court found that Wagner had been adequately
5
informed by PennWest of his rights of first refusal and that
Wagner had failed to exercise those rights in a timely manner.
Bankruptcy Ct. Op. (Nov. 23, 1994). Since Wagner's right of
first refusal had expired, the bankruptcy court concluded that
Wagner’s property was no longer part of the bankruptcy estate.
Id.
Wagner appealed this order to the district court,
arguing that his right of first refusal had not expired because
PennWest failed to follow required statutory procedures.
Specifically, Wagner argued that PennWest violated the ACA by
requiring that the closing occur within fifteen days and by
failing to provide Wagner with the terms and conditions of the
competitive bidding process. The district court affirmed,
holding that Wagner had failed to close within a timely manner so
lost his right of first refusal. See Dist. Ct. Op. at 19 (Feb.
29, 1996). Wagner appeals to this court.
II.
Wagner recognizes that the initial question on this
appeal is whether the right of first refusal provided under the
ACA is property of the bankruptcy estate. See Appellant's brief
at 15. Subsumed in Wagner's argument that PennWest failed to
comply with the mandatory notification to him as required by 12
U.S.C. § 2219a(d)(1) is the implicit assumption that Wagner would
have a cause of action for that violation. The district court
noted that there is “an emerging line of authority which holds
that there is no express or implied private right of action under
the Agricultural Credit Act of 1987," Dist. Ct. Op. at 9 n.2, but
6
did not decide the issue since neither party had raised it.
Instead, the district court turned to the merits of Wagner's
claim. After affirming the bankruptcy court's decision that
PennWest's use of an in-house appraiser was permissible, the
district court reviewed seriatim each of Wagner's claims as to
PennWest's alleged failure to comply with the ACA and rejected
them, holding that Wagner's right of first refusal expired prior
to his bankruptcy filing. Id. at 9-19.
PennWest now argues on appeal that the bankruptcy and
district courts should have dismissed Wagner’s actions for
failure to state a claim since the ACA provides no private right
of action. We are cognizant that PennWest did not raise this
issue in the district court. While we will ordinarily not
consider issues raised for the first time on appeal, we have
recognized that in exceptional circumstances we may consider such
issues if it would be just under the circumstances. O’Neill v.
United States, 411 F.2d 139, 143-44 (3d Cir. 1969). In this
case, the existence (or, more accurately, the non-existence) of a
private right of action under the ACA is so fundamental to the
claims alleged in the district court that we cannot address the
issues raised by the parties without first deciding whether there
is a private right of action. Furthermore, an appellate court
may uphold a judgment on any proper theory, even if not raised by
the parties first in the district court, as long as there is no
prejudice to the other party. See Altman v. Altman, 653 F.2d
755, 758 (citing Jurinko v. Edwin L Weingard Co., 477 F.2d 1038
(3d Cir.), vacated on other grounds, 414 U.S. 970 (1973)).
7
The issue of whether there is such a private right of
action has been considered by at least seven courts of appeals.
They have uniformly held that there is no private right of action
under the ACA or its predecessor, The Farm Credit Act of 1971.
See Grant v. Farm Credit Bank of Texas, 8 F.3d 295, 296 (5th Cir.
1993); Saltzman v. Farm Credit Services of Mid-America, ACA, 950
F.2d 466, 467-69 (7th Cir. 1991); Zajac v. Federal Land Bank of
St. Paul, 909 F.2d 1181, 1182-83 (8th Cir. 1990)(en banc);
Griffin v. Federal Land Bank of Wichita, 902 F.2d 22, 24 (10th
Cir. 1990); Harper v. Federal Land Bank of Spokane, 878 F.2d
1172, 1177 (9th Cir. 1989), cert. denied, 498 U.S. 1057 (1990);
Bowling v. Block, 785 F.2d 556, 557 (6th Cir.)(holding that the
Farm Credit Act of 1971, the precursor to the ACA, has no private
right of action), cert. denied sub nom., Bower v. Lyng, 479 U.S.
829 (1986); Smith v. Russellville Production Credit Ass’n, 777
F.2d 1544 (11th Cir. 1985); cf. Jarrett Ranches, Inc. v. Farm
Credit Bank of Omaha, 128 B.R. 263, 264-65 (N.D.S.D. 1990)
(specifically finding no private right of action afforded to
farmer/borrowers under the ACA to enforce their rights of first
refusal); Rennick Brothers, Inc. v. Federal Land Bank Ass’n of
Dodge City, 721 F. Supp. 1198, 1200 (D.Kan. 1989); Neth v.
Federal Land Bank of Jackson, 717 F. Supp. 1478, 1479 (S.D. Ala.
1988).
In light of such an array of precedent, we would
require a compelling basis to hold otherwise before effecting a
circuit split. Nonetheless, we examine the issue independently
and find no reason to disagree with the other courts.
8
The Supreme Court's decision in Cort v. Ash, 422 U.S.
66, 78 (1975), set forth four factors for determining whether a
federal statute provides a private cause of action. “First, is
the plaintiff 'one of the class for whose especial benefit the
statute was enacted' . . . ? Second, is there any indication of
legislative intent, explicit or implicit, either to create such a
remedy or to deny one? Third, is it consistent with the
underlying purposes of the legislative scheme to imply such a
remedy for the plaintiff? And finally, is the cause of action
one traditionally relegated to state law . . . ?” Id. (citations
omitted). In a later opinion, the Court explained that the
"focal point" for finding a private right of action is
congressional intent in enacting the statute. Thompson v.
Thompson, 484 U.S. 174, 179 (1988). The Court stated, “unless
this congressional intent can be inferred from the language of
the statute, the statutory structure, or some other source, the
essential predicate for implication of a private remedy simply
does not exist.” Id. (internal quotations omitted).
In applying this mode of analysis to the Agricultural
Credit Act, the most persuasive indication of legislative intent
is Congress's decision to delete a proposed private right of
action provision from the final version of the Act. In Harper,
one of the earliest appellate decisions under the ACA, the Court
of Appeals for the Ninth Circuit reviewed the legislative history
of the ACA. The court noted that the House version of the bill
contained an express private right of action, that some Senators
also sought to include such a provision and that ultimately
9
"[t]he Senate opposed the House provision and it was deleted from
the final 1987 Act. H.R. 3030, 100th Cong., 1st Sess., 133 Cong.
Rec. 11820 (December 18, 1987)." 878 F.2d at 1175. The Ninth
Circuit recognized that there were some ambiguous statements on
the Senate floor that suggested that some legislators may have
been under the impression that such a right of action already
existed, but the court stated that it was clear "that there
existed no implied private right of action under the various
predecessor statutes or regulations in force prior to the 1987
Act." Id. The court cited the Supreme Court's statement in
Midlantic Nat'l. Bank v. New Jersey Dept. of Envtl. Protection,
474 U.S. 494, 501 (1986), that "[t]he normal rule of statutory
construction is that if Congress intends for legislation to
change the interpretation of a judicially created concept, it
makes that intent specific." Harper, 878 F.2d at 1176.
The decision of the Court of Appeals for the Seventh
Circuit in Saltzman, 950 F.2d at 468, also focused on the
deletion of the express provision for a private right of action.
The court noted that this deletion took place “against the
backdrop of numerous court decisions (interpreting the Farm
Credit Act of 1971) concluding no private right of action was
implied,” and viewed this as bolstering the conclusion that
Congress did not intend an implied right of action under the ACA.
Id.
The issue was also the subject of an en banc decision
in the Eighth Circuit where the court held, over a vigorous
dissent, that there was no private right of action. Zajac, 909
10
F.2d at 1182-83. The court noted that Congress enacted a
comprehensive legislative scheme which, by the absence of any
specific provisions for a private right of action, militates
against finding a private remedy. Indeed, as the Zajac court
pointed out, it would be inappropriate to infer a private right
of action in the area of foreclosure, which is an area
traditionally controlled by state law. See id.
We are aware of only one district court decision that
has not been overturned holding that the ACA establishes a
private right of action. See Leckband v. Naylor, 715 F. Supp.
1451, 1453 (D.Minn. 1988). However, the Eighth Circuit's
decision in Zajac came later and thus is dispositive. In any
event, the reasoning in Leckband has been rejected by the
numerous appellate decisions that followed.
We can find no persuasive basis for rejecting the
reasoned analysis of the numerous courts that have addressed this
issue. We join them in holding that the Agricultural Credit Act
does not contain an implied private right of action. It follows
that Wagner had no asset in the right of first refusal when the
matter came before the bankruptcy court.
III.
For the reasons set forth we do not address the merits
of Wagner's claim that PennWest did not comply with the statutory
right of first refusal and we will affirm the judgment of the
district court, albeit for reasons other than those on which it
decided.
11
|
Opinion issued December 14, 2006
In The
Court of Appeals
For The
First District of Texas
NO. 01-03-01214-CV
VOLUME MILLWORK, INC., Appellant
V.
WEST HOUSTON AIRPORT CORPORATION, Appellee
On Appeal from County Civil Court at Law No. 1
Harris County, Texas
Trial Court Cause No. 766571
OPINION ON MOTION FOR REHEARING
We issued our opinion in this case on August 3, 2006. Appellant, Volume
Millwork, Inc., has filed a motion for rehearing of our opinion and judgment of
August 3, 2006, and appellee, West Houston Airport Corporation, has filed a response
at our request. We grant rehearing, withdraw our opinion and judgment of August
3, 2006, and issue this opinion and accompanying judgment in their stead.
This is an eviction case resolved by forcible-entry-and-detainer in justice court
and appealed by the tenant for trial de novo to county court, the trial court here.
Appellant, Volume Millwork, Inc. (tenant), presents four issues challenging the
judgment of the trial court. Tenant's first two issues challenge the interlocutory
summary judgment rendered on the issues of the rights of appellee, West Houston
Airport Corporation (landlord) to sue tenant and to possess the leased premises.
Tenant's remaining issues challenge the legal and factual sufficiency of the evidence
submitted to the trial court to support the damages and attorney's fees awarded to
landlord. Because tenant's first two issues challenge landlord's right of possession
to commercial premises, section 24.007 of the Property Code deprives us of
jurisdiction to review those issues. (1) Accordingly, we dismiss tenant's appeal of
issues one and two. We affirm the judgment of the trial court in all other respects.
Background
Pelican Importing & Exporting Company, the previous owner of real property
at the West Houston Airport Subdivision, also owned a hangar that the company had
built on lots G-4 and G-5 of the subdivision. Tenant leased the hangar from Pelican
in June 1997 for a term of five years that would expire on July 1, 2002, unless
terminated earlier, at a base monthly rental payment of $3,600.00. The lease terms
included late-payment fees, rental adjustments to compensate for increases in
property taxes, and provisions for attorney's fees in the event of litigation arising
from the lease. On November 29, 2001, Pelican transferred the airport property,
including the hangar on lots G-4 and G-5, to the Woodrow V. Lesikar Family Trust
(the trust). On the same day, Pelican assigned tenant's lease to the trust, which
assumed Pelican's rights and duties as landlord under the lease with tenant.
On November 30, 2001, Woody Lesikar, in his capacity as landlord's manager,
notified tenant that landlord would henceforward be collecting the rent due under the
terms of tenant's existing lease with Pelican. Seven days later, landlord's counsel
issued a notice informing tenant that it had defaulted on the lease, with respect to both
payments and use of the premises, and would be required to vacate unless tenant
complied with the lease provisions. See Tex. Prop. Code Ann. § 24.005 (Vernon
2000) (requiring notice as predicate to filing eviction suit). Notice of default proved
ineffective, and landlord filed a forcible-entry-and-detainer action in justice court.
Tenant did not appear, and landlord prevailed by default and was issued a writ of
possession, in accordance with section 24.0061 of the Property Code and rule 748 of
the Rules of Civil Procedure. (2) See Tex. Prop. Code Ann. § 24.0061 (Vernon 2000);
Tex. R. Civ. P. 748.
After posting bond in compliance with Tex. R. Civ. P. 571, tenant appealed the
justice court's ruling by trial de novo to the trial court, County Civil Court No.1 of
Harris County. See Tex. Gov't Code Ann. §§ 25.0003(a), 26.042(e) (Vernon 2004);
Tex. R. Civ. P. 574b, 749. Landlord again prevailed, by interlocutory summary
judgment, on its right to possess the leased premises. The summary judgment
evidence included the affidavit of Woody K. Lesikar, in his capacity of president of
landlord, in which he explained that the trust had assigned its rights in the lease to
landlord in exchange for management of the premises. Landlord had also moved for
summary judgment on its claims for damages for unpaid holdover rent and attorney's
fees, but the parties tried these issues to the court after tenant opposed landlord's
motion for summary judgment. Landlord prevailed again, and the trial court rendered
a final judgment, from which tenant appeals.
The final judgment of the county court premised landlord's recovery on the
terms recited in tenant's lease with Pelican, whose obligations landlord had assumed
by assignment from the trust. The judgment awarded landlord $15,624.00 in unpaid
holdover rent after July 1, 2002, when the lease expired on its own terms, based on the
$3,600.00 monthly rental stated in the lease. In addition, and again pursuant to the
terms of the lease, the judgment awarded landlord $200.00 for two unpaid delinquent
penalty payments, and an additional $1,289.97 for the difference between property
taxes assessed for 2001-2002, the year in which the lease expired, and those assessed
in 1997, when the lease term began. The judgment thus awarded landlord $17,113.97
for total, unpaid rent under the terms stated in the lease. The judgment also awarded
landlord a total of $28,623.10 for attorney's fees, pursuant to section 24.006 of the
Property Code, section 38.001(8) of the Civil Practice and Remedies Code, and rule
752 of the Rules of Civil Procedure. Tex. Prop. Code Ann. § 24.006 (Vernon 2000);
Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8) (Vernon Supp. 2006); Tex. R. Civ.
P. 752.
Tenant superseded the judgment, in compliance with rule 749, by filing a
$52,592.16 cash deposit with the Harris County clerk, and perfected its appeal to this
Court to challenge the county court's determinations on the issue of possession and
the award of damages and attorney's fees to landlord. See Tex. Prop. Code Ann. §
24.007 (Vernon 2000). The record on appeal contains the reporter's record of the trial
on landlord's damages and attorney's fees. No party requested findings of fact and
conclusions of law, and none were filed.
No Jurisdiction to Review Possession or Issues Essential to Possession
Tenant's first issue challenges landlord's capacity to evict tenant from the
hangar premises by bringing the forcible-entry-and-detainer action. Tenant's second
issue challenges the interlocutory summary judgment awarding possession of the
hangar to landlord. Section 24.007 of the Property Code deprives this Court of
jurisdiction to address either of these issues. See Tex. Prop. Code Ann. § 24.007. (3)
Subject-matter jurisdiction cannot be conferred by consent, waiver, or estoppel
at any stage of a proceeding. See Saudi v. Brieven, 176 S.W.3d 108, 110 (Tex.
App.--Houston [1st Dist.] 2004, no pet.); Tourneau Houston, Inc. v. Harris County
Appraisal Dist., 24 S.W.3d 907, 910 (Tex. App.--Houston [1st Dist.] 2000, no pet.)
(citing Fed. Underwriters Exch. v. Pugh, 174 S.W.2d 598, 600 (Tex. 1943)). Lack
of subject-matter jurisdiction is fundamental error that this Court may properly raise
and recognize sua sponte. See Saudi, 176 S.W.3d at 113. A court's lack of
jurisdiction over the subject matter renders a judgment void and requires dismissal of
the cause. State ex rel. Latty v. Owens, 907 S.W.2d 484, 485-86 (Tex. 1995); Tex.
Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993); Saudi, 176
S.W.3d at 113.
The Texas Constitution and the Legislature vest courts of appeals with
jurisdiction over civil appeals from final judgments of district and county courts,
provided the amount in controversy or the judgment exceeds $100. Tex. Const. art.
V, § 6(a); Tex. Civ. Prac. & Rem. Code Ann. § 51.012 (Vernon 1997); Tex. Gov't
Code Ann. § 22.220(a) (Vernon 2004). See Sultan v. Mathew, 178 S.W.3d 747, 752
(Tex. 2005). The constitutionally authorized right of appeal may be limited, however,
by "such restrictions and regulations as may be prescribed by law[,]" specifically, by
legislative action. Sultan, 178 S.W.3d at 752 (quoting Tex. Const. art. V, § 6(a))
emphasis in original). Thus, "'the principle is fixed that the Legislature has the power
to limit the right of appeal.'" Id. (quoting Seale v. McCallum, 287 S.W. 45, 47 (Tex.
1926)).
Forcible-entry-and-detainer actions provide a speedy, summary, and
inexpensive determination of the right to the immediate possession of real property.
Scott v. Hewitt, 90 S.W.2d 816, 818-19 (Tex. 1936); Gibson v. Dynegy Midstream
Servs. 138 S.W.3d 518, 522 (Tex. App.--Fort Worth 2004, no pet.). In keeping with
this purpose, the Legislature has exercised its authority to limit this Court's
jurisdiction in appeals from forcible-entry-and-detainer eviction proceedings by
enacting section 24.007 of the Property Code, pursuant to which, "A final judgment
of a county court in an eviction suit may not be appealed on the issue of possession
unless the premises in question are being used for residential purposes only." Tex.
Prop. Code Ann. § 24.007 (emphasis added); see also Chang v. Resolution Trust
Corp., 814 S.W.2d 543, 545 (Tex. App.--Houston [1st Dist.] 1991) (orig. proceeding)
(declining to grant injunctive relief or writ of prohibition sought to protect pending
appellate jurisdiction because court of appeals had no pending appellate jurisdiction
to protect over judgment in forcible-entry-and-detainer action that awarded possession
of commercial property); Carlson's Hill Country Beverage, L.C. v. Westinghouse
Road Joint Venture, 957 S.W.2d 951, 952-53 (Tex. App.--Austin 1997, no pet.)
(concluding that section 24.007 precluded appellate review, not only of issue of
possession of commercial premises, but also of "any finding essential to the issue of
possession").
It is undisputed that tenant used the property at issue, a hangar on landlord's
premises, as its business location and thus exclusively for commercial purposes and
not residential purposes. After the justice court awarded possession to landlord, tenant
appealed that issue for trial de novo to the county court below, which again awarded
possession to landlord. We have no jurisdiction, therefore, to review either the county
court's determination on the issue of landlord's possession of the hangar or any
finding by the trial court that is essential to the issue of possession of the hangar. Tex.
Prop. Code Ann. § 24.007; Chang, 814 S.W.2d at 545; Carlson's Hill Country
Beverage, L.C., 957 S.W.2d at 952-53.
Tenant's first issue challenges landlord's legal capacity to bring the forcible-entry-and-detainer action to evict tenant. Tenant presented its challenges by means
of a rule 12 motion to show authority. See Tex. R. Civ. P. 12. The trial court denied
tenant's challenge and resolved this issue in favor of landlord, thus permitting landlord
to proceed in the trial de novo. Landlord's capacity, or legal authority, to proceed to
evict tenant by forcible-entry-and-detainer was thus a finding by the trial court that
was essential to the issue of possession. See Carlson's Hill Country Beverage, L.C.,
957 S.W.2d at 953. Because landlord's capacity or authority to proceed against tenant
was an essential finding on the issue of possession, section 24.007 precludes our
exercising jurisdiction to address tenant's first issue as well. (4) Tex. Prop. Code Ann.
§ 24.007; Carlson's Hill Country Beverage, L.C., 957 S.W.2d at 952-53.
Because tenant's first two issues challenge landlord's right to possess, or are
essential to landlord's right to possess, a commercial premises, we dismiss tenant's
appeal as to those two issues.
Jurisdiction--County Civil Court at Law No. 1
Tenant has submitted to the Court a supplemental letter brief, in which tenant
challenges the jurisdiction of the trial court , County Civil Court at Law No. 1, on trial
de novo. Landlord responded to these contentions at this Court's request. Tenant
contends that the county court impermissibly exceeded its jurisdiction on the trial de
novo, in violation of section 27.031 of the Government Code, because the amount of
the county court's judgment exceeded the $5,000.00 jurisdictional maximum of the
justice court. See Tex. Gov't Code Ann. § 27.031(a)(1) (Vernon 2004) (stating
jurisdictional limit of justice court); see also Garza v. Chavarria, 155 S.W.3d 252,
255, 258 Tex. App.--El Paso 2004, no pet.); Color Tile, Inc. v. Ramsey, 905 S.W.2d
620, 622 (Tex. App.--Houston [14th Dist.] 1995, no writ) (both stating that appellate
jurisdiction of county court at law confined to jurisdictional limits of justice court);
cf. Gibson, 138 S.W.3d at 521 (construing section 24.007 of Property Code as limited
to precluding review of commercial cases raising issue of possession).
To the extent that the county court may have lacked jurisdiction, this Court also
lacks jurisdiction and must dismiss tenant's cause entirely. (5) See Garza, 155 S.W.3d
at 252, 258; Color Tile, Inc., 905 S.W.2d at 622. If tenant's contention is correct, his
challenge pertains to our jurisdiction as well, and we address it for that reason, despite
tenant's having raised it for the first time on appeal. See Tex. Ass'n of Bus., 852
S.W.2d at 445; Saudi, 176 S.W.3d at 113; Garza, 155 S.W.3d at 258; Color Tile, Inc.,
905 S.W.2d at 622.
Color Tile, Inc., on which tenant relies, does not apply. Like this case, Color
Tile, Inc., began as a suit in justice court. See Color Tile, Inc., 905 S.W.2d at 621. In
contrast to the forcible-entry-and-detainer action at issue here, however, Color Tile,
Inc. was an action for a balance due on a flooring contract. See id. Although Ramsey,
the buyer, asserted defenses and counterclaims, Color Tile prevailed and recovered a
judgment for $1,179.50. Id. On appeal by trial de novo in county court, however,
Ramsey amended his pleadings to assert additional counterclaims, on which he
prevailed and recovered judgment that far exceeded the jurisdictional amount of the
justice-court judgment. See id. at 623 (citing Peek v. Equip. Serv. Co., 779 S.W.2d
802, 804 (Tex. 1989); United Fin. Corp. v. Quinn, 149 S.W.2d 148, 149 (Tex. Civ.
App.--Galveston 1941, writ dism'd). For that reason, our sister court dismissed Color
Tile's attempted appeal of the judgment awarding damages to Ramsey. Color Tile,
905 S.W.2d at 623. The El Paso Court of Appeals reached the same result in Garza,
155 S.W.3d at 258.
This case, however, arises under provisions of the Rules of Civil Procedure that
exempt appeals to county court for trial de novo from justice-court forcible-entry-and-detainer determinations from the jurisdictional-amount limitations applied in cases like
Color Tile and Garza. Part VII of the Rules of Civil Procedure is entitled "Rules
Relating to Special Proceedings." Section 3 of part VII controls forcible-entry-and-detainer actions and therefore applies to this case. Tex. R. Civ. P. 749 authorizes an
appeal from a judgment of a justice court to "the county court of the county in which
the judgment is rendered." Tenant relied on rule 749 here in perfecting its appeal to
the county court and complied with the bond required by that rule. See id.; see also
Tex. R. Civ. P. 750 (stating form for appeal bond).
Of particular importance to tenant's jurisdictional challenge here is rule 752,
which permits the prevailing party, on trial de novo to county court, to recover
"damages for withholding or defending possession of the premises during the
pendency of the appeal." See Tex. R. Civ. P. 752. "Damages may include but are not
limited to loss of rentals during the pendency of the appeal and reasonable attorney's
fees in the justice and county courts . . . ." Id.; see RCJ Liquidating Co. v. Village,
Ltd., 670 S.W.2d 643, 644 (Tex. 1984) (quoting rule 752 and predecessor statute to
Property Code section 24.007; further holding that tenant's failure to file appeal bond
deprived county court, and, therefore, appellate court, of jurisdiction).
Rule 752, which authorizes appeals by trial de novo to county court from
justice-court determinations in forcible-entry-and-detainer actions, thus authorizes
recovery of damages, "reasonable" attorney's fees, (6) and costs on trial de novo to
county court. See Tex. R. Civ. P. 752. Because rule 752 imposes no limits beyond
those stated in the rule, a judgment may, therefore, exceed the jurisdictional-amount
limitation that otherwise controls county-court adjudications on appeals by trial de
novo from justice court, as applied in Color Tile, Inc., and Garza. We therefore agree
that "nothing in the rules limits the damage claims joined in the county court to the
jurisdictional limits of the justice court." Carlson's Hill Country Beverage, 957
S.W.2d at 954; see also RCJ Liquidating Co., 670 S.W.2d at 644 (holding that court
of appeals incorrectly concluded that it and county court lacked jurisdiction due to
jurisdictional-amount limitation of justice court, but that appellate court's judgment
of dismissal was correct, because late-filed appeal bond deprived county court of
jurisdiction).
Having sued for possession and prevailed in justice court, landlord properly
relied on rule 752 to pursue its additional damages, reasonable attorney's fees, and
costs, as authorized by that rule and section 24.007 of the Property Code, without
regard to the amount-in-controversy limitation of justice court.
We overrule the challenge to the jurisdiction of the trial court presented by
tenant's supplemental letter brief.
Sufficiency of Evidence of Damages and Attorney's Fees
Tenant's third and fourth issues challenge the legal and factual sufficiency of
the evidence to support the damages awarded landlord for loss of rental value and the
attorney's fees awarded landlord.
A. Standard of Review
Neither tenant nor landlord requested postjudgment findings of fact and
conclusions of law pursuant to Tex. R. Civ. P. 296, and the trial court filed none.
Accordingly, the trial court's judgment implies all findings necessary to support it,
provided the necessary findings are raised by the pleadings and supported by the
evidence, See BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.
2002); Wade v. Comm'n for Lawyer Discipline, 961 S.W.2d 366, 374 (Tex.
App.--Houston [1st Dist.] 1997, no writ), and the decision can be sustained on any
reasonable theory consistent with the evidence and the governing law. Friedman v.
New Westbury Village Assocs., 787 S.W.2d 154, 157-58 (Tex. App.--Houston [1st
Dist.] 1990, no writ). Because the record on appeal contains a full reporter's record
of the trial, tenant may challenge the trial court's implied findings for legal and factual
sufficiency, under the same standards that govern challenges to a jury's findings. See
BMC, 83 S.W.3d at 795. (7) Tenant must, however, demonstrate that the trial court's
judgment cannot be sustained by any theory raised by the evidence. See Friedman,
787 S.W.2d at 158.
In City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005), the supreme court
reexamined the standard of review for legal-sufficiency challenges. "The final test for
legal sufficiency," concluded the court, "must always be whether the evidence at trial
would enable reasonable and fair-minded people to reach the verdict under review."
Id. at 827. "[L]egal-sufficiency review in the proper light must credit favorable
evidence if reasonable jurors could, and disregard contrary evidence unless reasonable
jurors could not." Id. If the evidence "would enable reasonable and fair-minded
people to differ in their conclusions, then jurors," and here, the trial court, as trier of
fact, "must be allowed to do so." See id. at 822. As long as the evidence falls within
the zone of reasonable disagreement, "[a] reviewing court cannot substitute its
judgment for that of the trier-of-fact." Id. at 822. Although the reviewing court must
"consider evidence in the light most favorable to the judgment, and indulge every
reasonable inference that would support it[,] . . . if the evidence allows of only one
inference, neither jurors nor the reviewing court may disregard it." Id.
In determining factual sufficiency, this Court weighs all the evidence, both
supporting and conflicting, and may set the finding aside only if it is so contrary to the
overwhelming weight of the evidence as to be clearly wrong and manifestly unjust.
Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Comm'n of Contracts v. Arriba Ltd.,
882 S.W.2d 576, 582 (Tex. App.--Houston [1st Dist.] 1994, no writ). In an appeal
from a bench trial, we may not invade the fact-finding role of the trial court, who alone
determines the credibility of the witnesses, the weight to give their testimony, and
whether to accept or reject all or any part of that testimony. Nordstrom v. Nordstrom,
965 S.W.2d 575, 580-81 (Tex. App.--Houston [1st Dist.] 1997, pet denied).
B. Damages
Tenant challenges the legal and factual sufficiency of the evidence to support
the damages awarded to landlord. Tenant asserts that the trial court should have
disregarded the testimony from Woody K. Lesikar because his testimony was
inadmissible, and that the only remaining evidence about damages was the lease,
which tenant claims is no evidence of damages.
Although not set out in findings of fact and conclusions of law, the trial court
impliedly concluded that the lease was valid and impliedly found both that tenant
breached the lease by holding over in its tenancy after the lease term expired and that
landlord was entitled to holdover damages. However, tenant asserts that the trial court
erred by admitting the lease into evidence and by considering the terms of the lease
in assessing the amount of damages awarded. Tenant cites to Hart v. Keller Props.,
567 S.W.2d 888 (Tex. Civ. App.--Dallas 1978, no writ), as authority for its claim that
the lease is inadmissible evidence. In Hart, the trial court "rendered judgment against
the lessee . . . based on a provision in the lease for a payment of three times the rent
otherwise provided as a penalty for withholding possession." Id. The court held that
the lease was inadmissible because the measure of damages is "reasonable rental
value," rather than the penalty stated in the lease. Id. But the court did not address
whether the lease was admissible as evidence of reasonable rental value. Id. at 889.
The court stated, "We do not pass on . . . whether the monthly rental provided in the
lease would be admissible as evidence of reasonable rental value . . . ." Id. at 889.
Hart, therefore, does not hold that a lease is inadmissible as evidence of reasonable
rental value. Id. We conclude that the trial court properly considered the terms in the
lease agreement between the parties as evidence of reasonable rental value for the
premises. See Standard Container Corp. v. Dragon Realty, 683 S.W.2d 45, 47 (Tex.
App.--Dallas 1984, writ ref'd n.r.e.) (holding that trial court properly awarded
damages for holdover rent that was in accordance with the monthly rate stated in the
lease agreement).
The lease provided that after the expiration of the lease, unpaid holdover rent
would be based on a $3,600.00 monthly rental, unpaid delinquency fees, and an
increase in property taxes. It is undisputed that tenant owed holdover rent from July
1, 2002, when the lease expired by its own terms, until landlord obtained its writ of
possession. Under the terms of the lease, the total amount due for unpaid rent, unpaid
fees, and property taxes was $17,113.97. The final judgment of the county court
awarded $17,113.97 in damages to landlord.
We conclude that the trial court impliedly found that the amount of reasonable
rental value for the premises was the amount set forth in the lease. The trial court thus
impliedly disregarded the testimony by Lesikar that $10,000 per month was the
reasonable rental value of the hangar. Because nothing in the record suggests that the
trial court relied on Lesikar's testimony to assess damages, we need not determine
whether the trial court erred by overruling tenant's objections to Lesikar's testimony.
On applying the legal-sufficiency standards recently stated in City of Keller, 168
S.W.3d at 827, we hold that the evidence on which the trial court relied, which was
derived from the lease terms, would enable reasonable and fair-minded persons to
award landlord the damages awarded here by the trial court. See id. at 827. Because
this evidence permits only one inference, specifically, the damages awarded to
landlord here, the trial court could not disregard it and we may not disregard it. See
id. at 814, 817. On reviewing the same evidence for factual sufficiency, we hold there
is no basis on which to conclude that the award of $17,113.97 in damages to landlord
is so contrary to the overwhelming weight of the evidence that the award is clearly
wrong and manifestly unjust. See Cain, 709 S.W.2d at 176; Arriba Ltd., 882 S.W.2d
at 582. We therefore conclude that tenant has not met its burden to demonstrate that
the trial court's judgment awarding landlord $17,113.97 in damages cannot be
sustained by any theory raised by the evidence. See Friedman, 787 S.W.2d at 158.
Having thus concluded that the evidence is both legally and factually sufficient
to support the award of $17,113.97 in damages to landlord, we overrule tenant's third
issue.
C. Attorney's Fees
Tenant's fourth issue challenges the legal and factual sufficiency of the
evidence to support the $28,623.10 award to landlord as attorney's fees. We review
these challenges under the standards and scope of review stated above. See Friedman,
787 S.W.2d at 157-58. Here, recovery of attorney's fees is permitted by section
24.006 of the Property Code, section 38.001(8) of the Civil Practice and Remedies
Code, and rule 752 of the Rules of Civil Procedure. See Tex. Prop. Code Ann. §
24.006 (Vernon 2000) (authorizing recovery of reasonable attorney's fees to landlord
evicting tenant provided statutory notice given); Tex. Civ. Prac. & Rem. Code Ann.
§ 38.001(8) (Vernon Supp. 2006) (authorizing recovery of reasonable attorney's fees
and cost to prevailing party in suit on written or oral contract); Tex. R. Civ. P. 752
(authorizing recovery of reasonable attorney's fees and costs, provided requirements
of section 24.006 of Property Code met). Because landlord prevailed on its breach-of-contract claim, the trial court had a mandatory duty to award attorney's fees pursuant
to chapter 38. See Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex. 1998). In addition,
the lease provisions authorized recovery of attorney's fees.
The trial-court judgment cites both statutes and rule 752 as authorizing the
attorney's fees award, and the judgment recites the trial court's express finding that
landlord "incurred reasonable and necessary attorney's fees in seeking and obtaining
possession of the hangar and seeking and obtaining recovery of other damages related
to obtaining possession (i.e. unpaid rent) which totaled $28,623.10." In addition, the
judgment identifies seven different proceedings in which landlord incurred attorney's
fees and specifies an award for each proceeding. These proceedings and respective
allocations of fees include the following: those before the justice court ($2,541),
pretrial proceedings in the trial court ($5,500), responding to tenant's unsuccessful
motion to show authority ($10,487.50), preparing landlord's motion for summary
judgment ($3,730), responding to tenant's unsuccessful plea in abatement ($2,354.60),
trial preparation and trial of the case to conclusion ($3,500), and posttrial matters
relating to securing entry of judgment ($1,500).
An award of attorney's fees must be supported by evidence that the fees were
both reasonable and necessary. See Stewart Title Guar. Co. v. Sterling, 822 S.W.2d
1, 10 (Tex. 1991). A trial court determines the reasonableness of an attorney's fee
award by considering the factors enumerated in Arthur Andersen & Co. v. Perry
Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) (citing Tex. Disciplinary R. Prof.
Conduct 1.04(b), reprinted in Tex. Gov't Code tit. 2, subtit. G app. (State Bar
Rules, art. X, § 9) (listing "factors that may be considered in determining the
reasonableness" of a fee, but without excluding other relevant factors)). See C.M.
Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, 801-02 (Tex. App.--Houston [1st
Dist.] 2004, no pet.) (quoting Andersen factors).
On appeal, tenant asserts that the evidence is legally insufficient because (1)
landlord's counsel's testimony impermissibly relied on the excluded billing records
and was thus inadmissible, and (2) under McFadden v. Bressler Malls, Inc., the
amount of attorney's fees awarded to landlord is "a patently unreasonable amount for
an appeal of a forcible detainer proceeding," for which no more than $1,500.00 is a
permissible recovery. See McFadden v. Bressler Malls, Inc., 548 S.W.2d 789, 790
(Tex. Civ. App.--Austin 1977, no writ). Tenant also contends that the evidence is
legally and factually insufficient to support the amount of attorney's fees awarded.
1. Impermissible Reliance on Excluded Billing Records
Tenant contends that the trial court should have disregarded the testimony of
landlord's counsel, which was the only evidence offered by landlord in support of the
award of attorney's fees. Tenant argues that counsel's testimony relied on notes that
were abstractions of landlord's counsel's billing records, which the trial court had
excluded from evidence after tenant objected that landlord did not produce those
records in response to discovery requests. Tenant contends that counsel's abstractions
from the billing records should also have been excluded from evidence.
The record shows that landlord's counsel called himself to the stand to testify
concerning landlord's attorney's fees and received the trial court's permission to
testify in narrative form. See Tesoro Petroleum Corp. v. Coastal Ref. & Mktg., Inc.,
754 S.W.2d 764, 767 (Tex. App.--Houston [1st Dist.] 1988, writ denied); Goad v.
Goad, 768 S.W.2d 356, 359 (Tex. App.--Texarkana 1989, writ denied) (noting that
when counsel has personal knowledge through representing client, counsel is qualified
to represent party at trial to give expert opinion testimony concerning attorney's fees
incurred in case). Landlord's counsel began his narrative by stating that he was
familiar with "the normal, ordinary, customary legal rates charged" to a client like
landlord in the Houston area, that he was a principal of his firm, retained to represent
landlord in this case, and that he was familiar with all proceedings in this case.
Counsel explained that he had opinions concerning "the reasonable and ordinary and
necessary" attorney's fees incurred. Continuing the narrative, counsel stated that his
opinion testimony was based on his personal knowledge, as trial counsel throughout
the proceedings of this case and as an attorney with ten years' experience in civil
litigation, of the pleadings he prepared, both on behalf of landlord and in response to
tenant's claims; the discovery between the parties; and the hearings conducted before
the trial court, particularly as necessitated by tenant's responsive pleadings, which
included the unsuccessful motions to show authority and for abatement.
Tenant's first objection was that landlord's counsel should not be permitted "to
offer any opinion as to reasonable and necessary attorney's fees" because landlord
would necessarily be testifying based on billing records that landlord had not produced
in response to discovery requests. Landlord's counsel replied that he had not relied
on a particular document, but had based his opinions on attorney's fees on his
experience and training and his "personal familiarity throughout the pendency of this
case." The trial court responded to tenant's objection as follows:
Sustain the objection in part. To the extent that any opinion that you may
render would be based upon the records that have not been produced, the
objection is sustained. I will not sustain it to the extent of precluding you from
testifying outside of those records.
After the trial court announced this ruling, landlord's counsel began to testify from
memory, based on notes written on a pad. Counsel then stated his opinion that
$28,622.20 was a "reasonable, necessary, and ordinary" amount for attorney's fees and
explained that the amount excluded fees expended in the earlier district-court action.
Counsel proceeded to state that his work as an attorney in this case could be broken
down into six different segments and that $2,541.00 and $5,500 were the reasonable
and necessary fees for the justice court segment and the defensive response to tenant's
challenge to the justice court's ruling, respectively.
After that testimony, tenant challenged landlord's counsel's use of his notepad
as "a summary of [his] attorney's fees in this case" and obtained the trial court's
permission to conduct a voir-dire examination of landlord's counsel. In response to
tenant's questioning, landlord's counsel stated that he had no summary, that there was
no underlying document that would be offered into evidence, that the note pad
contained only his notes, and that he was familiar with his billing statements, but did
not review them in preparing the notes from which he was testifying. Landlord's
counsel explained that he was familiar with what he had charged throughout the
proceeding. Following the voir-dire examination by tenant's counsel, landlord's
counsel concluded his narrative testimony by stating that he had based his opinions
concerning the reasonable, necessary and ordinary attorney's fees in this case on his
"knowledge of and familiarity with the aspects concerning attorney's fees set forth in
Rule 1.04 of the Texas rules governing lawyers."
Though tenant objected to landlord's counsel's testimony, on the grounds that
it included abstractions from the excluded billing records, the trial court never ruled
on the objections. See Tex. R. App. P. 33.1(a)(2)(A) (requiring ruling by trial court to
preserve error on appeal). Because tenant did not obtain a ruling on its objection to
the admissibility of landlord's counsel's testimony, tenant may not, through its
sufficiency challenge, contend on appeal, that the trial court should have disregarded
that testimony. Id.
2. McFadden Does Not Apply
On appeal, as at trial, tenant challenges counsel's request for attorney's fees by
asserting that it was unreasonable as a matter of law under McFadden, which held that
an "award of attorney's fees in excess of $1,500 is excessive." See McFadden, 548
S.W.2d at 790.
We note at the outset that, in responding to tenant's trial-court challenges,
landlord's counsel distinguished McFadden from this case by stating,
I think in a general sense the [McFadden] Court is absolutely right[,] but
in this specific sense, no. What they were describing, unfortunately, is
not what happened in this case primarily because you and your client
endeavored to make this a[s] complicated and lengthy [a] process for my
client as you possibly could.
We agree that McFadden is factually distinguishable. As the opinion reflects, the
McFadden case involved a simple detainer action, decided almost 30 years ago, that
resulted in an award of attorney's fees deemed reasonable at that time. See id. at
789-90. Nothing in McFadden suggests that the tenant in that case opposed the
landlord's eviction by asserting challenges like those presented by tenant here. Of the
total fees awarded in this case, approximately $5,000, or one-fifth of the total fees, was
attributed to landlord's counsel's preparing and filing oppositions to tenant's motions
to show authority and for abatement.
Moreover, the McFadden trial court based the award solely on rule 752 and
what is now section 24.006 of the Property Code. See McFadden, 548 S.W.2d at 790.
In this case, the county court also relied on chapter 38, of which section 38.003 is part.
See Tex. Civ. Prac. & Rem. Code Ann. § 38.003 (Vernon 1997). Pursuant to section
38.003, proof that the fees requested are "usual and customary," as provided by
landlord's counsel here, gives rise to a statutory presumption that the usual and
customary fees requested are reasonable. See id.; Gen. Elec. Supply Co. v. Gulf
Electroquip, Inc., 857 S.W.2d 591, 601 (Tex. App.--Houston [1st Dist.] 1993, no
writ). We conclude that McFadden does not apply and therefore conclude that tenant
may not rely on McFadden to assert that the $28,623.10 awarded as attorney's fees is
unreasonable as a matter of law.
3. Amount of Attorney's Fees
Tenant also asserts that the evidence is legally and factually insufficient to
support the $28,623.10 award for attorney's fees, because the amount is unreasonable.
The reasonableness of an attorney's fee award generally presents a question of fact.
See Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex. 1990);
Tesoro, 754 S.W.2d at 767. "Ordinarily, the allowance of an attorney's fees rests with
the sound discretion of the trial court and will not be reversed without a showing of
abuse of that discretion." Id. at 881.
Landlord's counsel's testimony detailed the six segments of work he performed
in representing landlord. His testimony cited the experience and expertise on which
he relied in representing landlord and in forming his opinion that the fees requested
for his work were reasonable, necessary, and ordinary. Landlord's counsel further
documented the necessity of the fees by demonstrating the need to respond to tenant's
motions to show authority and for abatement. He attested to his knowledge of and
familiarity with both the proceedings in this case and the factors that govern an award
of attorney's fees stated in rule 1.04 of the State Bar Rules. He further explained that
he relied on those factors in determining that the attorney's fees he requested were
reasonable, necessary, and ordinary. See Arthur Andersen & Co., 945 S.W.2d at 818.
In testifying as an expert on attorney's fees in response, tenant's counsel offered
his opinion that an attorney's fee in excess of $2,500 "would be unwarranted and
unjustified in the matters regarding possession only." Tenant's attorney explained that
attorney's fees greater than $2,500 are excessive because (1) under controlling case
law, it is never appropriate for attorney's fees to exceed $2,500 for this type of case,
and (2) the trial court should not have compensated landlord for fees incurred
regarding "ancillary motions" that did not relate solely to possession. The "ancillary
motions" to which tenant's counsel referred specifically were landlord's response to
the motion to show authority, filed by tenant, which resulted in attorney's fees of
$10,487.50 according the judgment, and landlord's response to the plea in abatement,
also filed by tenant, which resulted in attorney's fees of $2,354.60 according to the
judgment.
Tenant's attorney's assertion that case law limits attorney's fees to $2,500
derives from the McFadden case. In distinguishing McFadden above, we rejected
tenant's contention that case law limits attorney's fees to a specific, minimal amount
in every case. Case law, therefore, does not limit attorney's fees in this case to $2500,
as tenant suggests.
Tenant also contends that the trial court abused its discretion by awarding
attorney's fees based merely on the testimony of landlord regarding the motion to
show authority and the plea in abatement, which tenant disputed. The record,
however, shows that the trial court had more than this disputed testimony. The record
includes (1) the motion to show authority filed by tenant, (2) the plea in abatement
filed by tenant, (3) landlord's eight-page written response to tenant's plea in
abatement, (4) the trial court's written order granting the motion to show authority,
and (5) the trial court's oral order denying the plea in abatement after a hearing. The
trial court, therefore, had documents that were part of the record in this case, that were
consistent with the testimony from landlord's counsel concerning his work performed
in this matter.
We conclude that the record shows that the trial court could have reasonably
determined that the actions taken by landlord, in responding to the motion to show
authority and plea in abatement, were reasonable and necessary, in accordance with
the Anderson factors and rule 1.04(b) of the Disciplinary Rules of Professional
Conduct, for landlord to pursue possession of the premises. See Tex. Prop. Code
Ann. § 24.006; Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8); Tex. R. Civ. P. 752
(all cited in trial court's judgment); authorizing recovery of reasonable attorney's fees
and costs, provided requirements of section 24.006 of Property Code met); see also
Arthur Anderson & Co., 945 S.W.2d at 818 (citing Tex. Disciplinary R. Prof.
Conduct 1.04(b), reprinted in Tex. Gov't Code tit. 2, subtit. G app. (State Bar
Rules, art. X, § 9) (listing "factors that may be considered in determining the
reasonableness" of a fee, but without excluding other relevant factors)); C.M. Asfahl
Agency, 135 S.W.3d at 801-02 (quoting Andersen factors).
The remainder of landlord's evidence on attorney's fees, which concerns the
reasonableness of the fees charged to perform the services and the amount of time to
perform the services, remained undisputed. The trial court did not abuse its discretion,
therefore, by awarding fees in amounts provided by landlord's attorney, an
undisputedly interested witness, because that evidence was "clear, direct and positive,
and not contradicted by any other witness or attendant circumstances" or
circumstances that tend to cast suspicion on the evidence. See Ragsdale, 801 S.W. 2d
at 882.
As noted above, the trial court had a mandatory duty to award landlord
attorney's fees, based on its having prevailed on its breach-of-contract claim. See
Bocquet, 972 S.W.2d at 20. On applying the standards for legal-sufficiency review
stated in City of Keller, 168 S.W.3d at 827, and considering the record based on those
standards, the record within the statutory framework of chapter 38, and the undisputed
evidence in the record, we hold that the evidence is legally sufficient for reasonable
and fair-minded persons to award landlord $28,623.10 as reasonably necessary fees
for this matter.
On reviewing the record to analyze the factual sufficiency of the evidence
before the trial court, which we also consider within the statutory framework of
chapter 38 and the undisputed evidence in the record, we hold that there is no basis on
which to conclude that the award of $28,623.10 as reasonably necessary fees is so
contrary to the overwhelming weight of the evidence that the award is clearly wrong
and manifestly unjust. See Cain, 709 S.W.2d at 176; Arriba Ltd., 882 S.W.2d at 582.
We therefore conclude that tenant has not met its burden to demonstrate that the trial
court's judgment awarding landlord $28,623.10 in attorney's fees cannot be sustained
by any theory raised by the evidence. See Friedman, 787 S.W.2d at 157-58.
We overrule tenant's fourth point of error.
Conclusion
We dismiss tenant's appeal with respect to its first two issues, which
impermissibly challenge landlord's right of possession. In all other respects, we
affirm the judgment of the trial court.
Elsa Alcala
Justice
Panel consists of Chief Justice Radack and Justices Alcala and Bland.
1. See Tex. Prop. Code Ann. § 24.007 (Vernon 2000).
2. Tenant did not seek a new trial in justice court. See Tex. R. Civ. P. 566, 749.
3. On April 14, 2006, in compliance with Tex. R. App. P. 42.3(a), we issued an order in
which we notified the parties that it appeared to this Court, from our review of the
record before us, that we have no jurisdiction to consider tenant's first two issues,
pursuant to Tex. Prop. Code Ann. § 24.007 (Vernon 2000).
4. Tenant's challenges do not contest landlord's standing to sue, but, rather, landlord's
legal capacity or authority to proceed as a party. A party has capacity or authority
and is thus a proper party when the party has the legal authority to act. Austin Nursing
Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848-49 (Tex. 2005) (citing Nootsie, Ltd. v.
Williamson County Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996)) As in the trial
court, tenant's challenges question landlord's legal authority to act on behalf of the
trust in claiming to have purchased the airport hangar in November 2001 and to have
assumed management rights as landlord. As in the trial court, tenant's challenges do
not question standing, which may be asserted for the first time on appeal to question
whether a party has an enforceable right or interest that can actually be determined by
the judicial remedy sought. See id. at 849. See also id. at 849 & n.1 (noting case law
that has blurred distinction between standing and capacity).
5. Tenant incorrectly contends that it would be entitled to a reversal if the county court
lacked jurisdiction.
6. Rule 752's authorization of recovery of attorney's fees states that, "the requirements
of Section 24.006 of the Texas Property Code have been met." Tex. R. Civ. P. 752;
see Tex. Prop. Code Ann. § 24.006 (Vernon 2000) (governing "Attorney's Fees and
Costs of Suit"). Landlord's compliance with section 24.006 is not at issue here.
7. In a case tried to the court, the appealing party need not file a motion for new trial to
preserve legal or factual-sufficiency points on appeal. Vannerson v. Vannerson, 857
S.W.2d 659, 677 n.8 (Tex. App.--Houston [1st Dist.] 1993, writ denied); see also In
re Marriage of Parker, 20 S.W.3d 812, 816 (Tex. App.--Texarkana 2000, no pet.)
(stating same); O'Farrill Avila v. Gonzalez, 974 S.W.2d 237, 248 (Tex. App.--San
Antonio 1998, pet. denied) (holding that party to case tried to trial court need not
preserve legal or factual sufficiency points).
|
855 So.2d 489 (2003)
Ex parte THIRD GENERATION, INC.
(In re Stephen M. Wilson v. Benjamin F. Harbin III, individually, and Third Generation, Inc.).
1000471.
Supreme Court of Alabama.
February 7, 2003.
*490 William A. Ratliff, Jay H. Clark, and Michael L. Jackson of Wallace, Jordan, Ratliff & Brandt, L.L.C., Birmingham, for petitioner.
John O. Cates of Wilmer & Lee, P.A., Huntsville, for respondent Stephen M. Wilson.
Laura W. Hamilton, Circuit Judge, Huntsville.
HOUSTON, Justice.
This petition for a writ of mandamus represents the third time this case has been before us. The case was tried in 1993, and a judgment was entered on a jury verdict awarding $125,000 to Third Generation, Inc. ("TGI"), on its claims against Stephen M. Wilson, and $15,500 to Wilson on his claims against TGI and Benjamin F. Harbin III. The trial court subsequently granted a new trial, but we reversed that decision and ordered the trial court to reinstate the judgment on the jury's verdict. Third Generation, Inc. v. Wilson, 668 So.2d 518 (Ala.1995).
We later granted TGI's petition for a writ of mandamus and directed the trial court to set aside its November 8, 2000, order granting Wilson's Rule 60(b)(3), Ala. R. Civ. P., motion[1] and compelling TGI to accept worthless inventory as partial satisfaction of its judgment against Wilson. Ex parte Third Generation, Inc., 820 So.2d 89 (Ala.2001). The trial court then issued two orders dated March 8, 2002, and May 13, 2002. The March 8 order limited TGI's postjudgment interest to approximately 19 months. However, the May 13 order, granted in response to Wilson's April 8, 2002, Rule 60(b)(4), Ala. R. Civ. P., motion,[2] set aside the judgment on the grounds that it was "void" and ordered a new trial.
TGI now seeks a writ of mandamus directing the trial court (1) to vacate the March 8 and May 13 orders and (2) to *491 enter an order reinstating the judgment on the jury verdict with postjudgment interest to run from June 15, 1993the date of the original entry of judgment on the jury verdict[3]to the present. However, TGI's request for mandamus relief from the March 8 order is unnecessary because in its May 13 order the trial court vacated the March 8 order. Therefore, we need address only the issue whether TGI is entitled to a writ of mandamus with respect to the May 13 order.
I. Analysis
To be successful, TGI must demonstrate "(1) a clear legal right ... to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court." Ex parte Integon Corp., 672 So.2d 497, 499 (Ala. 1995). If either the trial court's original judgment on the jury verdict was not "void" or Wilson's Rule 60(b)(4) motion was not filed within "a reasonable time" after the judgment became final as required of motions filed under Rule 60(b)(4), then it is apparent not only that TGI would have a clear legal right to have the May 13 order set aside, but also that the other prerequisites for mandamus relief would be met. Therefore, because we hold that the judgment entered on the jury verdict was not void, TGI is entitled to a writ of mandamus.
As discussed in our 1995 opinion, the jury awarded TGI $0 in compensatory damages and $125,000 in punitive damages on TGI's fraudulent-suppression claim against Wilson. Third Generation, 668 So.2d at 521. If such a verdict were awarded today, the losing party would certainly be entitled to a new trial based on our decision in Life Insurance Co. of Georgia v. Smith, 719 So.2d 797 (Ala.1998). In Smith, we stated that in order to be consistent with due process, "a jury's verdict [must] specifically award either compensatory damages or nominal damages in order for an award of punitive damages to be upheld." 719 So.2d at 806 (citing BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996)). However, at the time the judgment was entered on the jury's verdict in this case June 15, 1993such an award was acceptable. See First Bank of Boaz v. Fielder, 590 So.2d 893 (Ala.1991).[4]
In its May 13 order, the trial court granted Wilson's motion under Rule 60(b)(4), Ala. R. Civ. P., on the basis that the jury's verdict was inconsistent under Smith and that it thereby violated his due-process rights. The order cites Satterfield v. Winston Industries, Inc., 553 So.2d 61, 64 (Ala.1989), in which this Court stated:
*492 "The standard of review on appeal from the denial of relief under Rule 60(b)(4) [Ala. R. Civ. P.] is not whether there has been an abuse of discretion. When the grant or denial of relief turns on the validity of the judgment, as under Rule 60(b)(4), discretion has no place. If the judgment is valid, it must stand; if it is void, it must be set aside. A judgment is void only if the court that rendered it lacked jurisdiction of the subject matter or of the parties, or if it acted in a manner inconsistent with due process."
(Citing Pollard v. Etowah County Comm'n, 539 So.2d 225 (Ala.1989), and Cassioppi v. Damico, 536 So.2d 938 (Ala. 1988).) (Emphasis added.) Essentially, in its May 13 order the trial court ruled that because the jury verdict violated Wilson's substantive due-process rights as described in Smith, the judgment entered on that verdict was void and the court, therefore, had an express duty to grant the requested relief. The order relied not solely on Smith, but also on BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), which provided the foundation for our decision in Smith.[5]
The main issue presented by this mandamus petition is whether the trial court's grant of Wilson's Rule 60(b)(4) motion for a new trialfiled nine years after the original judgment was enteredwas proper based on the reasoning in Smith.[6] Wilson contends (1) that his motion was filed within a reasonable time after the entry of judgment because, when he filed the motion, the case was still "pending" in that the manner of collecting the judgment was still in dispute, and (2) that the trial court had no discretion in ruling on his motion and had to grant the motion based on the due-process violation.
We agree with Wilson on only one point: a trial court's ruling on a Rule 60(b)(4) motion involves no discretion; whether a judgment is void is purely a matter of law, and a trial court must grant a properly presented Rule 60(b)(4) motion filed in response to a void judgment. However, we do not agree that the judgment was void, a conclusion that pretermits any discussion of whether the motion was filed within a reasonable time.
As stated above, Satterfield includes in the definition of a "void" judgment for purposes of Rule 60(b)(4) those judgments in which the trial court has "acted in a manner inconsistent with due process." 553 So.2d at 64. However, as we recently discussed in Neal v. Neal, 856 So.2d 766 (Ala.2002), the term "due process," in the context of providing a foundation for declaring a judgment void, refers to procedural, rather than substantive, due process:
"`[I]t is established by the decisions in this and in Federal jurisdictions that due process of law means notice, a hearing according to that notice, and a judgment entered in accordance with such notice and hearing.'
*493 "Frahn v. Greyling Realization Corp., 239 Ala. 580, 583, 195 So. 758, 761 (1940) (emphasis added [in Neal]). The rule that a want of due process, so defined, voids a judgment is not redundant with the rule that a want of personal jurisdiction likewise voids a judgment, for a person already effectively made a party to litigation could, on some critical motion or for some critical proceeding within that litigation, be deprived of the `notice, a hearing according to that notice, and a judgment entered in accordance with such notice and hearing,' required by the Due Process Clause of the Fourteenth Amendment to the United States Constitution, Frahn, supra. See Winhoven v. United States, 201 F.2d 174 (9th Cir.1952), Bass v. Hoagland, 172 F.2d 205 (5th Cir.1949), Cassioppi [v. Damico, 536 So.2d 938 (Ala.1988)], and Seventh Wonder [v. Southbound Records, Inc., 364 So.2d 1173 (Ala.1978) ].
Neal, 856 So.2d at 781-82.
Because our decision in Smith was based on substantive due-process grounds (following the lead of the United States Supreme Court's BMW decision), the Smith rationale may not be used as a ground for declaring a judgment void under Rule 60(b)(4). Therefore, the original judgment entered on the jury's verdict was not void, and the trial court erred in granting Wilson's Rule 60(b)(4) motion.
II. Conclusion
For the reasons stated above, TGI is entitled to a writ of mandamus. Therefore, we issue the writ and order the trial court (1) to vacate its order of May 13, 2002, and (2) to reinstate the June 15, 1993, original judgment on the jury's verdict with, as the trial court ordered on March 11, 1996, postjudgment interest to be awarded at the statutory rate from June 15, 1993, to the time the judgment is paid. See Raines v. Williams, 397 So.2d 86 (Ala.1981); Berry v. Druid City Hosp., 333 So.2d 796 (Ala.1976).
PETITION GRANTED; WRIT ISSUED.
MOORE, C.J., and SEE, LYONS, BROWN, JOHNSTONE, HARWOOD, WOODALL, and STUART, JJ., concur.
NOTES
[1] While Wilson had purportedly filed his motion pursuant to Rules 60(b)(3) and 60(b)(6), we noted that, given the substance of his motion (which was based upon alleged perjury), the motion was properly filed pursuant only to Rule 60(b)(3). See Ex parte Third Generation, Inc., 820 So.2d 89, 90 (Ala.2001).
[2] Although the motion was not styled as a Rule 60(b)(4) motion, the parties agree that the trial court correctly treated Wilson's motion for a new trial as a Rule 60(b)(4) motion.
[3] Our 1995 opinion erroneously gave this date as "June 14, 1993." Third Generation, Inc. v. Wilson, 668 So.2d at 521.
[4] TGI argues that the matter of the inconsistent verdict was resolved on appeal in 1995 and is nowregardless of any later-determined due-process problems"the law of the case." See Third Generation, Inc. v. Wilson, 668 So.2d at 521-22. While not raised by the parties, one of the difficulties with TGI's law-of-the-case argument is Ala.Code 1975, § 12-2-13, which appears to negate any binding effect of the "law-of-the-case" doctrine as it applies to this Court:
"The Supreme Court, in deciding each case when there is a conflict between its existing opinion and any former ruling in the case, must be governed by what, in its opinion, at that time is law, without any regard to such former ruling on the law by it; but the right of third persons, acquired on the faith of the former ruling, shall not be defeated or interfered with by or on account of any subsequent ruling."
However, our disposition of this petition obviates the need to address this issue.
[5] The May 13 order especially relies upon the United States Supreme Court's statement that "[t]o punish a person because he has done what the law plainly allows him to do is a due process violation of the most basic sort." Bordenkircher v. Hayes, 434 U.S. 357, 363, 98 S.Ct. 663, 54 L.Ed.2d 604 (1978)(quoted in BMW at 517 U.S. at 573 n. 19, 116 S.Ct. 1589).
[6] In Smith, we specifically stated that the "new" rule requiring an award of some compensatory or nominal damages as a prerequisite for an award of punitive damages would "not be applied so as to require reversal and the rendering of a judgment for the defendant in any case tried before [July 17, 1998]." 719 So.2d at 807 (emphasis added).
|
41 Mich. App. 508 (1972)
200 N.W.2d 369
WILLARD
v.
DORE.
Docket No. 11639.
Michigan Court of Appeals.
Decided June 26, 1972.
Halbower, Ruck & Flynn, for plaintiff.
Cholette, Perkins & Buchanan (by Edward D. Wells), for defendant.
Before: HOLBROOK, P.J., and T.M. BURNS and BORRADAILE,[*] JJ.
Leave to appeal denied, 388 Mich 777.
BORRADAILE, J.
Plaintiff Leona Willard, a farm worker, was injured while picking apples when she fell off a 16-foot ladder provided by defendant, Gayle M. Dore. Plaintiff claimed that defendant *509 was negligent in not determining if the ladder was unsafe. The jury found for plaintiff in the amount of $10,000. Defendant appeals as of right.
Defendant contends that the trial court erred in not granting his motion for directed verdict based on the applicability of the simple-tool doctrine. The rationale of the simple-tool doctrine was stated in Rule v Giuglio, 304 Mich 73, 79-80 (1942):
"The next and most serious question is whether or not the ladder furnished by defendant and used by plaintiff at the time of the accident was within the classification of a simple tool. If such ladder was not a simple tool, it was defendant's duty to make proper inspection and necessary repair thereof and to furnish plaintiff with a reasonably safe ladder to do the painting work. However, defendant would not be under such duty to plaintiff if the ladder used was within the classification of a simple tool, because under the simple-tool doctrine plaintiff would be as well qualified as defendant to examine such ladder, to detect defects therein, and to judge the probable danger of using it."
In delineating the applicability of the simple-tool doctrine, the Michigan Supreme Court stated in Rule, p 82, that:
"`What is, or is not, a simple tool under the rule stated, and the duty to inspect if it is not, depends much upon the use to which it is to be put by the employee. His age, his incapacity to appreciate danger, the nature of the employment, his familiarity with the work to be done, these and many other things may be considered in determining the obligation resting on the employer to make inspection. His nonliability in such cases rests upon the assumption that the employee is in as good, if not better, position to observe the defect as the employer. Meyer v Ladewig, 130 Wis 566 (110 NW 419, 13 LRA [NS] 684).'"
*510 On the basis of this test, the Rule Court held that plaintiff's previous use of the ladder in question had given him sufficient knowledge of its condition to allow the simple-tool doctrine to apply. Similarly, in Pawlowski v Van Pamel, 368 Mich 513 (1962), the other leading case in Michigan on the simple-tool doctrine, plaintiff's knowledge of the condition of a defective ladder was used to justify the applicability of the simple-tool doctrine.
In instructing the jury, the trial judge recognized that there was conflicting testimony as to whether or not the ladder was a simple tool. He, therefore, instructed the jury that the determination of whether or not plaintiff was qualified to detect the defects in the ladder, whether or not plaintiff was qualified to judge the probable danger of the defect in using the ladder, and whether or not the defect itself was observable by ordinary observation, were all questions of fact which a jury should determine.
We believe the record supports the trial judge's decision that the issue of whether or not the ladder was a simple tool was a question of fact for the jury. Unlike the Rule and Pawlowski cases, there was sufficient evidence to support the plaintiff's contention that the ladder was of a unique design and that she lacked the prior knowledge and the ability to determine if the ladder was defective.
Affirmed. Costs to plaintiff.
All concurred.
NOTES
[*] Former circuit judge, sitting on the Court of Appeals by assignment pursuant to Const 1963, art 6, § 23 as amended in 1968.
|
160 S.E.2d 76 (1968)
273 N.C. 348
STATE of North Carolina
v.
Alton Bryant KELLUM.
No. 168.
Supreme Court of North Carolina.
March 20, 1968.
*77 Donald P. Brock, Trenton, for defendant appellant.
Thomas Wade Bruton, Atty. Gen., by William W. Melvin, Asst. Atty. Gen., and T. Buie Costen, Raleigh, Staff Atty., for the State.
PER CURIAM.
G.S. § 20-138 makes it unlawful for any person, whether licensed or not, who is under the influence of intoxicating liquor to drive any vehicle upon the highways within this State. The three elements of the offense are (1) driving a vehicle, (2) upon a highway within the State, (3) while under the influence of intoxicating liquor. State v. Haddock, 254 N.C. 162, 118 S.E.2d 411.
All the evidence points unerringly to the conclusion that defendant operated a vehicle along highway 17 in arriving at the Eubanks home. The only vehicular entrance to that home was the driveway connected with said highway. Mr. Eubanks saw the car enter his premises. In response to the horn he went to the rear of the house and observed defendant to be the driver and only occupant of the car. Defendant himself says he was so drunk he has no idea where he was or how he got there. The circumstances revealed by the record are, as stated by Parker, J., now C. J., in State v. Lowther, 265 N.C. 315, 144 S.E.2d 64, "consistent with the hypothesis that the accused is guilty, and at the same time are inconsistent with the hypothesis that he is innocent and with every other reasonable hypothesis except that of guilt."
No other verdict could have been rendered on the evidence. Prejudicial error does not appear.
No error.
|
Case: 14-40851 Document: 00513309071 Page: 1 Date Filed: 12/15/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 14-40851
Conference Calendar
United States Court of Appeals
Fifth Circuit
FILED
December 15, 2015
UNITED STATES OF AMERICA,
Lyle W. Cayce
Clerk
Plaintiff-Appellee
v.
LEOPOLDO GARCIA-MALDONADO,
Defendant-Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 7:14-CR-216-1
Before JONES, SOUTHWICK, and COSTA, Circuit Judges.
PER CURIAM: *
The Federal Public Defender appointed to represent Leopoldo Garcia-
Maldonado has moved for leave to withdraw and has filed a brief in accordance
with Anders v. California, 386 U.S. 738 (1967), and United States v. Flores, 632
F.3d 229 (5th Cir. 2011). Garcia-Maldonado has not filed a response. We have
reviewed counsel’s brief and the relevant portions of the record reflected
therein. We concur with counsel’s assessment that the appeal presents no
* 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: 14-40851 Document: 00513309071 Page: 2 Date Filed: 12/15/2015
No. 14-40851
nonfrivolous issue for appellate review. Accordingly, counsel’s motion for leave
to withdraw is GRANTED, counsel is excused from further responsibilities
herein, and the APPEAL IS DISMISSED. See 5TH CIR. R. 42.2.
2
|
164 S.E.2d 301 (1968)
In re ESTATE of Paul S. THACKER (Claim of Beulah Mallow).
No. 12717.
Supreme Court of Appeals of West Virginia.
Submitted September 17, 1968.
Decided November 19, 1968.
*302 George I. Sponaugle, Franklin, for plaintiff in error.
Ralph W. Haines, Romney, for defendant in error.
HAYMOND, Judge:
Ben H. Hiner, Executor of the Will of Paul S. Thacker, deceased, prosecutes this writ of error to the final judgment of the Circuit Court of Pendleton County, West Virginia, rendered August 9, 1967, in favor of Beulah Mallow against the estate of Paul S. Thacker, deceased, in the sum of $4,200.00 with interest and costs. To that judgment this Court granted this writ of error upon the application of the executor.
By an order of the County Court of Pendleton County the estate of Paul S. Thacker, deceased, was referred to William McCoy, Jr., Commissioner of Accounts of the County Court, for settlement as provided by Section 1, Article 2, Chapter 44, Code, 1931, as amended. The claimant, Beulah Mallow, filed her verified claim before the commissioner in the *303 amount of $11,865.00. The claim consisted of $10,800.00 for personal services rendered Thacker from August 1, 1963 to January 21, 1966 and $1,065.00 for an automobile which according to the claimant he promised to give her. The items of the claim for personal services were for part time services from August 1, 1963 to August 1, 1965 at the rate of $300.00 per month, amounting to $7,200.00, and for intensive care and services from August 1, 1965 to January 21, 1966 at the rate of $600.00 per month, amounting to $3,600.00, and aggregated the sum of $10,800.00.
The matter was heard by the commissioner on December 10, 1966, at which time the claimant and fifteen other witnesses testified in her behalf, and Ben H. Hiner, executor of the will of Paul S. Thacker, deceased, and Constance Thacker, the beneficiary under the will, and Evelyn W. Thacker, the former wife of the decedent, testified in opposition to the claim and in behalf of the estate. The commissioner found in favor of the claimant and awarded her $500.00 for services at the rate of $20.00 per week for twenty five weeks. On behalf of the estate the executor excepted to this finding on the ground that the claimant had failed to prove any contract, express or implied, by which she was to be compensated for her services and that she had failed to prove any claim against the estate; and the claimant excepted to the report on the ground that the amount allowed was inadequate for the services rendered. No exception was filed by the claimant with respect to the item of $1,065.00 for the automobile which appears to have been abandoned by her. On May 20, 1967, the county court confirmed the report of the commissioner and the claimant appealed to the Circuit Court of Pendleton County.
On August 9, 1967 the proceeding was heard by the circuit court upon the evidence taken before the commissioner of accounts, the ruling and the report of the commissioner and the exceptions to the report, and the order of the county court and the exceptions to the order. The circuit court found that the claimant rendered valuable personal services to Paul S. Thacker, in his lifetime, that she was entitled to recover for such services the sum of $4,500.00, less a credit of $300.00 which she had received, that the balance of $4,200.00 was due and owing to her from the estate of Paul S. Thacker, deceased, and rendered judgment in her favor against the estate in that amount with interest and costs. To that judgment this Court granted this writ of error upon the application of the executor.
The principal errors assigned by the executor are the action of the commissioner of accounts and the circuit court in holding (1) that the testimony of the claimant in support of her claim was admissible; and (2) that the evidence in behalf of the claimant was sufficient to prove her claim.
Paul S. Thacker, who had practiced the profession of dentistry in Franklin, Pendleton County, West Virginia, for several years, died testate while a resident of that county on January 25, 1966. The principal beneficiary in his will, which was probated and recorded January 28, 1966, was his daughter Constance Thacker, and Ben H. Hiner was appointed and qualified as executor. The estate consisted of real estate of the value of $20,000.00 and personal property of the value of $17,376.11, or a total of $37,376.11 subject to an undisputed indebtedness of approximately $4,500.00, exclusive of the claim of Beulah Mallow.
The claimant and Paul S. Thacker had been childhood sweethearts and after his marriage their association together led to litigation between him and his wife, in which she obtained a divorce. After the divorce he lived alone in his residence in Franklin and during the last thirty months of his life the claimant rendered the services for which she seeks compensation. Thacker drank heavily and during his later years was a pronounced alcoholic and because of ill health he engaged in little or no practice for some time before his death on January 25, 1966. The evidence of the *304 claimant and fifteen other witnesses in her behalf shows clearly that during the period of approximately thirty months before his death the claimant performed services consisting of ordinary housekeeping, cooking, cleaning and laundry work, services similar to those of a practical nurse and secretarial services in connection with his office, such as making appointments, keeping books, writing checks, and preparing tax reports, and that he needed all such services. Though the executor contends that the claimant rendered the services gratuitously with the expectation of marrying Thacker, her testimony was that, though at first she did not intend to charge for her services, she did intend to do so before and during the thirty month period. She testified that he wanted to marry her but that she refused to consider marriage until and unless he stopped drinking which he never did, and the executor testified that Thacker told him on two occasions that he would not marry the claimant because he did not believe that she would be true to him. There is no evidence that any other person performed any services for Thacker during the thirty month period and no witness in behalf of the estate denies that the claimant performed the services for which she seeks compensation. The evidence also shows that Thacker requested her services.
Dr. R. L. Thacker, the eighty-nine year old father of Paul S. Thacker, testified that his son drank heavily for the last thirty months of his life, that this affected him physically and caused him to suffer from various ailments; that the claimant cared for his son and performed personal services for him during that period of time; that she administered to his personal needs and comfort, took care of his business to a limited extent and performed such household duties as house cleaning and preparation of meals; and that to his knowledge no other person rendered services to his son. He also testified that he never saw anything improper in the relationship between his son and the claimant. A close friend of Thacker, who occupied a place of business near Thacker's dental office, testified that the claimant began to perform services for Thacker about thirty months before his death; that he saw her in the office taking care of book work, cleaning the office, and working in his home; and that Thacker told the witness that the claimant brought and fixed his food and did his laundry and house work. Another friend of Thacker testified that in a conversation about a month before his death Thacker stated that he was going to give the claimant a car and was going to change his will to make it worthwhile for what she had done for him. A woman employed by the claimant testified that the prevailing rate in that locality for the kind of services rendered by the claimant was $1.00 per hour, that the average wage for such services was $7.00 per day, and that sometime before his death Thacker had told the witness that he intended to see that the claimant was paid for the time she had lost in caring for him. A local businessman testified that in a conversation in the fall of 1964 Thacker said that the claimant had been good to him and that he was going to make some arrangements to take care of her and give her property or cash or something. A woman who lived near the residence of Paul S. Thacker testified that Thacker was suffering from sickness, alcoholism and other troubles for thirty months before his death; that she saw him ill in the yard and also saw him lie on his kitchen floor; that she saw the claimant care for him and perform household duties; and that the wages which she and most other people paid for domestic services was $5.00 per day.
In opposition to the claim the executor testified that in the divorce suit between Thacker and his wife the claimant was named co-respondent; that the witness had two conversations with Thacker concerning the claimant after the will was written and that Thacker made a direct statement to him that the claimant wanted to marry him but that he had no desire to marry her or anybody else and did not intend to do so; and that at the time of one conversation Thacker was drunk and at the time of the *305 other conversation he was sober. On cross-examination he testified that on two or three occasions when he was called by Thacker to his residence the claimant was there but that he did not see her prepare any meals for Thacker or clean his clothes; and that during the two and a half years before Thacker's death the witness saw the claimant at his home probably three or for times. Constance Thacker, the daughter of Paul S. Thacker and the beneficiary under the will, testified that after the divorce she visited the home of her father several times; that the condition of the house was filthy; that no person other than Thacker's father was present when she visited her father's home, and that when she visited his home after his death it was in the same condition. She stated that on one occasion when she visited her father's home he was ill; that the claimant was there but that she did not do anything to help in sending her father to Weston; and that the claimant left immediately after the witness came to her father's home. She also testified that she did not feel kindly toward the claimant and was prejudiced against her.
In his defense against the claim the executor does not assert that the claimant did not render the services for which she seeks compensation. Instead the principal contention in behalf of the estate is that such services were rendered gratuitously with the intention and in the expectation that she and Thacker would marry. This contention is not sustained by the evidence. She was unwilling to marry Thacker unless he discontinued his excessive drinking which, the evidence shows, he did not do, and he told Hiner on two occasions that he did not intend to marry the claimant. Accordingly there is no evidentiary basis for the contention that either party expected or intended to marry the other during the period in which the services of the claimant were rendered. There was no blood or family relationship between them and from the standpoint of any such relationship she was a stranger who was under no legal or moral obligation to serve or care for Thacker.
In the circumstances disclosed by the record the evidence establishes clearly and convincingly an implied contract between Thacker and the claimant to compensate her for the personal services which she rendered him in his lifetime and imposes liability against his estate for the payment of such compensation. See In Re: Estate of Michael G. Murphy, deceased, 140 W.Va. 539, 85 S.E.2d 836; Furman v. Hunt, 135 W.Va. 716, 65 S.E.2d 1.
The testimony of the claimant in support of her claim involved personal transactions or communications between her and Thacker, within the meaning of Section 1, Article 3, Chapter 57, Code, 1931, as amended, and was inadmissible when such testimony was given. That section provides, in part, that "No party to any action, suit or proceeding, nor any person interested in the event thereof, nor any person from, through or under whom any such party or interested person derives any interest or title by assignment or otherwise, shall be examined as a witness in regard to any personal transaction or communication between such witness and a person at the time of such examination, deceased, insane or lunatic, against the executor, administrator, heir at law, next of kin, assignee, legatee, devisee or survivor of such person, or the assignee or committee of such insane person or lunatic. But this prohibition shall not extend to any transaction or communication as to which any such executor, administrator, heir at law, next of kin, assignee, legatee, devisee, survivor or committee shall be examined on his own behalf, nor as to which the testimony of such deceased person or lunatic shall be given in evidence: * * *.". See State ex rel. Linger v. The County Court of Upshur County, 150 W.Va. 207, 144 S.E.2d 689; Coleman v. Wallace, 143 W.Va. 669, 104 S.E.2d 349; Mann v. Peck, 139 W.Va. 487, 80 S.E.2d 518; In re Estate of Elizabeth E. Fox, 131 W.Va. 429, *306 48 S.E.2d 1, 7 A.L.R.2d 1; Shew v. Prince, 119 W.Va. 524, 194 S.E. 345; Painter v. Long, 69 W.Va. 765, 72 S.E. 1092; Poling v. Huffman, 48 W.Va. 639, 37 S.E. 526; Seabright v. Seabright, 28 W.Va. 412; Owens v. Owens's Adm'r, 14 W.Va. 88.
When, however, the executor and Constance Thacker, the daughter of the decedent and the beneficiary under his will, testified, as they did, with respect to the claim their testimony involved the same personal transactions or communications between the claimant and Thacker testified to by her and rendered admissible her testimony in behalf of her claim. Coleman v. Wallace, 143 W.Va. 669, 104 S.E.2d 349; Smith v. Pew, 116 W.Va. 734, 183 S.E. 53; Hall v. Linkenauger, 105 W.Va. 385, 142 S.E. 845; Ogdin v. The First National Bank of St. Marys, 103 W.Va. 665, 138 S. E. 376; Curtis v. Curtis, 85 W.Va. 37, 100 S.E. 856, 8 A.L.R. 1091; Painter v. Long, 69 W.Va. 765, 72 S.E. 1092; Wooldridge v. Wooldridge, 69 W.Va. 554, 72 S.E. 654, Ann.Cas.1913B, 653. In the Coleman case the opinion contains this statement: "This Court has held that where an executor or other personal representative of an estate testified against the claim of an interested party, such testimony under the statute serves to open the case for complete inquiry concerning the transactions testified to by such executor or other personal representative."
A person asserting a claim against the estate of a deceased person for personal services rendered during his lifetime may not testify in support of such claim for the reason that the testimony of such person involves personal transactions or communications between the claimant and a deceased person and is incompetent and inadmissible under the provisions of Section 1, Article 3, Chapter 57, Code, 1931, as amended; but if the executor or a beneficiary of the estate of the deceased person testifies against such claim and concerning such personal transactions and communications the bar of the statute is removed and the testimony of the claimant in support of such claim, given either before or after the testimony of the executor or beneficiary of the estate, becomes competent and admissible.
The evidence is sufficient to prove the claim without the testimony of the claimant. See In Re Estate of John C. Gilbert, 115 W.Va. 599, 177 S.E. 529; Keys v. Keys, 93 W.Va. 33, 116 S.E. 681. The circuit court found from the evidence that the claimant "did render valuable personal services to the decedent, Paul S. Thacker, in his lifetime, and that she is entitled to recover for said services, the sum of $4500.00, less a credit of $300.00 which had been paid, leaving a balance of $4200.00 due and owing Beula Mallow by the Estate of Paul S. Thacker, deceased." That finding, being amply supported by the evidence, will not be disturbed by this Court upon this writ of error. The rule is well established, by many decisions of this Court, that the finding of a trial court upon facts submitted to it in lieu of a jury will be given the same weight as the verdict of a jury and will not be disturbed by an appellate court unless the evidence plainly and decidedly preponderates against such finding. The State Road Commission of West Virginia v. Oakes, 150 W.Va. 709, 149 S.E.2d 293; Bluefield Supply Company v. Frankel's Appliances, Inc., 149 W.Va. 622, 142 S.E.2d 898; Daugherty v. Ellis, 142 W.Va. 340, 97 S.E.2d 33; and the many cases cited in the opinions of those cases.
As there was no blood or family relationship between the claimant and Thacker and from the standpoint of such relationship she was a stranger and was under no legal or moral obligation to furnish services to him, the law presumes the existence of a contract between them and she should be paid for such services. Furman v. Hunt, 135 W.Va. 716, 65 S.E.2d 1; In Re Elizabeth E. Fox, 131 W.Va. 429, 48 S.E.2d 1, 7 A.L.R.2d 1; Ireland v. Hibbs, 125 W.Va. 31, 22 S.E.2d 706; Shew v. Prince, 119 W.Va. 524, 194 S.E. 345; Keys *307 v. Keys, 93 W.Va. 33, 116 S.E. 681; Hurst's Adm'r v. Hite, Adm'r, 20 W.Va. 183.
In the early case of Hurst's Adm'r v. Hite, Adm'r, 20 W.Va. 183, this Court enunciated this general rule in point 4 of the syllabus: "Where service is performed by one at the instance and request of another, and especially when that other is personally benefited by the service, the law implies a contract, that the party, who performs the service, shall be paid a reasonable compensation therefor, unless there be something in the relation of the parties or the circumstances of the case, which precludes the idea of such compensation; in which case there would be an implied agreement or understanding, that no such compensation was to be paid." In Keys v. Keys, 93 W.Va. 33, 116 S.E. 681, citing the Hurst case, this Court said that when services are performed by one person at the instance and request of another, and especially when the other is benefited by the services, the law implies a contract that the person who performs the services shall be paid a reasonable compensation therefor, unless there is something in the relation of the parties or the circumstances of the case which precludes the idea of such compensation.
In Furman v. Hunt, 135 W.Va. 716, 65 S.E.2d 1, the general rule enunciated in the Hurst case is incorporated in the opinion which also contains this language: "Out of this holding has evolved the principle that where the person claiming compensation is a near relative of the person for whom the service is performed, it will be presumed to be gratuitous, and to overcome that presumption there must be a clear showing of a contract, express or implied, that compensation for the services should be paid. If such presumption is overcome by proof, then reasonable allowance for service is made. On the other hand, where there is no relationship between the parties, out of which the presumption of gratuitous service can reasonably arise, it is presumed that the person who performs service is to be compensated therefor." The opinion also refers to and quotes, in part, this language from In Re Estate of Elizabeth E. Fox, 131 W.Va. 429, 48 S.E.2d 1, 7 A.L.R.2d 1: "It is an elementary rule * * * that wherever services are rendered and received, a contract of hiring or an obligation to pay compensation will generally be presumed."
In Shew v. Prince, 119 W.Va. 524, 194 S.E. 345, this Court held in point 1 of the syllabus that "Persons under neither legal nor moral obligation to maintain an aged individual are presumptively entitled to be paid from his estate, after his death, the reasonable worth of board, lodging, and essential service which they furnished him during the period of five years immediately preceding his death."
When personal services are performed by one person at the instance and request of another person who is benefited by such services and there is no blood or family relationship between them and no legal or moral obligation that such services should be performed, the law implies a contract that the person who performs such services shall be paid reasonable compensation for such services unless it is shown that the persons intended that such compensation should not be paid.
The claimant, at the request of Paul S. Thacker, performed personal services which were of benefit to him, were not intended by either party to be rendered gratuitously, and were not so rendered. There was no blood or family relationship between the claimant and Thacker and she was under no legal or moral obligation to perform services or to care for him. Under the above cited authorities the claimant is clearly entitled to the compensation fixed and awarded to her by the circuit court in the amount of $4,200.00, and the judgment of that court, rendered August 9, 1967, should be and it is affirmed.
Affirmed.
|
785 F.2d 1033
Otto Candiesv.McDermott Int'l
85-3069
United States Court of Appeals,Fifth Circuit.
3/13/86
E.D.La., 600 F.Supp. 1334
AFFIRMED
|
UNITED STATES ARMY COURT OF CRIMINAL APPEALS
Before
TOZZI, CAMPANELLA, and CELTNIEKS
Appellate Military Judges
UNITED STATES, Appellee
v.
Specialist JOSEPH W. MOORE, JR.
United States Army, Appellant
ARMY 20120496
Headquarters, Fort Bliss
David H. Robertson and Karen Riddle, Military Judges
Colonel Francis P. King, Staff Judge Advocate
For Appellant: Lieutenant Colonel Imogene M. Jamison, JA; Major Richard E.
Gorini, JA; Captain Robert A. Feldmeier, JA (on brief).
For Appellee: Colonel John P. Carrell, JA; Lieutenant Colonel James L. Varley, JA;
Major Robert A. Rodrigues, JA; Captain Steve T. Nam, JA (on brief).
15 August 2014
---------------------------------
SUMMARY DISPOSITION
---------------------------------
Per Curiam:
A military judge sitting as a special court-martial convicted appellant,
pursuant to his pleas, of one specification of absence without leave, one
specification of violating a lawful general regulation, two specifications of assault
consumated by battery, and one specificaiton of breaking restriction, in violation of
Articles 86, 92, 128, and 134, Uniform Code of Military Justice, 10 U.S.C. §§ 886,
892, 928, 934 (2006). The military judge sentenced appellant to a bad-conduct
discharge, confinement for six months, and reduction to the grade of E-1. The
convening authority approved the adjudged sentence and credited appellant with 108
days of confinement credit against the sentence to confinement.
Appellant’s case is before this court for review pursuant to Article 66, UCMJ.
None of appellant’s assignments of error or matters personally raised pursuant to
United States v. Grostefon, 12 M.J. 431 (C.M.A. 1982) warrant relief. We note,
however, one additional issue that warrants discussion and relief.
MOORE—ARMY 20120496
Upon review of the record, we conclude the military judge failed to elicit an
adequate legal and factual basis to establish appellant’s breaking restriction was of a
nature to bring discredit upon the armed forces, in violation of Clause 2 of Article
134, UCMJ. “During a guilty plea inquiry the military judge is charged with
determining whether there is an adequate basis in law and fact to support the plea
before accepting it.” United States v. Inabinette, 66 M.J. 320, 321–22 (C.A.A.F.
2008) (citing United States v. Prater, 32 M.J. 433, 436 (C.M.A. 1991)). We review
a military judge’s decision to accept a plea for an abuse of discretion by determining
whether the record as a whole shows a substantial basis in law or fact for
questioning the guilty plea. Id. at 322; UCMJ art. 45; Rule for Courts-Martial
910(e).
The government charged appellant with breaking restriction, “which conduct,
under the circumstances, was to the prejudice of good order and discipline in the
armed forces and was of a nature to bring discredit upon the armed forces,” a
violation of Clauses 1 and 2 of Article 134, UCMJ. See Manual for Courts–Martial,
United States (2008 ed.), pt. IV, ¶¶ 60.c.(2), (3). As our superior court recently
reiterated, “[t]he . . . clauses of Article 134 constitute ‘. . . distinct and separate
parts.’” United States v. Fosler, 70 M.J. 225, 230 (C.A.A.F. 2011) (quoting United
States v. Frantz, 2 U.S.C.M.A. 161, 163, 7 C.M.R. 37, 39 (1953)). It follows, then
that “[v]iolation of one clause does not necessarily lead to a violation of the other . .
. .” Id. More specifically to the case before us, the court in Fosler went on to state
that “disorders and neglects to the prejudice of good order and discipline” are not
synonymous with “conduct of a nature to bring discredit upon the armed forces . . .
.” Id. Thus, when a specification alleges both Clause 1 and 2, and an accused
pleads guilty to the entire specification, then appellant’s guilty plea must be
provident to each clause.
Given the facts of this case, there is no question that appellant broke
restriction. Moreover, the plea inquiry firmly established facts demonstrating
appellant’s conduct was prejudicial to good order and discipline. The plea inquiry,
however, failed to elicit an adequate legal and factual basis from appellant
establishing his understanding that his conduct “would tend to bring discredit on the
armed forces if known by the public.” United States v. Phillips, 70 M.J. 161, 165-
166 (C.A.A.F. 2011).
Here, the military judge properly defined Clause 2 of Article 134, and
appellant acknowledged he understood that definition. Appellant summarily
acknowledged his conduct violated Clause 2, and the military judge never asked
appellant to explain how his conduct violated Clause 2. Furthermore, the stipulation
of fact only stated that appellant’s conduct “was of a nature to bring discredit upon
the armed forces as Soldiers and civilians were aware of his breaking restriction.”
However, nothing in the record shows how this stipulated fact reflects the
appellant’s understanding of how this fact relates to the law. See United States v.
2
MOORE—ARMY 20120496
Medina, 66 M.J. 21, 26 (C.A.A.F. 2008) (citing United States v. Care, 18
U.S.C.M.A. 535, 538-39, 40 C.M.R. 247, 250-51 (1969)) (“The providence of a plea
is based not only on the accused's understanding and recitation of the factual history
of the crime, but also on an understanding of how the law relates to those facts.”).
We therefore find a substantial basis in law and fact to question the providence of
appellant’s plea to committing conduct of a nature to bring discredit upon the armed
forces in violation of Clause 2 of Article 134, UCMJ.
CONCLUSION
On consideration of the entire record, as well as those matters personally
raised by appellant pursuant to Grostefon, the court affirms only so much of the
finding of guilty of the Specification of Charge III as finds that appellant, “U.S.
Army, having been restricted to the limits of White Sands Missile Range, by a
person authorized to do so, did, at or near White Sands Missile Range, New Mexico,
on or about 5 October 2011, break said restriction, which conduct, under the
circumstances, was to the prejudice of good order and discipline in the armed
forces.” The remaining findings of guilty are AFFIRMED. Reassessing the sentence
on the basis of the error noted, the entire record, and in accordance with the
principles articulated by our superior court in United States v. Winckelmann, 73 M.J.
11, 15-16 (C.A.A.F. 2014) and United States v. Sales, 22 M.J. 305 (C.M.A. 1986),
the sentence as approved by the convening authority is AFFIRMED. All rights,
privileges, and property, of which appellant has been deprived by virtue of that
portion of the findings set aside by this decision, are ordered restored.
FOR
FOR THE
THE COURT:
COURT:
MALCOLM H. SQUIRES, JR.
MALCOLM H. SQUIRES, JR.
Clerk of Court
Clerk of Court
3
|
In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 16‐2009, ‐2077, & ‐2980
ILLINOIS TRANSPORTATION TRADE ASSOCIATION, et al.,
Plaintiffs‐Appellants,
v.
CITY OF CHICAGO,
Defendant‐Appellee,
and
DAN BURGESS, et al.,
Intervening Defendants‐Appellees.
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:14‐cv‐00827 — Sharon Johnson Coleman, Judge.
____________________
ARGUED SEPTEMBER 19, 2016 — DECIDED OCTOBER 7, 2016
____________________
Before POSNER, WILLIAMS, and SYKES, Circuit Judges.
POSNER, Circuit Judge. This case, closely parallel to Joe
Sanfelippo Cabs, Inc. v. City of Milwaukee, No. 16‐1008, also de‐
cided today, involves constitutional challenges to the en‐
2 Nos. 16‐2009, ‐2077, ‐2980
deavor of a city (Chicago in this case, Milwaukee in the oth‐
er) to stimulate greater competition in the “for‐hire auto
transportation market.” That is the market composed of
owners of taxicabs that one hails on the street, of livery ser‐
vices, which are usually summoned by phone (as for that
matter taxis sometimes are), and of the newer auto‐transport
services for hire, of which the best known is Uber (the sec‐
ond best known is Lyft); generically these services are
known either as Transportation Network Providers (TNPs)
or as ridesharing services.
Because the acronym TNPs is not well known, nor the
term ridesharing services, but Uber is very well known,
we’ll focus on Uber, which “at its core … is just an app that
you download to your smartphone and use to get a nearby
Uber driver to come pick you up. While some taxi services
are getting on board with these newfangled apps most for‐
rent cars still wait at the taxi stand or require you to give the
service dispatch center a call in advance. Uber doesn’t do
that. … You can only hitch an Uber ride via the service’s
app.” Kristen Hall‐Geisler, “5 Ways Uber Is Really Different
from a Regular Taxi,” http://auto.howstuffworks.com/tech‐
transport/5‐ways‐uber‐really‐different‐from‐regular‐taxi1.ht
m (visited Oct. 6, 2016, as was the other website in this opin‐
ion). (However, Uber has now added a feature that allows
customers to schedule an Uber pickup in advance. See Ub‐
er.com, “Scheduled Ride for Extra Peace of Mind,”
www.uber.com/info/scheduled‐rides/.) There are other dif‐
ferences, which many consumers consider advantages of
Uber over taxis: the storage of payment information, so that
one does not need to be carrying cash or a credit card; the
ability to see a time estimate of how long a pickup will take
and also a driver’s rating by past users; and the ability to re‐
Nos. 16‐2009, ‐2077, ‐2980 3
quest a ride from wherever one is (e.g., from the comfort of
home, inside during the rain) rather than by hailing on a
street).
The plaintiffs are companies that own and operate either
taxicabs or livery vehicles in Chicago or that provide ser‐
vices to such companies, such as loans and insurance. Taxi
companies are tightly regulated by the City regarding driver
and vehicle qualifications, licensing, fares, and insurance;
livery companies are also tightly regulated, but we won’t
need to discuss them separately. Uber (which remember
we’re treating as representative of the TNPs) is less heavily
regulated than the taxi and livery companies (until 2014 it
wasn’t regulated at all) and has a different business model.
For example, you can’t hail an Uber vehicle on the street;
you must use a smartphone app to summon an Uber car.
Since 2014 Uber and the other TNPs have been governed by
an ordinance, but it is different from the ordinances govern‐
ing taxi and livery services and more permissive; for exam‐
ple, it allows the companies to set their own fares, and in this
and other ways allows them to do by contract some of the
things that Chicago ordinances require taxi and livery com‐
panies to do.
The plaintiffs challenge the ordinance on seven grounds,
of which four are based on the U.S. Constitution and the
other three on Illinois law. The district judge dismissed all
but the two claims that accuse the City of denying the equal
protection of the laws by allowing the TNPs to compete with
taxi and livery services without being subject to all the regu‐
lations governing those services. The plaintiffs appeal the
district judge’s dismissal of five of their claims and the City
appeals the judge’s refusal to dismiss the other two as well.
4 Nos. 16‐2009, ‐2077, ‐2980
All seven of the plaintiffs’ claims are weak. The first is
that allowing the TNPs into the taxi and livery markets has
taken away the plaintiffs’ property for a public use without
compensating them. A variant of such a claim would have
merit had the City confiscated taxi medallions, which are the
licenses that authorize the use of an automobile as a taxi.
Confiscation of the medallions would amount to confiscation
of the taxis: no medallion, no right to own a taxi, Boonstra v.
City of Chicago, 574 N.E.2d 689, 694–95 (Ill. App. 1991),
though the company might be able to convert the vehicle to
another use. Anyway the City is not confiscating any taxi
medallions; it is merely exposing the taxicab companies to
new competition—competition from Uber and the other
TNPs.
“Property” does not include a right to be free from com‐
petition. A license to operate a coffee shop doesn’t authorize
the licensee to enjoin a tea shop from opening. When proper‐
ty consists of a license to operate in a market in a particular
way, it does not carry with it a right to be free from competi‐
tion in that market. A patent confers an exclusive right to
make and sell the patented product, but no right to prevent a
competitor from inventing a noninfringing substitute prod‐
uct that erodes the patentee’s profits. Indeed when new
technologies, or new business methods, appear, a common
result is the decline or even disappearance of the old. Were
the old deemed to have a constitutional right to preclude the
entry of the new into the markets of the old, economic pro‐
gress might grind to a halt. Instead of taxis we might have
horse and buggies; instead of the telephone, the telegraph;
instead of computers, slide rules. Obsolescence would equal
entitlement.
Nos. 16‐2009, ‐2077, ‐2980 5
Taxi medallions authorize the owners to own and oper‐
ate taxis, not to exclude competing transportation services.
The plaintiffs in this case cannot exclude competition from
buses or trains or bicycles or liveries or chartered sight‐
seeing vehicles or jitney buses or walking; indeed they can‐
not exclude competition from taxicab newcomers, for the
City has reserved the right (which the plaintiffs don’t chal‐
lenge) to issue additional tax medallions. Why then should
the plaintiffs be allowed to exclude competition from Uber?
To this question they offer no answer.
All that the City gives taxi‐medallion owners is the right
to operate taxicabs in Chicago, see Municipal Code of Chica‐
go § 9‐112‐020(b) (a parallel provision, § 9‐114‐020(b), gov‐
erns liveries). That isn’t a right to exclude competitive pro‐
viders of transportation. As pointed out in Boston Taxi Own‐
ers Ass’n, Inc. v. City of Boston, 2016 WL 1274531, at *5 (D.
Mass. March 31, 2016), “if a person who wishes to operate a
taxicab without a medallion is prevented from doing so, it is
because he or she would violate municipal regulations, not
because he or she would violate medallion owners’ property
rights.” Section 9‐112‐020(b) of the Municipal Code, cited
above, which has been on the books since 1963, entitles the
medallion owners to be the exclusive providers of taxi ser‐
vice, but not to exclude alternatives to the service they offer.
The City has created a property right in taxi medallions; it
has not created a property right in all commercial transpor‐
tation of persons by automobile in Chicago.
The plaintiffs continue to receive some insulation from
competition, because they alone are permitted to operate
taxicabs in Chicago. Taxicabs are preferred to Uber and oth‐
er TNPs by many riders, because you don’t have to use an
6 Nos. 16‐2009, ‐2077, ‐2980
app to summon them—you just wave at one that drives to‐
ward you on the street—and also because the fares are fixed
by the City.
The plaintiffs argue that the City has discriminated
against them by failing to subject Uber and the other TNPs
to the same rules about licensing and fares (remember that
taxi fares are set by the City) that the taxi ordinance subjects
the plaintiffs to. That is an anticompetitive argument. Its
premise is that every new entrant into a market should be
forced to comply with every regulation applicable to incum‐
bents in the market with whom the new entrant will be
competing.
Here’s an analogy: Most cities and towns require dogs
but not cats to be licensed. There are differences between the
animals. Dogs on average are bigger, stronger, and more ag‐
gressive than cats, are feared by more people, can give peo‐
ple serious bites, and make a lot of noise outdoors, barking
and howling. Feral cats generally are innocuous, and many
pet cats are confined indoors. Dog owners, other than those
who own cats as well, would like cats to have to be licensed,
but do not argue that the failure of government to require
that the “competing” animal be licensed deprives the dog
owners of a constitutionally protected property right, or al‐
ternatively that it subjects them to unconstitutional discrimi‐
nation. The plaintiffs in the present case have no stronger
argument for requiring that Uber and the other TNPs be
subjected to the same licensure scheme as the taxi owners.
Just as some people prefer cats to dogs, some people prefer
Uber to Yellow Cab, Flash Cab, Checker Cab, et al. They pre‐
fer one business model to another. The City wants to en‐
Nos. 16‐2009, ‐2077, ‐2980 7
courage this competition, rather than stifle it as urged by the
plaintiffs, who are taxi owners.
So there is no merit to the plaintiffs’ claim that the City
has taken property from them without compensation, and
there is also no need to discuss four of their six other claims,
which whether based on the Constitution or on Illinois
common law add nothing to the takings claim. The two ad‐
ditional claims we do need to discuss are the equal protec‐
tion claims, because those are the claims that the district
judge thought had sufficient potential merit to survive a mo‐
tion to dismiss. She ruled that the City, by failing to place as
many regulatory burdens on the TNPs as on the taxicab
companies, might have denied the latter the equal protection
of the law. But this was taking equal protection literally, and
it should not be taken so. Otherwise prospective entrants to
a market who had lower costs than incumbent firms would
not be allowed to enter the market unless some regulatory
entity burdened the new entrants with regulations, whether
or not necessary or even appropriate, that eliminated any
cost advantage the new entrants would otherwise have in
competing with the incumbent firms. The imposition of such
an impediment to competition and disservice to consumers
would be absurd.
The proper question to ask regarding equal protection is
whether the regulatory differences between Chicago taxicabs
and Chicago TNPs are arbitrary or defensible, and the City
makes a compelling case that they’re the latter. Taxis but not
TNPs are permitted to take on as passengers persons who
hail them on the street. Rarely will the passenger have a pri‐
or relationship with the driver, and often not with the taxi‐
cab company either; and it makes sense therefore for the
8 Nos. 16‐2009, ‐2077, ‐2980
City to try to protect passengers by screening the taxi drivers
to assure that they’re competent and by imposing a uniform
system of rates based on time or distance or both. So taxi
service is regulated by the City of Chicago, but so is TNP
service, though differently because the service is different
from taxi service. A major difference is that customers, ra‐
ther than being able to hail an Uber car, must sign up with
Uber before being able to summon it, and the sign up creates
a contractual relationship specifying such terms as fares,
driver qualifications, insurance, and any special need of the
potential customer owing to his or her having a disability.
Unlike taxicab service Uber assumes primary responsibility
for screening potential drivers and hiring only those found
to be qualified, and the passengers receive more information
in advance about their prospective rides—information that
includes not only the driver’s name but also pictures of him
(or her) and of the car. Furthermore, the TNPs use part‐time
drivers extensively, and it is believed that these part‐timers
drive their cars fewer miles on average than taxicab drivers,
who are constantly patrolling the streets in hope of being
hailed; and the fewer miles driven the less likely a vehicle is
to experience wear and tear that may impair the comfort of a
ride in it and even increase the risk of an accident or a
breakdown.
There are enough differences between taxi service and
TNP service to justify different regulatory schemes, and the
existence of such justification dissolves the plaintiffs’ equal
protection claim. Different products or services do not as a
matter of constitutional law, and indeed of common sense,
always require identical regulatory rules. The fallacy in the
district judge’s equal protection analysis is her equating her
personal belief that there are no significant differences be‐
Nos. 16‐2009, ‐2077, ‐2980 9
tween taxi and TNP service with the perception of many
consumers that there are such differences—a perception
based on commonplace concerns with convenience, rather
than on discriminatory or otherwise invidious hostility to
taxicabs or their drivers. If all consumers thought the ser‐
vices were identical and that there was therefore no ad‐
vantage to having a choice between them, TNPs could never
have gotten established in Chicago.
Suppose the district judge happened to think dogs and
cats interchangeable, and on that ground ruled that requir‐
ing dogs but not cats to be licensed (the law in Chicago) was
a violation of equal protection. The proper response would
be that she is entitled to her opinion but not entitled to im‐
pose it when the market perceives, and as we noted earlier
has reasonable and nondiscriminatory grounds for perceiv‐
ing, a rational difference between the competing animals
that she does not perceive. Her belief that taxis and TNPs are
interchangeable is similarly not shared by the entire relevant
consumer market.
A “legislature, having created a statutory entitlement, is
not precluded from altering or even eliminating the entitle‐
ment by later legislation. Were the rule otherwise, ‘statutes
would be ratchets, creating rights that could never be re‐
tracted or even modified without buying off the groups up‐
on which the rights had been conferred.’” Dibble v. Quinn,
793 F.3d 803, 809 (7th Cir. 2015), quoting Pittman v. Chicago
Board of Education, 64 F.3d 1098, 1104 (7th Cir. 1995); see also
Wisconsin & Michigan Ry. Co. v. Powers, 191 U.S. 379, 387
(1903) (“the legislature is not making promises, but framing
a scheme of public revenue and public improvement”).
10 Nos. 16‐2009, ‐2077, ‐2980
Beginning in the 1970s a deregulation movement swept
the country, powered by the belief that competition is often a
superior alternative to regulation. Entire agencies vanished,
such as the Civil Aeronautics Board, which had greatly lim‐
ited competition in the airline industry. Many cities loosened
the regulatory limitations on taxi services—and this well be‐
fore there were any TNPs. See Adrian T. Moore & Ted Ba‐
laker, “Do Economists Reach a Conclusion on Taxi Deregu‐
lation?” 3 Econ Journal Watch 109, 111 (2006). The deregula‐
tion movement has surged with the advent of the TNPs.
Chicago, like Milwaukee in our companion Sanfelippo case,
has chosen the side of deregulation, and thus of competition,
over preserving the traditional taxicab monopolies. That is a
legally permissible choice.
The judgment of the district court is affirmed in all but
that court’s ruling on the plaintiffs’ equal protection claims;
that ruling is reversed with instructions to dismiss those
claims with prejudice.
|
112 F.Supp.2d 877 (2000)
OUTLOOK WINDOWS PARTNERSHIP, a Nebraska Limited Partnership, Plaintiff,
v.
YORK INTERNATIONAL CORPORATION d/b/a Natkin Services; Travelers Property Casualty Insurance Company; and UtiliCorp United, Inc., d/b/a Peoples Natural Gas, Defendants.
No. 4:99CV3108.
United States District Court, D. Nebraska.
August 21, 2000.
*878 *879 *880 Timothy R. Engler, Shana Q. Wright-Avery, Harding, Shultz Law Firm, Lincoln, NE, for plaintiff.
Andrea D. Snowden, Cline, Williams Law Firm, Lincoln, NE, James M. Bausch, Cline, Williams Law Firm, Omaha, NE, Rex A. Rezac, Fraser, Stryker Law Firm, Omaha, NE, Margaret Hupp Fahey, Clausen, Miller Law Firm, Chicago, IL, Celeste A. Hill, Chicago, IL, John E. Hubbard, Trenton P. Bausch, Megan E. Sebastian, Blackwell, Sanders Law Firm, Omaha, NE, for defendants.
MEMORANDUM AND ORDER
KOPF, Chief Judge.
This matter is before the court on separate motions for summary judgment filed by the defendants, York International Corporation d/b/a Natkin Services ("Natkin") (filing 56), Travelers Property Casualty Insurance Company ("Travelers") (filing 53), and UtiliCorp United, Inc., d/b/a Peoples Natural Gas ("Peoples") (filing 49). Upon consideration of the pleadings, filed affidavits, and briefs submitted by the parties, I find that the motions filed by Travelers and Peoples should be granted, and that the motion filed by Natkin should be denied. Pursuant to Fed.R.Civ.P. 54(b), final judgment will be entered in favor of Travelers and Peoples.
I. BACKGROUND
This action was originally filed by the plaintiff, Outlook Windows Partnership, a Nebraska limited partnership ("Outlook"), in the District Court of Lancaster County, Nebraska, but on April 16, 1999, was removed to federal court by the defendant Natkin, based upon diversity of citizenship. It appears that the removal was timely, and that this court has jurisdiction.
The parties' dispute concerns the heating system at Outlook's manufacturing facility. Outlook's wood-fired boiler suffered a "melt-down" in January 1997, which was determined to be a covered loss under an *881 insurance policy issued by Travelers. In settlement of the claim, Travelers ultimately paid Outlook the purchase price of two gas-fired boilers which were sold and installed by Natkin. Outlook claims that the settlement with Travelers was the result of a mutual mistake concerning the cost of operation of the new gas-fired system, which Outlook erroneously was led to believe, based upon an estimate provided by Natkin and the gas supplier, Peoples, would be about equal to the cost of operation the old wood-fired system. Outlook seeks to recover from the defendants the difference between the actual and estimated cost of operation of the gas-fired system over its useful life or, alternatively, the cost of installing a new wood-fired system.
Outlook's state-court petition contains four causes of action: (1) as against Natkin and Peoples, a claim for fraudulent misrepresentation; (2) also as against Natkin and Peoples, a claim for negligent misrepresentation; (3) as against Natkin only, a claim for breach of implied warranty of fitness for a particular purpose; and (4) as against Travelers only, a claim for breach of contract. Essentially, Outlook contends that it was relying upon each of the defendants to provide it with a replacement heating system that would perform as well as the old system, and for the same cost of operation.
Natkin contends that it cannot be held liable for misrepresentation, whether fraudulent or negligent, because the estimated cost of operation of the gas-fired system was merely an opinion. It further contends that there was no intent to deceive Outlook, and that the estimate pertained to the cost of operation of one gas-fired boiler rather than two, which is the only cost estimate that Outlook requested. (The second gas-fired boiler was added after the first boiler proved inadequate, because of insufficient horsepower, to heat Outlook's building operating by itself.) As to the claim for breach of implied warranty, Natkin contends that it was not aware of any particular purpose when it sold the boilers to Outlook, and that the boilers are fit for their ordinary purpose of providing heat.
Peoples similarly contends that Outlook could not justifiably have relied upon the cost estimate and, in any event, that the estimate was accurate based upon the information that was provided. Peoples disputes that it owed any duty to Outlook to provide a new estimate when the second boiler was added.
Travelers contends that a release executed as part of the insurance claim settlement bars Outlook's breach of contract claim, and that the additional cost of operation of the gas-fired boilers was not wholly unknown at the time the release was executed. Travelers also maintains that it has fully compensated Outlook for its loss in accordance with the plain language of the insurance policy.
As required by NELR 56.1(a), each of the defendants has set forth in its brief a statement of undisputed facts, which are repeated below. Citations to the record have been omitted, except as to those statements (identified by underlining) with which Outlook has expressed some disagreement. Also set forth verbatim below is Outlook's stated position regarding such contested statements of fact.
A. Natkin's Statement of Undisputed Facts
1. Outlook is a limited partnership duly organized and existing under the laws of the State of Nebraska with its principal place of business in Lincoln, Lancaster County, Nebraska.
2. Natkin is a corporation duly organized and existing under the laws of the State of Delaware and engages in business activities in the State of Nebraska.
3. Travelers Property Casualty Insurance Company ("Travelers") is a corporation duly organized and existing under the laws of the State of Connecticut and engages in business activities in the State of Nebraska.
*882 4. UtiliCorp United, Inc. d/b/a Peoples Natural Gas ("Peoples") is a corporation duly organized and existing under the laws of the State of Delaware and engages in business activities in the State of Nebraska.
5. Craig Anderson ("Anderson") is, and was at all relevant times, CEO of Outlook. As CEO of Outlook, Anderson is responsible for the sales, marketing, financial, production and product design aspects of Outlook's business.
6. Marvin Burbach ("Burbach") is, and was at all relevant times, the manager of Natkin's Lincoln, Nebraska office. As manager of Natkin's Lincoln office, Burbach is responsible for the day-to-day operation of Natkin's business in Lincoln, including doing estimates and project management.
7. William Lucke ("Lucke") is, and was at all relevant times, a consumer market representative for Peoples. As a consumer market representative, Lucke handles customer inquiries and complaints and does estimates of future utility costs for businesses which are relocating, expanding or converting their operations.
8. On or about January 14, 1997, Outlook's old 165 horsepower ("hp") wood-fired boiler, which provided heat to Outlook's facility, failed.
9. After Outlook's wood-fired boiler failed, Outlook contacted Natkin to arrange for temporary heating for Outlook's building.
10. At that time, Outlook and its insurer, Travelers, began considering whether to rent or purchase a gas-fired boiler to provide temporary heat to Outlook's facility until a decision was made as to whether to install a wood-fired or gas-fired boiler on a permanent basis.
11. Also at that time, it was estimated that it would take 12-14 weeks to make delivery of a wood-fired boiler, and that the cost of procuring and installing a wood-fired boiler would be significantly greater than for a gas-fired boiler.
12. In an effort to assist Outlook in providing temporary heat to Outlook's facility, Natkin agreed to attempt to locate a gas-fired boiler that could be immediately installed on Outlook's premises to provide heat on a temporary basis.
13. When Natkin was able to locate a 100hp gas-fired boiler, Travelers directed Natkin to purchase the 100hp gas-fired boiler for temporary heat.
14. Outlook purchased the 100hp gas-fired boiler to provide temporary heat for its facility. Natkin began to install the boiler on Outlook's premises on January 22, 1997.
15. The installation of the 100hp gas-fired boiler on Outlook's premises was completed on or about February 2, 1997.
16. In January, 1997, before the 100hp gas-fired boiler was ordered to provide heat on a temporary basis, Burbach contacted Lucke at Peoples for an estimate of the utility costs for a 100hp gas-fired boiler.
17. Lucke routinely provides estimates of utility costs for business customers that are expanding, relocating or converting their operations. In doing so, Lucke uses a standard formula developed by Peoples in which the hours of operation are multiplied by the gas input and a regional factor. The resulting figure is the customer's annual gas consumption.
18. Burbach provide Lucke with Outlook's hours of operation during the winter months, which he had obtained from Dan Zysset, an Outlook employee, and the 4.5 million BTU rating of the old 165hp wood-fired boiler, which was slightly higher than the 4 million BTU rating of the 100hp gas-fired boiler that was ultimately ordered and installed to provide temporary heat. Lucke increased the hours of operation provided by Zysset from eight to ten to sufficiently account for Outlook's heating needs. Based on that information, Lucke estimated that the utility costs of operating the gas-fired boiler would be approximately *883 $17,900 a year. Using Peoples' standard formula, Lucke arrived at the $17,900 figure by multiplying the natural gas input (4.5 million BTUs) by the number of hours of operation (10) and then multiplying the resulting figure by 90, a regional factor applied to all estimates done in Nebraska. Application of the formula resulted in an estimated annual gas consumption of the gas-fired boiler of 4,050 thousand cubic feet. By multiplying the annual gas consumption by the gas rate and adding the service charge, Lucke arrived at the estimated annual total utility cost of $17,900 for the gas-fired boiler.
19. In early February, 1997, Burbach communicated to Anderson the estimated utility costs calculated by Lucke. At that meeting, Anderson informed Burbach that the annual cost of operating the wood-fired boiler previously utilized by Outlook, was approximately $18,000, and concluded that the estimated fuel costs of the 100hp gas-fired boiler would be roughly equal to what the cost of fueling the 165hp wood-fired boiler had been. (Filing 57, Ex. 9, Burbach dep. ex. 45; Ex. 3, Anderson dep. 215:8-25; Ex. 5, Burbach dep. 66:10-67:13)[1]
Outlook: In fact, the calculations were
performed by Burbach based
on the information provided
by Outlook. Burbach was the
one who concluded that the
estimated fuel costs of the
100hp gas-fired boiler would
be equivalent. (Filing 61, Ex.
C, Burbach dep. 62:19-67:13;
Ex. K, Burbach dep. ex. 38)[2]20. The calculations performed by Lucke and communicated by Burbach to Anderson were estimates of the future utility costs of operating the 100hp gas-fired boiler. (Filing 57, Ex. 10, Anderson dep. ex. 9; Ex. 3, Anderson dep. 203:17-24; Ex. 4, Anderson dep. 224:18-228:6)[3]*884 Outlook understood that the actual utility costs would depend on a number of factors, including the temperature at which the building was maintained during the winter season, the rates the gas company was charging at the time, the severity of the winter season, etc.
Outlook: Outlook disputes the inference
that the calculation performed
by Lucke and communicated
by Burbach to Anderson were
estimates of the future utility
costs of operating the 100hp
gas-fired boiler. The estimate
was to be an estimate of the
overall heating costs based on
existing facts utilizing the
same heat loads in an average
winter. (No citation to evidence
index)
21. During the months of February and March, after its installation, the 100hp temporary gas-fired boiler did not generate sufficient heat to adequately heat Outlook's building.
22. After the determination was made that additional heating capacity would be needed, a disagreement developed between Outlook and Travelers as to the size of an additional boiler for which Travelers would pay.
23. At Outlook's request, Natkin advised Outlook and Travelers that a 65hp gas-fired boiler could be installed to operate in tandem on a permanent basis with the 100hp gas-fired boiler that had been installed to provide heat on a temporary basis. Travelers' position was that it would only pay for the addition of a 30hp gas-fired boiler.
24. On July 10, 1997, Anderson advised Travelers that:
We expect Travelers to provide a heat source equivalent to the existing source and capability. If this means that we have to go back and install a new Kewanee model 7L284 [wood-fired boiler], then maybe we need to do so.
Anderson also pointed out to Travelers that with the old wood-fired boiler, Outlook "derived fuel form our scrap wood. With the current system [100hp gas-fired boiler], we have to purchase natural gas, at an additional cost...."
25. The disagreement between Outlook and Travelers regarding the size of an additional boiler for which Travelers would pay was resolved at the end of July, 1997, and Outlook decided to install the 100hp gas-fired boiler on a permanent basis and purchase a 67hp gas-fired boiler to operate in tandem with the 100hp gas-fired boiler. (Filing 57, Ex. 2, Burbach aff. ¶ 14; Ex. 3, Anderson dep. 93:8-24, 110:18-23)[4]
Outlook: The decision to install the
100hp gas-fired boiler on a
permanent basis and purchase
a 67hp gas-fired boiler
was a joint decision between
Outlook and Travelers based
on Natkin's representations.
*885
(Ex. 61, Ex. B, Anderson dep.
87:6-15)[5]26. Natkin commenced the work necessary to permanently install the 100hp gas-fired boiler on or about August 27, 1997, and began installation of the 67hp gas-fired boiler in early October, 1997. Natkin completed the permanent installation of the two boilers on or about October 30, 1997.
27. If, rather than purchase the 100hp and 67hp gas-fired boilers to permanently replace the old, damaged boiler, Outlook had decided to purchase and install a 165hp wood-fired boiler, Natkin would have made more money than it did in installing the gas-fired boilers.
28. When Outlook decided to add the 67hp gas-fired boiler in the summer of 1997, Outlook did not request that Natkin or Peoples provide it with an estimate of the operating costs of running the 100hp gas-fired boiler together with the 67hp gas-fired boiler. (Filing 57, Ex. 2, Burbach aff. ¶ 16; Ex. 3, Anderson dep. 113:18-114:14)[6]
Outlook: Outlook disputes that it did not
request that Natkin or Peoples
provide it with an estimate of
the operating costs of running
the 100hp gas-fired boiler together
with the 67hp gas-fired
boiler. Outlook assumed there
would be no change in the utility
costs, and had there been a
change in the utility costs by
adding the second boiler, and
(sic) Peoples and/or Natkin
would have brought that information
to Outlook's attention
before the decision was made.
(Filing 61, Ex. C, Burbach dep.
111:9-19)[7]29. On March 18, 1999, Outlook filed this action against Natkin, Travelers and Peoples in the District Court of Lancaster County, Nebraska. (No citation to evidence index)
Outlook: The lawsuit was actually filed
on March 19, 1997. (No citation
to evidence index)[8]30. Outlook's claim for damages is made in four claims: (1) fraudulent misrepresentation by Natkin and Peoples; (2) negligent misrepresentation by Natkin and Peoples; (3) breach of implied warranty of fitness for a particular purpose by Natkin; and (4) breach of contract by Travelers.
31. Outlook alleges that the misrepresentations, both fraudulent and negligent, made by Natkin and Peoples were that the 100hp gas-fired boiler would efficiently heat its facility and have an equivalent cost of operation to that of the old wood-fired boiler.
32. Outlook does not allege the particular purpose for which it claims to have purchased the gas-fired boiler system. (Filing 1, Petition ¶ 32)[9]
*886
Outlook: While it is true Outlook has
not alleged in its Petition the
particular purpose for which it
claims to have purchased the
gas-fired boiler system, Outlook
was relying upon Natkin
to recommend a boiler system
for the particular purpose of
heating its facility using a
boiler system which had fuel
costs equivalent to what it had
before. Natkin was aware of
Outlook's unique heating system
utilizing wood scrap and
shavings produced during the
construction of doors and windows.
Natkin also knew the
utility costs were relatively
nonexistent to Outlook because
of its ability to either
burn its wood scraps or sell its
wood scraps at a premium to
offset the cost of wood chips
purchased from a third party.
Thus, the particular purpose
Outlook had was to have a
heating system with equivalent
heating costs to what it
had prior to the boiler failure.
(No citation to evidence index)[10]
B. Peoples' Statement of Undisputed Facts
1. On January 14, 1997, Outlook's wood-fired boiler suffered a total failure. As many as three safety features on the boiler did not perform their function, allowing the boiler to heat beyond its capacity and virtually melt down.
2. The day after the meltdown, Outlook contacted its servicer, Natkin. One of Natkin's technicians conducted the initial investigation and questioned whether it was possible to repair the boiler. Either Outlook maintenance personnel or Marv Burbach determined that the boiler had suffered a total failure. (Filing 50, Ex. A, Anderson dep. 39:20-40:7)[11]
Outlook: Outlook maintenance personnel
made no determination,
but the determination was
made by Marvin Burbach and
Jim Marvin in consultation
with Travelers. (No citation
to evidence index)
3. Due to the fact that the failure had occurred in January, the immediate need was to heat the facility in order to get the business back in operation. Outlook obtained propane heaters as localized temporary heat.
4. At the same time, Mr. Burbach began searching for a replacement boiler. During his search, it became evident to Mr. Burbach that a wood-fired boiler would not be available for an extended period of time. However, a gas-fired boiler was available almost immediately. Mr. Burbach provided that information to Mr. Craig Anderson at Outlook who referred him to Jerry Gaillard at Travelers. Mr. Gaillard authorized the purchase of the gas-fueled boiler for temporary heat.
5. Mr. Burbach contacted Mr. Bill Lucke at Peoples Natural Gas by telephone requesting an estimate for operating costs of a gas-fueled boiler based on certain parameters. Mr. Burbach relayed to Mr. Lucke certain information that included *887 a 4.5 MM BTU rating as well as the hours of operation.
6. A BTU is the amount of energy needed to heat one pound of water one degree Fahrenheit. Mr. Burbach stated to Mr. Lucke that the BTU rating was 4.5 MM (4.5 million BTUs) and the hours of operation were around eight. Mr. Lucke stated that if they used ten hours of operation, they would be on the safe side. Mr. Burbach agreed.
7. Mr. Lucke performed a calculation which he has used for many years in his professional career. The formula takes the natural gas input on an hourly basis, or BTUs, multiplied by an estimated number of hours of operation multiplied by a regional factor, which results in gas consumption per year, measured in thousand cubic feet:
BTUs × Hours × factor = Mcf of gas. Peoples generally estimates that gas-fueled boilers will operate for 10 hours per day, because that is an average it has seen over the years. Years ago, Peoples developed regional factors based on actual usage by randomly chosen customers, which account for the severity of the weather, and uses a factor of 90 for all customers in Nebraska. After obtaining the gas consumption using the formula, Mr. Lucke multiplied the gas consumption by Peoples' firm rate for gas and added the $12 per month ($144/year) customer charge for the meter to reach the rough estimate for a yearly natural gas cost.
8. After he had performed the calculations which he had used for many years in his professional career, Mr. Lucke returned Mr. Burbach's phone call. He provided a rough estimate to Mr. Burbach of approximately $17,900 annual cost to run the gas-fueled boiler. (Filing 50, Ex. E, Lucke dep. 60:22-61:4; Ex. D, Burbach dep. 66:10-14)[12]When Bill Lucke called Mr. Burbach with the estimated yearly cost, he told Mr. Burbach he had enough information to give him a "very rough estimate." (Filing 50, Ex. E, Lucke dep. 60:24-61:4)
Outlook: Outlook disputes that Lucke's
estimate was a "rough estimate."
In fact, Lucke admitted
to one of his co-employees
that his estimate was a "good
one." (Filing 61, Ex. G, Nordell
dep. 9:19-10:19)[13]9. Mr. Lucke was not asked by Mr. Burbach to contact anyone at Outlook. Mr. Lucke was not asked to, and in fact did not, perform a cost comparison between gas-fueled boilers and wood-fired boilers.
10. Mr. Lucke did not receive any requests to perform any further estimates of operating costs.
11. Mr. Anderson had discussions with Mr. Burbach about replacing the wood-fired boiler with a gas-fueled boiler on a permanent basis. Mr. Burbach provided the estimate to Mr. Anderson at Outlook. Mr. Burbach then requested that Mr. Anderson provide Mr. Burbach certain information regarding the wood-fired boiler.
12. Upon receiving information about the wood-fired boiler from Mr. Anderson, Mr. Burbach performed a cost comparison and determined that the costs of operating the gas-fueled boiler would be approximately the same. Mr. Anderson admits that the estimate supplied by Mr. Burbach *888 was an estimate for future and unknown costs. (Filing 50, Ex. B, Anderson dep. 227:22-228:6)[14]
Outlook: Outlook disputes the inference
that Anderson knew the estimate
supplied by Mr. Burbach
was an estimate for future
and unknown costs.
While Outlook agrees it is impossible
to predict the weather,
particularly in Nebraska,
the estimate was to have been
an average estimate based on
current gas consumption.
(No citation to evidence index)
13. In or around early February 1997, Mr. Anderson decided to replace the wood-fired boiler with a gas-fueled boiler on a permanent basis. (Filing 50, Ex. A, Anderson dep. 86:11-87:10)[15]
Outlook: Outlook disputes it was Mr.
Anderson who decided to replace
the wood-fired boiler
with the gas-fired boiler on a
permanent basis. This decision
was made with the approval
of Travelers, because
Mr. Anderson would not incur
any costs without Travelers'
approval and/or consent.
(Filing 61, Ex. B, Anderson
dep. 87:6-15)[16]14. Outlook's 100hp boiler has a BTU rating of 4.035 MM.
15. In early spring of 1997, Mr. Anderson requested additional capacity to heat his facility. When Outlook decided to install a second gas-fueled boiler, Mr. Burbach again called Peoples, but his concern was whether Peoples had adequate pressure and natural gas to serve the additional load. However, neither Mr. Anderson nor Mr. Burbach asked Mr. Lucke for an estimate of gas costs for the additional capacity.
16. In the fall of 1997, additional capacity in the form of a 67hp gas-fueled boiler was installed with a 3.5 MM BTU rating (3.5 million BTUs). With the addition of the second gas-fueled boiler, the overall BTU rating of the facility nearly doubled.
17. Outlook contends that is gas bills were approximately $30,000.00 per year. When its gas bills proved to be higher than the estimate Mr. Lucke had given Mr. Burbach, Outlook refused to pay.
C. Travelers' Statement of Undisputed Facts
1. Travelers provided property insurance coverage to Outlook Windows Partnership ("Outlook") under policy No. BAJ-BMC-227X1256-TIL-96 with effective dates of January 12, 1996 to January 31, 1997. The Travelers' policy contained a standard Boiler and Machinery Coverage Form (BM 00 25 06 95) which stated in pertinent part:
BOILER AND MACHINERY COVERAGE FORM
* * * * * *
A. COVERAGE
We will pay for direct damage to Covered Property caused by a Covered Cause of Loss.
1. Covered Property
Covered Property, as used in this Coverage Part means any property that:
a. You own; ...
* * * * * *
3. Covered Cause of Loss
A Covered Cause of Loss is an "accident" to an "object" shown in the Declarations.
* * * * * *
*889 E. BOILER AND MACHINERY CONDITIONS
The following conditions apply in addition to the Common Policy Conditions:
* * * * * *
1. Loss Conditions
* * * * * *
j. Valuation
(1) We will pay you the amount you spend to repair or replace your damaged property directly damaged by an "accident." Our payment will be the smallest of:
(a) The Limit of Insurance;
(b) The cost of the time of he (sic) "accident" to repair the damaged property with property of like kind, capacity, size and quality;
(c) The cost at the time of the "accident" to replace the damaged property on the same site with other property:
(i) Of like kind, capacity, size and quality; and
(ii) Used for the same purpose;
(d) The amount you actually spend that is necessary to repair or replace the damaged property.
2. On January 14, 1997, Outlook's wood-fired boiler system failed. According to Outlook, the wood-fired boiler which failed had a rated capacity of 165 horsepower. (Filing 55, Ex. B, Struyk dep. 51:14-16)[17]
Outlook: The determination of the capacity
of the wood-fired boiler
was made by Marvin Burbach.
(Filing 61, Ex. J, Zysset dep.
65:16-25)[18]3. Shortly after the failure, Outlook's wood-burning boiler was replaced by a 100 horsepower gas-fired boiler. The 100 horsepower gas-fired boiler was recommended to Outlook by Natkin, the company which serviced Outlook's boiler system. Travelers telephonically authorized payment of the gas-fired boiler recommended by Natkin. However, Travelers never insisted or required that Outlook replace its wood-fired boiler with a gas-fired boiler. (Filing 55, Ex. C, Anderson dep. 87:12-22)[19] The installation of the 100 horsepower gas-fired boiler was completed on February 2, 1997.
Outlook: Travelers knew Outlook was
looking to Travelers to make
a determination as to what
costs would be covered under
the policy because Outlook
would not replace or incur any
costs unless it was covered by
the policy of insurance. (Filing
61, Ex. B, Anderson dep.
44:18-45:1)[20]4. Travelers formally acknowledged coverage for the loss through correspondence from its adjuster, Gerald Gaillard, to *890 Craig Anderson of Outlook dated February 2, 1997.
5. Prior to the installation of the 100 horsepower gas-fired replacement boiler, Marvin Burbach of Natkin provided Craig Anderson of Outlook with a verbal estimate of the annual fuel costs for operating the 100 horsepower gas-fired boiler. Travelers never provided Outlook with an estimate of fuel consumption costs for the 100 horsepower gas-fired boiler. (Filing 55, Ex. C, Anderson dep. 111:2-8; Ex. A, Gaillard aff. ¶ 6)[21]
Outlook: While it is true Travelers never
provided Outlook with an
estimate, Travelers confirmed
on several occasions that it
was relying upon the fact that
fuel consumption costs would
be equivalent in authorizing
the conversion from a wood-fired
boiler to a gas-fired boiler.
(Filing 61, Ex. K, dep. ex.
3 & 5)[22]6. Sometime in the spring of 1997, Outlook determined that the 100 horsepower gas-fired boiler was not adequately heating its facility. Outlook contacted Natkin and Travelers regarding the problem.
7. Mr. Burbach of Natkin determined that additional capacity would be required to adequately heat Outlook's space. A dispute between Travelers and Outlook arose as to how much additional capacity was necessary. Based on his investigation of the rated capacity of the failed boiler, Mr. Gaillard, Travelers' representative, believed that Outlook was entitled to an additional 25 horsepower capacity. Outlook believed that the rated capacity of the failed wood-fired boiler had been 165 horsepower and that it should receive additional capacity to match this horsepower rating.
8. In July 1997, Travelers agreed to provide Outlook with a 67 horsepower gas-fired boiler to supplement the capacity of the 100 horsepower gas-fired boiler, just as Outlook had requested. Neither Natkin *891 nor Travelers provided Outlook with any calculations or estimates of the additional fuel costs associated with operating the 100 and 67 horsepower boilers combined. (Filing 55, Ex. C, Anderson dep. 111:2-8, 234:19-24; Ex. A, Gaillard aff. ¶ 6; Ex. E, Burbach dep. 177:9-19, 178:13-16)[23]
Outlook: Mr. Gaillard from Travelers
admits he was operating under
the assumption the fuel
costs would be equivalent
even at the time the 67 horsepower
boiler was added. (Filing
61, Ex. A, Gaillard dep.
79:23-80:7)[24] Marv Burbach
never mentioned to Anderson
that there would be any additional
fuel costs associated
with adding the second boiler.
(Filing 61, Ex. C, Burbach
dep. 111:9-19)[25]9. Not later than July 10, 1997, Outlook was aware of the additional cost of natural gas necessary to operate the 100 horsepower gas fired boiler. (Filing 55, Ex. A, Gaillard aff. ¶ 7)[26]
Outlook: Outlook was simply aware of
the fact that it had to purchase
natural gas, whereas in
the past, it could burn the
wood scraps, rather than actually
acquire fuel from an outside
source. Beginning in
1995, Outlook did purchase
wood scraps from an outside
vendor. It did so only because
it found it was more
economical to sell its wood
scrap at a premium and purchase
wood chips to serve as
the fuel source. (Filing 61,
Ex. B, Anderson dep. 103:13-106:14)[27]*892 10. Outlook made a formal claim to Travelers arising from the January 14, 1997 failure and submitted a Sworn Statement in Proof of Loss dated August 6, 1997, in the amount of One Hundred Five Thousand, Three Hundred Ninety-Two and 59/100 dollars ($105,392.59) in support of its claim. (Filing 55, Ex. A, Gaillard aff. ¶ 9; Ex. F, Swanson dep. 38-40)[28]
Outlook: The sworn statement of proof
of loss was actually prepared
by Travelers. (Filing 61, Ex.
I, Fridholm dep. 55:13-56:4)[29]11. The amount claimed in Outlook's Sworn Statement included the cost of both the 100 and the 67 horsepower gas-fired boilers installed to replace the failed woodburning boiler.
12. On August 6, 1997, in exchange for payment of $105,392.59, Outlook signed and executed an agreement releasing Travelers from all claims arising from the failure of the wood-fired boiler in January of 1997. (Filing 55, Ex. A, Gaillard aff. ¶ 10; Ex. F, Swanson dep. 41-42)[30]
Outlook: The release speaks for itself.
13. Prior to execution of the August 6, 1997 Release, Outlook never submitted a proof of loss or claim to Travelers for the replacement of the failed boiler with a similar wood-fired boiler. On March 19, 1997, Outlook initiated this lawsuit against Travelers, seeking damages for the cost of installing a new wood-fired boiler plus the additional costs it has incurred for the payment of gas for the replacement boilers.
14. As of this date, Outlook has never replaced the two gas-fired boilers installed in 1997 with a wood-fired boiler of the same type and kind as existed in Outlook's premises prior to January 14, 1997. (Filing 55, Ex. G, Plaintiff's answer to Interrogatory No. 7)[31]
*893
Outlook: The replacement of the wood-fired
boiler by the gas-fired
boilers was done under the
mistaken belief that these boilers
were of the same kind,
capacity, size and quality as
existed in Outlook's premises
prior to January 14, 1997.
(Filing 61, Ex. A, Gaillard dep.
65:2-8)[32]
II. DISCUSSION
Summary judgment should be granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). See also Egan v. Wells Fargo Alarm Servs., 23 F.3d 1444, 1446 (8th Cir.), cert. denied, 513 U.S. 929, 115 S.Ct. 319, 130 L.Ed.2d 280 (1994). In passing upon a motion for summary judgment, the district court must view the facts in the light most favorable to the party opposing the motion. Dancy v. Hyster Co., 127 F.3d 649, 652 (8th Cir.1997), cert. denied, 523 U.S. 1004, 118 S.Ct. 1186, 140 L.Ed.2d 316 (1998).
In order to withstand a motion for summary judgment, the nonmoving party must substantiate their allegations with "`sufficient probative evidence [that] would permit a finding in [their] favor on more than mere speculation, conjecture, or fantasy.'" Moody v. St. Charles County, 23 F.3d 1410, 1412 (8th Cir.1994) (quoting Gregory v. City of Rogers, 974 F.2d 1006, 1010 (8th Cir.1992), cert. denied, 507 U.S. 913, 113 S.Ct. 1265, 122 L.Ed.2d 661 (1993)). "A mere scintilla of evidence is insufficient to avoid summary judgment." Id. Essentially the test is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is "entitled to a judgment as a matter of law" because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
"Rule 56(e) provides that, when a properly supported motion for summary judgment is made, the adverse party `must set forth specific facts showing that there is a genuine issue for trial.'" Anderson, 477 U.S. at 250, 106 S.Ct. 2505. "Rule 56(e) therefore requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324, 106 S.Ct. 2548.
A. Fraudulent Misrepresentation Claim Against Natkin and Peoples
In order to maintain an action for fraudulent misrepresentation, a plaintiff must allege and prove the following *894 elements: (1) that a representation was made; (2) that the representation was false; (3) that when made, the representation was known to be false or made recklessly without knowledge of its truth and as a positive assertion; (4) that it was made with the intention that the plaintiff should rely upon it; (5) that the plaintiff reasonably did so rely; and (6) that the plaintiff suffered damage as a result. Cao v. Nguyen, 258 Neb. 1027, 1031, 607 N.W.2d 528, 532 (2000). Intent to deceive is not an indispensable element of a cause of action for fraud based on misrepresentation. Foiles v. Midwest Street Rod Ass'n of Omaha, 254 Neb. 552, 556-57, 578 N.W.2d 418, 422 (1998).
Because the gas cost estimate that was provided to Outlook was a matter of opinion regarding the future operation of the heating system, Natkin and Peoples argue that an action for fraudulent misrepresentation cannot be maintained. Generally, fraud cannot be based on predictions or expressions of mere possibilities in reference to future events. NECO v. Larry Price & Associates, 257 Neb. 323, 329, 597 N.W.2d 602, 606 (1999). There are, however, certain exceptions to this general rule.
One exception is where a representation concerning a future event is falsely and fraudulently made with an intent to deceive. See Mueller v. Union Pacific R.R., 220 Neb. 742, 371 N.W.2d 732, 740 (1985); Huffman v. Poore, 6 Neb.App. 43, 56, 569 N.W.2d 549, 559 (1997). This exception most often is applied in cases in which the future event is within the control of the person making the representation. See, e.g., NECO v. Larry Price & Associates, supra; Mueller v. Union Pacific R.R., supra. This is not the situation in the present case.
Another recognized exception may be applicable, though. In Burke v. Harman, 6 Neb.App. 309, 345, 574 N.W.2d 156, 179 (1998), the Nebraska Court of Appeals approved the following jury instruction:
The recipient of a fraudulent misrepresentation solely of the maker's opinion is not justified in relying upon it in a transaction with the maker, unless the fact to which the opinion relates is material, and the maker (a) purports to have special knowledge of the matter that the recipient does not have, or (b) stands in a fiduciary or other similar relation of trust and confidence to the recipient, or (c) has successfully endeavored to secure the confidence of the recipient, or (d) has some other special reason to expect that the recipient will rely on his opinion.
As noted by the Court in Burke, the category delineated in (d) above is "quite expansive" and would seem to include the situation presented by the facts of this case. There is also evidence that Natkin and Peoples had special knowledge regarding gas cost estimates which Outlook did not possess.
Outlook must also establish, of course, that it reasonably relied upon the gas cost estimate. Whether a party's reliance upon a misrepresentation was reasonable is a question of fact. Cao v. Nguyen, supra, at 1032, 607 N.W.2d at 533. A party is justified in relying upon a representation made to the party as a positive statement of fact when an investigation would be required to ascertain its falsity. Id. While no action will lie where ordinary prudence would have prevented the deception, that rule is generally applied where the means of discovering the truth was in the hands of the party defrauded. Schuelke v. Wilson, 250 Neb. 334, 549 N.W.2d 176, 182 (1996).
Natkin and Peoples argue that Outlook could not have reasonably relied upon the estimated gas cost figure because the estimate was provided with reference to the 100hp boiler only, and it is common sense that the addition of the second (67hp) boiler would increase the cost of operation. The defendants' argument might have merit if the evidence conclusively established that Outlook was *895 aware that the estimate pertained only to the first boiler. Outlook, however, has presented evidence that it understood the estimate was for the cost of heating its facility with gas, regardless of the size or number of boilers. In other words, when the first boiler proved to be inadequate to heat the facility, Outlook could have assumed that it was consuming less than the estimated amount of gas, and that adding a second boiler would not affect the cost estimate. Significantly, there is also evidence that Peoples neglected to send Outlook any gas bills during this period of time, so Outlook had no knowledge concerning the actual cost of operation of the 100hp gas-fired boiler.
Peoples also argues that the information it supplied to Natkin on Outlook's behalf was accurate. In this connection, Peoples has endeavored to show that its formula, if the second boiler had been taken into account, would have resulted in an estimated annual cost of approximately $29,900 for natural gas, which is consistent with People's actual billings to Outlook.[33] This revised calculation, while tending to validate People's formula, is otherwise irrelevant to the issues that are presented in this case. This is because the only estimate that was provided to Outlook was the $17,900 figure, and Outlook does not claim that such estimate falsely represented the cost of operation of the 100hp boiler. Instead, as stated in the order on final pretrial conference, Outlook claims that the false representation concerned "the cost to heat Outlook's facility." (Filing 66, pp. 4-5)
There is no evidence that Peoples was ever asked to provide an estimate of the cost to heat Outlook's facility, nor that Peoples ever had direct contact with Outlook. All communications took place between Lucke (People's representative) and Burbach (Natkin's representative). It is undisputed that Burbach simply asked Lucke to provide a cost estimate for operating the 100hp boiler based on its BTU rating and normal hours of operation. There is no evidence that the $17,900 figure that Lucke provided to Burbach was "known to be false or made recklessly without knowledge of its truth and as a positive assertion." Indeed, there is no evidence that the $17,900 figure was not a reliable estimate of the annual cost of operation of the 100hp boiler. It is therefore clear that a claim for fraudulent misrepresentation cannot be maintained against Peoples.
Natkin, however, occupies a different position because of its direct dealings with Outlook. In this regard, there is evidence that Burbach was aware that Anderson wanted an estimate of the cost to heat Outlook's facility using gas, and that Burbach incorrectly assumed that the 100hp gas-fired boiler would provide adequate heat because its BTU rating was equivalent to that of the old wood-fired boiler. The $17,900 figure that he conveyed to Anderson was not an accurate estimate of the cost to heat Outlook's facility using gas, and there is sufficient evidence from which a jury could reasonably conclude that this representation as to the cost of gas heating, if not knowingly false, was at least made recklessly and without knowledge of its truth. Consequently, Natkin's motion for summary judgment on the fraudulent misrepresentation claim will be denied.
B. Negligent Misrepresentation Claim Against Natkin and Peoples
The doctrine of negligent misrepresentation is relatively new in Nebraska and was not recognized prior to the Nebraska Supreme Court's decision in Flamme v. Wolf Ins. Agency, 239 Neb. 465, 476 N.W.2d 802 (1991). See Kouma v. Blue Valley Co-op., 6 Neb.App. 714, 715, 576 N.W.2d 854, 855 (1998). Subsequently, in Gibb v. Citicorp Mortgage, Inc., 246 Neb. *896 355, 518 N.W.2d 910 (1994), the Nebraska Supreme Court officially adopted the definition of negligent misrepresentation found in Restatement (Second) of Torts § 552 (1997). See id., at 716, 576 N.W.2d at 856. Section 552 of the Restatement, at pp. 126-27, reads as follows:
(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
(2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered
(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and
(b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.
(3) The liability of one who is under a public duty to give the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them.
As previously discussed, there is no evidence that Peoples provided false information to Outlook, either directly or indirectly. That is, there is no evidence that Peoples' cost estimate concerning the operation of the 100hp gas-fired boiler was inaccurate, or that Natkin was misled in any respect concerning the nature of the cost estimate or the basis for its computation. Not until the $17,900 cost estimate was communicated to Outlook by Natkin could it be considered false information. Because there is evidence from which a jury could reasonably conclude that Natkin failed to exercise reasonable care or competence in obtaining or communicating this information to Outlook, the claim for negligent misrepresentation will be allowed to proceed against Natkin.[34]
Outlook argues in its brief that Natkin and Peoples each had a duty to provide a revised cost estimate when the second gas-fired boiler was added. This argument, however, does not advance Outlook's claim for negligent misrepresentation against either defendant. Section 552 of the Restatement limits negligent misrepresentation claims to cases where one party has supplied the other with false information. See Hawkins Const. v. Intern. Ass'n Local 21, 3 Neb.App. 238, 243, 525 N.W.2d 637, 642 (1994) (holding that allegations regarding defendant's failure to inform plaintiff of certain facts did not constitute a claim for negligent misrepresentation in Nebraska); White v. State Farm Mut. Auto. Ins. Co., 1995 WL 521004 (Neb.App. Sept.5, 1995) (distinguishing negligent misrepresentation claim from nondisclosure claim). A claim based on a failure to disclose information is instead governed by Restatement of Torts (Second) § 551 (1997).[35]*897 See White, supra; Streeks, supra, at 590, 605 N.W.2d at 118. In its state-court petition (filing 1), Outlook merely alleges that Natkin and Peoples made affirmative misrepresentations, not that they failed to disclose certain facts. On the basis of this pleading, it is unnecessary to consider whether liability might attach to these defendants for failing to provide Outlook with a revised cost estimate. See Burke v. Harman, supra, at 345, 574 N.W.2d at 178 (holding that plaintiff was not entitled to an instruction on nondisclosure, patterned after NJI2d Civ. 15.23, where plaintiff's theory of the case was limited to fraudulent and negligent misrepresentation claims).
However, at the final pretrial conference that was held on August 8, 2000, Outlook listed the following among its controverted and unresolved issues:
8. Whether Peoples or Natkin should have considered the impact on the utility cost estimate when the decision was made to purchase the 67 horsepower boiler to supplement the 100 horsepower boiler.
9. Whether Peoples or Natkin owed such a duty; whether Natkin or Peoples breached such a duty; whether the breach of duty caused damages; and the nature and extent of the damages caused.
(Filing 66, Order on Final Pretrial Conference, p. 7) Natkin and Peoples have both objected to these "omission" issues as not having been specifically pled by Outlook. (Filing 66, pp. 8-9)
Although Outlook did not seek leave to amend within the time prescribed by the court's scheduling order (filing 17),[36] Fed.R.Civ.P. 15(a) provides that "leave shall be freely granted when justice so requires." Given the courts' liberal viewpoint towards leave to amend, it should normally be granted absent good reason for a denial. Popp Telcom v. American Sharecom, Inc., 210 F.3d 928, 943 (8th Cir.2000). Generally speaking, reviewing courts have found an abuse of discretion in cases where the district court denied amendments based on facts similar to those comprising the original complaint. Id. The inclusion of a claim based on facts already known or available to both sides does not prejudice the non-moving party. Id. In the present case, the nondisclosure claim is closely related to the misrepresentation claims and involves a common set of facts, such that the defendants cannot fairly claim to be prejudiced if Outlook is allowed to pursue this alternative theory of recovery.
*898 Outlook, Natkin, and Peoples to some extent have each briefed the issue of whether there existed an obligation to provide a revised fuel cost estimate, but not with reference to Section 551 of the Restatement. Instead, they have focused on the Nebraska Supreme Court's decision in Bakody Homes & Dev., Inc. v. City of Omaha, 246 Neb. 1, 516 N.W.2d 244 (1994), in which it was held that the State Department of Roads was not negligent in failing to provide the plaintiff with corridor maps in response to a specific request for right-of-way plans. Because Bakody did not involve a business transaction, but, rather, an information request to a public agency, it is not strictly applicable to the present case.
Applying Section 551 of the Restatement to this case, there is sufficient evidence from which a jury could reasonably conclude that Natkin owed Outlook a duty to disclose that the cost of operating two gas-fired boilers would be more than the original cost estimate of $17,900. Such a duty could be found to exist under subsections (2)(b), (c), or (e) of Section 551.
As to Peoples, on the other hand, there is no evidence to support a finding that it owed a duty to exercise reasonable care to disclose additional cost information. Thus, there is no evidence of any fiduciary or similar relationship between Peoples and Outlook. There is no evidence that Peoples made any partial or ambiguous statement of fact; the original cost estimate that it provided to Natkin was made in response to a specific request concerning the cost of operating the 100hp boiler only. There is no evidence that Peoples subsequently acquired any information that would make its cost estimate untrue or misleading; while Peoples was aware that a second boiler was being installed, and made a determination that it had adequate capacity to serve the additional load, there is nothing in the record to suggest that Peoples should have been aware that Outlook had an understanding that the cost estimate included the second boiler, and Natkin quite clearly did not have such an understanding. As previously discussed, there also is no evidence that the $17,900 cost estimate was false when it was communicated to Natkin. Finally, there is no evidence that Peoples knew Outlook's decision to install the second boiler, and to increase its natural gas consumption, was being made under a mistaken impression concerning the total cost of service that would be provided by Peoples.
Because Outlook did not assert a nondisclosure claim until after the filing of Peoples' motion for summary judgment, and because that motion is specifically limited to the claims for fraudulent and negligent misrepresentation (Counts I and II of Outlook's state-court petition), the court has some hesitation in treating Peoples' motion for summary judgment as extending to the nondisclosure claim. It would appear, however, that any evidence Outlook might have to support this claim should have been presented to the court with reference to the misrepresentation claims since these theories of recovery are interrelated and Outlook has argued in its brief that Peoples was negligent in failing to provide a revised cost estimate. Under these circumstances, it is appropriate that Peoples be dismissed from the action. Should Outlook have additional evidence that is relevant to the nondisclosure claim, it may present the same in connection with a motion filed pursuant to Fed.R.Civ.P. 59.
It is noted that Peoples, in filing its answer (filing 4), asserted a counterclaim against Outlook for unpaid gas bills in the amount of $52,626.31. However, this counterclaim was not preserved in the final pretrial conference order (filing 66). The pretrial order supersedes all previous pleadings and controls the subsequent course of the action. See Anderson v. Genuine Parts Co., 128 F.3d 1267, 1271 (8th Cir.1997); Fed.R.Civ.P. 16(e). It appears, therefore, that Peoples has effected a voluntary dismissal of its counterclaim. So that there will be no confusion, however, the court will order the dismissal of *899 Peoples' counterclaim without prejudice, pursuant to 28 U.S.C. § 1367(c)(3).[37]
C. Breach of Implied Warranty Claim Against Natkin
Outlook and Natkin agree that Outlook's third cause of action, for "breach of implied warranty," arises under Neb. Rev.Stat.Ann. (Uniform Commercial Code) § 2-315 (Michie 1995), which pertains to implied warranties of fitness for a particular purpose. The elements of such an implied warranty claim are stated in Stones v. Sears, Roebuck & Co., 251 Neb. 560, 569, 558 N.W.2d 540, 547 (1997):
A plaintiff relying on the implied warranty of fitness for a particular purpose must prove that (1) the seller had reason to know of the buyer's particular purpose in buying the goods, (2) the seller had reason to know that the buyer was relying on the seller's skill or judgment to furnish appropriate goods, and (3) the buyer, in fact, relied upon the seller's skill or judgment. Laird v. Scribner Coop, 237 Neb. 532, 466 N.W.2d 798 (1991). Ordinarily, whether or not the implied warranty of fitness for a particular purpose arises in any individual case is a question of fact to be determined by the circumstances of the contracting between the parties. See El Fredo Pizza, Inc. v. Roto-Flex Oven Co., 199 Neb. 697, 261 N.W.2d 358 (1978). In this regard, a buyer proceeding under this implied warranty must first provide some evidence that the seller knew of the buyer's particular purpose for which the goods are acquired. See Laird v. Scribner Coop, supra.
A "particular purpose" differs from the ordinary purpose for which the goods are used in that it envisages a specific use by the buyer which is peculiar to the nature of his or her business whereas the ordinary purposes for which goods are used are those envisaged in the concept of merchantability and go to uses which are customarily made of the goods in question.
§ 2-315, comment 2.
Natkin argues that there is no evidence that Outlook purchased the gasfired boilers for a specific use peculiar to the nature of Outlook's business, and notes that Outlook has not even alleged a particular use in its petition. Natkin thus analogizes this case to Stones, in which the evidence indicated that a gas grill (which caused a house fire) was used for its customary purpose of grilling food, such that § 2-315 did not apply. Because the gasfired boilers are used by Outlook for their ordinary purpose of heating a building, Natkin concludes that the breach of warranty claim must be dismissed.
Nebraska caselaw does not support Natkin's narrow interpretation of U.C.C. § 2-315. In Mennonite Deaconess Home & Hosp. v. Gates Eng., 219 Neb. 303, 363 N.W.2d 155 (1985), for example, the plaintiff hospital had explored various options for repairing or replacing its old roof, and it was concerned about water leakage around various projections on the roof. The defendant's representative assured the hospital that the Gates one-ply roofing system would handle the problem. It, of course, did not. The Nebraska Supreme Court held that the evidence in the case would support a breach of either an implied warranty of merchantability under U.C.C. § 2-314 or an implied warranty of fitness for a particular purpose under U.C.C. § 2-315, or a breach of both sections. As to the § 2-315 claim, the Court stated:
*900 Certainly, the jury could find that Gates had reason to know of the hospital's particular purpose for the roof. Likewise, the jury could find that Gates had reason to know that the hospital was relying on Gates' skill or judgment to furnish the appropriately installed roof. Indeed, the hospital told Gates it was. And, finally, the jury could certainly find that the hospital relied upon Gates' skill or judgment. It was only after the hospital was contacted by the representatives of Gates and assured of the quality of the roof that it purchased the Gates roof rather than another one-ply roof.
Id. at 315, 363 N.W.2d at 164.
Similarly, in Larutan Corp. v. Magnolia Homes Mfg. Co. of Neb., 190 Neb. 425, 209 N.W.2d 177 (1973), a soil compaction substance was applied around the outside of a factory for the purpose of eliminating muddy conditions, especially in areas where forklifts were driven and mobile homes, which were manufactured at the facility, were parked. Considering that the sales representative for the product was aware of the use of the area, and had given assurances that the product could do the job, the Nebraska Supreme Court affirmed the trial court's finding that there was an implied warranty of fitness for a particular purpose. In Shotkoski v. Standard Chemical Mfg. Co., 195 Neb. 22, 237 N.W.2d 92 (1975), a dairy farmer was assured that the defendant's cattle feed supplement would increase milk production. Using the product in the manner directed, however, milk production actually decreased. The Nebraska Supreme Court held that the evidence was sufficient to present a jury question as to the breach of an implied warranty under U.C.C. § 2-315. El Fredo Pizza, Inc. v. Roto-Flex Oven Co., 199 Neb. 697, 261 N.W.2d 358 (1978), involved a pizza oven which did not heat evenly. The Nebraska Supreme Court held that a jury question was presented as to whether the oven had been sold subject to an implied warranty of fitness for a particular purpose.[38]
As the above cases demonstrate, it is not necessary that the buyer put the goods to an abnormal use. Because there is evidence that Natkin was aware that Outlook wanted a heating system which would provide the same amount of heat for the same fuel cost as the old system, and that Outlook was relying upon Natkin's expertise in making the selection, Natkin's motion for summary judgment on this breach of warranty claim will be denied.[39]
D. Breach of Contract Claim Against Travelers
In the context of personal injuries, at least, "Nebraska has long followed the majority rule that a settlement agreement which purports to release any and all claims for accident-related damages may *901 be set aside on grounds of mutual mistake where there are injuries of a serious character wholly unknown to the parties which were not taken into consideration when the release was executed." Oliver v. Clark, 248 Neb. 631, 636, 537 N.W.2d 635, 639 (1995). This rule has also been applied by the Nebraska Supreme Court to a property damage claim settlement. See Armbruster v. Stanton-Pilger Drainage Dist., 169 Neb. 594, 100 N.W.2d 781, 794 (1960).
In the present case, though, there is no evidence of an unknown injury. The only injury to Outlook was the loss of the wood-fired boiler, for which Travelers was contractually obligated to pay Outlook the smaller of: (1) the cost at the time of the accident to replace the damaged property on the same site with other property of like kind, capacity, size and quality, and used for the same purpose; or (2) the amount Outlook actually spent that was necessary to replace the damaged property.
It is undisputed that the claim settlement was based on the amount that was actually spent by Outlook to replace the wood-fired boiler with two gas-fired boilers. The additional cost to operate the replacement boilers was not material to the settlement of the claim on this basis. It therefore is irrelevant whether Outlook and Travelers both assumed at the time the release was signed that the cost of operation of the replacement boilers would be equivalent to that of the old boiler, or that the replacement boilers were of "like kind, capacity, size and quality" as the old boiler.
The cost of operation of the replacement boilers is simply a condition which resulted (indirectly) from the covered loss, and a mistaken belief concerning those future costs, even if shared by Outlook and Travelers, cannot void the release. As explained by the Nebraska Supreme Court in Oliver:
[T]he true rule is that the mistake must relate to either a present or past fact or facts that are material to the contract of settlement, and not to an opinion as to future conditions as the result of present known facts. A mistake as to the future development of a known injury is a matter of opinion, and is not one of fact, and is not such a mistake as will avoid a release; ....
Id. at 637, 537 N.W.2d at 640 (quoting Simpson v. Omaha & C.B. Street R. Co., 107 Neb. 779, 783, 186 N.W. 1001, 1003 (1922)).
In effect, Outlook is arguing that Travelers guaranteed or insured that the replacement boilers would be equivalent to the old boiler. This is contrary to the plain language of the insurance policy. Because there is no evidence that the release was executed based upon a mutual mistake of material fact, summary judgment will be entered in favor of Travelers.
III. CONCLUSION
For the reasons stated, summary judgment will be entered in favor of Peoples and Travelers, and the case will proceed to trial against Natkin only, on claims of fraudulent misrepresentation, negligent misrepresentation, nondisclosure, and breach of implied warranty of fitness for a particular purpose (and on Natkin's counterclaim against Outlook for amounts allegedly due on open account). Peoples' counterclaim for unpaid gas bills will be dismissed without prejudice.
IT IS ORDERED:
(1) The motion for summary judgment filed by the defendant UtiliCorp United, Inc., d/b/a Peoples Natural Gas (filing 49) is granted, and it is dismissed from the action;
(2) The motion for summary judgment filed by the defendant Travelers Property Casualty Insurance Company (filing 53) is granted, and it is dismissed from the action;
(3) The motion for summary judgment filed by the defendant York International *902 Corporation d/b/a Natkin Services (filing 56) is denied;
(4) There being no just reason for delay, final judgment shall be entered by separate document in favor of the defendants Travelers Property Casualty Insurance Company and UtiliCorp United, Inc., d/b/a Peoples Natural Gas; and
(5) Pursuant to 28 U.S.C. § 1367(c)(3), the counterclaim filed by the defendant UtiliCorp United, Inc., d/b/a Peoples Natural Gas (filing 4) is dismissed without prejudice.
NOTES
[1] Burbach Deposition Exhibit 45 (filing 57, Ex. 9) is not identified in the filed portions of the deposition (filing 57, Ex. 5). It appears to be a unsigned, typewritten letter, dated May 27, 1998, from Lucke to Burbach, together with handwritten notes dated January 16, 1997. The letter states in part:
I have included what information I have re: the ROUGH estimate of consumption/cost for SealRite. As you will recall, This was only an estimate and it was made with the following assumptions: 4.5 MMBTUH input. 10 hours per day.
Burbach testified that he calculated the $18,000 cost to operate the wood-fired system based on information provided by Anderson. Anderson testified that during the meeting Burbach wanted to know how the gas cost would compare to the wood cost, "[s]o we called up Mark Shuck and how much wood are we buying, Mark, what are we paying for it, what's the cost." According to Anderson, the costs were roughly equal.
[2] Burbach Deposition Exhibit 38 is identified as containing notes that Burbach made during a telephone conversation with Lucke, on or about January 16, 1997, in which Lucke provided an estimated annual cost figure of $17,900 for firm gas service, and as also containing the $18,000 wood-cost calculation that Burbach made during his subsequent meeting with Anderson, based on numbers that he requested from Anderson. Whether Burbach reached any conclusion regarding the comparative cost of operation of the boilers is not stated in his testimony.
[3] Anderson Deposition Exhibit 9 (filing 57, Ex. 10) is not identified in the filed portions of the deposition (filing 57, Ex. 3, 4). It appears to be a faxed letter, dated April 28, 1997, from Burbach to Jack Struyk, who also is not identified, but who appears to be an insurance agent or broker. The letter states in part:
After the Kewanee boiler failed, I located a boiler that was in a supplier's inventory in Souix (sic) City, Iowa. This new boiler is rated at 4,035,000 BTU and the old boiler's name plate indicated a 4,496,000 BTU rating. Since new boilers are generally more efficient and the old unit was being fired with wood chips, this difference in rating did not appear to be a problem.
However, the horse power rating of the old boiler was 165 and 100HP with the new one. Normally the BTU rating and horse power convert back and forth to each other. I incorrectly assumed, that since the BTU's matched, the new boiler would provide the required hot water.
Due to the time of heating season and the need to get the facility back in operation, we installed the 100HP boiler. To provide Outlook Windows with the heating capacity of 165 HP, we can install a 65HP boiler similar to the new unit. I suggested to Outlook Windows, Craig Anderson, that they consider a boiler of the same capacity (100HP) as the other new unit, but he indicated that they wanted to match heating capacity of the old system.
Anderson agreed with defense counsel's statement that "you testified that sometime in February of 1997, you had discussions with Mr. Burbach about the cost estimates for having a gas-fired system as compared to what you had under the wood-fired system, you were told they'd be comparable and you made your decision to go with the gas-fired boiler." When asked if it was correct that "in those discussions Mr. Burbach gave you some figures that he indicated to you was his estimate of what operating the gas-fired boiler would cost in terms of gas bills," Anderson replied that "[h]e gave us an estimate of what it would cost to heat the plant." This statement was then clarified as referring to the cost to heat the plant "using gas."
[4] The disputed statement is taken directly from Burbach's affidavit. Anderson testified that Burbach recommended the second boiler and that Jack Struyk was supportive of it. Anderson told them that he was agreeable to the recommendation if it would meet his heating needs, and that Burbach indicated that it would.
[5] Anderson testified that "[t]he decision to utilize the 100-horsepower boiler on a permanent basis would have been between myself, Marv Burbach and with Mr. Gaillard's consent."
[6] Burbach's affidavit states: "At no time did Outlook ever request that Natkin or Peoples provide Outlook with additional estimates of the utility costs of running the 100hp gas-fired boiler together with the 67hp gas-fired boiler." Anderson testified that he indicated during a discussion with Burbach concerning the additional boiler that "I was not going to pay more than what I paid before [for fuel]." Anderson did not recall Burbach's answer.
[7] Burbach testified that he could not recall there being any discussion when the decision was made to add the second boiler about the comparability of fuel costs between wood and gas.
[8] The actual date of filing of the action in state court cannot be determined from the court file. However, the summons that was served on Natkin on March 22, 1999, recites that the action was filed on March 18, 1999.
[9] Outlook's petition alleges: "Defendant Natkin was informed by Outlook and thereby had knowledge of the purpose for which the gas-fired boiler system was purchased by Outlook and, at the time of such sale, impliedly warranted the same to be, in all respects, fit and proper for such purpose."
[10] Anderson testified that after he learned from Burbach that there was a difference in horsepower rating between the 100hp gas-fired boiler and the old wood-fired boiler, "I instructed Mr. Burbach, Mr. Struyk that I don't know if Gaillard was involved in the conversation or not that I wanted equivalent heat source at the same cost and performance as my old one." (Filing 50, Ex. A, Anderson dep. 76:14-18) Anderson also testified that he agreed to accept the 67hp gas-fired boiler "[b]ased on the recommendations that it would do the job," that "[i]t would meet the original parameters we requested," which were to "[h]eat the plant the same it was before at the same cost...." (Filing 57, Ex. 4, Anderson dep. 229:11-25)
[11] Anderson testified that either Burbach or the maintenance department, or perhaps both, told him that the boiler was a total failure.
[12] Lucke testified that he gave the estimate to Burbach over the phone. When asked by counsel if he felt he had enough information to give an estimate of the costs, Burbach stated: "I had enough information to give him a very rough estimate is what I said. And I think then I followed it up with a short note to him. And I think I even even capitalized the rough estimate based on the natural gas input, 10 hours per day and our calculation that we had used." Burbach's brief testimony concerning this conversation does not mention the "rough estimate" comment.
[13] Donald J. Nordell, who is not specifically identified, but who appears to be a Peoples' employee, testified that Lucke "mentioned to me that based on the information that he was provided, he thought he gave a pretty darned good estimate and that was it."
[14] Anderson simply agreed with defense counsel's statement that "you understood that Mr. Burbach was giving you an estimate of what the expenses were going to be in the future."
[15] Anderson testified that the decision involved himself, Burbach, and Gaillard.
[16] See footnote 5.
[17] Jack H. Struyk, Jr., who is not specifically identified, but who appears to be an employee of Outlook's insurance broker, AON Risk Services, Inc., testified that he understood the wood-fired boiler was rated at 165 horsepower.
[18] Daniel Zysset, who is not specifically identified, but who appears to be an Outlook employee, testified that he and Burbach together looked at the information plate on the boiler.
[19] Anderson, after testifying that the decision to utilize the 100hp boiler on a permanent basis was made by himself and Burbach with Gaillard's consent, responded negatively when asked, "Did Mr. Gaillard ever have any conversations with you wherein he told you that you had to go with gas as opposed to wood?" Anderson also answered "No" when asked if Gaillard had ever insisted that the company utilize a gas-fired boiler after this loss.
[20] With reference to his telephone conversation with "someone at Travelers about what we were supposed to do and what we were authorized to do" which occurred shortly after the boiler failure, Anderson testified: "And my concern was I didn't go out and do something I wasn't supposed to, commit myself to a huge bill and the insurance company wasn't going to pay for. I wanted explicit instructions from the insurance company what I could and couldn't do."
[21] Anderson agreed with defense counsel's statement that "Mr. Gaillard or any representative of Travelers did not provide you with any calculations of estimated fuel costs of the gas-fired boiler or boilers that were installed after the incident." Gaillard states in his affidavit: "At no time did Travelers provide Outlook with any calculations or estimates of the additional fuel costs associated with operating the 100 horsepower replacement boiler, the additional 67 horsepower boiler, or the combination of those two boilers."
[22] Deposition Exhibit 3 is not identified, but appears to be an internal memo prepared by Gaillard. It states in part:
American Boiler has located a new 100 HP L.E.S. FTFB boiler, gas fired, and available for $31,000.00 plus installation. He was not certain wheter or not the Insured would want to make the fuel change, but he is certain that the capacity would meet the Insured's needs, due to the gross inefficiency of the current arrangement. This would obviously (sic) affect the Insured's operating costs. There would be increased efficiency, but there would be added fuel expense, and the Insured would need to dispose of the waste wood chips and sawdust....
I spoke with Jack Strike (sic), Aon, and he was not certain whether (sic) or not the Insured would be eager to make the switch to an alternate fuel, although the old boiler did apparently use gas as a fuel to start the boiler. I advised we should make the offer, and then research alternate installations if the Insured elects to go with the same design. That would involve a considerable amount of additional expense and could double the size of the loss, as well as increase the size of the continuing BI loss, and possibly necessitate the need for a rental boiler to offset the loss.
Deposition Exhibit 5 is not identified, but appears to be an internal memo prepared by Al Spary, who also is not identified, but who appears to be a Travelers' representative. The memo states in part:
According to Natkin the total cost of a gas boiler would run $60,000 and a like replacement wood burning boiler, which is available would run in the area of $80,000. A gas boiler could be there in 5 days or less. The wood boiler would take a month or two. Fuel costs for both boilers would be about the same according to Natkin and the gas utility. Thye (sic) buy the wood chips as what they produce is only a small amount of what they need. There is a market for their wood chips.
[23] See footnote 21 regarding the designated portions of the Gaillard affidavit and Anderson deposition (excluding page 234, which is not in evidence). Burbach testified that his discussions with Anderson related to the fuel costs for the 100hp boiler, and that he did not provide Anderson with calculations of the fuel cost with respect to the 100hp and the 67hp boilers combined.
[24] Gaillard was asked: "Now, through August 6, 1997, had anyone discussed with you an issue regarding whether the fuel costs would be gas fired boiler or equivalent to fuel cost on the wood boiler?" He answered, "No." He was then asked: "So you were still operating under the assumption that those costs would be equivalent, correct?" Gaillard answered, "Yes."
[25] See footnote 7.
[26] Gaillard's affidavit identifies a memorandum from Anderson, dated July 10, 1997, which is attached to the affidavit as Exhibit 3. It states as follows:
I received your letter dated June 19th, 1997 reference the capacity on the Kewanee Boiler. To some degree, I feel that we are looking at this entirely wrong.
My number one concern is to adequately heat the facility, and to provide room for expansion. We expect Travelers to provide a heat source equivalent to the existing source and capability. If this means that we have to go back and install a new Kewanee model 7L284, then maybe we need to do so. With the Kewanee system, we derived fuel from our scrap wood. With the current system, we have to purchase natural gas, at an additional cost to us. Again, our overall concern is the ability of the system to adequately heat the plant. We will require written assurances from Travelers, that the proposed 30 hp addition will adequately heat our facility. In the event that cold weather hits next winter, and the system is incapable of heating facility, we expect Travelers to rectify the system by providing additional capacity at that time, regardless of the hp rating or btu's. The old Kewanee was capable of adequately heating the facility in the dead of winter, and was affordable. Item could heat the plant during the winter and still cycle on and off. The new system should have an equivalent performance. Running 100% of the time would indicate that regardless of the hp rating, it is not equivalent to the previous unit.
All that I require is a warm plant in the winter time. We expect the proposed system to do the same, at an affordable energy cost.
[27] Anderson testified that the statement in his letter that "we have to purchase natural gas at an additional cost to us" did not mean that there was a perceived difference in cost between gas and wood, but only that Outlook had to purchase natural gas, whereas it could burn its own scrap wood. He described the statement as "a little bit of a negotiating position." He also testified that at the time he wrote the letter, Outlook had not received any billing from Peoples for the actual gas usage.
[28] Gaillard's affidavit states: "Travelers received a Sworn Statement in Proof of Loss, executed by Marlene Swanson of Outlook and dated August 6, 1997, in the amount of $105,392.59." A copy of the proof of loss statement is attached to the affidavit as Exhibit 5. It states that the replacement cost of the boiler at the time of loss was $110,392.59, which is the only loss and damage reported. Less a $5,000 deductible, the total amount claimed under the policy was $105,392.59. Swanson testified that the papers were delivered by Mr. Struyk, and that she understood the "total amount claimed" to be what the insurance company was paying.
[29] Kathleen Fridholm, who is not identified, but who appears to work with Jack Struyk, testified that the typewritten entries on the proof of loss statement, including the dollar amounts, were made by Travelers.
[30] Gaillard's affidavit states: "Travelers received an agreement executed by Outlook releasing Travelers from all claims arising from the failure of the wood-fired boiler in January 1997." A copy of the release is attached to the affidavit as Exhibit 6, and reads as follows:
RELEASE
$105,392.59 _________ 19__
RECEIVED of the Travelers Indemnity Company, the sum of One Hundred Five Thousand Three
Hundred Ninety-Two and 59/100 Dollars, in full settlement and final discharge of all claims by
Outlook Windows Partnership under Policy No. BMC-227X1956 arising from "damages to a
Kewanee watertube boiler" which occurred on or about the the 1st day of January 1997.
s/ Jack Struyke s/ Marlene Swanson Sec/Treas
Witness Insured
Swanson testified that she was authorized to sign the release on behalf of Outlook.
[31] Outlook's answer to Interrogatory No. 7 states: "The 100HP and 65HP boiler systems have not been replaced."
[32] Gaillard was asked by plaintiff's counsel: "You and the insured were both operating under the assumption that the equivalency of the fuel cost was part of the reason why we had a replacement that was of like kind, capacity, size and quality, correct?" Gaillard answered, "Yes."
[33] The parties have stipulated in the order on final pretrial conference (filing 66, p. 4) that Outlook's gas bills were $33,967.60 for 1997, $27,904.97 for 1998, $29,785.36 for 1999, and $27,785.36 for the first half of 2000.
[34] This result naturally follows from the determination that Outlook's claim for fraudulent misrepresentation can be maintained against Natkin. As the Nebraska Supreme Court observed in Gibb, supra, at 371, 518 N.W.2d at 921:
[T]he difference between fraudulent misrepresentation and negligent misrepresentation is the duty required in each claim. In fraudulent misrepresentation, one becomes liable for breaching the general duty of good faith or honesty. However, in a claim of negligent misrepresentation, one may become liable even though acting honestly and in good faith if one fails to exercise the level of care required under the circumstances.
[35] Section 551 of the Restatement, at p. 119, provides as follows:
(1) One who fails to disclose to another a fact that he knows may justifiably induce the other to act or refrain from acting in a business transaction is subject to the same liability to the other as though he had represented the nonexistence of the matter that he has failed to disclose, if, but only if, he is under a duty to the other to exercise reasonable care to disclose the matter in question.
(2) One party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated,
(a) matters known to him that the other is entitled to know because of a fiduciary or other similar relation of trust and confidence between them; and
(b) matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading; and
(c) subsequently acquired information that he knows will make untrue or misleading a previous representation that when made was true or believed to be so; and
(d) the falsity of a representation not made with the expectation that it would be acted upon, if he subsequently learns that the other is about to act in reliance upon it in a transaction with him; and
(e) facts basic to the transaction, if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs of the trade or other objective circumstances, would reasonably expect a disclosure of those facts.
[36] The Eighth Circuit has stated that when the district court has filed a Rule 16 pretrial scheduling order, it may properly require that good cause be shown for leave to file an amended pleading that is substantially out of time under that order. See In re Milk Products Antitrust Litigation, 195 F.3d 430, 437 (8th Cir.1999).
[37] This statute provides that the district court may decline to exercise supplemental jurisdiction where it "has dismissed all claims over which it has original jurisdiction." Because of the amount in controversy, this court does not have original jurisdiction over the subject matter of the counterclaim, and although claims remain pending against Natkin, those claims should no longer be tried in conjunction with Peoples' counterclaim for unpaid gas bills.
[38] The disputed issue in El Fredo Pizza was not whether baking pizzas is a particular purpose of a pizza oven, but, rather, whether the plaintiff actually relied upon the defendant's skill to furnish suitable goods for the plaintiff's business. In this connection, the Nebraska Supreme Court stated: "Comment 1 to section 2-315, U.C.C., provides that whether or not the warranty of fitness for a particular purpose arises in any particular case `is basically a question of fact to be determined by the circumstances of the contracting. Under this section the buyer need not bring home to the seller actual knowledge of the particular purpose for which the goods are intended or of his reliance on the seller's skill and judgment, if the circumstances are such that the seller has reason to realize the purpose intended or that the reliance exists. The buyer, of course, must actually be relying on the seller.'" Id., at 703, 261 N.W.2d at 362-63.
[39] Outlook's claim against Natkin for breach of warranty is substantially similar to its misrepresentation claims. As noted by the Nebraska Supreme Court in Edwin Bender & Sons v. Ericson Livestock, 228 Neb. 157, 162, 421 N.W.2d 766, 770 (1988): "A misrepresentation and a warranty are not mutually exclusive and may arise from the same representation on which the cause of action is based." See also Streeks, Inc. v. Diamond Hill Farms, Inc., 258 Neb. 581, 598, 605 N.W.2d 110, 123 (2000) ("Nebraska's U.C.C. does not preclude an action for fraud.")
|
4 F.Supp.2d 1248 (1998)
E.I. DUPONT DE NEMOURS & COMPANY, Hoechst Celanese Corporation and ICI Americas Inc., Plaintiffs,
v.
UNITED STATES, Defendant,
SKC Limited and SKC America, Inc.; Cheil Synthetics, Inc. and Samsung America, Inc.; STC Corporation, STC of America, Inc. and American Tape Company; Kolon Industries, Inc., Defendant-Intervenors.
Slip Op. 98-35. Court No. 95-09-01216.
United States Court of International Trade.
March 26, 1998.
*1249 *1250 Wilmer, Cutler & Pickering (John D. Greenwald) and Howry & Simon (Michael A. Hertzberg, Matthew J. Clark, Maria Tan Pedersen and F. Alexander Amrein), Washington, DC, for Plaintiffs.
Frank W. Hunger, Asst. Atty. Gen.; David M. Cohen, Director, Commercial Litigation Branch, Civil Div., U.S. Dept. of Justice; Velta A. Melnbrencis, Asst. Director (Lance J. Lerman); of counsel: Karen L. Bland, Attorney-Advisor, Office of Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, DC, Washington, DC, for Defendant.
Akin, Gump, Strauss, Hauer & Feld, L.L.P. (Warren E. Connelly and Katherine M. Ho), Washington, DC, for Defendant-Intervenors, Cheil Synthetics, Inc. and Samsung America, Inc.
Kaye, Scholer, Fierman, Hays & Handler, LLP (Michael P. House, R. Will Planert and Stephen E. Lebowitz), Washington, DC, for Defendant-Intervenors, SKC Ltd. and SKC America, Inc.
Shearman & Sterling (Jeffrey M. Winton), Washington, DC, for Defendant-Intervenor, Kolon Industries, Inc.
OPINION
TSOUCALAS, Senior Judge:
Plaintiffs, E.I. DuPont de Nemours & Company, Hoechst Celanese Corporation and ICI Americas Inc. (collectively "DuPont"), move for judgment on the agency record pursuant to Rule 56.2 of the Rules of this Court. DuPont challenges the Department of Commerce, International Trade Administration's ("Commerce") final results of the administrative review, entitled Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea; Final Results of Antidumping Duty Administrative Review ("Final Results"), 60 Fed.Reg. 42,835 (Aug. 17, 1995), as amended, 61 Fed.Reg. 5375 (Feb. 12, 1996).
Background
On June 5, 1991, pursuant to an affirmative final determination of sales at less than fair value ("LTFV") and an affirmative final determination of material injury, Commerce issued an antidumping duty order encompassing all entries of Polyethylene Terephthalate ("PET") film from Korea. See Antidumping Duty Order and Amendment to Final Determination of Sales at Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea, 56 Fed. Reg. 25,669. Commerce subsequently initiated an administrative review of PET film for the period covering November 30, 1990, through May 31, 1992.[1]See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 57 Fed.Reg. 32,521 (July 22, 1992). Commerce published the preliminary results of the first administrative review on July 8, 1994. See Polyethylene Terephthalate Film, Sheet, and Strip From the Republic of Korea; Preliminary Results of Antidumping Duty Administrative Review ("Preliminary Results"), 59 Fed.Reg. 35,098. On August 17, 1995, Commerce published the Final Results at issue. See 60 Fed.Reg. at 42,835.
*1251 In light of the Court of Appeals for the Federal Circuit's ("CAFC") decision in IPSCO, Inc. v. United States, 965 F.2d 1056 (Fed.Cir.1992), this court remanded to Commerce certain aspects of the LTFV investigation. See E.I. DuPont de Nemours & Co. v. United States, 17 CIT 1266, 841 F.Supp. 1237 (1993). On March 20, 1996, the court issued a ruling on the remand redetermination of the LTFV investigation. See E.I. DuPont de Nemours & Co. v. United States, 20 CIT ___, 932 F.Supp. 296 (1996). In that case, the court affirmed Commerce's remand redetermination with respect to Cheil's and SKC's cost methodologies for recycled PET material, Cheil's and SKC's cost methodologies for prime and off-grade PET film and SKC's product-specific costs. See id.
DuPont now claims Commerce erred in the Final Results by: (1) accepting the value-based costing methodologies utilized by Cheil Synthetics, Inc. ("Cheil") and SKC Limited and SKC America, Inc. (collectively "SKC") to calculate the material costs of recycled PET material; (2) accepting SKC's methodology for calculating the production costs of off-grade PET film; (3) accepting SKC's product-specific cost data; (4) determining that there was no evidence in the record that SKC manipulated roll film pricing on its United States sales to Anacomp, Inc. ("Anacomp"); (5) accepting inventory carrying costs as reported by Kolon Industries, Inc. ("Kolon"); (6) calculating an imputed credit expense based on the short-term interest rate as reported by SKC; and (7) deciding to account for non-customary inventory carrying costs incurred by Cheil in the home market on its United States sales.
Discussion
The Court has jurisdiction over this matter under 19 U.S.C. § 1516a(a)(2) (1994) and 28 U.S.C. § 1581(c) (1994).
The Court must uphold Commerce's final determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B). Substantial evidence is "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). "It is not within the Court's domain either to weigh the adequate quality or quantity of the evidence for sufficiency or to reject a finding on grounds of a differing interpretation of the record." Timken Co. v. United States, 12 CIT 955, 962, 699 F.Supp. 300, 306 (1988), aff'd, 894 F.2d 385 (Fed.Cir. 1990).
1. Acceptance of Cheil's and SKC's Costing Methodologies for Recycled PET Film
In calculating the cost of production ("COP") and constructed value ("CV") of the PET film, Commerce accepted the cost data reported by Cheil and SKC, concluding that both methodologies reasonably calculated the material costs of recycled material. See Final Results, 60 Fed.Reg. at 42,836. PET film is manufactured in a two-stage process that ultimately combines virgin and recycled PET chips in different combinations to produce different types of PET film. In the first stage, raw materials of ethylene glycol, dimethyl terephthalate and terephthalate acid are combined to produce virgin polyester chips from polymerization. In the second stage, the virgin chips are melted down and extruded through a dye and rolled out on rollers to produce finished PET film. The production of PET film from chips features a first pass efficiency, i.e., a percentage of good, salable finished film from each production run, of between 50% and 80% of the volume of input material. Cheil and SKC both recycle the PET material edge trimmings and scrap resulting from the production process into chips and combine them with virgin material to manufacture film of the same or lower specification in subsequent runs. As very little PET polymer degrades during production, over 90% of the total volume of raw material introduced into the production process ultimately emerges as finished PET film.
Cheil and SKC both calculate material costs utilizing valuebased methodologies to account for the recycled PET material. Cheil employs a figure representing the potential *1252 resale value of a recycled chip, known as a "net realizable value" ("NRV"). To arrive at its total materials cost for each run, Cheil adds the cost of the virgin material to the NRV of the chip input and subtracts the NRV of the chips produced. In contrast, SKC assigns a cost to its transferred recycled PET equal to the processing cost involved in recovering and recycling the scrap material into chips and treats the recycled material as having a zero materials cost. In essence, from a materials cost standpoint, SKC assigns a zero value for recycled PET transferred to the receiving film, but includes the cost of processing the edge trimmings into recycled PET. See Final Results, 60 Fed.Reg. at 42,836. Cheil includes this processing cost in its film fabrication costs.
DuPont claims Cheil's and SKC's methodologies attribute a value to recycled PET that is far below the cost of virgin PET, for which it is substitutable, hence resulting in a cost figure unrepresentative of actual cost. DuPont argues that the end result of defendant-intervenors' methodologies is the shifting of costs from films sold in the United States to films sold in Korea when material is transferred. In essence, DuPont maintains that a distinction can be made between films that both Cheil and SKC manufacture: those that generate recycled PET and those that consume recycled PET. According to DuPont, as consuming films are predominantly sold in the United States and generating films are predominantly sold in Korea, Cheil's and SKC's inaccurate accounts for costs succeed in shifting costs away from the films principally involved in the review, thus systematically understating COP and CV. DuPont's Mem. Supp. Mot. J. Agency R. at 24-53.
Commerce first responds that it need not apply the cost methodology mandated by the CAFC in IPSCO, as that case applies solely to co-products and the recycled chips in this case are by-products of the PET film production process. Commerce further reiterates its conclusion in the Final Results that both methodologies at issue reasonably reflect the actual cost of producing PET film. Nevertheless, Commerce acknowledges the potential merit of DuPont's cost-shifting claims and commits to specifically investigate this allegation in subsequent reviews. Def.'s Partial Opp'n to Mot. J. Agency R. at 23-34. Cheil and SKC agree generally with the position taken by Commerce. Cheil's Opp'n to Mot. J. Agency R. at 14-33; SKC's Opp'n to Mot. J. Agency R. at 7-14.
The edge trimmings and other scrap materials that comprise the recycled PET chips at issue are neither finished goods nor co-products of the PET film; rather, they are byproducts of the PET film manufacturing process. See, e.g., E. Kohler, A Dictionary for Accountants 70 (4th ed.1970) (stating that production would not be carried out for the sake of by-products, as they are incidental to, and of relatively small importance in, the production of the main product). As the court stated in E.I. DuPont, "[t]he recycling process does not disinvest the recycled material from its by-product character, regardless of whether the recycled product hypothetically could be sold on the open market." 20 CIT at ___, 932 F.Supp. at 302. That being said, it is equally evident that the CAFC's decision in IPSCO requiring that all components be valued in a manner that fully comprehends production costs is limited to the value of co-products, and not by-products. See IPSCO, 965 F.2d at 1060; see also Thai Pineapple Pub. Co. v. United States, 20 CIT ___, ___, 946 F.Supp. 11, 18 n. 5 (1996) (stating that, because no party had argued that the merchandise at issue was a by-product, the court applied a co-product methodology for allocation of joint costs); Asociacion Colombiana de Exportadores de Flores, 22 CIT ___, ___, 6 F.Supp.2d 865, 881-82 (1998). IPSCO, therefore, does not apply to the valuation of the recycled PET material at issue here.
The evidence in this case demonstrates that recycled PET material is not entirely substitutable with virgin material. See, e.g., SKC's Administrative Rebuttal Brief, P.R. Doc. No. 231, at 8 n. 6, SKC's App., Ex. 2 (Aug. 24, 1994) (noting that chips with higher recycled chip content are cheaper to produce because they require fewer high-quality virgin chips); Administrative Hearing Transcript, P.R. Doc. No. 238, at 78-82, SKC's *1253 App., Ex. 6 (Sept. 2, 1994) (same). It is, therefore, inappropriate to require respondents to base their materials costs of recycled PET on the market value of equivalent volumes of virgin PET.
Further, as the court held in the appeal of Commerce's LTFV determination, Cheil's and SKC's methodologies reasonably capture the value of recycled PET chips re-introduced into the production process. See E.I. DuPont, 20 CIT at ___, 932 F.Supp. at 300-01.[2] Cheil's accounting methodology maintains the necessary equilibrium in COP by adding the NRV of transferred recycled PET chips while subtracting the NRV of the chips created from the production run. See id. Further, this methodology is consistent with both Korean and United States generally accepted accounting principles. SKC's zero value method is also reasonable, as it fully accounts for the cost of producing the recycled PET chips. Moreover, although SKC assigns a zero value to recycled PET chips, SKC does not subtract the value of recycled chips from the cost of producing film. Hence, there is no basis for adding any recycled chip value back into the cost of film manufactured with chip material input. See E.I. DuPont, 20 CIT at ___, 932 F.Supp. at 301.
Consequently, the Court concludes that Commerce properly accepted the costing methodologies utilized by Cheil and SKC to calculate the materials costs of recycled PET material. As a final note, however, the Court recognizes the cost-shifting potential inherent in Cheil's and SKC's methodologies because of the relatively high percentage of recycled material used in U.S. destined merchandise compared to Korea-destined merchandise. While there is no evidence of such shifting here, Commerce should commit to investigate specifically this allegation in subsequent reviews.
2. SKC's Cost Accounting Methodology for Off-Grade Film
Commerce accepted SKC's methodology for calculating the production costs of off-grade PET film because it was satisfied that SKC properly calculated these costs in a manner consistent with the CAFC's IPSCO decision. See Final Results, 60 Fed.Reg. at 42,840.
DuPont challenges Commerce's acceptance of SKC's off-grade PET film production cost methodology, arguing that record evidence indicates that SKC did not report identical costs for prime and off-grade film produced in the same production run as required by IPSCO. In particular, DuPont alleges that SKC obscured the link between prime and off-grade film by designating the different types of off-grade film in such a way that they had no prime-grade equivalents on the record. DuPont bolsters its claim that all off-grade films are undervalued by pointing to one model of off-grade film that did not approximate the average costs of other PET film types. DuPont's Mem. Supp. Mot. J. Agency R. at 53-63.
Commerce supports its Final Results decision, noting that SKC reported actual costs and did not allocate costs between prime and off-grade films based on relative value. Def.'s Partial Opp'n to Mot. J. Agency R. at 34-36. SKC agrees generally with the position taken by Commerce. SKC's Opp'n to Mot. J. Agency R. at 17-21.
As the prime and off-grade films at issue are co-products, and not by-products, the CAFC's decision in IPSCO applies. Under IPSCO, actual costs of materials, labor, capital and overhead must be used in calculating product COP and CV. 965 F.2d at 1060; see also U.S. Steel Group, a Unit of USX Corp. v. United States, 22 CIT ___, ___, 998 F.Supp. 1151, 1159 (1998). Moreover, costs may not be allocated between different grades of products based on their relative value. IPSCO, 965 F.2d at 1061; see also Thai Pineapple, 20 CIT at ___, 946 F.Supp. at 23 (stating that, under IPSCO, Commerce may not rely on output price-based allocation methodologies). Upon review of the record, the Court concludes that SKC properly reported its off-grade costs in *1254 a manner that reflected actual costs of production and did not allocate costs between prime-grade and off-grade films.
The Court is not convinced by DuPont's assertion that SKC undervalued all off-grade actual costs because the reported costs for one model of off-grade film did not approximate the average costs of other PET film types. As Commerce noted in the Final Results, 60 Fed.Reg. at 42,840, due to the numerous models of PET film sold of both grades, models exist with costs both above and below the average.
DuPont's complaint appears to center around the ramifications of SKC's recycled film methodology. Under this methodology, the final costs of prime-grade and off-grade film are not always identical because SKC does not subtract from finished film cost the cost of scrap film produced during a particular production run that is recycled. Hence, these costs remain in the cost of prime-grade films, but not off-grade films. First, the Court determined above that Commerce's acceptance of SKC's recycled film methodology is reasonable. Moreover, the fact that SKC's prime grade and off-grade films had different costs does not suggest that the costs assigned to them were not their actual costs, as required by IPSCO; co-product actual costs are not necessarily equal.[3] As SKC demonstrated in its questionnaire responses, it has accurately reported the actual costs of off-grade film. See SKC's Questionnaire Response, Section VIII, C.R. Doc. No. 7, at 14-16, SKC's App., Ex. 1 (Oct. 16, 1992) (stating that SKC determined chip costs for each PET film by accumulating the total costs for each specific PET film (type, grade and thickness) according to actual virgin chip and recycled chip usage).
Consequently, because SKC's reported off-grade costs reflect actual costs in accordance with IPSCO and because SKC did not allocate costs between prime and off-grade films based on relative value, the Court concludes that Commerce's acceptance of these costs is supported by substantial evidence.
3. Acceptance of SKC's Product-Specific Costs
SKC submitted product-specific costs, which Commerce accepted without verifying in this review. Final Results, 60 Fed.Reg. at 42,839. However, Commerce had verified and accepted SKC's product-specific cost methodology in the original antidumping investigation. DuPont contests Commerce's decision, alleging that Commerce unlawfully decided not to verify SKC's response and that SKC's costs do not provide actual costs, as mandated by IPSCO. DuPont's Mem. Supp. Mot. J. Agency R. at 63-67.
According to the statute, Commerce is required to perform verifications during administrative reviews only following a timely request by an interested party or if no verification was performed in the two immediately preceding reviews. See 19 U.S.C. § 1677e(b)(3); see also 19 C.F.R. § 353.36(a)(v). The only exception is when Commerce receives a timely request for verification and determines that "good cause" exists for verification, a determination that is within Commerce's discretion. See 19 C.F.R. § 353.36(a)(iv); Torrington Co. v. United States, 17 CIT 560, 565, 824 F.Supp. 1095, 1101 (1993), aff'd, 44 F.3d 1572 (Fed. Cir.1995).
The Court concludes that Commerce reasonably determined that good cause did not exist for verification of SKC's response. First, this court has upheld Commerce's acceptance of SKC's identical methodology for calculating product-specific costs. E.I. DuPont, *1255 20 CIT at ___, 932 F.Supp. at 302-03. Nevertheless, Commerce took measures to ensure that SKC's responses in the first review were accurate by issuing supplemental questionnaires on cost of production information, which tracked DuPont's concerns over SKC's original questionnaire responses. See Letter from Import Administration Transmitting Supplemental Cost Questionnaire for SKC, P.R. Doc. No. 110, Def.'s App., Ex. 8 (Apr. 20, 1993).
Consequently, in light of Commerce's discretion and this court's decision in E.I. DuPont, the Court concludes that Commerce's decision not to verify SKC's product-specific costs and Commerce's acceptance of these costs is supported by substantial evidence.
4. Whether SKC, Cheil and Kolon Manipulated Roll Film Pricing on U.S. Sales
DuPont claims that Commerce failed to adequately investigate DuPont's allegation that Cheil had manipulated reported prices to Anacomp when SKC had the incentive and means to manipulate such prices. DuPont contends it identified discrepancies between nominal and actual weight of roll film sales, allegedly caused by SKC providing a greater quantity of film than that required in the contract, thereby lowering the actual price per pound of sold film. DuPont's Mem. Supp. Mot. J. Agency R. at 67-70.
Upon review of the record, the Court concludes that Commerce's determination that there was no manipulation by SKC is supported by substantial evidence. The formula and calculations DuPont submitted to support its position were based on minimum width, length and thickness requirements specified in the Anacomp contract. See DuPont's Comments on the Preliminary Results, P.R. Doc. No. 221, Def.'s App., Ex. 14 (Aug. 11, 1994); SKC Supplemental Questionnaire Response, P.R. Doc. No. 103, Def.'s App., Ex. 9 (Apr. 19, 1993). However, DuPont's calculations were based on an inaccurate minimum length value which, when applied to one customer order, understated the film quantity on a particular sale. When the accurate value was substituted, this discrepancy was resolved. See SKC Administrative Rebuttal Brief, P.R. Doc. No. 231, at 22, Def.'s App., Ex. 16 (Aug. 24, 1994). DuPont's remaining "evidence" consists of unsubstantiated claims that it is industry practice to deliver excess film to ensure that producers do not deliver short footage rolls. The record, however, does not demonstrate any such discrepancies between nominal and actual weight quantities in the SKC roll film sales at issue.
DuPont's allegation that Cheil and Kolon manipulated roll film prices was not raised during the administrative proceedings and, therefore, is not properly before this Court. See 28 U.S.C. § 2637(d) (1994); Saarstahl Ag v. United States, 20 CIT ___, ___, 949 F.Supp. 863, 868 (1996) (noting that the Court would usurp the agency's function by setting aside an agency determination on a ground not presented before the agency, and which the agency did not have the opportunity to consider); see also Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed.Cir.1990).
5. Acceptance of Kolon's Inventory Carrying Costs
Kolon's initial questionnaire response excluded exporter's sales price ("ESP") sales made during the period of review, January 1991 to May 1992, but that entered before November 30, 1990. See Kolon Questionnaire Response, P.R. Doc. No. 47, at 53, Def.'s App., Ex. 4 (Oct. 14, 1992). Pursuant to Commerce's request, Kolon subsequently revised its sales listing to include these sales. See Kolon Supplemental Questionnaire Response, P.R. Doc. No. 165, at 2, Def.'s App., Ex. 12 (July 28, 1993). Relying on Kolon's data allocating total expenses during the period of review over total sales value during the review period, Commerce deducted Kolon's reported inventory carrying costs incurred on its ESP sales from U.S. price. See Final Results, 60 Fed.Reg. at 42,840.
DuPont argues Kolon's allocation methodology understates the quantity of expenses by excluding the later-reported ESP sales that were made during the period of review but that entered prior to November 30, 1990. DuPont essentially contends that Kolon's inventory carrying cost methodology also *1256 should have been revised to account for the additional sales Kolon supplied in its supplemental response. DuPont further alleges that Commerce did not require transaction-specific data, although it was available, but instead accepted Kolon's average inventory carrying costs for the period of review. DuPont's Mem. Supp. Mot. J. Agency R. at 87-88.
Commerce responds that it properly accepted Kolon's methodology because it accounted for all sales made during the period of review. In particular, Commerce maintains that Kolon's methodology was not tied to specific sales reported during the period of review, and so, the methodology automatically accounted for the later-reported ESP sales. Def.'s Partial Opp'n to Mot. J. Agency R. at 44-46.
Kolon agrees generally with the position taken by Commerce, emphasizing that the inventory carrying costs at issue were not based on costs associated with particular sales reported in its initial questionnaire response but, rather, on the total costs its U.S. subsidiary incurred during the period of review. Kolon's Opp'n to Mot. J. Agency R. at 7-19.
As a preliminary matter, it is fully within Commerce's discretion to calculate inventory carrying costs based on the average inventory period, as opposed to transaction-specific inventory periods. First, Commerce has been granted deference in deciding what methodology to use in carrying out its statutory responsibilities. See Ceramica Regiomontana, S.A. v. United States, 10 CIT 399, 404, 636 F.Supp. 961, 966 (1986), aff'd, 810 F.2d 1137 (Fed.Cir.1987). Moreover, Commerce's determinations have consistently accepted an average inventory period using an inventory turnover analysis in calculating inventory carrying costs. See, e.g., Color Television Receivers, Except for Video Monitors, From Taiwan; Final Results, 55 Fed.Reg. 47,093, 47,098 (Nov. 9, 1990) ("[T]he cost of carrying merchandise in inventory is indirect and is not absorbed by one particular television set, but by the company's entire operations. It is not necessary to allocate indirect expenses specifically to particular models or sales."); see also Television Receivers, Monochrome and Color, From Japan; Final Results of Antidumping Duty Administrative Reviews, 56 Fed.Reg. 24,370, 24,371 (May 30, 1991).
The Court concludes that Commerce's acceptance of Kolon's reported inventory carrying costs is supported by substantial evidence. Because Kolon based its methodology on total expenses and invoices during the period of review, its calculations were not affected by the inclusion or exclusion of merchandise that entered the United States prior to the period of review. As Commerce verified Kolon's methodology by tracing the reported figures to actual data from Kolon's inventory transaction journal and found no discrepancies, see Kolon Verification Report, P.R. Doc. No. 180, at 22-23, Def.'s App., Ex. 13 (Nov. 18, 1993), Commerce properly concluded that Kolon's methodology was not distortive.
6. Selection of Interest Rate Used to Calculate SKC's Imputed Credit Expense on its U.S. Sales to Anacomp
SKC reported an imputed credit expense on its United States sales of PET film to one of its U.S. customers, Anacomp, using an interest rate based on the type of loan associated with the sale. See SKC Questionnaire Response, Part VIII, P.R. Doc. No. 49, at App. VII-6, Def.'s App., Ex. 5 (Oct. 16, 1992). In the Preliminary Results, Commerce accepted SKC's imputed credit expense on sales to Anacomp, but did not offset SKC's imputed credit expense on those sales by the actual interest income received pursuant to SKC's contract with Anacomp. See Preliminary Analysis Memorandum for SKC, P.R. Doc. No. 194, at 11, SKC's App., Ex. 9 (Apr. 22, 1994). In the Final Results, however, Commerce accepted this calculation in accordance with its established practice, further noting that the loans SKC used to calculate its short-term borrowing rate were short-term loans from U.S. banks denominated in U.S. dollars. See 60 Fed.Reg. at 42,838-39.
DuPont disagrees with this short-term interest rate, arguing that it fails to accurately reflect SKC's true cost of extending credit to Anacomp. Relying on the CAFC's decision *1257 in LMI-La Metalli Industriale, S.p.A. v. United States, 912 F.2d 455 (Fed.Cir.1990), DuPont claims that Commerce should use a higher interest rate because the short-term interest SKC used for sales to Anacomp does not, in its unusual duration and conditions, reflect the commercial realities of extending credit to a company in weak financial condition. DuPont's Mem. Supp. Mot. J. Agency R. at 71-80.
Commerce agrees to a remand to reconsider its acceptance of the interest rate SKC selected in light of LMI-La Metalli. Def.'s Partial Opp'n to Mot. J. Agency R. at 47-48.
SKC objects to a remand, claiming first that DuPont's complaint is untimely. SKC further alleges that DuPont's claim fails on the merits, as there is no support for the proposition that imputed credit costs should be arbitrarily inflated to account for the perceived creditworthiness of the buyer. SKC claims this is especially true because the purpose of the imputed credit expense adjustment is to measure the opportunity cost to SKC of not receiving immediate payment, which depends on SKC's, not Anacomp's, cost of borrowing. Moreover, SKC contends DuPont improperly compares the rate at issue to an admittedly high rate in SKC's contract with Anacomp that applies solely to payments that are overdue and is, therefore, in the nature of an interest penalty. SKC's Opp'n to Mot. J. Agency R. at 21-30.
As a preliminary matter, this issue is properly before the Court. A plaintiff that does not exhaust its administrative remedies is estopped from raising the claim before the court, as the court would usurp Commerce's function by examining an agency's determination upon a ground not presented before Commerce. See 28 U.S.C. § 2637(d); Saarstahl, 20 CIT at ___, 949 F.Supp. at 868; see also Magnesium Corp. of Am. v. United States, 20 CIT ___, ___, 938 F.Supp. 885, 906 (1996). The Court may only consider issues that have not been exhausted below in exceptional cases where injustice would arise by applying strictly the general rule of exhaustion. See Mitsui & Co. v. United States, 18 CIT 185, 194 (1994) (quoting Hormel v. Helvering, 312 U.S. 552, 557, 61 S.Ct. 719, 85 L.Ed. 1037 (1941)).
Under Commerce's regulations, a plaintiff's case brief must contain "all arguments that continue in the submitter's view to be relevant to [Commerce's] final determination," and a plaintiff's rebuttal brief must be limited to issues raised in the other parties' case briefs. 19 C.F.R. §§ 353.38(c)(2) & (d). In the instant case, SKC painstakingly points out that DuPont's only argument regarding the interest rate used in the SKC credit expense calculation was that SKC had improperly included in its short-term borrowing rate certain Eurodollar loans, an argument they later abandoned. See DuPont's Administrative Case Brief, C.R. Doc. No. 73, at 22, Fiche 147 (Aug. 10, 1994). Indeed, the record indicates that DuPont first raised the issue of Anacomp's cost of borrowing in their rebuttal brief before Commerce at the administrative level. See DuPont's Administrative Rebuttal Brief, C.R. Doc. No. 76, at 2-7, SKC's App., Ex. 10 (Aug. 24, 1994). Although DuPont timely objected to SKC's proposed offset in its rebuttal brief, it also disputed Commerce's disregard of Anacomp's allegedly weak financial condition in its calculation of imputed credit expenses. DuPont, therefore, advanced a new affirmative argument in its administrative rebuttal brief, hence failing to properly exhaust its administrative remedies.
Nevertheless, the Court concludes that the present situation is an exceptional case where injustice would arise by applying strictly the general rule of exhaustion. Although "a request by Commerce for remand does not control the Court," Gulf States Tube Div. of Quanex Corp. v. United States, 21 CIT ___, ___, 981 F.Supp. 630, 647 (1997), the Court deems it significant that Commerce has requested a remand to reconsider its position. See Magnesium, 20 CIT at ___, 938 F.Supp. at 898 (granting Commerce's request for a remand to correct its calculation of certain expenses even though plaintiff had not exhausted its administrative remedies in contesting the calculations at issue). This is particularly true in the circumstances of this case, where Commerce asks for a remand to correct its Final Results in accordance with a CAFC decision.
*1258 That being said, upon review of the record, the Court agrees that a remand is necessary in this case. In LMI-La Metalli, the CAFC held that the interest rate used to calculate imputed credit expenses should be selected on the basis of "usual and reasonable commercial behavior." 912 F.2d at 461. As Commerce notes, it did not take into account Anacomp's financial condition in the Final Results. Consequently, this issue is remanded for Commerce to determine whether, in light of Anacomp's financial condition, SKC's reported short-term interest rate is consistent with LMI-La Metalli and to provide a clearly articulated rationale to support its determination.
7. Deduction of Inventory Carrying Costs from Cheil's Foreign Market Value in Purchase Price Sales
During the period of review, Cheil made only purchase price sales to the United States. Cheil reported inventory carrying costs in the home market for sales with respect to which there was a lag time between the date the sold merchandise left its factory and the day it was shipped to the United States as a selling expense and calculated them on a transaction-by-transaction basis. Cheil's Questionnaire Response, P.R. Doc. No. 44, at 41-54, Def.'s App., Ex. 3 (Oct. 13, 1992). In the Final Results, Commerce made a comparable deduction to home market inventory carrying costs because a deduction was made from U.S. price for such costs. See 60 Fed.Reg. at 42,838.
DuPont argues that Commerce's decision was improper, as its established practice has been to account for such expenses only when incurred on ESP sales. DuPont's Mem. Supp. Mot. J. Agency R. at 80-87.
Commerce consents to a remand to reconsider its decision to deduct Cheil's inventory carrying costs from foreign market value ("FMV"). Def.'s Partial Opp'n to Mot. J. Agency R. at 48-49.
Cheil objects to a remand, claiming that, under the circumstances of this case, it was appropriate to deduct inventory carrying costs from FMV. Cheil argues that, because Commerce decided to deduct U.S. inventory carrying costs from U.S. price, even though Cheil's sales were purchase price sales, it was appropriate similarly to deduct home market inventory carrying costs from FMV to ensure an apples-to-apples comparison. In the alternative, Cheil asks that, if the Court decides that Commerce should follow its normal practice and not deduct U.S. inventory carrying costs from U.S. price, then it also should require Commerce not to deduct home market inventory carrying costs from FMV. Cheil's Opp'n to Mot. J. Agency R. at 33-35.
Upon review of the record, the Court agrees that a remand is necessary for Commerce to reconsider its position in the Final Results. Because Commerce has considered inventory carrying costs to be indirect selling expenses, it normally has not deducted these expenses from U.S. price on purchase price sales and, therefore, normally has not made such deductions from FMV. Consequently, this issue is remanded to Commerce to reconsider its decision to deduct Cheil's inventory carrying costs from FMV.
Conclusion
In accordance with the foregoing opinion, this case is remanded to Commerce to: (1) determine whether, in light of Anacomp's financial condition, SKC's reported short-term interest rate is consistent with LMI-La Metalli and to provide a clearly articulated rationale to support its determination; and (2) reconsider its decision to deduct Cheil's inventory carrying costs from FMV. Commerce is sustained as to all other issues.
ORDER
This case having been duly submitted for a decision and the Court, after due deliberation, having rendered a decision herein; now, in accordance with said decision, it is hereby
ORDERED that this case is remanded to the Department of Commerce, International Trade Administration ("Commerce"), to determine whether, in light of Anacomp, Inc.'s financial condition, SKC Limited and SKC America, Inc.'s reported short-term interest rate is consistent with LMI-La Metalli Industriale, S.p.A. v. United States, 912 F.2d 455 (Fed.Cir.1990), and to provide a clearly *1259 articulated rationale to support its determination; and it is further
ORDERED that Commerce is to reconsider its decision to deduct Cheil's inventory carrying costs from foreign market value; and it is further
ORDERED that Commerce is sustained as to all other issues; and it is further
ORDERED that the remand results are due within ninety (90) days of the date that this opinion is entered. Any comments or responses by the parties to the remand results are due within thirty (30) days thereafter. Any rebuttal comments are due within fifteen (15) days of the date that the responses or comments are due.
NOTES
[1] In the preliminary LTFV results, Commerce determined that Cheil had a de minimus margin, and so, the first review period with respect to Cheil began on April 22, 1991.
[2] The court in E.I. DuPont determined that plaintiffs failed to properly raise the issue of SKC's costing of recycled PET chips at the administrative level but, nevertheless, concluded that SKC's methodology was reasonable. 20 CIT at ___, 932 F.Supp. at 301.
[3] This case is factually distinguishable from IPSCO. The products at issue in IPSCO were prime and limited-service grades of steel pipe, which were separated based on stress and serviceability tests. 965 F.2d at 1057-58. The court concluded that, because the producer expended the same materials, capital, labor, and overhead in the manufacturing lot that produced both grades of pipe, the CV of a quantity of limited-service pipe "necessarily matched" that of the same quantity of prime pipe. Id. at 1060. In this case, SKC has not expended the same materials cost input for the resultant prime and off-grade film, a fact reinforced by SKC's production accounting, which assigns a zero value to recycled materials because the materials costs of the recycled chips have already been fully captured in the accounting for the virgin chips. Consequently, unlike IPSCO, the actual costs of the co-products produced in this case are not identical.
|
733 S.W.2d 566 (1987)
ALLIED BANK OF TEXAS, et al, Appellants,
v.
PLAZA DeVILLE ASSOCIATES, Plaza Associates, Duelm & Swientek Dry Wall Company, Inc., Larry Little d/b/a Quality Glass, Foster Electric Company, Inc., Project Lighting Company, Inc., CSA International, Inc., Fisher Brothers Lumber Company/Fisher Brothers Building Center, Bexar Insulation, and Action Drapery, Appellees.
No. 04-86-00170-CV.
Court of Appeals of Texas, San Antonio.
May 20, 1987.
Rehearing Denied July 17, 1987.
*567 J. Clifford Gunter III, Michael Kuhn, Mark E. Lowes, Carrin F. Patman, Houston, for appellants.
Tom Allen Cunningham, Roger Townsend, Judith Meyer, Sarah Duncan, Fulbright & Jaworski, Houston, Jane H. Macon, James A. Kosub, San Antonio, for appellees.
Before CADENA, C.J., and BUTTS and REEVES, JJ.
*568 OPINION
BUTTS, Justice.
Allied Bank of Texas appeals from a judgment requiring it to pay damages to Plaza DeVille Associates for fraud and to Plaza Associates for fraud, breach of contract and negligence. The judgment also subordinated Allied's liens on certain property to those of various mechanics and materialmen under the theory of equitable subordination. Plaza Associates appeals from part of the judgment which awarded Allied damages for conversion.
This lawsuit arose as the result of Allied's administration of two construction loans providing Etto Corporation with funds to build an apartment complex in San Antonio. Allied loaned the money to Etto pursuant to two Construction Loan Agreements concerning development of Phase I and Phase II of the Plaza DeVille Apartments.
At the same time Allied and Etto executed their loan agreements, Etto sold its interest in the project to two investment limited partnerships created by the Balcor Company, a subsidiary of Shearson/American Express. Plaza DeVille Associates bought Phase I of the apartment development, and Plaza Associates bought Phase II. Etto agreed to complete the improvements through Purchase Agreements executed with each of the Plaza entities. Allied consented to this sale in Lender/Buyer Agreements between itself and the Plaza entities.
Etto completed construction of Phase I and obtained permanent financing for that project. However, Etto defaulted on its obligations regarding Phase II. Allied posted Phase II for foreclosure, while Etto filed for bankruptcy. Etto Corporation is not a party to the suit.
The day before the scheduled foreclosure, the Plaza entities sued to enjoin the foreclosure and alleged various causes of action against Allied stemming from its administration of the loans to Etto. The Plaza entities also sued the several holders of mechanics' and materialmens' liens alleging that the liens were fraudulent. The lienholders filed cross-actions against the Plaza entities and Allied, while Allied filed cross-actions against the Plaza entities.
After a jury trial the court entered judgment against Allied, awarding the Plaza Associates actual and exemplary damages based on their causes of action for fraud, breach of contract and negligence, as well as actual and exemplary damages to Plaza DeVille Associates on their fraud claim. The judgment further subordinated Allied's liens to those of the lien claimants on the theory of equitable subordination. It also provided that Allied recover various credits from each of the Plaza entities, and awarded Allied damages for conversion of rental proceeds against Plaza Associates.
Allied raises thirty-three points of error and six cross-points, and Plaza, as cross-appellant, raises six points of error. Although the statement of facts consists of twelve volumes, and there are many exhibits, the lawsuit turns on established rules of contract construction and cases interpreting payment retention clauses in construction contracts.
Allied's Liability under the Construction Loan Agreements
The basic question is whether Allied could be liable to the Plaza entities or the holders of mechanics' and materialmens' liens for its handling of the loan proceeds pursuant to the Construction Loan Agreements between Allied and Etto.[1] We hold *569 that the loan agreements themselves precluded any such liability.
Courts are in the business of construing agreements, not making them. The cornerstone of contract construction demands that courts look to the language of the instrument itself to determine the intent of the parties. See, e.g., Citizens Nat. Bank v. Texas & P. Ry. Co., 136 Tex. 333, 150 S.W.2d 1003, 1006 (1941) cert. denied 314 U.S. 656, 62 S.Ct. 109, 86 L.Ed. 526 (1941). As the Texas Supreme Court has ruled, "courts should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless." Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983) (emphasis in original).
If this examination reveals that the instrument is reasonably susceptible to more than one meaning, the contract is ambiguous. Skelly Oil Co. v. Archer, 163 Tex. 336, 356 S.W.2d 774, 778 (1961). However, if we can glean a definite legal meaning from a written instrument, then it is not ambiguous, and that meaning will bind the parties as a matter of law. See, e.g., R & P Enterprises v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 519 (Tex.1980).
Each Construction Loan Agreement primarily set forth the prerequisites Etto was required to meet to be entitled to proceeds of its loans from Allied.[2] Sections II through V of the agreements described the documentation, representations, warranties and covenants Etto was required to supply to Allied in order to trigger Allied's obligation to make loan advancements. Section VI, entitled "Loan Advances," described the method by which Allied would disburse the loan proceeds. The Plaza entities and the lienholders base all their claims on allegations that Allied breached the obligations set forth in this section.
Section VI specified the details of Allied's disbursement procedures in the event Etto met all of the requirements listed in the prior sections of the agreement. Section VI, paragraph (a), provided that Allied would disburse the initial purchase price of the complex when Etto complied with the requirements of Section II of the agreement. Paragraph (b) detailed the schedule whereby Allied would make subsequent advances under the note.
Significantly, this part allowed Allied to withhold ten percent of the amount of an advance requested by Etto. According to the contract, Allied would pay ninety percent of the value of work done the previous month, "based on the contract prices of labor and materials incorporated in the work and materials suitably stored at the site ... as estimated by and per certificates of Borrower [Etto or its assigns], Borrower's Architect, and Lender's [Allied's] Representative, attached to a Request for Advance,..." Allied would then pay the balance of the amount requested, the remaining ten percent retainage, thirty days after it was satisfied the improvements had been fully completed and "evidence satisfactory to the Lender [was] furnished showing that all bills for labor performed and material supplied by all Contractors [had] been fully paid...." Paragraph (c) merely reasserted the Borrower's obligation to spend the money advanced on the apartment project itself and not some unrelated venture. Finally, paragraph (d) detailed the schedule for payment of interest on the note.
Following those four provisions, Section VI contained this clause:
Notwithstanding anything to the contrary herein contained and only upon the *570 request of Borrower, Lender shall have the right, but not the obligation, to make such adjustments in the cost allocations set forth in Paragraphs (a) through (d) of Section VI of this Agreement as Lender in its sole discretion shall deem appropriate and thereby make Advances under said paragraphs in amounts greater than or lesser than the amounts specified in said paragraphs.
This clause clearly limited Allied's obligations detailed in the earlier paragraphs. Therefore, Section VI, taken as a whole, imposed only one duty upon Allied: to lend Etto up to the amount of money described in the note, provided Etto satisfied the conditions set forth in the Construction Loan Agreement.
Echoing this interpretation, Section VIII, paragraph 4, of the Construction Loan Agreement further provided:
4. All conditions to the obligation of Lender to make Advances hereunder are imposed solely and exclusively for the benefit of Lender and its assigns and no other person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make Advances in the absence of strict compliance with any or all thereof and any or all of such conditions may be freely waived in whole or in part by the Lender at any time if in its sole discretion it deems it advisable to do so. (Emphasis added).
This language reinforced the clear dictates of Section VI of the agreement: Allied could disburse all of the loan proceeds without incurring any liability for failing to follow the loan disbursement procedures. See, e.g., Corpus Christi Bank and Trust v. Smith, 525 S.W.2d 501 (Tex.1975); Citizens Nat. Bank v. Texas. P.Ry. Co., 136 Tex. 333, 150 S.W.2d 1003 (1941). Allied's only mandatory obligation was to loan the money agreed to if Etto and its assigns met all the requirements set out in the agreement.
Yet the Plaza entities and the lien claimants insist that because Allied disbursed all of the loan proceeds without retaining ten percent, and without requiring Etto to supply proof that all of the materials and labor were fully paid for, Allied should be liable to them for actual and exemplary damages. The Plaza entities seek to force Allied to assume liability for the unpaid debts to the suppliers of material and labor relating to the apartment complex. They argue that if Allied had withheld ten percent of the loan proceeds and otherwise exercised all of its rights regarding loan distribution, requiring Etto to supply documentation of all costs and deposit money sufficient to cover completion of the project if the loan proved insufficient, the lien claimants would have been paid out of the loan proceeds.
However, this argument overlooks Allied's specific reservation of the right to waive those requirements. Allied expressly reserved the right to distribute the loan proceeds in any manner it deemed fit. The requirement for documentation showing where the money went and the right to retain a percentage of the loan proceeds until Etto supplied that documentation were clearly rights which Allied could waive without incurring liability. Those provisions were solely for Allied's benefit. See Corpus Christi Bank and Trust v. Smith, 525 S.W.2d at 504. Citizens Nat. Bank v. Texas & P. Ry. Co., 150 S.W.2d at 1007; Tezel & Cotter v. Roark, 301 S.W.2d 179 (Tex.Civ.App.-San Antonio 1957, writ ref'd); Scarborough v. Victoria Bank & Trust Co., 250 S.W.2d 918 (Tex.Civ.App.- San Antonio 1952, writ ref'd).[3]
The Plaza entities, as assignees of Etto's rights under the Construction Loan Agreement, had no contractual right to demand that Allied exercise all of the discretionary provisions under the agreement, and, thus, cannot later claim damages for Allied's failure to exercise its own rights. Allied's clear disclaimers of liability contained in Section VI and in Section VIII of the Construction Loan Agreement preclude Allied's *571 assumption of liability to anyone involved in this case, be they parties or third party beneficiaries.
The only way Allied might assume liability to Plaza for failing to exercise its own rights regarding loan distribution would be if Plaza were a surety of Etto's obligation under the note. See Aetna Casualty & Surety Co. v. Russell, 24 S.W.2d 385, 387 (Tex.Comm'n App. 1930, holding approved). A surety is one who makes "a direct promise to perform the principal's obligation if he fails to perform it as he agreed to do." Tolbert v. Standard Accident Ins. Co., 148 Tex. 235, 223 S.W.2d 617, 619 (1949). However, in this case the Plaza entities specifically disclaimed any liability for Etto's failure to meet its obligations to Allied. Paragraph seven of the Lender/Buyer agreement between Allied and Plaza entities provided:
7. Neither Buyer [Plaza DeVille Associates in the contract dated December 27, 1983, regarding Phase I, and Plaza Associates in the contract dated February 2, 1984, regarding Phase II] nor any of its general or limited partners shall have any personal liability for the payment of the principal of or interest on the Note or for any claim based on the Note, or the performance or observance of the covenants, representations, warranties or obligations contained in the Note or in any instruments securing the Note....
Thus the Plaza entities were not sureties of Etto's obligations to Allied, and consequently had no standing to complain of Allied's waiver of its rights in disbursing the loan proceeds. Aetna Casualty & Surety Co. v. Russell, 24 S.W.2d at 387. We therefore hold, based on the language of the contracts, that Allied owed no duty to the Plaza entities, either contractual or legal, to fully exercise its own rights regarding loan distribution as described in the Construction Loan Agreements.
Accordingly, Allied cannot be liable to the Plaza entities for fraud, because the Plaza entities had no right to rely on any representations Allied made regarding the manner in which it would disburse the loan proceeds. Neither can Allied be liable for breach of contract, for the contract itself clearly enabled Allied to waive all its rights in disbursing the loan to Etto. Further, since Allied owed no duty to the Plaza Associates regarding the distribution of the loan proceeds, Allied could not be liable to them for negligence regarding the distribution of the loan.
Accordingly, we reverse the judgment of the trial court and render a take nothing judgment against appellees Plaza DeVille Associates and Plaza Associates on their respective claims for fraud, breach of contract, and negligence.
Equitable Subordination
The judgment also subordinated Allied's lien on the property to those of the lien claimant's[4] on the theory of equitable subordination. We are mindful of precedent for the doctrine of equitable subordination. See In the Matter of Mobile Steel Co., Benjamin v. Diamond, 563 F.2d 692, 699 (5th Cir.1977). However, we hold that the doctrine cannot apply to the facts in this case. Allied did nothing inequitable to warrant the subordination of its liens. Allied's obligation under the contracts was to provide construction funds up to the amount evidenced by Etto's note. Allied fulfilled that obligation by disbursing the loan proceeds. The judgment subordinating the liens of Allied Bank of Texas to those of the appellees, the lien claimants in this case, is therefore reversed and rendered.
Allied's "Credits"
Plaza DeVille and Plaza Associates, as cross-appellants, each bring several points of error. Their first concerns "credits" awarded to Allied to offset the amount it was ordered to pay the Plaza entities in actual and exemplary damages. The judgment ordered Allied to pay Plaza DeVille Associates actual damages amounting to *572 $175,000.00 plus prejudgment interest, and one million dollars in exemplary damages. The judgment went on to entitle Allied to a $600,000.00 credit against these amounts. The judgment further ordered Allied to pay Plaza Associates $501,000.00 plus prejudgment interest, and one million dollars in exemplary damages. Allied received a $1,200,000.00 credit against those amounts.
These credits represent amounts the jury found the Plaza entities withheld from Etto pursuant to their Purchase Agreement. The Purchase Agreement gave the Plaza entities the right to withhold purchase money from Etto in the event they were not satisfied Etto was conforming to the construction or purchase contracts. Allied's theory for receiving these offsets was that the Plaza entities contributed to causing Etto's bankruptcy by withholding purchase money in breach of the Purchase Agreement. Therefore, if Allied was liable for damages caused by Etto's default and subsequent bankruptcy, then the Plaza entities should contribute to paying those damages based on their failure to apply purchase money to cure Etto's default.
Most importantly, these credits were not compensation for damages to Allied. Allied was not seeking to recover these sums for any injury to themselves. These credits simply mitigated Allied's liability to the Plaza entities. Without passing on the validity of such credits under other circumstances, we hold that since Allied is not liable to the Plaza entities, the credits cannot be applied in this case. Accordingly, we reverse that part of the judgment awarding Allied credits totalling $1,800,000.00.
Allied's Claim for Conversion
The judgment further awarded Allied $150,000.00 for damages caused by Plaza Associate's wrongful withholding of Phase II rental proceeds. Appellee's second, third and fourth cross-points of error relate to this award. The jury found that Plaza Associates had converted Phase II rental proceeds rightfully belonging to Allied, that Allied was injured by the conversion, and that Allied was entitled to $150,000.00 in actual damages from Plaza Associates.
Plaza Associates maintains that there was no evidence or insufficient evidence to sustain this jury finding. Plaza argues that while Etto did assign Allied its right to rental proceeds from Phase II as part of Etto's security for the construction loan, Etto was only entitled to net proceeds from the rent on Phase II after Etto defaulted on its loan from Allied. Plaza claims that Etto's assignment to Allied of its right to rental proceeds as described in Etto's Assignment of Leases, executed February 2, 1984, could give Allied no more right to rental proceeds than Etto possessed at the time of the assignment. Plaza points out that the Management and Cash Flow Guaranty Agreement, executed February 1, 1984, entitled Etto to the rental income from the property only to the extent that gross rental income was sufficient to pay the expenses and fees of the project, and to make loan payments associated with the project. Plaza Associates admits to having received all the rental proceeds from Phase II from the time of Etto's default. However, Plaza claims that there were no net proceeds remaining after paying expenses. Plaza therefore forwarded no rental proceeds to Allied.
Paragraph six of the Lender/Buyer Agreement between Plaza Associates and Allied provided:
6. Buyer [Plaza Associates] hereby agrees that its rights under or pursuant to the terms of the Purchase Documents [expressly including the Management and Cash Flow Guaranty Agreement] are and shall be subordinate, inferior and subject to all of the liens and security interests now or hereafter securing payment of the Note or Notes....
Etto's Lease Assignment, which expressly gave Allied the right to collect all rents, served as part of Etto's security for the construction loan. Further, the Lender/Buyer Agreement between Allied and Plaza Associates specifically notified Plaza of that security interest. The record contains evidence that the rental proceeds amounted to at least $150,000.00 following *573 Etto's default. Therefore, we affirm the part of the judgment awarding Allied Bank of Texas $150,000.00 as damages for conversion of the rental proceeds.
The judgment is reversed and rendered that Plaza DeVille Associates and Plaza Associates take nothing and that the lienclaimants take nothing. The judgment is affirmed as to the damages to Allied for conversion of the rental proceeds.
NOTES
[1] The Plaza entities claim that they were parties to the Construction Loan Agreement because that contract was executed at the same time and dealt with the same transaction as the Purchase Agreement between Plaza and Etto, and their Lender/Buyer agreement with Allied. The Plaza entities cite the well settled rule that separate instruments executed at the same time, for the same purpose, and in the course of the same transaction may be considered as one instrument, to be read and construed together in determining the intent of the parties. See, e.g., Jim Walter Homes v. Schuenemann, 668 S.W.2d 324, 327 (Tex.1984).
Many opinions refer to this rule as a mandatory rule of construction, requiring contemporaneously executed documents which relate to a single transaction to be considered one, indivisible contract. See, e.g., Veal v. Thomason, 138 Tex. 341, 159 S.W.2d 472, 475 (1942). However, applied correctly, it is "simply a device for ascertaining and giving effect to the intention of the parties and cannot be applied arbitrarily and without regard to the realities of the situation." Miles v. Martin, 159 Tex. 336, 321 S.W.2d 62, 65 (1959).
We find no indication that the parties intended the three documents to form a single contract in which all of the clauses were interchangeable from one agreement to another.
But even if we view them that way, nothing in them imposed a mandatory obligation upon Allied to insure the loan proceeds would adequately pay all of the construction expenses.
[2] The two Agreements, one dated December 27, 1983, the other February 2, 1984, differed only in that one applied to Phase I and the other applied to Phase II.
[3] While those cases deal with materialmens' and laborers' rights to retained funds in construction contracts, the principle is the same as to Plaza. Arguably, the materialmen and laborers are in a better position to claim those funds than Plaza.
[4] The lien claimants in this case are: Duelm & Swientek Dry Wall Co., Inc., Larry Little d/b/a Quality Glass, Foster Electric Co., Project Lighting Co., Inc., CSA International, Inc., Fisher Bros. Lumber Co./Fisher Bros. Building Center, Bexar Insulation and Action Drapery.
|
51 So.3d 406 (2009)
PERRY YOUNG
v.
STATE.
No. CR-07-1734.
Court of Criminal Appeals of Alabama.
April 3, 2009.
DECISION WITHOUT PUBLISHED OPINION
Rehearing denied.
|
DISMISS and Opinion Filed February 8, 2019
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-18-01294-CV
EX PARTE RONROYAL J. OWENS
On Appeal from the 204th Judicial District Court
Dallas County, Texas
Trial Court Cause No. X16-897-Q
MEMORANDUM OPINION
Before Chief Justice Burns, Justice Whitehill, and Justice Nowell
Opinion by Chief Justice Burns
After reviewing the clerk’s record, the Court questioned its jurisdiction over this appeal as
it appeared the notice of appeal was untimely. We instructed appellant to file a letter brief
addressing our concern with an opportunity for appellee to file a response. Appellant complied.
The timely filing of a notice of appeal is jurisdictional. See Garza v. Hibernia Nat'l Bank,
227 S.W.3d 233, 233 (Tex. App.—Houston [1st Dist.] 2007, no pet.); TEX. R. APP. P. 25.1(b).
Without a post-judgment motion extending the deadline, a notice of appeal is due within thirty
days of the date of judgment. See TEX. R. APP. P. 26.1.
In his letter brief, appellant concedes that he did not file his notice of appeal within thirty
days of the date of judgment. Relying on Texas Rule of Appellate Procedure 4.2, he asserts his
notice is still timely because he filed it within thirty days of receiving actual knowledge of the
judgment. Id. 4.2.
Texas Rule of Appellate Procedure 4.2 provides that, if the party lacks actual knowledge
of the signing of a judgment or appealable order, the running of the appellate deadlines begins on
the date of actual knowledge, not to exceed ninety days after the original judgment is
signed. See TEX. R. APP. P. 4.2(a)(1). The procedure to gain this additional time is governed by
Texas Rule of Civil Procedure 306a(5), which requires a party receiving actual knowledge more
than twenty days after the signing of the judgment, to establish the date of actual knowledge in the
trial court by motion and with notice. See id. 4.2(b); TEX. R. CIV. P. 306a(5). Following a hearing,
the trial court must sign a written order finding the date when the party first received
notice. See TEX. R. APP. P. 4.2(c).
The record before this Court reflects the trial court signed the judgment on August 3, 2018.
Appellant asserts he received actual knowledge on September 19, 2018. However, the record does
not contain the required rule 306a motion or written order establishing the date of actual
knowledge. Under these circumstances, the notice of appeal was due on September 4,
2018. See id. 4.1(a); 26.1. Because appellant filed his notice of appeal on October 25, 2018, we
lack jurisdiction and dismiss this appeal. See TEX. R. APP. P. 42.3(a).
/Robert D. Burns, III/
ROBERT D. BURNS, III
CHIEF JUSTICE
181294F.P05
–2–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
EX PARTE RONROYAL J. OWENS On Appeal from the 204th Judicial District
Court, Dallas County, Texas
No. 05-18-01294-CV Trial Court Cause No. X16-897-Q.
Opinion delivered by Chief Justice Burns.
Justices Whitehill and Nowell participating.
In accordance with this Court’s opinion of this date, the appeal is DISMISSED.
Judgment entered February 8, 2019.
–3–
|
661 F.2d 920
Elby's Big Boy of Wilkes-Barre, Inc.v.Boury
80-1302
UNITED STATES COURT OF APPEALS Fourth Circuit
5/26/81
1
N.D.W.Va.
AFFIRMED
|
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 98-40480
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
FERNANDO ALVARADO; IRMA GARCIA; ARGELIA LLANOS; SAVAS URIBE;
ALEJANDRO PAZ,
Defendants-Appellants.
Appeals from the United States District Court
For the Southern District of Texas
(M-97-CR-221-2)
March 22, 2000
Before DAVIS, CYNTHIA HOLCOMB HALL* and SMITH, Circuit Judges
PER CURIAM:**
In this appeal from convictions and sentences in a multiple
defendant drug trafficking and money laundering case, the
Appellants raise a number of issues.***
*
Circuit Judge of the Ninth Circuit, sitting by designation.
**
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.
***
Appellants make the following claims: (1) Fernando Alvarado
claims that the district court miscalculated his base level
sentence by overestimating the amount of drugs involved in the
conspiracy and improperly enhanced his sentence for both possession
After carefully reviewing the record and considering the
Briefs and arguments of counsel, we are persuaded that none of the
Appellants’ arguments have merit and the district court committed
no reversible error. The judgment of conviction and sentence as to
all defendants is therefore affirmed.
AFFIRMED.
of firearms and playing an organizational or leadership role in
connection with his drug trafficing offenses; (2) Irma Garcia
claims that insufficient evidence was presented at trial to support
her money laundering convictions, the district court improperly
admitted evidence of an uncharged financial transaction that was
unduly prejudicial to her defense, and her property was wrongly
seized under mandatory criminal forfeiture laws; (3) Angelia Llanos
claims that the district court failed to instruct the jury that her
alleged money laundering transactions must have affected interstate
commerce, that there was insufficient evidence to show that
interstate commerce was adequately affected, and that the federal
money laundering statute at issue is unconstitutional both facially
and as applied; (4) Savas Uribe claims that insufficient evidence
was presented at trial to support his convictions and that the
district court erred in admitting evidence at trial of numerous
firearms recovered in a search of his residence, in enhancing his
sentence for possession of these weapons in connection with his
crimes, and in miscalculating his base level sentence by
overestimating the amount of drugs involved in his offense; and (5)
Alejandro Paz claims that insufficient evidence was presented at
trial to support his convictions.
2
|
IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
STATE OF DELAWARE, )
)
)
Vv. ) I.D. No. 1408009170
)
)
CARL R. RHOADES, )
)
Defendant. )
ORDER
AND NOW TO WIT, this 17th day of December 2019, upon consideration
of Carl R. Rhoades’ (“Defendant”) Motion for Modification of Sentence, the
sentence imposed upon the Defendant, and the record in this case, it appears to the
Court that:
Ihe On November 18, 2015, Defendant was convicted after a two-day jury
trial of Drug Dealing, Aggravated Possession, Disregarding a Police Officer’s
Signal, Resisting Arrest, and related offenses.! On April 8, 2016, Defendant was
declared an habitual offender,? and was sentenced on April 8, 2016, accordingly.’
1 See Verdict Sheet, State of Delaware v. Carl R. Rhoades, ID No. 1408009170, D.I. 24 (Del.
Super. Nov. 18, 2015).
2 See Motion to Declare Defendant An Habitual Offender Granted, State of Delaware v. Carl R.
Rhoades, ID No. 1408009170, D.I. 31 (Del. Super. Apr. 8, 2016).
3 See Sentence Order, State of Delaware v. Carl R. Rhoades, ID No. 1408009170, D.I. 32 (Del.
Super. Apr. 8, 2016).
Defendant appealed his conviction, and the Delaware Supreme Court held that the
Drug Dealing and Aggravated Possession charges should have merged for
sentencing purposes, and remanded to this Court for resentencing.*
i. On March 31, 2017, Defendant was resentenced as follows: (1) For
Drug Dealing, Defendant was sentenced to six years at Level V; (2) For Disregarding
a Police Signal, he received two years at Level V, suspended for two years at Level
IV Department of Correction (“DOC”) Discretion, suspended after six months, for
one year at Level III; and (3) For Resisting Arrest, he received one year at Level V,
suspended for one year at Level I.° Defendant was ordered to pay fines for the
remaining charges.°®
2. On September 27, 2019, Defendant filed this request to modify his
sentence’ to allow him to live at his mother’s house or to modify his Level IV
sentence to be “added” to his Level III sentence.’ In support of his motion,
Defendant states the following grounds for relief: (1) dissatisfaction with
“conditions” of his probation; (2) plans to seek employment opportunities; and (3)
4 See Mandate Filed From Supreme Court: Case Remanded to Superior Court, State of Delaware
y. Carl R. Rhoades, Crim. ID No. 1408009170, D.I. 39 (Del. Dec. 20, 2016); see also Rhoades v.
State, 152 A.3d 123, 2016 WL 7011352, at *3 (Del. Nov. 30, 2016) (TABLE).
> See Review/Resentencing, Defendant Re-Sentence, State of Delaware v. Carl R. Rhoades,
Crim. ID No. 1408009170, D.I. 40 (Del. Super. Mar. 31, 2017).
6 Sentence: ASOP Order Signed and Filed on 04/03/17, State of Delaware v. Carl R. Rhoades,
Crim. ID No. 1408009170, D.I. 41 (Del. Super. Mar. 31, 2017).
7 Defendant’s Letter Filed, State of Delaware v. Carl R. Rhoades, Crim. ID No. 1408009170,
D.I. 43 (Del. Super. Sept. 27, 2019) [hereinafter “Def.’s Mot.”].
8 Def.’s Mot. at page 2.
2
previous probation experience where Defendant was able live at his mother’s
residence.”
3. Defendant does not specifically cite to Superior Court Criminal Rule
35(b) in his motion. However, in his letter he asks the Court to change the conditions
of his Level IV sentence. Generally, “[t]here is no separate procedure, other than
that which is provided under Superior Court Criminal Rule 35, to reduce or modify
a sentence.”!? The Court therefore considers this request under Superior Court
Criminal Rule 35(b).
4. Under Rule 35(b), “[t]he Court may . . . reduce the . . . term or
conditions of partial confinement or probation, at any time.”'!! Defendant is not time-
barred because he does not seek to modify or reduce his Level V sentence, but rather
requests a reduction of his probation. However, this is Defendant’s second request.!”
5. This Court denied a Motion to Modify Sentence on August 18, 2019."
Superior Court Criminal Rule 35(b) also provides that “[t]he court will not consider
repetitive requests for reduction of sentence.”’* A motion is considered repetitive
when it “is preceded by an earlier Rule 35(b) motion, even if the subsequent motion
° See generally Def.’s Mot.
10 Jones v. State, 2003 WL 21210348, at *1 (Del. May 22, 2003).
' SupER. CT. CRIM. R. 35(b).
!2 See Motion for Modification, State of Delaware v. Carl R. Rhoades, ID No. 1408009170, D.I.
41 (Del. Super. June 24, 2019).
'3 See Motion for Modification, State of Delaware v. Carl R. Rhoades, ID No. 1408009170, D.I.
42 (Del. Super. Aug. 18, 2019).
14 SUPER CT. CRIM. R. 35(B) (emphasis added).
raises new arguments.”!> The bar to repetitive motions has no exception. It is
absolute and flatly “prohibits repetitive requests for reduction of sentence.”!® This
second Rule 35(b) motion is therefore barred as repetitive.
6. Even if not time-barred, the bases for modification are without merit.
No additional information has been provided to the Court that would warrant a
modification of this sentence. As such, the sentence was and remains appropriate for
all the reasons stated at the time of sentencing.
IT IS SO ORDERED that Defendant’s Motion for Modification is
DENIED.
Vivian L. Medinilla 7
Judge /
oc: Prothonotary
cc: Department of Justice
Investigative Services
Defendant
15 State v. Culp, 152 A.3d 141, 144 (Del. 2016).
16 Thomas v. State, 2002 WL 31681804, at *1 (Del. 2002). See also Jenkins v. State, 2008 WL
2721536, at *1 (Del. 2008) (Rule 35(b) “prohibits the filing of repetitive sentence reduction
motions.”); Morrison v. State, 2004 WL 716773, at *2 (Del. 2004) (defendant’s “motion was
repetitive, which also precluded its consideration by the Superior Court.”).
4
|
255 Md. 682 (1969)
259 A.2d 60
ACCROCCO ET UX.
v.
FORT WASHINGTON LUMBER COMPANY, INC. T/A FORD LUMBER COMPANY
[No. 60, September Term, 1969.]
Court of Appeals of Maryland.
Decided December 2, 1969.
The cause was argued before HAMMOND, C.J., and BARNES, FINAN, SINGLEY and SMITH, JJ.
Robert J. Woods for appellants.
Marvin M. Klein for appellee.
PER CURIAM:
Mr. and Mrs. Accrocco would have us reverse a decree entered by the Circuit Court for Prince George's County enforcing a lien claimed by Fort Washington Lumber Company, Inc. (the Lumber Company) in the amount of $6,519.19, with interest and costs, for goods and materials furnished by the Lumber Company in connection *683 with the construction of a house owned by the Accroccos at 814 Pocahontas Drive, Fort Foote.
The Accroccos concede that the mechanics' lien claim was in proper form and was filed within 90 days of the time when the last materials were furnished. They challenge the validity of the claim, because they say that when materials have been contracted for by a person other than the owner, the mechanics' lien law, Maryland Code (1957, 1968 Repl. Vol.) Art. 63, § 11 (a), requires that written notice of intention to claim a lien be given to the owner and they read the law to mean that such notice must be given prior to the filing of the claim.
Code Art. 63, § 11 (a) provides:
"If the contract for furnishing such work or materials, or both, shall have been made with any architect or builder or any other person except the owner of the lot on which the building may be erected, or his agent, the person so doing the work or furnishing materials, or both, shall not be entitled to a lien unless, within ninety days after furnishing the same, he or his agent shall give notice in writing to such owner or agent, if resident within the city or county, of his intention to claim such lien."
Code Art. 63, § 23 requires that the lien claim be filed within six months after the work has been finished or the materials furnished. Art. 63, § 28 requires that proceedings for the enforcement of the lien must be commenced before the end of two years from the day on which the claim was filed.
What happened here was that the Lumber Company wrote to the Accroccos on 14 February 1968, giving notice of its intention to claim a lien, and enclosing a copy of the lien claim. The lien claim was filed with the court clerk at 10:17 a.m. on 15 February 1968. Mr. Accrocco received the Lumber Company's letter at 2:30 p.m. on the same day.
*684 The Accroccos would have us hold that receipt of notice by the property owner is a condition precedent to the filing of the claim. The mechanics' lien law does not say this, nor do the cases on which the Accroccos put their principal reliance, William Penn Supply Corp. v. Watterson, 218 Md. 291, 146 A.2d 420 (1958); Bukowitz v. Maryland Lumber Co., 210 Md. 148, 122 A.2d 486 (1956); Kenly v. Sisters of Charity, 63 Md. 306 (1885). As we read the cases, what they do say is succinctly put in the Kenly case, 63 Md. at 309:
"* * * [B]efore the owner could be held liable for a mechanics' lien two things are made essentially necessary by the statute. One is that a notice should be given to the owner within sixty [now ninety] days from the furnishing [of] the materials, and the other is that the lien claim shall be filed within six months after the materials have been furnished."
The Lumber Company did both, in each case within the time specified by Art. 63. Compare Hess v. Poultney, 10 Md. 257, 268 (1856).
Decree affirmed, costs to be paid by appellants.
|
599 S.E.2d 415 (2004)
STATE of North Carolina, On Relation of R. Stuart Albright, District Attorney of the 18th Prosecutorial District, Plaintiff,
v.
Robert C. ARELLANO, Cha U. Arellano, Rocha Enterprises, Inc. d/b/a Rose Spa, and Other Unknown Persons, Defendants.
No. COA03-258.
Court of Appeals of North Carolina.
August 3, 2004.
*416 R. Stuart Albright, District Attorney, 18th Prosecutorial District, Forman Rossabi Black, P.A., by Amiel J. Rossabi and William F. Patterson, for the State.
A. Wayne Harrison, Greensboro, for defendants.
TIMMONS-GOODSON, Judge.
This case involves a complaint by Guilford County District Attorney R. Stuart Albright ("plaintiff") to claim the illegal profits from a public nuisance owned and operated by Robert C. Arellano and Cha U. Arellano ("defendants"). Defendants appeal two orders of summary judgment entered against them pursuant to N.C. Gen.Stat. § 19. For the reasons stated herein, we affirm in part and reverse in part the trial court's judgment.
*417 The pertinent factual and procedural history of the case is as follows: Defendants owned and operated Rose Spa, a massage business in Greensboro, North Carolina from 1991 to 2001. The Greensboro Police Department Vice/Narcotics Division suspected Rose Spa of housing a prostitution ring. Following an undercover investigation, the Greensboro Police Department obtained evidence of prostitution.
Defendants were arrested and charged with the misdemeanor criminal offenses of maintaining a place for purposes of prostitution, permitting the use of a place for prostitution, and aiding and abetting prostitution pursuant to N.C. Gen.Stat. § 14-204(1), (2) and (7). Defendants were convicted in district court on 14 February 2002 of all charges. The trial court sentenced defendants to forty-five days in jail with a suspended sentence of five years, and placed defendants on unsupervised probation on the conditions that they not be convicted of a similar offense, and that they pay a $500 fine.
Concurrent with the criminal prosecution, plaintiff filed the underlying civil action in 2001 pursuant to N.C. Gen.Stat. § 19 to permanently enjoin defendants from operating a public nuisance, and to seek "an order of forfeiture of all personal property, monies, contents and other considerations received or used in conducting and maintaining said nuisance." Defendants filed a motion for summary judgment on 15 February 2002, one day after their criminal convictions, asserting that "this proceeding is barred by the protection against double jeopardy." Defendants presented no evidence in support of their motion. Plaintiff filed a cross motion for summary judgment on 22 April 2002 accompanied by affidavits from three witnesses. The trial court heard oral arguments on 22 July 2002 and granted plaintiff's motion for summary judgment on 12 August 2002, granting plaintiff injunctive relief, an order of abatement, and an order of forfeiture of personal property. The trial court decreed in its order, inter alia, that the matter would "proceed to trial solely on the issue of damages."
After an accounting of the income earned from Rose Spa from 1991 through 2001, plaintiff filed a motion for summary judgment on damages on 1 November 2002 claiming that all of defendants' income should be forfeited. Defendants filed affidavits on 29 October 2002 stating that they did not have the documentation necessary to perform an accounting. Defendants filed a response to the motion for summary judgment on 31 October 2002, asserting that "the amount of damages, if any, is a subject for resolution of contested factual and legal issues." The trial court granted plaintiff's motion for summary judgment in November 2002, and ordered defendants to pay $1,633,137.13 in damages plus court costs and attorneys fees. It is from these two orders of summary judgment that defendants appeal.
The issues presented on appeal are whether (I) the civil action against defendants invokes the Double Jeopardy Clause; (II) the trial court erred by granting summary judgment on the issue of forfeiture; (III) the trial court erred by awarding damages in the amount of $1,633,137.13; and (IV) the damages award violates the excessive fines clauses of the North Carolina and United States constitutions.
Defendants first argue that the civil action against defendants invokes the Double Jeopardy Clause because defendants were convicted of criminal charges arising from the same conduct. We disagree.
The Double Jeopardy Clause prohibits "a second prosecution for the same offense after acquittal, a second prosecution for the same offense after conviction, and multiple punishments for the same offense." Montana Dept. of Rev. v. Kurth Ranch, 511 U.S. 767, 769, n. 1, 114 S.Ct. 1937, 128 L.Ed.2d 767 (1994). "The Law of the Land Clause incorporates similar protections under the North Carolina Constitution." State v. Oliver, 343 N.C. 202, 205, 470 S.E.2d 16, 18 (1996), citing N.C. CONST. art. I, § 19.
In Hudson v. United States, 522 U.S. 93, 118 S.Ct. 488, 139 L.Ed.2d 450 (1997), the United States Supreme Court modified the standard for Double Jeopardy analysis. The Hudson Court noted that "the Double Jeopardy Clause does not prohibit the imposition of all additional sanctions that could, in common *418 parlance, be described as punishment." 522 U.S. at 98-99, 118 S.Ct. 488 (citations omitted). Instead, "[t]he [Double Jeopardy] Clause protects only against the imposition of multiple criminal punishments for the same offense." 522 U.S. at 99, 118 S.Ct. 488 (citations omitted). The Hudson Court then advanced a two-part inquiry for determining whether a statutory scheme imposes punishment for double jeopardy purposes:
Whether a particular punishment is criminal or civil is, at least initially, a matter of statutory construction. A court must first ask whether the legislature, "in establishing the penalizing mechanism, indicated either expressly or impliedly a preference for one label or the other." Even in those cases where the legislature "has indicated an intention to establish a civil penalty, we have inquired further whether the statutory scheme was so punitive either in purpose or effect," as to "transform what was clearly intended as a civil remedy into a criminal penalty."
522 U.S. at 99, 118 S.Ct. 488 (citations omitted). The Hudson Court further established the following seven factors to be considered in assessing whether the punitive nature of the statute transforms the civil remedy into a criminal penalty:
(1) whether the sanction involves an affirmative disability or restraint; (2) whether it has historically been regarded as a punishment; (3) whether it comes into play only on a finding of scienter; (4) whether its operation will promote the traditional aims of punishment retribution and deterrence; (5) whether the behavior to which it applies is already a crime; (6) whether any alternative purpose to which it may rationally be connected is assignable to it; and (7) whether it appears excessive in relation to the alternative purpose assigned.
522 U.S. at 99-100, 118 S.Ct. 488 (emphasis omitted). The Hudson Court emphasized that no one factor is controlling, 522 U.S. at 101, 118 S.Ct. 488, and cautioned that "only the clearest proof will suffice to override legislative intent and transform what has been denominated a civil remedy into a criminal penalty." 522 U.S. at 100, 118 S.Ct. 488 (citations omitted).
Pursuant to the two-part inquiry articulated in Hudson, we analyze the case sub judice by first examining the purpose behind North Carolina statutes on abatement of nuisances, which provide in pertinent part the following:
Wherever a nuisance is kept, maintained, or exists, as defined in this Article, the ... district attorney ... may maintain a civil action in the name of the State of North Carolina to abate a nuisance under this Chapter, perpetually to enjoin all persons from maintaining the same, and to enjoin the use of any structure or thing adjudged to be a nuisance under this Chapter ...
N.C. Gen.Stat. § 19-2.1 (2003).
If the existence of a nuisance is admitted or established in an action as provided for in this Chapter an order of abatement shall be entered as a part of the judgment in the case, which judgment and order shall perpetually enjoin the defendant and any other person from further maintaining the nuisance at the place complained of ... Such order may also require the effectual closing of the place against its use thereafter for the purpose of conducting any such nuisance.
N.C. Gen.Stat. § 19-5 (2003).
All personal property, including money and other considerations, declared to be a nuisance under ... other sections of this Article, are subject to forfeiture to the local government and are recoverable as damages in the county wherein such matter is sold, exhibited or otherwise used.... An amount equal to the sum of all moneys estimated to have been taken in as gross income from such unlawful commercial activity shall be forfeited to the general funds of the city and county governments wherein such activity took place ... as a forfeiture of the fruits of an unlawful enterprise, and as partial restitution for damages done to the public welfare.
N.C. Gen.Stat. § 19-6 (2003).
The fact that § 19-2.1 expressly labels a lawsuit brought in this manner as a civil action indicates a legislative intent to establish a civil remedy for nuisance issues. Having *419 made this determination, we next apply the seven-factor test discussed supra to determine whether the effect of the statute is to impose a criminal punishment.
The first factor requires a review of whether the statute imposes an "affirmative disability or restraint," i.e., whether it imposes a sanction "approaching the infamous punishment of imprisonment." State v. Beckham, 148 N.C.App. 282, 285, 558 S.E.2d 255, 257 (2002), citing Hudson, 522 U.S. at 104, 118 S.Ct. 488 (citations omitted). Defendants argue that this question must be answered in the affirmative because the statute allows for permanent injunctive relief, which can result in imprisonment for contempt if such an injunction is violated. We disagree.
The realm of this statute does not provide for a punishment of imprisonment. It is only the ancillary possibility of a contempt violation which may impose such a punishment. This connection is too tenuous to invoke the Double Jeopardy Clause. As the Court reasoned in Hudson, if double jeopardy implications prevented contempt rulings, then all civil remedies would give rise to double jeopardy. See Hudson, 522 U.S. at 102, 118 S.Ct. 488. Our civil courts could not use contempt rulings to reinforce injunctive relief because of double jeopardy implications,
The second factor asks whether the civil remedy in question has historically been regarded as a punishment. Defendants argue that the answer to this question is "yes" because "prostitution has been subjected to criminal punishment since the dawn of civilization."
Defendants' response indicates that they misinterpret the nature of the question asked. The appropriate inquiry is not whether the nuisance activity has been historically punished, but rather if the civil remedy imposed by the statute has been historically viewed by the courts as punishment. We hold that the civil remedy imposed by General Statute § 19.6 has not been historically viewed by the courts as punishment.
Historically, criminal "punishment has taken the forms of incarceration and incapacitation." State v. Evans, 145 N.C.App. 324, 333, 550 S.E.2d 853, 859 (2001). The statute in question does not offer a remedy of incarceration or incapacitation. It only allows for injunctive relief and monetary damages which "have historically not been viewed as criminal punishment." Beckham, 148 N.C.App. at 285, 558 S.E.2d at 257, citing Helvering v. Mitchell, 303 U.S. 391, 58 S.Ct. 630, 82 L.Ed. 917 (1938).
The third factor asks whether the civil remedy comes into play only on a finding of scienter. Defendants argue that this question must be answered affirmatively because General Statutes § 19-6 provides that money damages are "recoverable from such persons who, under G.S. 19-2.4, have knowledge of the nuisance at the time such moneys are received by them." We disagree.
The sanction does not come into play upon a finding of scienter. The paragraph that allows for forfeiture permits such a penalty "upon judgment against the defendant or defendants in legal proceedings" without regard to defendants' state of mind. Thus, defendants' intent is not at issue in this analysis. See Hudson, 522 U.S. at 105, 118 S.Ct. 488.
The fourth factor asks whether the sanction promotes the "traditional aims of punishment retribution and deterrence." Beckham, 148 N.C.App. at 286, 558 S.E.2d at 258. Defendant argues that "surely a statute that can result in the complete loss [of] all assets of ones [sic] business, real and personal, carries a deterrent impact, and voices societal retribution." We find this argument unpersuasive.
We "recognize that the imposition of both money penalties and [other] sanctions will deter others from emulating [defendants'] conduct," Hudson, 522 U.S. at 105, 118 S.Ct. 488; however, "the mere presence of a [deterrent quality] is insufficient to render a sanction criminal [because] deterrence may serve civil as well as criminal goals." Beckham, 148 N.C.App. at 286, 558 S.E.2d at 258, citing Hudson, 522 U.S. at 105, 118 S.Ct. 488 (citations omitted).
We also recognize that civil forfeiture has a retributive effect. In fact, § 19-6 plainly states that "[a]n amount equal to the sum of all moneys estimated to have been taken in *420 as gross income from such unlawful commercial activity shall be [treated] ... as a forfeiture of the fruits of an unlawful enterprise, and as partial restitution for damages done to the public welfare." N.C. Gen.Stat. § 19-6 (2003). However, as we have previously noted,
[c]ivil forfeitures in contrast to civil penalties, are designed to do more than simply compensate the Government [for the cost of investigating and prosecuting this case]. Forfeitures serve a variety of purposes, but are designed primarily to confiscate property used in violation of the law, and to require disgorgement of the fruits of illegal conduct. They are not, however, intended as punishment, and therefore do not constitute penal measures in violation of double jeopardy prohibitions.
Belk v. Cheshire, 159 N.C.App. 325, 329, 583 S.E.2d 700, 704 (2003), citing U.S. v. Ursery, 518 U.S. 267, 284-88, 116 S.Ct. 2135, 135 L.Ed.2d 549 (1996). Therefore, we conclude that there is not a sufficient criminal effect under this statute to invoke double jeopardy.
The fifth factor asks whether the behavior to which the statute applies is already a crime. Section 19-1 provides a civil remedy for public nuisance. The statute defines public nuisance as follows:
[t]he erection, establishment, continuance, maintenance, use, ownership or leasing of any building or place for the purpose of assignation, prostitution, gambling, illegal possession or sale of alcoholic beverages, illegal possession or sale of controlled substances as defined in the North Carolina Controlled Substances Act, or illegal possession or sale of obscene or lewd matter.
N.C. Gen.Stat. § 19-1 (2003). There is a correlating criminal statute regarding prostitution. See N.C. Gen.Stat. § 14-203 et seq. However, "`this fact is insufficient to render'" the civil remedy "`criminally punitive, particularly in the double jeopardy context.' "Beckham, 148 N.C.App. at 286, 558 S.E.2d at 258, citing Hudson, 522 U.S. at 105, 118 S.Ct. 488 (citations omitted).
The sixth and seventh factors ask whether any purpose, other than criminal punishment, to which the statute may rationally be connected is assignable to it, and whether the statute appears excessive in relation to the alternative purpose assigned. We hold that there is an alternative purpose that is assignable to this statute. As discussed supra, there is a remedial purpose behind this civil remedy since it allows the government to recover the cost of investigating and prosecuting violators, and it disables the illegal activity which allows the general public to recover its sense of safety and well-being. The effect that the statute has on criminal activity is not excessive in relation to these benefits.
Having examined N.C. Gen.Stat. § 19 in light of the two-part analysis established by Hudson, we find no clear proof that the true legislative intent of the statute is to impose a criminal penalty. Accordingly, we reject defendants' assignment of error that N.C. Gen.Stat. § 19 constitutes punishment under a double jeopardy analysis.
Defendants also argue that the trial court erred by granting plaintiff's motion for summary judgment awarding plaintiff injunctive relief, an order of abatement, and an order of forfeiture of personal property. Defendants argue that the trial court violated their constitutional right to a jury trial. We disagree.
Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits ... show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C. Gen.Stat. § 1A-1, Rule 56(c) (2003). "When a motion for summary judgment is made and properly supported ... the adverse party may not rest upon the mere allegations or denials of his pleading, but must, by affidavit or otherwise, set forth specific facts showing that there is a genuine issue for trial." Five Star Enters., Inc. v. Russell, 34 N.C.App. 275, 278, 237 S.E.2d 859, 861 (1977).
A public nuisance is defined to include, inter alia, "[e]very place which, as a regular course of business, is used for the purposes of ... prostitution, and every such place in or upon which acts of ... prostitution[ ] are held or occur." N.C. Gen.Stat. § 19-1.2(6) *421 (2003). Additionally, all "money or other valuable consideration... received or used in ... prostitution" is deemed a nuisance. N.C. Gen.Stat. § 19-1.3(3) (2003).
Section 19-6 provides for forfeiture of all moneys that are declared to be a nuisance:
An amount equal to the sum of all moneys estimated to have been taken in as gross income from such unlawful commercial activity shall be forfeited to the general funds of the city and county governments wherein such activity took place, to be shared equally, as a forfeiture of the fruits of an unlawful enterprise, and as partial restitution for damages done to the public welfare.
N.C. Gen.Stat. § 19-6 (2003).
With regard to the proof required to show knowledge of nuisances involving prostitution, the statute provides that "evidence that the defendant knew or by the exercise of due diligence should have known of the acts or conduct constitutes proof of knowledge." N.C. Gen.Stat. § 19-1.1(1a) (2003).
In the case sub judice, the trial court notes in its order of summary judgment that
The plaintiff has offered evidence in support of its motion in the form of affidavits and portions of the transcript of the defendants' prior criminal trial and depositions. The defendants have offered no evidence in response ... except the "verified" answer. The defendants' responses to the specific allegations are simple, mostly one-word, responses: "Admitted" or "Denied." When questioned during depositions about the nature of operations at their property and the activities being undertaken there, the defendants invoked their privileges against self-incrimination.
The State's evidence is sufficient to prove that defendants engaged in nuisance activity, and that the proceeds of the activity should be forfeited. Defendants provided no evidence to refute plaintiff's account of defendants' activity, and therefore failed to raise a genuine issue of material fact. Accordingly, we conclude that summary judgment was appropriate. We further note that summary judgment does not deprive defendants of their right to a jury trial. The right to a jury trial accrues only when there is a genuine issue of fact to be decided at trial. See Kidd v. Early, 289 N.C. 343, 368-69, 222 S.E.2d 392, 409 (1976). For these reasons, we overrule this assignment of error.
Defendants next argue that the trial court erred by granting plaintiff summary judgment on the issue of damages. We agree.
Section 19-6 states in pertinent part the following:
Upon judgment against the defendant or defendants in legal proceedings brought pursuant to this Article, an accounting shall be made by such defendant or defendants of all moneys received by them which have been declared to be a nuisance under this Article. An amount equal to the sum of all moneys estimated to have been taken in as gross income from such unlawful commercial activity shall be forfeited to the general funds of the city and county governments wherein such activity took place, to be shared equally, as a forfeiture of the fruits of an unlawful enterprise, and as partial restitution for damages done to the public welfare.
(emphasis added).
In the case sub judice, both defendants filed affidavits on 29 October 2002 stating the following:
1. I am aware of the order of Judge Lindsay R. Davis, Jr. dated August 12, 2002, which states that I should provide an accounting for all gross income earned from Rose Spa from 1991 to the present date including the dates and amounts of each item of income, with a detailed description of goods or services provided therefore.
2. It is impossible for me to comply with the letter of that order since all the records relative to the income of Rose Spa and any description of goods or services provided are presently there, in the possession of the Internal Revenue Service and the United States Attorney's Office for the Middle District of North Carolina. My lawyer advises me that he has asked that the records be copied and the copies returned to *422 me, but that the Federal Authorities have refused to return the items. In addition, it may be practically impossible for anyone to determine a separate accounting for each item of income; and, unless the description of services provided appear on the document held by the Federal Authorities, I have no knowledge as to the specific nature of them.
3. I have earlier provided all information concerning gross income from Rose Spa to Mrs. Erma T. Reynolds. I have instructed my counsel to release all that information to this Court, however, it is my belief that the plaintiff in this action has already filed copies of my business tax returns from the past several years. A[sic] this time, I can do no more by way of an accounting.
Defendants later filed a response to the motion for summary judgment on damages stating that "the amount of damages, if any, is a subject for resolution of contested factual and legal issues." The only evidence presented on the issue of damages was the State's affidavit by Erma Reynolds ("Reynolds") stating that she was defendants' accountant from 1991 or 1992 until 2001, that she prepared defendants' income tax returns during those years, that her records show defendants' income over that period of time to be $1,633,137.13, and providing defendants' tax records for those years. Based on this information alone, the trial court awarded plaintiff damages in the amount of $1,633,137.13.
We conclude that while the total amount of gross income from Rose Spa may be calculated based on the accountant's copies of defendants' tax records, the amount of gross income derived from defendants' unlawful activity is disputed. Thus, summary judgment on the issue of damages was premature. Thus, we reverse the trial court's summary judgment on the issue of damages.
Defendants also argue that the damages award was excessive pursuant to the Eighth Amendment of the United States Constitution and Article I, Section 27 of the North Carolina Constitution. Because we reverse the trial court's summary judgment on damages, it is unnecessary to address this assignment of error.
For the aforementioned reasons, we hereby affirm in part, and reverse in part the judgment of the trial court, and remand the case for further proceedings consistent with this opinion.
AFFIRMED IN PART, REVERSED IN PART AND REMANDED.
Judges WYNN and McCULLOUGH concur.
|
121 Ind. App. 635 (1951)
101 N.E.2d 822
SWARTZ
v.
SWARTZ.
No. 18,159.
Court of Appeals of Indiana.
Filed November 28, 1951.
*638 Mox G. Ruge, of Chesterton, for appellant.
Ryan, Chester and Clifford, of Valparaiso, for appellee.
ACHOR, J.
This is an appeal from an adverse judgment in which the trial court refused to vacate and set aside a decree taken by default, by which *639 decree the court reopened a divorce judgment after term and reset the same for redetermination as to the property rights of the parties. The essential facts in the case are as follows:
On December 27, 1947, the Superior Court of Porter County made a finding and decree of divorce as to the parties. The pertinent parts of the decree are as follows:
"... and the court being duly advised in the premises finds for the plaintiff on her amended complaint that she is entitled to a decree of absolute divorce from the defendant, ... that the plaintiff and the defendant are the owners in fee simple, as tenants by the entireties, of two (2) parcels of real property located in Porter County, Indiana, and described as follows, to-wit:
Parcel Number 1. (description)
Parcel Number 2. (description)
The court finds that it is necessary to adjust the respective property rights and alimony claims of the respective parties hereto, and from the evidence the court finds that the plaintiff should be entitled to have and retain as her own separate property the real estate hereinabove described as parcel number 1, and that the defendant and cross-complainant should be entitled to have and receive as his own separate property that real estate hereinabove described as parcel number 2, and the court further finds that the plaintiff is entitled to receive from the defendant an alimony judgment in the amount of Two Thousand ($2,000.00) Dollars by way of equalization in connection with the division of the said properties.
It is therefore considered, adjudged, and decreed by the court that plaintiff have, and she is hereby granted, a decree of absolute divorce from the defendant.
It is further adjudged and decreed by the court that within ten (10) days from the date of this decree the plaintiff shall convey to the defendant the premises hereinabove described in the findings *640 of the court as parcel number 2. And that the defendant within said ten (10) day period shall convey to the plaintiff the premises above described as parcel number 1.
It is further adjudged by the court that the plaintiff be and she is hereby given a judgment for alimony against the defendant in the amount of Two Thousand ($2,000.00) Dollars by way of an adjustment in connection with the division of said real property. It is further adjudged by the court that said sum of alimony shall be paid in cash by the defendant into the Clerk's Office of this court contemporaneously with the delivery of said deeds.
It is adjudged further by the court that if either or both of the parties hereto do not make such conveyances, or if they or either of them refuse to do so, within said period of ten (10) days from date hereof, then in such event, Englebert Zimmerman, Jr., of Valparaiso is appointed as the commissioner of this court to make said conveyances as herein ordered as commissioner of the court, and said commissioner shall thereby be empowered to convey the full, entire, and complete interests of the respective parties to each other in accordance with this judgment.
It is further adjudged and decreed by the court that at the time of the delivery of said conveyances the abstracts of title covering said respective parcels shall be delivered over to the party acquiring the title thereto. If conveyances are not made by the parties voluntarily then and in such event the commissioner shall execute such deeds and report the same to this court for the court's approval and the costs of this action are taxed to the defendant other than the costs of the commissioner, if any, and the matter of the allocation of such costs is taken under advisement."
The parties did not execute reciprocal conveyances as prescribed in the judgment of the court. Appellant initiated proceedings for an appeal of the judgment and Englebert Zimmerman, Jr., appointed as commissioner, refused to make conveyance.
*641 Pending such appellate proceedings, the parcel of real estate assigned to appellee was burned. Appellant did not perfect her appeal and thereafter demanded performance according to the judgment of the court as entered. Thereafter, on June 1, 1948, appellee filed his "Petition to Amend Judgment, etc.," wherein he prayed that the original divorce decree entered December 27, 1947, be reopened and modified as to the property rights of the parties. Hearing on said petition was first set for March 25, 1950, at which time neither the appellant nor her attorney appeared. The cause was reset June 24, 1950, on which date the cause was heard in the absence of the appellant and finding and judgment was made by the court, by which the original judgment for divorce was reopened for further determination as to the property rights of the parties.
After reciting the circumstances of appellant's failure and refusal to make conveyance according to the specification of the divorce decree and of the subsequent loss of one of the properties by fire, the remaining part of the finding and the judgment of the court is as follows:
"The court further finds that said order and decree of December 27, 1947, was not a complete and final judgment but that the cause remained in fieri, and that this court, in order to do equity for the parties, should now vacate and set aside all those parts and portions of the decree of December 27, 1947, having to do with the division of the property of the parties and that the same should be now reconsidered by the court and all the property of the parties, held by them either separately in their own individual names or as tenants by the entireties, should be divided, adjusted or otherwise distributed in connection with the decree of divorce heretofore granted herein.
"IT IS THEREFORE CONSIDERED, ADJUDGED and DECREED by the court that the decree of divorce granted to the plaintiff on her *642 amended complaint in this cause on December 27, 1947, be confirmed and be not disturbed or set aside. That, however, the other parts and portions of said decree, are hereby vacated and set aside insofar as they concern the ownership, division and/or distribution of the property and the property rights of the parties.
"IT IS ADJUDGED AND DECREED further that the pending motion of the defendant be and the same is hereby granted and the court at a further hearing shall and will hear evidence touching upon the property rights of the plaintiff and the defendant in order that a just and equitable division may be made to the parties."
Thereafter, on September 7, 1950, appellant filed her "Verified Motion to Set Aside the Order and Judgment of the Court Entered Herein on June 24, 1950" and filed her answer to appellee's prior Petition to Amend the divorce decree of December 27, 1947. To appellant's aforesaid "Verified Motion to Set Aside the Order of June 24, 1950," the appellee filed his answer by way of a Counter Affidavit and trial was had on these issues September 30, 1950, on which date the court found against the appellant and denied her "Verified Motion to Vacate the Order of June 24, 1950."
Appellant's assignment of errors avers that the court erred in finding against her on her Verified Motion to Vacate the Judgment of June 24, 1950. It is upon this issue that the case is before us on appeal. Appellant's Verified Motion to Vacate the Order of June 24, 1950 was grounded upon § 2-1068, Burns' 1946 Replacement, which provides as follows:
"The court shall relieve a party from a judgment taken against him through his mistake, inadvertence, surprise, or excusable neglect, on complaint filed and notice issued, as in original actions within two (2) years from and after the date of the judgment, .. ."
*643 The law regarding the setting aside of default judgments, taken as a result of the mistake, inadvertence, surprise or excusable neglect of the defendant, is ably stated in the following cases:
In the case of Hoag v. Jeffers (1928), 201 Ind. 249, 252, 253, 159 N.E. 753, the court said:
"Under the statute now in force (§ 423 Burns 1926), as under former statutes somewhat similar in effect (§ 396 R.S. 1881), to obtain relief from a judgment taken against a party by virtue of the action granted him by this statute, two things must concur: (1) The judgment taken against the judgment defendant through his mistake, inadvertence, surprise or excusable neglect; and (2) his showing by his complaint that he has a meritorious defense to the cause of action upon which the judgment against him was founded. Woodward v. Killen (1925), 196 Ind. 570, 148 N.E. 195; Nash v. Cars (1883), 92 Ind. 216; Nord v. Marty (1877), 56 Ind. 531, 535; Buck v. Havens (1872), 40 Ind. 221; Hill v. Crump (1865), 24 Ind. 291, 294; Rooker v. Bruce (1908), 171 Ind. 86, 89, 85 N.E. 351.
...
"It is the function of the trial court to decide the question whether or not the default judgment in the particular case must be set aside, which action requires it to determine the sufficiency of the evidence which bears upon the question of the mistake, inadvertence, surprise or excusable neglect of the plaintiff. United States Fidelity, etc., Co. v. Poetker (1913), 180 Ind. 255, 102 N.E. 372, L.R.A. 1917B 984."
In the case of Carty v. Toro (1944), 223 Ind. 1, 4, 57 N.E.2d 434, the court stated:
"As indicated in the beginning the trial court in ruling upon the petition was required to exercise a sound judicial discretion. 31 Am. Jur. Judgments, § 717, U.S. Fidelity, etc. Co. v. Poetker (1913), 180 Ind. 255, 268, 102 N.E. 372, 376. Its decision will be set aside only for an abuse of such discretion. *644 With this rule in mind the facts alleged must be analyzed."
See also Neat v. Topp (1912), 49 Ind. App. 512, 97 N.E. 578; Gary Hobart Inv. Realty Co. v. Earle (1922), 78 Ind. App. 412, 135 N.E. 798.
The first question is, did appellant show by his complaint that he had a meritorious defense to appellee's "Petition to Amend" that portion of the original decree of divorce which related to the property rights of the parties. Appellee grounded his action to so reopen and set aside the divorce decree upon two theories the first being that the decree as entered was not a final judgment, that it remained in fieri or interlocutory and that it was the right and obligation of the trial court under the decree as made to follow through until such time as the parties obtained title and the actual physical possession of the properties which they were each to receive. The second theory of appellee's action was that the court, acting on the equity side, had the additional right and duty to relieve the appellee from the unfortunate results of accident where the condition was brought about by the appellant without the connivance of the innocent party.
The first issue which this court must determine is whether or not appellant's verified petition showed a meritorious defense. See Haas v. Schrum (1919), 72 Ind. App. 381, 124 N.E. 761.
If the original judgment of the court in the divorce action was a final judgment, as contended by appellant, then the court was without jurisdiction after term, in the absence of fraud, to set the judgment aside and reconsider the property rights of the parties. If the judgment be so construed the order of June 25, 1950 was void and it necessarily follows that appellee had a "meritorious defense" thereto. If, on the *645 other hand, said judgment of divorce was in fieri or interlocutory only as affecting the property rights of the parties, then the court had continuing jurisdiction over the property rights of the parties and the appellant has asserted no meritorious defense against further inquiry into and determination thereof by the court. Appellee, in support of its contention that the original divorce decree was not a final judgment, has merely cited Vol. 33 C.J., § 18, p. 1061, which is as follows:
"A final judgment is one which disposes of the cause both as to the subject matter and the parties so far as the court has power to dispose of it, while an interlocutory judgment is one which does not so dispose of the cause, but reserves or leaves some further question or direction for future determination...."
No authorities in support of this text have been cited. Those cited by Corpus Juris as supporting the above quoted section are not to be in point with the case at bar. Furthermore, it is necessary to consider the following portions of the same section of 33 C.J., § 18, at page 1063 to properly construe the meaning of the portion quoted:
"... But the judgments determining particular matters in controversy, and of such a nature that they could be immediately enforced and by their enforcement deprive the party against whom they were rendered of all benefit which he might obtain from an appeal at any subsequent stage of the proceedings, have been deemed final.... The question whether a particular order or judgment is final or interlocutory most frequently arises as a question of appealability, ..."
Further statement regarding this issue is made by 49 C.J.S., § 11, at page 37, as follows:
"... In determining whether a judgment is interlocutory or final, it should be construed in *646 accordance with the conduct of the parties and the intention of the court gathered from the language of the judgment or decree.... Also a judgment may be final although further directions may be necessary to carry it into effect, although further proceedings remain to be taken in court to make the judgment effective, ..."
The original divorce decree in the case at bar made a full determination of the issue as to the marital status of the parties and of their respective property rights. The case at bar is analogous to that of Rooker v. Fidelity Trust Co. (1926), 198 Ind. 207, 213, 214, 215, 151 N.E. 610. In that case the property rights of the parties to certain real estate were in controversy and were determined by the court. The property was ordered sold by a trustee. In that case the court stated:
"Appellants, by their exceptions to the report of sale by the trustee, appellee, allege that the sale, as reported, is contrary to law because of certain claimed rights, already settled by the decree upon the merits. Ibid 191 Ind. 141.
"It is apparent in the decree on the merits (Ibid 191 Ind. 141), that such decree was dependent upon further action of the court, i.e., receive and adjudge the report of sale by the trustee, as such decree ordered the trustee to do. It therefore became necessary for the court, which had jurisdiction of the case, to make further decrees in order to carry into effect the decree upon the merits of the case. And the court holds that any errors which occur in the rendition of decrees auxiliary to and in aid of execution of the decree upon the merits may be corrected upon appeal. But that, in such appeals from such decrees, subsequent to the decree to which they are auxiliary, the merits of the case as adjudicated may not be opened for further review or judicial action. Teaff v. Hewitt [(1853), 1 Ohio St. 511, 520, 59 Am. Dec. 634], supra; Hey v. Schooley (1836), 7 Ohio 373; Himley v. Rose (1809), 5 Cranch 312, 3 L.Ed. 111; The *647 Santa Maria (1825), 10 Wheat. 429, 442, 6 L.Ed. 430.
"The whole question of the merits of this matter was decided and determined by the decree which ordered a report of any sales of lands to be made to the court. That decree left no further question concerning the rights of the parties for future determination. The situation as made by the final decree upon the merits made it necessary for further decrees. But these subsequent decrees could be only auxiliary to or in aid of executing the final decree. This does not lead to the conclusion that the decree in this proceeding to confirm a sale is interlocutory. An interlocutory decree is one made in the progress of the suit, and one which leaves the equity of the case for future determination. Teaff v. Hewitt, supra. The decree in this proceeding is complete and final in relation to the matter to be determined, which was the sale of the land in Marion county. The decree is not interlocutory, it is final. An appeal will lie from the decree which confirmed the sale. The motion to dismiss the appeal is overruled."
Without approving the form of the decree herein, we are constrained to hold that the original divorce decree in the case at bar made a full and final determination of the issues in controversy, namely marital status and the property rights of the parties. Further decrees were merely "auxiliary." Under these circumstances the merits of the case, as adjudicated, may not be opened for further review or judicial action. Rooker v. Fidelity Trust Co., supra.
It therefore necessarily follows upon the theory that said judgment of divorce was in fieri or interlocutory only that appellant, on the basis of the pleadings, had a good and meritorious defense to appellee's "Petition to Amend Judgment, etc." of the original divorce decree.
Did appellant have a meritorious defense to the second theory of appellee's action to set said original *648 divorce decree aside? Appellant states, "The court, acting on the equity side, had the additional right and duty to relieve the appellee from the unfortunate results of accident where the condition was brought about by the appellant without the connivance of the innocent party." In support of this theory of action, appellant has cited Pomeroy's Equity Jurisprudence, Vol. 3, 5th ed., §§ 823 and 836. Neither Pomeroy nor the cases cited attempt to apply the "accident" doctrine of equity to the facts in the case at bar.
The property rights of the parties in the respective parcels of real estate was fixed by the decree of divorce December 27, 1947. Appellee had an insurable interest in the real estate assigned to him from that date. Appellee presented no issue in the court below which might justify setting the judgment aside and against which appellant was obliged to present a "meritorious defense" other than her original divorce decree. This decree is asserted as her defense in her motion to set aside.
Finally, this court must determine whether or not the trial court after weighing the evidence as to the mistake or excusable neglect of appellant, abused its discretion in refusing to set aside its judgment by which it ordered the original divorce decree set aside as to the property settlement between the parties.
It is admitted that the appellant's attorney was negligent in not notifying appellant or being present at the occasion of the first setting of the cause for trial, and that he did not appear on June 24, 1950, at which date the case was reset, heard and judgment rendered. However, it is also undisputed that on the date of said second setting, appellant and her son personally came to the courthouse for trial at the time assigned; that it was Saturday afternoon, when court was not regularly in *649 session, and the court room was locked; that appellant and her son waited in the rotunda outside the courtroom for perhaps an hour and a half after the time set for trial; that appellee's attorney knew that appellant and her son waited in the rotunda of the courthouse, outside the court room for said period; that appellee told appellant she had just as well go home because the case would not be tried and appellee then left the courthouse. These facts were not called to the attention of the court by appellee or his attorney. The hearing was held in the absence of appellant in the private chambers of the court, with no bailiff or reporter being present and without any attempt having been made to notify appellant that the matter was being considered by the court.
These circumstances, we believe, lead inescapably to the conclusion that the court abused its discretion when it denied appellant's motion to set aside said "default" decree.
Judgment is reversed, with instructions to the court below to sustain appellant's "Verified Motion to Set Aside the Order and Judgment of June 24, 1950," and for such other proceedings as are consistent herewith.
Crumpacker, J., took no part in the consideration or decision of this case.
Royse, J., concurring in result.
CONCURRING OPINION
ROYSE, J.
I agree with the majority opinion that the original divorce decree in this case made a full, complete and final adjudication of the marital status of the parties and of their respective property rights, and, therefore, there can be no further judicial review or action on the matters therein adjudicated. In *650 my opinion that was all that it was necessary or proper for us to decide in this case.
The record discloses the court overruled appellant's objection to the filing of appellee's petition to amend the original judgment.
While it is true certain of the averments of appellant's verified petition to set aside the alleged judgment of June 24, 1950 indicate it was filed pursuant to § 2-1068, Burns' 1946 Replacement, however, in my opinion the answer filed therewith directly challenged the authority of the court to make such judgment. I think our decision should be based on this theory. In my opinion the question of whether appellant had complied with the provisions of the above referred to statute was immaterial to a decision of the real question in this case. I therefore express no opinion on the discussion of those matters in the majority opinion.
NOTE. Reported in 101 N.E.2d 822.
|
32 F.3d 569
NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.Steven Francis BURMAN, Petitioner,v.IMMIGRATION AND NATURALIZATION SERVICE, Respondent.
No. 93-3544.
United States Court of Appeals, Sixth Circuit.
July 19, 1994.
Before: MILBURN and BATCHELDER, Circuit Judges; and CONTIE, Senior Circuit Judge.
PER CURIAM.
1
Steven Francis Burman challenges an order of deportation. We affirm.
I.
2
Petitioner Steven Francis Burman ("Burman") is a forty-one-year-old citizen of Canada. Burman entered the United States as a nonimmigrant visitor for pleasure on May 2, 1985, and married a United States citizen on May 12, 1985. Burman thereafter applied to the Immigration and Naturalization Service ("INS") for an "adjustment of status" pursuant to 8 U.S.C. Sec. 1255. On December 31, 1986, the INS denied Burman's application for permanent resident alien status and ordered that he leave the United States by January 31, 1987. On February 5, 1987, the INS issued an "Order to Show Cause, Notice of Hearing, and Warrant for Arrest of Alien" charging Burman with deportability because he had "remained in the United States for a longer time than permitted."
3
At his hearing before an immigration judge, Burman revealed that he had three marijuana convictions in Canada, but argued that his convictions should not preclude permanent resident alien status because his Canadian criminal activities would not be considered criminal in the United States, or, alternatively, his Canadian conduct equated to misprision of felony (which is not a deportable offense) under the laws of the United States. The immigration judge rejected Burman's request for permanent resident alien status. Burman appealed the immigration judge's determinations to the Board of Immigration Appeals ("Board"). The Board rejected Burman's appeal:
4
The respondent is a ... native and citizen of Canada, who seeks to adjust his status to that of a lawful permanent resident on the basis of his 1985 marriage to a United States citizen. At the hearing, the respondent admitted to having sustained three "minor narcotic" convictions in Canada on June 22, 1971; July 19, 1972; and July 16, 1975. According to the respondent, all three convictions were for possession of marihuana in violation of section 3(1) of the Canadian Narcotic Control Act. The respondent testified that, in each instance, he was never in actual custody or possession of the marihuana, as he was only riding in the vehicle or cohabitating in the apartment where the marihuana was found.
5
....
6
[W]e find the respondent's arguments flawed in several respects. First, the elements of the crime of "misprision," as defined in 18 U.S.C. Sec. 4, include: (1) knowledge of the actual commission of a felony; (2) concealment of the felony; and (3) failure to make known the felony to the appropriate authorities. In contrast, the Canadian definition of "possession" ... requires both knowledge, and, notably, consent of another's custody and possession. By definition, therefore, the respondent's possessory offenses are not analogous to the crime of misprision.
7
Secondly, the respondent was not convicted for misprision of the crime of possession of marihuana, but rather for the crime itself. [B]ecause the respondent [knowingly consented to] another's possession of the marihuana, he was deemed to be in the custody and possession of the same....
8
Board of Immigration Appeals' May 5, 1993 Order at 1-3 (citations and footnotes omitted).
9
Pursuant to 8 C.F.R. Sec. 3.1(d)(2), the Board's Order is a final order of deportation directly reviewable by this court. Burman filed his timely petition for review, pursuant to 8 U.S.C. Sec. 1105a, on May 19, 1993.
II.
10
Because he did not physically possess any marijuana on the three occasions that he was arrested, Burman argues: that he did not commit a crime under the laws of the United States; or, alternatively, that he committed misprision of felony under the laws of the United States. Misprision of felony does not preclude permanent resident alien eligibility.
11
Burman described the events underlying his three convictions to the immigration judge:
12
[Burman]: I was in Toronto, Ontario with some friends. We had gone to meet some other people, and I'd left my friends in a truck that we had borrowed from my father. It was a company van. We couldn't find parking, and they left me off .. they dropped me off, and when I came back to meet them, they were being arrested. I couldn't understand what .. what had happened. I got scared, and I left the scene. I ran away. My friends were arrested, they were taken to jail, the truck was impounded and a number of days later I was arrested as well in my .. in my home town. The police said they founds [sic] 2.2 grams of marijuana in the truck and the three of us were charged. When we went to Court, the officers said that I had .. said they had found the marijuana in the truck, and said that I had been in custody and broke away and ran and this is why I was also charged with escaping law from custody. The Judge heard the case, he .. his ruling was that because the three of us .. our .. our .. our stories were so similar, that we had to be lying and I was the only one charged with both the possession of narcotics and .. and for escaping law custody. I was given a plea to .. a two hundred dollar .. a one hundred dollar fine on the possession charge and two years probation on the escape from lawful custody charge.
13
[Judge]: Okay, now there is a second conviction noted in July 19th of 1972. Could you explain that situation to us?
14
[Burman]: I was living in a house with three other people. I had originally rented the house in my name. One day when I was at work, the police came to the house. They said they found one marijuana cigarette in the vacuum cleaner. Myself and one of the gals .. one of the .. one lady who was living in the house were both charged. They found both of us guilty at the Court, and during that case I pleaded guilty. The Judge just charged me because the house was in my name, and I didn't feel that either of us were responsible, but I .. I made the decision that time that there was no use for both of us being charged.
15
[Judge]: Okay, and then there is a third conviction [on] July 16, 1975. Could you speak to that conviction?
16
[Burman]: The circumstances are much similar. I was ... cohabiting a house .. an apartment, I was at work one day and I came home, and I was informed that the police had come and they had found a hash pipe and some marijuana seeds and again, since the house was in my name, I was charged. The apartment was rented in my name. I was charged and convicted.
17
* * *
18
[Judge]: And in these three .. three narcotics possession[ ] situation[s] you've just described, was there .. was there any narcotic on your person at the time that you were .. were arrested?
19
[Burman]: That was never .. no, nothing was ever found on my possession. I was never arrested because of any possession of illegal substance.
20
Joint Appendix at 16-19.
21
Though Burman argues that his actions do not constitute criminal possession under the laws of the United States because he was not in physical possession of the marijuana,
22
[p]ossession may be either actual or constructive and it need not be exclusive but may be joint.... Constructive possession exists when a person does not have actual possession but instead knowingly has the power and the intention at a given time to exercise dominion and control over an object, either directly or through others. Both actual possession and constructive possession may be proved by direct or circumstantial evidence. It is not necessary that such evidence remove every reasonable hypothesis except that of guilt.
23
United States v. Craven, 478 F.2d 1329, 1333 (6th Cir.) (citations omitted), cert. denied, 414 U.S. 866 (1973). See also United States v. Tisdale, 952 F.2d 934, 937 (6th Cir.1992) (Constructive possession means "the 'ownership, dominion, or control' over the item itself, 'or dominion over the premises' where the item is located.").
24
The relevant Canadian statute provides: "[W]here one of two or more persons, with the knowledge and consent of the rest, has anything in his custody or possession, it shall be deemed to be in the custody and possession of each and all of them." Joint Appendix at 29. The Board compared the definitions of criminal possession and rejected the petitioner's claim that his Canadian offenses equated to misprision of felony under United States law. See 18 U.S.C. Sec. 4 ("Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some judge or other person in civil or military authority" shall be guilty of misprision of felony.).
25
In United States v. Stuard, 566 F.2d 1 (6th Cir.1977) (per curiam), this court discussed the four elements necessary to sustain a conviction for misprision of felony: (1) the principal committed and completed the felony alleged; (2) the defendant had full knowledge of that fact; (3) the defendant failed to notify the authorities; and, (4) the defendant took affirmative steps to conceal the principal's crime. "Mere knowledge of the commission of the felony or failure to report the felony, standing alone, is insufficient to support a conviction for a misprision of a felony." United States v. Goldberg, 862 F.2d 101, 104 (6th Cir.1988).
26
In Castaneda de Esper v. INS, 557 F.2d 79 (6th Cir.1977), this court held that misprision of felony is not a crime within the statute authorizing deportation:
27
We conclude that misprision of felony under 18 U.S.C. Sec. 4 is not itself a law "relating to ... narcotic drugs." The holding of the Board that misprision of the felony of conspiracy to possess narcotics is a crime "relating to" narcotics goes beyond what Congress has described as grounds for deportation of an alien in 8 U.S.C. Sec. 1251(a)(11). Misprision is not conspiracy. Petitioner pled guilty to misprision of felony, not to commission of the underlying conspiracy felony she concealed.
28
We decline to adopt an interpretation of the statute that would incorporate the conviction for misprision of felony into the underlying conspiracy which petitioner concealed, or to hold that petitioner is guilty of an offense "relating to ... narcotic drugs." If Congress had desired to include "misprision of" narcotics laws among the grounds for deportation under 8 U.S.C. Sec. 1251(a)(11), it could have included misprision along with conspiracy in the Narcotic Control Act of 1956.
29
Id. at 84 (footnote omitted).
30
In Castaneda de Esper, the immigration judge "determined that petitioner had not been convicted of participation in a conspiracy to possess heroin, but had been convicted of misprision of a felony in that she concealed the knowledge of the actual commission of a conspiracy to possess heroin." Id. at 80-81. Burman was convicted for possessing marijuana, not for concealing a crime committed by others--it is irrelevant to our determination that Burman did not physically possess the marijuana because constructive possession qualifies as possession under the laws of the United States.
III.
31
In light of Burman's three controlled substance convictions and the governing immigration statute,1 the Board properly denied the petitioner's application. We therefore AFFIRM.
1
The applicable statute provides:
[A]ny alien convicted of, or who admits having committed, or who admits committing acts which constitute the essential elements of--
(I) a crime involving moral turpitude (other than a purely political offense), or
(II) a violation of (or a conspiracy to violate) any law or regulation of a State, the United States, or a foreign country relating to a controlled substance (as defined in section 802 of Title 21),
is excludable.
8 U.S.C. Sec. 1182(a)(2)(A)(i).
|
355 N.E.2d 243 (1976)
Roy M. ROBERTS, Appellant,
v.
STATE of Indiana, Appellee.
No. 676S185.
Supreme Court of Indiana.
October 5, 1976.
Raymond A. Grunert, Indianapolis, for appellant.
Theo. L. Sendak, Atty. Gen., Arthur Thaddeus Perry, Deputy Atty. Gen., Indianapolis, for appellee.
*244 De BRULER, Justice.
Appellant, Roy M. Roberts, was charged by information with commission of a felony while armed with a deadly weapon, to-wit: robbery, Ind. Code § 35-12-1-1 (Burns 1975). After a trial by jury, appellant was found guilty as charged and sentenced to fifteen years imprisonment.
Appellant presents three issues on appeal: (1) whether the State proved the element of putting the victim in fear, necessary to show a robbery, per Ind. Code § 35-13-4-6 (Burns 1975); (2) whether the trial court erred in overruling appellant's motion for a mistrial due to the prosecutor's asking appellant on cross-examination, "Do you remember telling [the detective] that you pulled the gun... ."; and (3) whether the trial court erred in overruling appellant's motion for a mistrial due to the investigating detective's volunteered statement: "I asked him what happened in reference to this case. He was more reluctant to talk about another case but he did tell me... ."
The facts show that Charles Van Cook was working at his business about midnight August 27, 1974. A few minutes after midnight on August 28th, he saw the door opposite his desk open slightly. He looked up and saw a person peering in at him. He got up and went to the door to see who he was. When he opened the door wide, he saw the person standing there with a gun on him. The person asked him to unlock the front door, open it, and then lock it again. Cook asked him if he didn't want to just go on out, and he said, "no," that "two men were waiting out there to kill him." He told Cook to give him his money, directing him to take it out of his pocketbook and lay it on a certain chair. Cook did so. There was $232.00 in American currency and $1.00 in Canadian. The person then told Cook he knew there was more money. With his gun four feet or less away from Cook, he had Cook go from room to room and open certain files. He then pushed him to a corner of one of the darker rooms with his gun and told him to stay there five minutes while he searched another part of the offices. Cook stayed only a minute or so, then started out a side door, where he met a policeman, whom a neighbor had called. Policemen apprehended appellant a few blocks away with a gun and the money. Cook identified him seven to ten minutes after the robbery.
I.
Appellant argues that there is no evidence that the robbery was accomplished by putting the victim in fear. We disagree. The Indiana robbery statute, Ind. Code § 35-13-4-6 (Burns 1975) reads:
"Whoever takes from the person of another any article of value by violence or by putting in fear, is guilty of robbery... ."
Certainly, in order to prove robbery, the State must prove beyond a reasonable doubt that the taking was accomplished by violence or by putting in fear. If the State is proving that appellant put the victim in fear, obviously the victim's state of mind is a material issue. However, there is no requirement that the victim testify that he was put in fear. Rather, it is enough that there is evidence of probative value from which the jury could infer that the victim surrendered his property because he was put in fear. McTate v. State, (1971) 256 Ind. 55, 267 N.E.2d 76; Perkins v. State, (1973) 261 Ind. 209, 301 N.E.2d 513; Cline v. State, (1969) 253 Ind. 264, 252 N.E.2d 793.
Here, the evidence that appellant had a gun, pointed it at Cook, and asked for his money; that Cook was alone and unarmed; and that Cook put the money on the chair as appellant directed permits an inference that Cook was put in fear and gave up his money for that reason. In rebuttal, appellant points to Cook's testimony that, when appellant took him back into the dark corner, appellant told him that he was *245 already in trouble so that it would not hurt him to shoot Cook. "That was when I really began to get a little scared." Appellant argues that this statement is indicative of the fact that Cook had not been made fearful by appellant's gun at the time he put out his money.
We cannot agree that appellant's interpretation of Cook's remark was the one the jury had to accept. The jury reasonably could have understood Cook's statement to mean that, at that point, Cook started to be afraid that appellant would harm him even though he had given him the money, whereas, until then, he had believed that appellant would leave him unharmed of he gave up his money. Cook's statement does not indicate that he was not afraid that appellant would harm him if he refused to give appellant the money. The jury reasonably inferred that Cook gave his money to appellant because appellant had a gun and Cook was afraid of the consequences if he refused.
II.
Appellant took the stand and testified that he had been on drugs and remembered being arrested. He testified that he had gotten the gun from a friend, probably earlier in the day of the robbery. On cross-examination, the State asked him if he remembered anything about the robbery besides his arrest. He said he did not, that he could not remember going into Cook's office or pulling a gun on Cook or asking him for his money. The State then asked appellant if he remembered having a discussion with Detective Devine. He said that he remembered. The State then asked, "Do you remember telling him that you pulled the gun...." Appellant immediately asked for a hearing outside of the presence of the jury.
At the hearing, appellant moved for a mistrial for the reason that the prosecutor had implied that appellant had made an admission and that that implication would remain with the jurors despite any admonition. The State replied that its purpose in asking appellant if he had made an earlier statement in which he did remember committing the crime was to enable the State to rebut his denial. Appellant replied that the State first had to show its conformance with the Miranda requirements and appellant's knowing and voluntary waiver. The court noted that appellant's statements might be admissible for impeachment although not admissible in the case-in-chief. Harris v. New York, (1971) 401 U.S. 222, 91 S.Ct. 643, 28 L.Ed.2d 1. The court permitted the State to continue to order to lay a foundation for evidence which would indicate that appellant did remember. The court warned that if the State did not present such evidence on rebuttal, then the court would again consider appellant's motion for mistrial. The State then continued its cross-examination, and appellant stated that he had talked to Detective Devine in jail about the gun, but not about the robbery.
On rebuttal, Devine testified that appellant had asked to have Devine come to see him in jail. Devine came, and appellant, after hearing a partial statement of his Miranda rights, told him that he broke into Cook's business with the intent of burglarizing it, that he had no intention of robbing the man and did not know he was there. He said he opened the door, saw the man sitting there, and started to shut it again. Then it was shut [shoved?] back, and, at that time, he went on in with his gun and robbed the man.
Appellant took the stand to show that, because he was under the influence of drugs, he had acted unconsciously and had no memory of his acts. Apparently, he was attempting to show no mens rea at the time of the act. The State could impeach his testimony that he had never remembered anything about the crime or made statements about it to Devine. Devine's testimony did that.
The impeaching questions and rebuttal were proper. If appellant's admission was *246 not admissible in the case-in-chief, it was still admissible to impeach. Once the admission was properly admitted, the State's impeaching question, "Do you remember telling [Devine] that you pulled the gun," was shown to have been properly asked. On appeal, appellant can show no harm from the question followed by his admission. The court did not err in refusing to grant a mistrial.
III.
In rebuttal, the investigating detective, Clifford Devine, was asked about his meeting with appellant in jail. He was asked if appellant had given any indication that he had understood the Miranda rights Devine had orally stated for him. Devine responded:
"Yes, he said he knew all about it. I asked him what happened in reference to this case. He was more reluctant to talk about another case but he did tell me... ."
Appellant immediately asked that the jury be excused. He then moved for a mistrial because the witness alluded to another case, "the inference being that defendant is currently some type of criminal." The State suggested that perhaps the jury would not realize the implications. The court questioned Devine, who said that he was thinking of other things, did not realize he could prejudice the jury by bringing in other matters outside of the case, and did not understand that his volunteered remark could mean a waste of court time and expenses. The court then overruled the motion for a mistrial and admonished the jury not to consider the answer for any purpose.
Devine's remark indicated to the jurors that appellant was a suspect in another case and presumably a more serious one since he refused to talk about it. In this case, appellant's identity as the robber was not in doubt, so that the most harmful effect of knowing that he was a suspect in another case was avoided. Appellant argues that the jurors must not have heeded the admonition, since they found him guilty of robbery and sentenced him to more than the minimum ten years. He contends that, but for this remark, the jury would have found the evidence of "putting in fear" to be insufficient and would have believed that appellant was under the influence of drugs, did not remember the crime, and was not responsible. This remark was not relevant to "putting in fear." In that regard, appellant's argument seems to be that, had the jury not been informed of appellant's other case, they would have treated him leniently and acquitted him of robbery in spite of the evidence. With regard to appellant's mens rea argument, the remark had some relevance. The jurors, if they ignored the admonition, could have found it less likely that appellant could commit two crimes without criminal intent. On the other hand, since appellant's mens rea argument was based on his use of drugs, the jurors could have believed that the drugs influenced his behavior over a period of time when he acted unconsciously on several occasions, so that his defense appeared more credible in this case. The detective's remark about "another case" did not affect the defendant's defenses or strengthen the evidence against him significantly.
Appellant argues also that the remark caused the jurors to sentence him to fifteen years, rather than to the ten year statutory minimum for robbery. We note that the jury gave appellant a sentence fifteen years less then the statutory maximum. Appellant was armed with a gun, threatened the victim's life, and was not a first offender. At trial, appellant admitted a 1971 conviction for joy-riding for which he served six months at the State Farm. We cannot attribute the jury's assessment of a penalty five years greater than the minimum to their hearing Devine's remark.
At the time the trial court denied the mistrial motion and admonished the jury, *247 appellant's counsel remarked that an admonition probably would not be adequate. The trial judge then said, "It may very well be,". Appellant argues that this response indicates that the judge himself believed that an admonition would not suffice, and, nevertheless, did not exercise his discretion when he refused to grant the motion for mistrial. He argues that, since the trial judge himself was not assured that appellant was given a fair trial, we should not consider the merits but should hold that he should have granted a mistrial.
The judge exercised his discretion and ruled against the motion for mistrial. Then, in response to appellant's attorney's disagreement, he stated in effect, "You have a right to appeal my ruling to the Supreme Court. And, it may very well be that the Court will determine that I have wrongly decided that an admonition is adequate. But I have exercised my discretion as seems correct, and we will wait and see." The judge's remark did not indicate that he thought an admonition was not adequate to assure appellant a fair trial. There is no evidence that he acted contrary to his best judgment.
Appellant also cites White v. State, (1971) 257 Ind. 64, 272 N.E.2d 312, which noted factors courts have considered in determining whether an admonition sufficed. Appellant notes that eleven of the thirteen facts which indicate that an admonition will not suffice are applicable to his case. However, White also noted that the best harmless error standard was stated in Kotteakos v. United States, (1946) 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557:
"If, when all is said and done, the conviction is sure [sic] that the error did not influence the jury, or had but very slight effect, the verdict and the judgment should stand, except perhaps where the departure is from a constitutional norm or a specific command of Congress... . But if one cannot say, with fair assurance, after pondering all that happened without stripping the erroneous action from the whole, that the judgment was not substantially swayed by the error, it is impossible to conclude that substantial rights were not affected. The inquiry cannot be merely whether there was enough to support the result, apart from the phase affected by the error. It is rather, even so, whether the error itself had substantial influence. If so, or if one is left in grave doubt, the conviction cannot stand." 328 U.S. at 764-65, 66 S.Ct. at 1248. (Footnotes and citation omitted.)
In this case, from what we have discussed in this section, we conclude that the error would have had no influence on the jury's determination of guilt of robbery or assessment of a fifteen year sentence. The trial court did not err in refusing to grant appellant's motion for mistrial.
Finding no error, we affirm the judgment of the trial court.
GIVAN, C.J., and ARTERBURN, HUNTER and PRENTICE, JJ., concur.
|
915 N.E.2d 210 (2009)
PICA
v.
STATE.
No. 71A04-0904-CR-229.
Court of Appeals of Indiana.
October 21, 2009.
VAIDIK, J.
Disposition of case by unpublished memorandum decision affirmed.
BAILEY, J., concurs.
BRADFORD, J., concurs.
|
United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT June 22, 2005
Charles R. Fulbruge III
Clerk
No. 04-40992
Conference Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JORGE ALBERTO GARCIA-AGUILAR,
Defendant-Appellant.
--------------------
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 1:04-CR-263-ALL
--------------------
Before WIENER, BENAVIDES, and DENNIS, Circuit Judges.
PER CURIAM:*
Jorge Alberto Garcia-Aguilar pleaded guilty to being an
alien unlawfully found in the United States after deportation,
having previously been convicted of an aggravated felony, and he
was sentenced to 46 months of imprisonment and three years of
supervised release. He appeals his conviction and sentence.
Garcia-Aguilar argues for the first time on appeal that the
felony and aggravated felony provisions of 8 U.S.C. § 1326(b) are
*
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. 04-40992
-2-
unconstitutional and that the validity of Almendarez-Torres v.
United States, 523 U.S. 224, 235 (1998), has been called into
question in light of later cases decided by the Supreme Court.
He concedes that this issue is foreclosed, and he raises it
solely to preserve it for further review by the Supreme Court.
Apprendi v. New Jersey, 530 U.S. 466, 489-90 (2000) did not
overrule Almendarez-Torres. As Garcia-Aguilar concedes, this
argument is foreclosed unless and until the Supreme Court itself
decides to overrule Almendarez-Torres. See Apprendi, 530 U.S.
at 489-90; United States v. Mancia-Perez, 331 F.3d 464, 470
(5th Cir.), cert. denied, 540 U.S. 935 (2003).
Garcia-Aguilar also argues that the district court erred in
sentencing him under a mandatory application of the guidelines
prohibited by United States v. Booker, 125 S. Ct. 738, 756-57,
769 (2005). Garcia-Aguilar did not raise this issue in the
district court, so we review it for plain error. See United
States v. Valenzuela-Quevedo, 407 F.3d 728, 732 (5th Cir. 2005).
Although there was an error, Garcia-Aguilar’s arguments and
review of the record do not demonstrate “that the district judge
would have imposed a different sentence” under advisory
guidelines. Id. at 733. Garcia-Aguilar has not shown that the
error affected his substantial rights as required under the plain
error standard. See Valenzuela-Quevedo 407 F.3d at 732-33;
United States v. Mares, 402 F.3d 511, 520-22 (5th Cir. 2005),
petition for cert. filed (Mar. 31, 2005)(No. 04-9517).
No. 04-40992
-3-
Garcia-Aguilar further argues that even if he has failed to
show prejudice, the court should reverse because the error was
structural and should be deemed presumptively prejudicial. He
acknowledges that the court did not adopt this approach in Mares,
but he believes that Mares was wrongly decided and he raises the
issue to preserve it for further review. The issue is indeed
foreclosed. See United States v. Malveaux, __F.3d__, No. 03-
41618, 2005 WL 1320362 at *1 n.9 (5th Cir. Apr. 11, 2005).
AFFIRMED.
|
341 S.E.2d 588 (1986)
In the Matter of the Appeal from the ENVIRONMENTAL MANAGEMENT COMMISSION FINAL ORDER GRANTING A CERTIFICATE OF AUTHORITY TO THE ORANGE WATER AND SEWER AUTHORITY PURSUANT TO G.S. SEC. 162A-7.
No. 8510SC694.
Court of Appeals of North Carolina.
April 1, 1986.
*590 Corvette & Hassell by Ted E. Corvette, Jr., Cary, for petitioners-appellants.
Thomas S. Erwin and Moore, Van Allen, Allen & Thigpen by Charles D. Case, Raleigh, for respondent-appellee. *591 Atty. Gen. Lacy H. Thornburg by Sp. Deputy Atty. Gen. Daniel C. Oakley, Raleigh, for Environmental Management Com'n.
MARTIN, Judge.
I.
Appellants have appealed from a judgment of the Superior Court upholding the order of the EMC granting a certificate of authority to OWASA to institute eminent domain proceedings to acquire lands along Cane Creek for the purpose of constructing an impoundment reservoir. The scope of judicial review of this administrative proceeding is not in dispute. Since this matter was initiated prior to the effective date of the new Administrative Procedure Act, N.C.Sess.Laws (2d Sess., 1985) c. 746, s. 19, codified at G.S. Chapter 150B, the provisions of the Administrative Procedure Act of 1973 (APA), G.S. Chapter 150A, apply to this case. Section 51 of the APA provides in part as follows:
The court may affirm the decision of the agency or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the petitioners may have been prejudiced because the agency findings, inferences, conclusions, or decisions are:
(1) In violation of constitutional provisions; or
(2) In excess of the statutory authority or jurisdiction of the agency; or
(3) Made upon unlawful procedure; or
(4) Affected by other error of law; or
(5) Unsupported by substantial evidence admissible under G.S. 150A-29(a) or G.S. 150A-30 in view of the entire record as submitted; or
(6) Arbitrary or capricious.
Under the whole record test embodied in subsection (5), agency findings of fact are conclusive if, upon review of the whole record, they are supported by evidence which is competent, material, and substantial. In re Faulkner, 38 N.C.App. 222, 247 S.E.2d 668 (1978). While the reviewing court is required to consider evidence that supports and detracts from the agency ruling, it may not substitute its judgment for the agency's and may not find facts. Community Savings and Loan v. N.C. Savings & Loan Comm'n, 43 N.C.App. 493, 259 S.E.2d 373 (1979); In re Faulkner, supra. Substantial evidence is relevant evidence that a reasonable person would consider adequate to support a finding of fact. Lackey v. Dept. of Human Resources, 306 N.C. 231, 293 S.E.2d 171 (1982). See also Coastal Ready Mix Concrete Co. v. Bd. of Commissioners of the Town of Nags Head, 299 N.C. 620, 265 S.E.2d 379, reh. denied, 300 N.C. 562, 270 S.E.2d 106 (1980).
Appellants contend that when the whole record test is applied to each of the six factors listed under G.S. 150A-51, the order of the EMC fails to satisfy all but the third one. Though neither OWASA nor the EMC addresses the point, we note at the outset that appellants' argument is based on an apparent misapprehension of the law. By the very terms of the statute, the whole record test applies only with respect to the fifth listed consideration, whether the agency decision is supported by substantial evidence in view of the entire record as submitted. This interpretation is supported by the opinion of our Supreme Court in Thompson v. Board of Education, 292 N.C. 406, 233 S.E.2d 538 (1977), and by this Court's decision in the earlier appeal in this case. In both cases, the whole record test was stated with specific reference to G.S. 150A-51(5):
This standard of judicial review is known as the "whole record" test and must be distinguished from both de novo review and the "any competent evidence" standard of review.... The "whole record" test does not allow the reviewing court to replace the Board's judgment as between two reasonably conflicting views, even though the court could justifiably have reached a different result had the matter been before it de novo,... On the other hand, the "whole record" rule requires the court, in determining the substantiality of evidence supporting the Board's decision, to take *592 into account whatever in the record fairly detracts from the weight of the Board's evidence. Under the whole evidence rule, the court may not consider the evidence which in and of itself justifies the Board's result, without taking into account contradictory evidence or evidence from which conflicting inferences could be drawn.
Thompson v. Wake County Board of Education, supra, at 410, 233 S.E.2d at 541 (citations omitted). See In re EMC, supra, 53 N.C.App. at 146, 280 S.E.2d at 527-28.
The other five factors involve different questions entirely. Depending on the facts of a particular case, consideration of these factors can involve scrutiny of the entire record. None of them, however, requires an evidentiary review of the same nature as that which the reviewing court is required to apply with respect to subsection (5).
II.
G.S. 162A-7 provides that water authorities seeking to acquire property by eminent domain must receive authorization from "the Board," and sets forth the procedures for doing so. "The Board" as used in the statute originally referred to the Board of Water Commissioners, G.S. 162A-2(2), whose function was succeeded to by the EMC. G.S. Secs. 143-211, 143B-282. G.S. 162A-7(c) provides that the certification may only be issued for projects that are "consistent with the maximum beneficial use of the water resources in the State and shall give paramount consideration to the statewide effect of the proposed project rather than its purely local or regional effect." The statute lists seven factors that the EMC must "specifically consider" in making its determination:
(1) The necessity of the proposed project;
(2) Whether the proposed project will promote and increase the storage and conservation of water;
(3) The extent of the probable detriment to be caused by the proposed project to the present beneficial use of water in the affected watershed and resulting damages to present beneficial users;
(4) The extent of the probable detriment to be caused by the proposed project to the potential beneficial use of water on the affected watershed;
(5) The feasibility of alternative sources of supply to the petitioning authority and comparative cost thereof;
(6) The extent of the probable detriment to be caused by the use of alternative sources of supply to present and potential beneficial use of water on the watershed or watersheds affected by such alternative sources of supply;
(7) All other factors as will, in the Board's opinion, produce the maximum beneficial use of water for all in all areas of the State affected by the proposed project or alternatives thereto.
G.S. 162A-7(c). Appellants contend that the EMC based its decision on an erroneous interpretation of this statute with the result that the overall goal of maximum beneficial use of the State's water resources was not achieved and the statewide effect of the project was ignored. They argue that the EMC placed too much emphasis on water quality, a consideration not listed in the statute, and failed to consider the listed factors sufficiently to effect the policy of the statute. Appellants rely on this Court's earlier decision in this case for the proposition that the policy of the statute requires the EMC to consider more than the exploitation and development of water resources. Appellants argue that the language of the statute leaves the EMC no choice or discretion as to which factors to consider and that giving due consideration to the interests of the State precludes consideration of such local concerns as water quality. Referring to the EMC's findings of fact dealing with water quality, and specifically to findings 19, 38, and 52, appellants contend that the EMC's decision reflects a disregard for the statutory mandate. We disagree.
To contend, as appellants apparently do, that water quality is of limited or no relevance to EMC decisions regarding *593 sources of proposed water supplies ignores one of the primary purposes of the N.C. Water and Sewer Authorities Act. G.S. 162A-1 through 162A-19. The authorities created under this Act are public instrumentalities charged with the delivery of water and sewer services to the public in a manner consistent with the objectives of the police power, including the public health and welfare. See G.S. 162A-6. Viewed in this context, we think that water quality is not only a permissible consideration for the EMC, but also one that is important if not essential to the responsible exercise of the police power. See Valevais v. City of New Bern, 10 N.C.App. 215, 178 S.E.2d 109 (1970); G.S. 160A-311. See generally 29A C.J.S. Eminent Domain Sec. 45 (1965 and Supp.1985). By arguing that the EMC may consider only the factors specifically listed in the statute, appellants advocate a more restrictive reading than the legislature, in our view, intended. The seventh listed factor is a "catch all" provision that allows the EMC to consider "all other factors as will, in the Board's opinion, produce the maximum beneficial use of water" for affected areas of the State. While directing that the EMC "shall specifically consider" the listed factors, the statute contains no language limiting the EMC's consideration to those factors. Clearly, the EMC has some latitude and discretion as to the factors to consider in each situation and the weight to be given them in reaching a decision. The only limitation is that the EMC's consideration of any factor relate to the maximum beneficial use of the State's water resources. When the alternatives proposed involve differences in water quality, then clearly water quality can be one of the "other factors" that may be considered.
As appellants point out, the EMC is required to give "paramount consideration to the statewide effect" of the proposed project. This does not, as appellants contend, preclude consideration by the EMC of local or regional factors. On the contrary, the language of the statute assumes that some consideration will be given to local and regional concerns but requires that the larger interest of the State be of "paramount" concern. Support for this interpretation may be found in Article 2 of Chapter 162A, the Regional Water Supply Planning Act of 1971, G.S. 162A-20 through 162A-25, a companion to Article 1, the Water and Sewer Authorities Act. The preamble of the Act reflects the legislative intent as regards the interaction of local and State interests. The need for regional planning and development of water systems is emphasized as "necessary in order to provide an adequate supply of high quality water to the State's citizens." G.S. 162A-21(3). The obvious purpose of the Act is to incorporate the many small water supply systems in North Carolina into a coordinated regional and statewide network. It is in this sense that statewide interests are paramount to local concerns. There is nothing in the Act that requires local concerns to be disregarded. See generally Fuller, N.C. Dept. of Water Resources Planning Report (1964).
We note finally that findings 19, 38 and 52, which appellants contend are "the heart of the EMC's decision," are only three non-consecutive findings out of a total of fifty-four. Given the important objective of providing safe drinking water to the State's population, this can hardly be called over-emphasis. In light of the principles discussed above, we think that the statutory interpretation urged by appellants is too restrictive and based on erroneous assumptions regarding legislative intent. In our opinion, the fact that the EMC made findings regarding water quality reflects an accurate interpretation of G.S. 162A-7 and is neither offensive to nor inconsistent with the policy of the Act.
III.
By its language, G.S. 162A-7 contemplates the consideration of one or more alternatives to the project for which the certificate of authority is sought. Accordingly, several alternatives to the Cane Creek project were proposed. Among these alternatives were three proposals *594 which involved piping water from three different sections of Jordan Lake, then being developed by the Corps of Engineers, to the OWASA filtration plant; three which involved piping water from Jordan Lake to University Lake; two proposals that called for pumping water from the Haw River at Bynum to University Lake or the OWASA filtration plant; and one that involved increasing the capacity of University Lake. Other proposals, such as purchasing water from Durham, were disregarded as not feasible.
a.
In their second substantive argument, appellants contend that the EMC erred because it failed to consider federal and state water quality standards in making its findings. This contention appears to be in direct conflict with appellants' position in the previous argument that water quality does not enter into the EMC's decision at all. Referring specifically to findings of fact 19 and 20, appellants contend that the EMC's consideration of water quality consisted merely of a comparison of the alternatives and not an objective evaluation based on the absolute standards contained in state and federal laws and regulations. Appellants argue that the comparison method is misleading and inaccurate and that its use by the EMC constitutes a reversible error of law. In support of this argument, appellants cite us to G.S. 143-214.1, which directs the EMC to develop a system for evaluating and classifying the water resources of the state in a manner that promotes the prudent utilization of them. The primary framework for classification under this statute is water quality and the criteria to be applied are to be drawn up in accordance with federal water quality standards.
As OWASA points out, however, appellants have completely ignored the North Carolina Drinking Water Act, G.S. 130A-311 through 130A-327, and its predecessor, G.S. 130-166.39 through 130-166.61, the stated purpose of which is "to regulate water systems within the State which supply drinking water to the public that may affect the public health." G.S. 130A-312. The Drinking Water Act directs the State Department of Human Resources, G.S. 130A-2(2), to "examine all waters and their sources and surroundings which are used as, or proposed to be used as, sources of public water supply." G.S. 130A-316 (emphasis added). With this in mind, the Department of Human Resources is directed to establish minimum standards for contaminants in drinking water and the treatment available for reducing the level of the contaminants. G.S. 130A-315. The law also provides for the amendment of the standards "as necessary in accordance with required federal regulations." G.S. 130A-315(c).
The section of the North Carolina Administrative Code that contains the water quality standards is 10D-1600 through 10D-1625. The statutory authority for these regulations is given as the North Carolina Drinking Water Act, supra, the Federal Safe Drinking Water Act, Pub. L.93-523, codified at 42 U.S.C. Sec. 300f300j9, and 40 CFR 141, the federal regulations promulgated under the Safe Drinking Water Act. A comparative reading of the federal and state statutes and the regulations promulgated under each discloses that the state standards are patterned on the federal model. For instance, the maximum permissible levels of all listed contaminantsinorganic chemicals, organic chemicals, and coliform bacteriaare the same. Compare N.C.A.C. 10D-161310D-1616 with 40 CFR 141.11141.14. The language of the State regulations is virtually identical to the federal regulations. Id.
The Final Environmental Impact Statements prepared by the Corps of Engineers and the Division of Environmental Management indicate clearly that the feasible alternatives were thoroughly evaluated in terms of the applicable standards and in accordance with the methods prescribed in the regulations. Other than generalized assertions that the EMC failed to consider this information in making its findings, appellants have not attempted to show how the data accumulated and reported in the Environmental *595 Impact Statements is inaccurate or was incorrectly gathered. It is clear that adequate data existed for the EMC to make a comparison based on water quality.
b.
Appellants seem to contend that the EMC's findings as to water quality do not reflect adequate consideration of the available data and amount to an ad hoc determination based on unspecified data, speculative and arbitrary criteria, and subjective aesthetic notions of water quality. Appellants' argument presupposes that the EMC is procedurally required in its decision to state the evidentiary basis for its ultimate findings regarding water quality. Otherwise, appellants argue, there is no assurance that the findings are based on competent record evidence or that the EMC considered the proper factors. We disagree.
The factors that the EMC is specifically directed to consider in determining whether to issue a certificate authorizing the exercise of eminent domain power are set forth in G.S. 162A-7, as noted above. While water quality is not one of them, we have already discussed how water quality is clearly an appropriate consideration. The statute makes no provision regarding how extensive the findings on any one factor are required to be or what evidence is required to support the findings made with regard to them. Any requirement that the factors be given equal weight or that specific supporting evidence exist in each situation would be impossible to satisfy and obviously was not intended by the legislature. The EMC's proceedings under G.S. 162A-7 are governed by the APA; the evidentiary standards set forth therein apply equally to any findings made by the agency. G.S. 150A-36, 150A-51. That standard, previously stated in part I, is that any finding must be supported by substantial, competent, and relevant evidence in view of the entire record as submitted. Thompson v. Board of Education, supra. If the EMC in its discretion deems water quality to be of such importance that specific findings are necessary to a sound decision, those findings must be supported accordingly. There is no statutory or other requirement that the EMC's findings regarding water quality or any other factor contain references to prescribed water quality standards, though one could easily have been imposed. Absent a clear legislative mandate, we will not require more than the APA demands. We perceive nothing about the EMC's findings regarding water quality that would render them inadequate as a matter of law to support the conclusions. Appellants' contention in this regard is without merit.
c.
It is difficult to determine from appellants' argument whether they challenge the water quality findings on the grounds that they are not supported by the evidence. Because we deem the resolution of this question important to a thorough and sound judicial review, we will treat the question as having been properly raised. We hold that the findings are amply supported.
In finding 19, the EMC found that Cane Creek was the safest and best water source of the available water sources, that it would provide water of a consistently high quality, and that it presented fewer risks than the Haw River or Jordan Lake alternatives. The data base for this finding is enormous. State and federal agencies conducted numerous tests in the course of preparing the EIS. In addition, several University and government sponsored surveys and studies on the quality of water in the drainage areas have been conducted. See U.S. Army Corps of Engineers, Final Environmental Impact Statement (1981) 38-44. Area water quality has been more or less continuously monitored pursuant to various government programs. In all, more than 66,000 individual water quality observations have been made of Cane Creek and the other alternatives since 1966. Division of Environmental Management, Final Cane Creek EIS (1982) at 55. The amount of material and the volume of raw data on water quality defies adequate summary in this opinion; such a summary would add little to the extensive and thorough *596 analyses contained in the state and federal EIS. Those analyses set forth clearly the data used, the methods employed, the criteria involved, and the assumptions made. The alternatives were evaluated in the four broad areas of contaminants listed in federal and state regulations: nutrients, synthetic organic chemicals, metals, and bacteria. They were also evaluated in terms of point source discharges and effectiveness of available treatment. Based on these evaluations, the findings of fact show the Cane Creek and University Lake alternatives to be the best sources; University Lake actually had a lower bacterial content than Cane Creek. Of these two, only Cane Creek could provide the desired yield of 10 million gallons per day. While significant improvement was noted in the water quality of Haw River and improvement was anticipated in the quality of Jordan Lake, the existence of numerous pollution discharge point sources and the presence within their drainage areas of significant amounts of urban land, developed areas, and major highways, as well as the difficulty of controlling discharges and monitoring quality in such a large area, were factors perceived as making those sources more susceptible to water quality degradation and thus not as safe. We are satisfied that the Corps of Engineers and the Division of Environmental Management evaluated the alternatives in a scientifically acceptable empirical manner. Any speculation occurred only because it was impossible with the Cane Creek and Jordan Lake alternatives to determine the quality of water in reservoirs that did not yet exist. When assumptions had to be made, they were limited. It is clear from the findings and from the record that careful attention was paid to federal and state water quality standards. Appellants' contention that these standards were ignored is without merit.
d.
As the finder of fact, the EMC is responsible under the APA for deducing the facts from raw evidence. See G.S. 150A-36. Within our judiciary it has long been recognized that there are two kinds of fact, evidentiary and ultimate facts. Williams v. Pilot Life Insurance Co., 288 N.C. 338, 218 S.E.2d 368 (1975). An ultimate fact is the result reached by processes of logical reasoning from the evidentiary facts, Farmers Bank v. Michael T. Brown Distributors, Inc., 307 N.C. 342, 298 S.E.2d 357 (1983), and is often difficult to distinguish from a legal conclusion. Id. When a trial court sits as a finder of fact, it is required under G.S. 1A-1, Rule 52, to find facts and state separately its conclusions of law. Our Supreme Court has held that the court must find only the ultimate facts on which its conclusions are based; a recitation of the evidence is not required. Quick v. Quick, 305 N.C. 446, 290 S.E.2d 653 (1982); Farmers Bank v. Michael T. Brown Distributors, Inc., supra. Though the Rules of Civil Procedure, G.S. 1A-1, Rules 1-84, do not govern proceedings under the APA, the same principles regarding ultimate and evidentiary facts apply regarding the findings the agency is required to make. With this in mind, it is clear that finding of fact 19, which appellants challenge as a conclusory finding based on unsupported assumptions, is actually an ultimate finding based on a sound evidentiary foundation. It contains a reference to other sections of the EMC's decision which include findings on the issue of water quality that are far more detailed and have a specific and identifiable evidentiary basis. Assuming arguendo that appellants are correct in their assertion that the EMC was required to state the evidentiary basis for its findings, their contention that the requirement was not satisfied is without merit.
e.
Appellants' final argument under this section appears to be that in making finding 19 the EMC established and applied standards not authorized by the State, amounting essentially to an ultra vires act. This argument is inconsistent with the position taken by appellants throughout most of their argument that the EMC either applied the wrong standards or used none *597 at all. We have already noted that water quality was an appropriate consideration for the EMC and determined that the correct standards were applied. Further discussion of these points would be unnecessarily repetitive. For reasons already stated, appellants' contention that the EMC exceeded its authority is without merit.
IV.
Appellants purportedly bring finding of fact no. 20 within their third argument and challenge it on all of the same grounds. That finding involves the costs of the various alternatives and reads as follows:
20. The reasonable estimated cost and relative ranking of the Cane Creek Reservoir and its alternatives, based on 1978 cost estimates with built-in costs for GAC (Granular Activated Carbon) filtration added to all alternatives except Cane Creek and University Lake, are set out below. The comparative costs are similar and do not provide a basis for ranking one project over the others.
ESTIMATED COSTS AND RANKINGS OF ALTERNATIVES
_____________________________________________
NET PRESENT WORTH ANALYSIS
_____________________________
Alternative Relative Total Costs
Ranking
1. Cane Creek to UL 1 $16.3 Million
2. Seg 1 Jordan L to UL 7 $19.8 Million
3. Seg 1 Jordan L to FP 9 $21.3 Million
4. Seg 2 Jordan L to UL 8 $20.1 Million
5. Seg 2 Jordan L to FP 10 $21.6 Million
6. Seg 3 Jordan L to UL 5 $18.9 Million
7. Seg 3 Jordan L to FP 6 $19.1 Million
8. Haw River to UL 2 $17.0 Million
9. Haw River to FP 4 $18.5 Million
10. University L Expansion3 $17.2 Million
_____________________________________________________
UL = University Lake
FP = OWASA Filter Plant
No specific reference is made to finding of fact no. 20 in appellants' third argument, which appears to be concerned entirely with finding no. 19. Under Rule 28 of the Rules of Appellate Procedure, appellants' argument regarding finding no. 20 may be deemed to be abandoned. We have nevertheless reviewed the entire record and find therein substantial competent evidence to support the finding. Indeed, there is little about the finding that appellants could reasonably take issue with. Elsewhere in their brief, appellants object to the inclusion by the EMC of the $6 million cost of Granular Activated Carbon (GAC) treatment to the total cost of all but the Haw River and Jordan Lake alternatives. Since GAC treatment is not legally required and is not necessary to render the Haw River and Jordan Lake sources potable, appellants argue that its cost should not be reflected in the total cost. We disagree.
GAC treatment helps control algae growth in water with high concentrations of nutrients, a condition that can cause taste and odor problems. Final Cane Creek EIS, supra, at 73-75. It also helps reduce the level of synthetic organic chemicals (SOC). Id. At the time of the EMC's decision, GAC treatment was not required. The Environmental Protection Agency had, however, proposed a regulation that would have required GAC treatment for the Haw River and Jordan Lake alternatives. U.S. Army Corps of Engineers, Final Environmental Impact Statement (Cane Creek) (1981) Appendix F-21. Nevertheless, because the levels of nutrients and SOC in the Jordan Lake and Haw River sources were significantly higher than in Cane Creek or University Lake, OWASA stipulated that GAC treatment would be used with these alternatives to control taste and odor and to reduce the SOC level. Final Cane Creek EIS, supra.
In view of the public health risks associated with contaminated water, see Final Cane Creek EIS, supra at 60, OWASA obviously viewed the GAC treatment of water from Jordan Lake or the Haw River as necessary to provide its service population with water as free of contaminants as possible. While not statutorily required, the GAC treatment is clearly a means for OWASA to satisfy its police power responsibility. We agree that public health concerns warranted the inclusion of the cost of GAC treatment as a component of the total cost of the alternatives with which it would be used. Appellants argue that this artificially inflates the cost of those projects and has the effect of making them less desirable alternatives. It is true that Cane *598 Creek is the least expensive alternative only when GAC treatment is added to the Jordan Lake and Haw River alternatives. We note, however, that cost is only one of the factors that the EMC must consider and that whatever cost advantage might be gained by using one of the Jordan Lake or Haw River alternatives would have to be weighed against the consequent degradation of water quality. The cheapest alternative may not be the best one.
Appellants' contention that including the cost of GAC treatment with some of the alternatives was an error of law is without merit; the cost of GAC treatment was properly included in the cost of the Jordan Lake and Haw River alternatives. Appellants do not otherwise seriously challenge this finding and our review of the record shows clearly that it is supported by competent and substantial evidence. Assuming arguendo that the finding was somehow erroneous, appellants have not established how it was prejudicial to them. Their contention in this regard is without merit.
V.
a.
Appellants next contend that 32 of the EMC's 54 findings of fact are not supported by substantial evidence based on the entire record as submitted. Appellants purport to bring forward under this single argument 81 exceptions and 27 assignments of error. In a related argument, appellants contend that the EMC erred in failing to find certain facts which they contend are supported by the record. This argument is based on a single assignment of error and 43 exceptions. In support of this argument, appellants set out the findings which they contend should have been made followed by a parenthetical reference to the place in the record where supporting evidence appears.
None of the 28 assignments of error or the 124 exceptions encompassed within these two arguments are addressed specifically in appellants' brief. Appellants instead take a broadened approach, arguing that all of the challenged findings are based on evidence which is either incompetent or so weak and speculative as to have no probative value. While the assignments and exceptions are specific enough, appellants' general argument amounts to no more than a broadside request for this Court to wade through the voluminous record to determine whether any of the assignments of error has merit or whether any of the exceptions has a legal basis. This is ineffectual to present a question for our review. Rule 28 of the Rules of Appellate Procedure provides that "[e]xceptions... in support of which no reason or argument is stated or authority cited, will be taken as abandoned." This has been interpreted by our Courts to require that a question purportedly raised by an assignment of error or exception be presented and argued in the brief in order to obtain appellate review. Stanley v. Stanley, 51 N.C.App. 172, 275 S.E.2d 546, disc. rev. denied, 303 N.C. 182, 280 S.E.2d 454, app. dismissed, 454 U.S. 959, 102 S.Ct. 496, 70 L.Ed.2d 374 (1981); Love v. Pressley, 34 N.C.App. 503, 239 S.E.2d 574 (1977), disc. rev. denied, 294 N.C. 441, 241 S.E.2d 843 (1978). Appellants' non-specific arguments merely reiterate the assignments of error and are not effective to present them for review by this Court. See State v. McMorris, 290 N.C. 286, 225 S.E.2d 553 (1976); State v. Brothers, 33 N.C.App. 233, 234 S.E.2d 652, disc. rev. denied, 293 N.C. 160, 236 S.E.2d 704 (1977).
b.
In the interest of a thorough review, we have considered appellants' arguments which raise the single question of whether the EMC's findings are supported by competent and substantial evidence based on the whole record as submitted. We find appellants' arguments to be without merit. Appellants contend that much of the expert testimony presented by OWASA is incompetent because it is speculative and lacks a proper evidentiary foundation. This argument is premised on appellants' assertion that North Carolina law requires an expert to base his opinion on facts within *599 his personal knowledge or on evidence in the record before the court. As authority for their arguments, appellants rely on the 1967 case of Todd v. Watts, 269 N.C. 417, 152 S.E.2d 448 (1967), and Stansbury, N.C. Evidence Sec. 136 (rev. ed. 1973). Those authorites state the rule formerly applicable in this jurisdiction that the facts on which an expert bases his opinion must be recited in a hypothetical question. G.S. 150A-29 provides that contested cases heard under the APA be conducted in accordance with the same rules of evidence that apply in the judicial courts. The requirement that a hypothetical question be used to elicit expert testimony was abolished by G.S. 8-58.12 (effective 1 October 1981), which was the rule in effect when the EMC heard evidence in this case in November and December of 1982. G.S. 8-58.14 provides: "Upon trial, the expert may testify in terms of opinion or inference and give his reasons therefore without prior disclosure of the underlying facts or data, unless an adverse party requests, [sic] otherwise, in which event the expert will be required to disclose such underlying facts or data on direct examination or voir dire." This rule, which has since been repealed, N.C. Sess. Laws (Regular Sess. 1984) c. 1037, s. 9, is essentially the same as G.S. 8C-1, Rule 705, which superseded it in 1984. 1 Brandis N.C. Evidence Sec. 136 (Supp.1983). Regarding the new rule, this Court has recently said, "[a]n expert need not testify from personal knowledge as long as the basis for his or her opinion is available in the record or upon demand." Thompson v. Lenoir Transfer Co., 72 N.C. App. 348, 350, 324 S.E.2d 619, 620-21 (1985). See generally Blakey, Examination of Expert Witnesses in North Carolina, 61 N.C. L.Rev. 1 (1982) (discussing the evolution and application of G.S. 8-58.14). Prior disclosure of the facts supporting the opinions of the experts was not required by hypothetical question or otherwise, except upon appellants' demand. Appellants do not argue that their requests for disclosure of these facts were denied nor do they demonstrate how, with respect to any of the assignments of error or related exceptions, the expert testimony on which the challenged findings were based is not founded on facts or data in the record. Though appellants do not specifically raise the question, we note for purposes of clarification that, under the law then in effect, expert testimony was not objectionable because it contained an opinion on the ultimate issue. State v. Sparks, 297 N.C. 314, 255 S.E.2d 373 (1979). See generally, 1 Brandis, N.C. Evidence Sec. 126 (1982). We note further that G.S. 150A-29(a) permits the admission of reliable hearsay evidence in certain circumstances which, in our opinion, are present in this case. Appellants' argument that the evidence is not competent is without merit.
c.
Having established that the evidence supporting the challenged findings is competent, we now consider whether it is sufficient to support the findings. The whole record test requires that the reviewing court consider not only evidence which supports the findings made, but that which detracts from them as well. Boehm v. N.C. Bd. of Podiatry Examiners, 41 N.C. App. 567, 255 S.E.2d 328, cert. denied, 298 N.C. 294, 259 S.E.2d 298 (1979). It is with this principle and those discussed in part I of this opinion in mind that we consider the findings that appellants contend should have been made. Based on our review of the record, unaided by appellants' bare assertions, these proposed findings and the evidence on which they were based are for the most part reflected in the findings that actually were made; to the extent that they are not thus reflected, they do not conflict with the findings made. Where the evidence which supports the proposed findings conflicts with the evidence that supports the EMC's findings, it does not detract from the EMC's findings sufficiently, in our opinion, to compel the conclusion that any of the EMC's findings lack adequate support. The EMC's findings are comprehensive and show every indication that all of the relevant, competent, and *600 substantial evidence was considered, as discussed more fully in part VI. The Superior Court order affirming the EMC's decision indicates clearly that its review of this question was in accordance with the mandate of In re EMC, supra.
Aided by OWASA's brief, our own review of the whole record in this case reveals that the challenged findings have adequate support. When the EMC's findings were based on expert opinion, the opinion was supported by information in the record. The opinions were elicited from qualified experts in accordance with the rules of evidence and appellants were allowed sufficient opportunity for cross-examination. Otherwise, the findings are based on data that is beyond serious dispute or evidence that is manifestly credible. Appellants have not attempted to demonstrate, except in the most general sense, how the challenged findings lack sufficient evidentiary support. In the interest of a thorough review, we have considered appellants' vague and non-specific arguments more thoroughly than either the law requires or their brief warrants. Their arguments are unpersuasive and we find the assignments of error purportedly brought forward thereunder to be totally lacking in merit.
VI.
Appellants next contend the findings are legally insufficient to support the EMC's conclusions of law. They argue essentially that the EMC is required to make findings on each of the seven factors listed under G.S. 162A-7(c) and that those findings must support a conclusion that the proposed project is "consistent with the maximum beneficial use of the water resources of the State giving paramount consideration to the statewide effect of the proposed project rather than its purely local effect." Appellants claim that the findings on three of those factors
(1) The necessity of the proposed project;
(2) The extent of the probable detriment to be caused by the proposed project to the present beneficial use of water in the affected watershed and resulting damages to present beneficial users;
....
(5) The feasibility of alternative sources of supply to the petitioning authority and the comparitive cost thereof;
are insufficient to support the conclusion that Cane Creek is the best project. We disagree.
G.S. 162A-7(c) requires only that the EMC "specifically consider" the listed factors. Neither the statute nor our earlier decision in this case requires the EMC to make findings regarding each factor. See In re EMC, supra. Nevertheless, making those findings is a means of insuring that each factor is specifically considered and we endorse this approach, though we do not require that it be followed. Appellants' argument consists in part of a contention that the findings do not accurately reflect the picture presented by the evidence. We have already considered this contention and have already determined in part V, above, that the findings are adequately supported in the record. Further discussion of this issue would serve no useful purpose.
With regard to whether the findings reflect adequate consideration by the EMC of the factors listed in G.S. 162A-7(c), our review of the record shows affirmatively that they do. We previously discussed, in part II, how water quality, though not a listed factor, had obvious importance and noted, in part III, that it was thoroughly considered by the EMC. In part IV, we noted that the factor of cost received a similarly thorough consideration. With regard to the remaining factors, we hold that the EMC's decision reflects adequate consideration.
Findings 5 through 11 are contained in a section of the decision designated "Necessity of Project." Those findings discuss the history of the water shortage problem in OWASA's service area and note the projected demand. Clearly they support the conclusion that an additional water supply is needed. There is no requirement that the EMC find with regard to this factor that the proposed project is the only *601 one that will meet this need, as appellants seem to argue. Rather, this factor appears to be designed to insure that a need exists and that the proposed project is capable of meeting it. The EMC's findings reflect the correct interpretation of that factor.
Paralleling the statute, the next section of the decision is entitled "Storage and Conservation of Water." It contains 3 findings. In essence, these findings state that the Cane Creek reservoir will have a storage capacity of 3 billion gallons with a safe daily yield of 10 million gallons that would not otherwise be utilized; and further that the Cane Creek reservoir would provide water of a quality that could not be matched by Haw River or Jordan Lake. Clearly, these findings address G.S. 162A-7(c)(2).
Regarding the detriment of the proposed project to present and potential beneficial uses of water in the watershed and danger to users, the EMC made 3 findings to the effect that the relatively insignificant detriment would be offset by the benefits that would result. Appellants argue that these findings give insufficient consideration to the socio-economic impacts on the Cane Creek community, directly disregarding the previous mandate of this Court in In re EMC, supra. While not contained in this section, the EMC did make findings regarding the socio-economic impact and included them under the section entitled "Other Factors Producing Maximum Beneficial Use." Those findings note that there will be unavoidable losses of forested land and land presently given over to farming activities; that portions of several farms will be inundated; that one family will have to move; and that the closing of state roads would inconvenience some of the affected people. The EMC further found, consistent with appellants' argument, that the other alternatives have a lesser likelihood of community disruptions or relocations. In our opinion, these findings reflect a consideration of the evidence on these points adequate to satisfy the statute and the mandate of In re EMC, supra. This question is discussed further in part VII, infra.
The EMC's findings regarding the feasibility of alternatives and the comparative costs were thoroughly discussed in part IV. They require no further discussion here except to reiterate that the cost of GAC treatment was viewed by OWASA as necessary for any of the Haw River or Jordan Lake alternatives to be feasible.
The section of the EMC's decision entitled "Detriment From Use of Alternatives to Present and Potential Beneficial Uses of Water in Their Watershed" contains 8 findings. These findings address primarily the differences in water quality among the feasible alternatives, an issue that was thoroughly discussed in part III above. We note here only that the use of any of the Jordan Lake or Haw River alternatives would have a detrimental effect on the quality of OWASA's raw water supply. Additionally, the EMC found that none of the other alternatives would create an additional supply of water of the volume of the proposed Cane Creek reservoir.
Under the "Other Factors Contributing to Maximum Beneficial Use" section, which contains 24 findings, the EMC discusses the socio-economic and environmental impact of the Cane Creek reservoir project. On the basis of the record, these were clearly the most thoroughly debated points and were the focus of much attention from all sides. We remanded this case when it was first appealed in part for more thorough consideration of these issues. The essence of the EMC's findings is that there will be some unavoidable impacts associated with the project that would not be associated with the others. The socio-economic displacement was viewed as minor and the project was found to have an effective package for mitigating environmental damage. The overall benefits to be gained from the use of Cane Creek to meet OWASA's water supply needs were found to outweigh the negative impacts of the project.
The final two factual sections of the EMC's decision include two findings, more properly labeled conclusions, (1) that the Cane Creek project in adding 3 billion gallons *602 to the State's water supply would be consistent with the maximum beneficial use of State water resources, and (2) that the proposal was consistent with the State water resources planning policy.
We think that the EMC's findings indicate that all of the factors listed under G.S. 162A-7(c) received the "specific consideration" that the EMC was required to give them. In addition, the EMC gave thorough consideration to factors that were not specifically listed, but were nevertheless of great importance to a sound determination. Appellants' contention is without merit.
VII
Based on its findings, the EMC made the following substantive conclusions of law:
3. The project proposed by OWASA is necessary to address its water needs and will promote the storage and conservation of water by means of its impoundment.
4. The project proposed by OWASA will cause little detriment to present or potential beneficial uses of water in the Cane Creek watershed area, and will cause little resulting damage to present beneficial users.
5. There are several alternatives to the project proposed by OWASA which may feasibly be implemented and these projects all have comparable costs.
6. The principle alternative sources of supplyHaw River and Lake Jordanwould not increase the storage and conservation of water, would eliminate the addition of the Cane Creek supply source to the resources of the State, and would subject the OWASA service area to increased pollution potentials and risks from pollution inputs. The University Lake expansion alternative will not meet the water supply needs of OWASA.
7. The project proposed by OWASA will preserve and utilize a well-protected water supply resource, and will promote the beneficial use of those waters, consistent with the water use policies of the State.
8. The project proposed by OWASA is consistent with the maximum beneficial use of the water resources in the State giving paramount consideration to the statewide effects of the project, rather than to its purely local or regional effect.
9. OWASA is entitled to the certificate pursuant to N.C.G.S. 162A-7 authorizing it to institute proceedings in the nature of eminent domain to acquire water, water rights or lands having water rights attached thereto.
With one exception, appellants' argument that these conclusions are not supported by the findings is vague and unsupported by legal authority. That exception is appellants' final argument, in which they contend that the findings regarding the closing of the state roads and resulting inconvenience do not support the EMC's fourth conclusion. They argue essentially that the EMC, or several members of it, misunderstood the EMC's fact finding function and its ability to take steps to mitigate the negative impacts of the project. Appellants support this argument by reference to a discussion which occurred just before voting on the motion to adopt the hearing examiner's recommended decision, as amended. Several EMC members, including the chairman and the hearing examiner, made remarks indicating their concern over the closing of two state roads that would apparently result from the project. The members discussed among themselves and with the attorneys the steps that the EMC could take to mitigate this damage or to insure further inquiry and appropriate action by the Orange County Commissioners. Appellants contend that these remarks indicate (1) that the EMC misconstrued In re EMC, supra, to the end that local socio-economic and environmental impacts were inadequately addressed and (2) that the EMC was misinformed as to its ability to condition issuance of the certificate of authority on further action. We disagree.
As already noted, the record indicates that ample opportunity was allowed for presentation of evidence on these issues *603 and the EMC's findings indicate a thorough consideration of that evidence. That the findings reflect that some detriment, including inundation of two roads and displacement of one family, will result from the project is not inconsistent with the conclusion that that detriment would be relatively minor.
We further think that the hearing examiner's remarks regarding the EMC's responsibility to consider the State's interests, far from being a misapprehension of the law, indicate a proper understanding of the EMC's function as well as the policy of G.S. 162A-7(c) that the interests of the State be "paramount" to local concerns. Finally, while some Commission members expressed a desire to issue a resolution to the county commissioners or take other action regarding the inundation of the roads, no request was made for an investigation into this possibility. The motion before the EMC was unambiguous. Had the individual members' reservations on any point been strong enough, they could have voted against the motion. G.S. 162A-7(c) allowed the EMC to grant a certificate in whole or in part or to deny it altogether. Appellants' contention on this point is without merit.
Appellants contend briefly and without authority that the EMC acted outside of its statutory authority in issuing the certificate and thereby violated the United States and North Carolina Constitutions. This purported argument is merely a reiteration of appellants' similarly phrased assignment of error and does not effectively present the constitutional question for review. N.C.App.R. 28(a); Martin v. Housing Corp., 277 N.C. 29, 175 S.E.2d 665 (1970); Sykes v. Clayton, Comr. of Revenue, 274 N.C. 398, 163 S.E.2d 775 (1968). We therefore decline to consider it.
As to the remainder of appellants' argument that the facts do not support the legal conclusions, we find it unpersuasive. Our careful review of the record shows that the EMC's decision parallels G.S. 162A-7(c) in its consideration of relevant factors. We think that the conclusions drawn from the findings were proper and that the EMC's decision is supported by competent, substantial evidence in view of the entire record as submitted. Appellants' contention in this regard is without merit.
The order of the Superior Court affirming the order granting OWASA's request for the certificate of authority and dismissing the appeal of petitioners CCCA and Teer Farms, Inc. is
Affirmed.
HEDRICK, C.J., and JOHNSON, J., concur.
|
417 F.3d 813
Margaret ANDREWS, Appellant,v.Robert FUOSS, individually and in his capacity as Sheriff of Jones County, South Dakota, Appellee.
No. 04-2429.
United States Court of Appeals, Eighth Circuit.
Submitted: February 18, 2005.
Filed: August 1, 2005.
Mike C. Fink, argued, Bridgewater, SD, for appellant.
Neil K. Fulton, argued, Pierre, SD, for appellee.
Before MORRIS SHEPPARD ARNOLD, BOWMAN, and GRUENDER, Circuit Judges.
GRUENDER, Circuit Judge.
1
Margaret Andrews ("Andrews") sued Sheriff Robert Fuoss ("Sheriff Fuoss"), individually and in his capacity as Sheriff of Jones County, South Dakota, for violations of her federal constitutional rights pursuant to 42 U.S.C. § 1983 and for state law battery, which the district court had supplemental jurisdiction to consider under 28 U.S.C. § 1367. Andrews alleged that Sheriff Fuoss violated her Fourth Amendment right to be free from unreasonable searches and seizures when he briefly stopped her during an incident that occurred in the Jones County Courthouse, and that Sheriff Fuoss employed excessive force in stopping her, also in violation of the Fourth Amendment. The district court1 granted Sheriff Fuoss's motion for summary judgment on Andrews's § 1983 claim on the ground that he was entitled to qualified immunity because Andrews failed to establish that he violated a constitutional right. The district court also refused to exercise supplemental jurisdiction over Andrews's state law claim and dismissed that claim without prejudice. Andrews appeals, arguing that the district court erred in holding that Sheriff Fuoss's seizure of Andrews was constitutionally permissible and that Sheriff Fuoss's use of force was not excessive. We affirm.
I. BACKGROUND
2
On March 1, 2003, Andrews was in the Jones County Courthouse in Murdo, South Dakota, to attend the sentencing of her son James Andrews ("James") for his involvement in a crime spree that included assaulting an elderly woman at gunpoint, stealing her car, shooting at a house that provided day care, and lighting his mother's house on fire. At the time of his sentencing, James had an extensive prior criminal history. Even Andrews admitted that James's prior behavior led her to believe that he was dangerous and violent.
3
South Dakota Circuit Court Judge Max A. Gors ("Judge Gors") presided over James's case. Judge Gors told Sheriff Fuoss that he was free to exercise his discretion over how to keep the courtroom safe and secure, making Sheriff Fuoss his de facto bailiff. At James's earlier arraignment, Judge Gors asked Sheriff Fuoss how close James could get to spectators, including his mother. Sheriff Fuoss stated that there should be a ten-foot proximity limit for everyone except James's attorney Thomas W. Clayton ("Clayton"). Sheriff Fuoss did not communicate the ten-foot prohibition to Andrews, but did tell her, James and Clayton that she could not have physical contact with James. Prior to James's sentencing, Sheriff Fuoss informed Deputy Mike Kiewel ("Deputy Kiewel") that he was implementing a rule that no person other than Clayton could come within ten feet of James. Sheriff Fuoss's "ten-foot rule" was intended to maintain courtroom security and safety but again was not communicated to Andrews, James or Clayton.
4
On the day of James's sentencing hearing, Andrews was seated in the public seating area. On the other side of a waist-high wooden railing, James sat at counsel's table with Clayton. While waiting for the hearing to begin, Clayton motioned for Andrews to come to him. Andrews recalls Clayton asking her a question, which she could not hear, and stepping forward as Clayton motioned to her.
5
The parties dispute the details of what happened next. Andrews claims she took two or three steps towards Clayton, coming within five or six feet of James, when she felt a forceful blow on her left shoulder that came from behind. The blow was forceful enough to make her "see stars," and the force spun her around so that she was facing Sheriff Fuoss. Sheriff Fuoss told her to remain ten feet away from her son. She told Sheriff Fuoss to "keep your hands off me." According to Andrews, Sheriff Fuoss's push was strong enough that she would have fallen had Sheriff Fuoss not grabbed her arms. Clayton, who did not witness the initial contact, stated that he noticed Andrews had been backed up five to seven feet in a split second.
6
In contrast, Sheriff Fuoss claims that the only contact he had with Andrews was when he extended his right arm and she ran into his open palm with her left shoulder, stopping her forward progress and only causing her to take one step back. Although Deputy Kiewel's description of the incident was similar to Andrews's, he stated that the only contact Sheriff Fuoss had with Andrews was a "straight-arm" push that caused Andrews to back up one step.
7
After the incident, Andrews was "shocked" and started to cry. Andrews reported an immediate pain flare-up relating to pre-existing neck and back conditions, but she returned to her seat and testified during the sentencing hearing. The incident left Andrews with a sore neck and a "horrible, horrible" headache. The next day, Andrews went to a physician due to continued soreness in her neck, arm and shoulder, but she could not recall whether she received any bruises from the encounter. Andrews also reported some increase in symptoms related to post-traumatic stress disorder, which she was diagnosed with after a prior, unrelated assault, but she admitted that her mental condition had been affected by other stressful events that also occurred at that time. Beyond exacerbation of her previous conditions, Andrews reported no other mental or physical problems resulting from the incident.
II. ANALYSIS
8
On appeal, Andrews asserts that the district court erred in granting Sheriff Fuoss's motion for summary judgment on the basis of qualified immunity because Sheriff Fuoss's actions violated her clearly established constitutional right to be free from unreasonable seizures under the Fourth Amendment to the United States Constitution as incorporated through the Fourteenth Amendment. We disagree.
9
"We review the district court's grant of summary judgment on the basis of qualified immunity de novo." DeArmon v. Burgess, 388 F.3d 609, 610 (8th Cir. 2004). State officers "are entitled to qualified immunity unless their alleged conduct violated `clearly established statutory or constitutional rights of which a reasonable person [in their positions] would have known.'" McCoy v. City of Monticello, 342 F.3d 842, 846 (8th Cir.2003) (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982)). When determining whether a grant of summary judgment based on qualified immunity was proper, we "must first consider the threshold question of whether, construed in the light most favorable to the party asserting the injury, the facts alleged show the officers' conduct violated a constitutional right." Crow v. Montgomery, 403 F.3d 598, 601 (8th Cir.2005). "If no constitutional right would have been violated were the allegations established, there is no necessity for further inquiries concerning qualified immunity." Saucier v. Katz, 533 U.S. 194, 201, 121 S.Ct. 2151, 150 L.Ed.2d 272 (2001); see also McCoy, 342 F.3d at 846.
10
Andrews argues that Sheriff Fuoss violated her Fourth Amendment right to be free from an unreasonable seizure when he stopped her from moving any closer to James or Clayton. To establish a Fourth Amendment violation for her § 1983 claim, Andrews must demonstrate both that Sheriff Fuoss seized her within the meaning of the Fourth Amendment and that the seizure was unreasonable. Hawkins v. City of Farmington, 189 F.3d 695, 702 (8th Cir.1999). Even assuming the incident in question constituted a seizure entitled to Fourth Amendment protections, we reject Andrews's argument because Sheriff Fuoss's actions were reasonable under the circumstances.
11
"A `seizure' triggering the Fourth Amendment's protections occurs only when government actors have, `by means of physical force or show of authority,... in some way restrained the liberty of a citizen.'" Graham v. Connor, 490 U.S. 386, 395 n. 10, 109 S.Ct. 1865, 104 L.Ed.2d 443 (1989) (quoting Terry v. Ohio, 392 U.S. 1, 19 n. 16, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968)); see also United States v. Barry, 394 F.3d 1070, 1074 (8th Cir.2005). The district court held that Sheriff Fuoss's use of physical contact to prevent Andrews from coming within ten feet of James restrained her freedom to move where she pleased, and, for that reason, constituted a seizure for purposes of the Fourth Amendment. We assume without deciding that the district court correctly determined that the push constituted a seizure and consider whether the alleged seizure was reasonable.2
12
To justify a limited and momentary detention of a person without violating the Fourth Amendment's proscription against an unreasonable seizure, "the police officer must be able to point to specific and articulable facts which, taken together with rational inferences from those facts, reasonably warrant that intrusion." Terry, 392 U.S. at 21, 88 S.Ct. 1868 (footnote omitted). Whether such a seizure is reasonable "must be determined on the totality of the circumstances and is to be judged from the perspective of a reasonable officer on the scene without regard to the underlying intent or motivation." Hawkins, 189 F.3d at 702.
13
On the day of James's sentencing, Sheriff Fuoss was Judge Gors's de facto bailiff, in charge of courtroom security and responsible for addressing any threats that may occur while James was in the courtroom. The parties in this case acknowledge that James had a long record of violent criminal behavior and was being sentenced for serious crimes, including aggravated assault. This history made his very presence in the courtroom a safety concern. In the interest of maintaining a safe and secure courtroom, it was reasonable for Sheriff Fuoss to place restrictions on the contact that anyone, Andrews included, could have with James for at least two reasons: first, James could have acted violently toward anyone near him, and, second, limiting physical contact with James greatly limited an outsider's ability to slip James a dangerous weapon to use in an attempted escape.
14
Recognizing that the important need for courtroom safety warranted some limits on the contact that Andrews could have with James, our analysis is not whether the ten-foot rule itself was constitutional, but whether Sheriff Fuoss's action in enforcing that rule was constitutional. While Andrews may not have known she needed to stay more than ten feet away from her son, she did know that she was not to have physical contact with him. Sheriff Fuoss's action, whether it was merely extending his arm or an actual, forceful push, was not an unreasonable response to the need to keep Andrews from coming into physical contact with her son. Although the parties contest precisely how, they agree that Sheriff Fuoss very briefly stopped Andrews to inform her that she must keep a certain distance from her son. Because stopping Andrews was a reasonable means of furthering courtroom safety, we hold that even if Sheriff Fuoss seized Andrews by briefly stopping her, that seizure was not unreasonable. Therefore, Andrews fails to establish that Sheriff Fuoss violated her Fourth Amendment right to be free of an unreasonable seizure.
15
Andrews also argues that the manner in which Sheriff Fuoss stopped her was an unconstitutional use of excessive force. Specifically, Andrews argues that no physical force was necessary under these circumstances. Again, we reject Andrews's argument because Sheriff Fuoss's actions were reasonable under the circumstances.
16
The right to be free from excessive force is included under the Fourth Amendment's prohibition against unreasonable seizures of the person. Guite v. Wright, 147 F.3d 747, 750 (8th Cir.1998) (citing Graham, 490 U.S. at 394, 109 S.Ct. 1865). A violation of that right will support a § 1983 action, but not every push or shove by an officer violates the Fourth Amendment. Crumley v. City of St. Paul, 324 F.3d 1003, 1007 (8th Cir.2003). Rather, an officer's use of force is not excessive under the Fourth Amendment if it was "objectively reasonable under the particular circumstances." Greiner v. City of Champlin, 27 F.3d 1346, 1354 (8th Cir. 1994). "`The calculus of reasonableness must embody allowance for the fact that police officers are often forced to make split-second judgments—in circumstances that are tense, uncertain, and rapidly evolving—about the amount of force that is necessary in a particular situation.'" Crumley, 324 F.3d at 1007 (quoting Graham, 490 U.S. at 396-97, 109 S.Ct. 1865).
17
As we have decided that Sheriff Fuoss's decision to stop Andrews was reasonable under the circumstances, we must only decide whether the means he employed, the "forceful blow," was a reasonable amount of force. Although we have remarked that "[i]t remains an open question in this circuit whether an excessive force claim requires some minimum level of injury," Hunter v. Namanny, 219 F.3d 825, 831 (8th Cir.2000), we have also held that "a de minimis use of force or injury is insufficient to support a finding of a constitutional violation." Crumley, 324 F.3d at 1007; see also Greiner, 27 F.3d at 1355 (noting that the lack, or minor degree, of any injury is also relevant in determining the reasonableness of the force used to effect an arrest). In this case, Andrews alleges at most very minor injuries, likely nothing more than the temporary and slight aggravation of pre-existing conditions. These are precisely the type of de minimis injuries that preclude a claim for excessive force. Crumley, 324 F.3d at 1007. As a result, Andrews's argument that it was an excessive use of force to make any physical contact is not only dubious given the rapidly developing nature of the incident but also fails because she sustained no more than de minimis injuries. Cf. Curd v. City Court, 141 F.3d 839, 841 (8th Cir.1998) (holding that "[e]ven if seizing [the plaintiff's] arm and turning her body was unnecessary to effect the arrest, we cannot conclude that this limited amount of force was objectively unreasonable," where there was no allegation or evidence of injury or physical pain).
18
In summary, even when the facts are viewed in the light most favorable to her claims, Andrews fails to establish that Sheriff Fuoss violated a clearly established constitutional right, and we hold that Sheriff Fuoss is entitled to qualified immunity.3
III. CONCLUSION
19
For the reasons stated above, we affirm the district court's grant of Sheriff Fuoss's motion for summary judgment on the basis of qualified immunity.
Notes:
1
The Honorable Richard H. Battey, United States District Judge for the District of South Dakota
2
Andrews supports her conclusion that Sheriff Fuoss unreasonably seized her by pointing out that Sheriff Fuoss acted without a warrant. The general rule with regard to the Warrant Clause of the Fourth Amendment is that the police must obtain a warrant for a search or seizure "whenever practicable."Terry, 392 U.S. at 20, 88 S.Ct. 1868. Andrews's insistence that Sheriff Fuoss's actions were constitutionally deficient because he did not have a warrant is futile because it is untenable to argue that it would have been in any way practicable for Sheriff Fuoss to have obtained a warrant before enforcing his ten-foot rule.
3
The district court rejected Sheriff Fuoss's argument that he was entitled to absolute quasi-judicial immunitySee, e.g., Martin v. Hendren, 127 F.3d 720, 721 (8th Cir.1997) ("Like other officials, bailiffs enjoy absolute quasi-judicial immunity for actions `specifically ordered by the trial judge and related to the judicial function.'" (quoting Robinson v. Freeze, 15 F.3d 107, 109 (8th Cir.1994))). On appeal, Sheriff Fuoss again argues that he is entitled to absolute immunity, but our holding that he is entitled to qualified immunity obviates the need to consider the issue of absolute immunity.
|
NOTE: This order is nonprecedential.
United States Court of Appeals for the Federal Circuit
2008-3236
SYLVIA M. REILLY,
Petitioner,
v.
OFFICE OF PERSONNEL MANAGEMENT,
Respondent.
Petition for review of the Merit Systems Protection Board in
DE831 E070359-I-1.
ON MOTION
Before PROST, Circuit Judge.
ORDER
Sylvia M. Reilly moves without opposition for a 14-day extension of time, until
February 11, 2009, to file her reply brief.
Upon consideration thereof,
IT IS ORDERED THAT:
The motion is granted.
FOR THE COURT
FEB 2 2009
/s/ Jan Horbalv
Date Jan Horbaly FILED
Clerk FOR U.S. COURT OF APPEALS
THE FEDERAL CIRCUIT
cc: Michael J. Dierberg, Esq. FEB 0 2 2009
Brian Thomas Edmunds, Esq.
s17 JAN HORNY
CLERK
|
202 F.Supp.2d 557 (2002)
SAMUEL TYLER W., by Next Friends HARVEY W. and Debbie M., Plaintiff,
v.
NORTHWEST INDEPENDENT SCHOOL DISTRICT, Defendant.
No. 4:01-CV-0285-A.
United States District Court, N.D. Texas, Fort Worth Division.
April 22, 2002.
*558 K. Marvin Adams, Fillmore Law office, Fort Worth, TX, Gary S. Meyerson, Mayerson & Associates, New York City, for plaintiff.
Cynthia S. Buechler, Buechler & Assoc., Austin, TX, for defendant.
MEMORANDUM OPINION and ORDER
McBRYDE, District Judge.
Came on for consideration the above-captioned action wherein Samuel Tyler W., by next friends Harvey W. and Debbie M., is plaintiff, and Northwest Independent School District is defendant. The court, having considered the record, including the record of the underlying administrative hearing, and applicable authorities, makes the following determinations.
I.
Nature of the Case and Underlying Proceedings
This is an appeal from the decision of a special education hearing officer in a proceeding filed under the Individuals With Disabilities Education Act, 20 U.S.C. §§ 1400-85 ("IDEA"). The administrative process was begun by a request filed February 3, 2000, for a due process hearing. Plaintiff sought a determination that defendant *559 had failed to provide him a free appropriate public education ("FAPE") in violation of IDEA. After a series of delays, due primarily to the unavailability of plaintiff's lead counsel, the hearing commenced August 23, 2000, and continued through August 25, then reconvened November 14 and continued through November 17, 2000. On February 26, 2001, the special education hearing officer issued her decision in favor of defendant.
On April 11, 2001, plaintiff filed his original complaint in this action. By agreement of the parties, the case is being decided on cross-motions for judgment as a matter of law. See Hunger v. Leininger, 15 F.3d 664, 669 (7th Cir.1994) (explaining the process of review in the district court of an IDEA case).
II.
Standard of Review
IDEA provides that:
[T]he court shall receive the records of the administrative proceedings, shall hear additional evidence at the request of a party, and, basing its decision on the preponderance of the evidence, shall grant such relief as the court determines is appropriate.
20 U.S.C. § 1415(e)(2). Although "due weight" is to be given to the administrative proceedings, the district court's review is "virtually de novo." Teague Indep. Sch. Dist. v. Todd L., 999 F.2d 127, 130-31 (5th Cir.1993). The role of the court is not to second-guess the state and local school policy decisions, but instead, to determine whether state and local officials have complied with IDEA. Flour Bluff Indep. Sch. Dist. v. Katherine M., 91 F.3d 689, 693 (5th Cir.1996), cert. denied, 519 U.S. 1111, 117 S.Ct. 948, 136 L.Ed.2d 836 (1997). The Supreme Court has explained that:
Therefore, a court's inquiry in suits brought under § 1415(e)(2) is twofold. First, has the State complied with the procedures set forth in the Act? And second, is the individualized educational program developed through the Act's procedures reasonably calculated to enable the child to receive educational benefits? If these requirements are met, the State has complied with the obligations imposed by Congress and the courts can require no more.
Board of Educ. v. Rowley, 458 U.S. 176, 206-07, 102 S.Ct. 3034, 73 L.Ed.2d 690 (1982) (footnotes omitted). The FAPE described by the Act does not have to be the best possible one or one that will maximize a student's educational potential; rather, the Act guarantees only a basic floor of opportunity. Cypress-Fairbanks Indep. Sch. Dist. v. Michael F., 118 F.3d 245, 247-48 (5th Cir.1997).
In the Fifth Circuit, the party attacking the appropriateness of an individualized education program ("IEP") established by a local educational agency bears the burden of showing why the IEP and resulting placement were inappropriate under IDEA. Id. at 252. Thus, plaintiff has the burden of showing that defendant did not comply with the procedures set forth in the Act or that, even if the procedures were proper, the challenged IEPs were not reasonably calculated to provide him with a meaningful educational benefit. Id.; Salley v. St. Tammany Parish Sch. Bd., 57 F.3d 458, 467 (5th Cir. 1995). If plaintiff meets those burdens, he must further show that his alternative placement was appropriate in order to be entitled to reimbursement therefor. Teague 999 F.2d at 131-32.
The law can only mandate equal opportunity, not equal results. McDowell v. Fort Bend Indep. Sch. Dist., 737 F.Supp. 386, 389 (S.D.Tex.1990). No school can guarantee that an IEP will be successful. Rowley, 458 U.S. at 192, 102 S.Ct. 3034; Board of Educ. v. Steven L., *560 898 F.Supp. 1252, 1261 (N.D.Ill.1995), vacated as moot, 89 F.3d 464 (7th Cir.1996), cert. denied, 520 U.S. 1198, 117 S.Ct. 1556, 137 L.Ed.2d 704 (1997). The fact that another plan might work as well or even better does not mean that defendant has failed to provide defendant an FAPE. Rather, defendant does what is required by providing personalized instruction with sufficient support services to permit plaintiff to benefit educationally from that instruction. Rowley, 458 U.S. at 203, 102 S.Ct. 3034.
III.
Pertinent Background Facts
Plaintiff was born on February 16, 1995. In July of 1998, when plaintiff was almost three and one-half, his mother took him to see a neurologist, who, after observing plaintiff for approximately five minutes, opined that he was autistic. He recommended that plaintiff be taken to the Child Study Center and that his parents contact defendant to place him in special services. An appointment was made for plaintiff to see Dr. Mauk at the Child Study Center on September 2, 1998. On August 20, plaintiff went to Justin Elementary School to be assessed. Defendant determined that plaintiff was eligible for special education and related services due to a speech impairment.
On August 26, 1998, defendant convened an admission, review, and dismissal ("ARD") committee meeting. Plaintiff's parents participated along with members of defendant's staff to develop an IEP for plaintiff. They agreed that plaintiff would be placed in the preschool program for children with disabilities ("PPCD") and provided speech therapy services for the 1998-99 school year. The PPCD was a full-day program. The ARD also recommended that plaintiff receive a comprehensive assessment with autism evaluation, which was to be completed by October 15, 1998. The report of the meeting reflects that "general education classroom" was considered, but was found to be "not appropriate due to young age." Tr. Vol. 6 at 485.
Plaintiff began school on August 31, 1998. Defendant's staff wanted to give him an opportunity to become acclimated to school before beginning testing. On October 1, 1998, plaintiff was evaluated by the school psychologist, speech pathologist, and a diagnostician using the Childhood Autism Rating Scale ("CARS"). His total score placed him in the non-autistic range. On October 5, plaintiff's mother took him out of school. During the fall semester, plaintiff was absent from school twenty-four out of fifty-one days. Plaintiff had been making progress prior to his removal.
On November 11, 1998, the ARD committee convened again. At that meeting, plaintiff's mother disclosed that he had been diagnosed as having Pervasive Developmental Disorder ("PDD"). She refused to provide any reports regarding the diagnosis. (On November 4, 1998, plaintiff's father had signed a release for defendant to obtain information from Dr. Mauk, but called several hours later to revoke his permission. Dr. Mauk had recommended that plaintiff be placed in the PPCD program.) Although plaintiff's CARS score had fallen in the non-autistic range, because of the new information, the committee decided that further testing should be performed, to be completed by January 15, 1999. Tr. Vol. 6 at 429. Plaintiff's mother and her in-home consultant, who was present at the meeting, agreed to the plan.
On December 3, 1998, defendant's staff conducted a Psycho-Educational Profile Revised ("PEP-R") on plaintiff. The PEP-R reflected that plaintiff had PDD. On December 18, 1998, an occupational therapist evaluated plaintiff and determined that although he had some delay in fine motor skills development, he did not *561 need occupational therapy services because his needs could be met through current programming.
On January 27, 1999, the ARD committee convened to discuss test results and new information and to determine plaintiff's educational needs. The committee added the eligibility category of autism to plaintiff's eligibility determination. The goals and objectives previously set forth in plaintiff's IEP remained unchanged by the addition of the autism eligibility determination. The committee recommended an in-home training evaluation and a functional behavioral assessment. Plaintiff's parents reported that plaintiff received intensive in-home behavioral therapy and that they wanted his home program to continue. Defendant's staff expressed a desire to have plaintiff return to the PPCD classroom.
The ARD commit convened again on March 30, 1999. At that time, the functional behavioral assessment had not been completed because plaintiff had not been in school and could not be observed. Plaintiff was then attending Children's Courtyard and his parents agreed that he could be observed there so that the assessment could be completed. The ARD committee reconvened on April 5, 1999, to discuss the functional behavioral assessment and in-home training evaluation. A behavior intervention plan was developed and accepted. Plaintiff's parents requested forty hours of in-home training. They continued to refuse to bring plaintiff to school.
On June 10, 1999, the ARD committee met to develop plaintiff's annual IEP and to consider extended-year services ("EYS"). EYS was not recommended at that time.
On June 18, 1999, the ARD committee reconvened to discuss plaintiff's needs and develop an IEP for the 1999-2000 school year. Although an IEP was agreed upon, plaintiff's parents did not accept the educational instruction offered by defendant. Plaintiff's parents requested at least twenty-five hours of weekly in-home training. Defendant's staff considered that to be excessive and continued to offer six hours of in-home training.
On August 16, 1999, the ARD committee met at plaintiff's parents' request to review his in-home goals and objectives. The committee agreed that the previous IEP would remain in effect but plaintiff's in-home training goals and objectives were revised. Plaintiff's parents continued to disagree that the six hours of in-home training provided for plaintiff was sufficient. They requested twenty-five hours.
On September 27, 1999, the ARD committee met again, this time to discuss a physical therapy evaluation of plaintiff and to determine his eligibility for physical therapy services. Physical therapy was added to plaintiff's previous IEP. Plaintiff's parents brought an outside assessment to the committee meeting, but refused to release it or share its contents. Plaintiff attended the preschool program during the 1999-2000 school year. On February 3, 2000, his parents filed their request for a due process hearing.
The ARD committee met twice in May 2000, but was unable to reach any agreement as to continued services for plaintiff. Ultimately, plaintiff's parents determined that they would not allow him to return to school until the due process hearing had been completed. Defendant was at all times ready, willing, and able to work with plaintiff's parents to develop an appropriate IEP for the 2000-2001 school year.
IV.
The Hearing Officer's Decision
The hearing officer found that defendant had complied with the procedural requirements of IDEA and had developed IEPs reasonably calculated to enable *562 plaintiff to receive educational benefits. Instead of focusing on the merits of the decision, plaintiff's first response is to attack the integrity of the hearing officer. He urges that because she ruled in favor of school districts in twenty-three of thirty cases she had heard, she was predisposed to decide in favor of defendant and against plaintiff.[1] The argument is entirely without merit.
The record reflects that the hearing officer bent over backwards to accommodate plaintiff's lead counsel. She granted numerous continuances at his behest. Moreover, because of his conduct, the proceedings took twice as long as they should have. The hearing officer's pleas that plaintiff's lead counsel allow his local counsel, who was familiar with the local rules, to participate fell on deaf ears. Plaintiff's lead counsel was obstreperous, argumentative, and frequently mischaracterized testimony.[2]
Plaintiff's brief continues the trend found in the administrative hearing transcript of misleading statements and arguments. Plaintiff's primary ground is that defendant violated the procedural safeguards of IDEA by failing to have a regular education teacher in attendance at several ARD committee meetings. As noted, supra, the record reflects that plaintiff was not eligible for general education services due to his young age. Plaintiff has no credible explanation for why the absence of such a teacher materially affected any of the proceedings. Instead, he misleadingly urges that any procedural inadequacy, i.e., technicality, will throw defendant out of compliance with IDEA and make it absolutely liable to fund plaintiff's private education. That is not the test. Rather, even the case cited by plaintiff holds that procedural flaws do not automatically require the finding that an FAPE has been denied; only if the procedural inadequacies result in the loss of educational opportunity or seriously infringe the parents' opportunity to participate in the IEP formulation process is an FAPE denied. W.G. v. Bd. of Trustees, 960 F.2d 1479, 1484 (9th Cir. 1992). A more serious point is the allegation that defendant refused to provide plaintiff's parents with copies of assessments before ARD committee meetings. If that indeed occurred, it had the potential to affect the parents' participation.[3] However, the record reflects that plaintiff's parents very vocally participated in every ARD committee meeting and that they were not hindered by any alleged withholding of documents.
After using approximately ten pages of his brief (pages 10 through 19) to discuss his two grounds for relief, plaintiff devotes sixteen pages to an all-out attack on defendant and its personnel. That plaintiff falls back on such a tactic belies the merit of his claims.[4] In sum, plaintiff's argument seems to be that since his parents made it *563 impossible for him to attend school, defendant should have to pay for him to be educated at home. None of the cases he cites support the proposition that parents alone can decide whether the FAPE requirement is met.
Finally, plaintiff devotes the remainder of his seventy-six-page brief to an exposition on the treatment of autism. Here, his thesis is that any fool would know that there is only one method "proven" (that is, about which extensive studies have been published in peer review journals) to be effective in treating children with autism. And, because defendant refuses to devote itself exclusively to following that methodology, it has failed to provide plaintiff with an FAPE. In other words, plaintiff puts the burden of proof on defendant to demonstrate that its methodology "was equal to or better than" plaintiff's program. Pl. Br. at 70. Methodology, however, is not an issue for the court to resolve. Daniel R.R. v. State Bd. of Educ., 874 F.2d 1036, 1044 (5th Cir.1989) (Congress chose to leave selection of education policy and methods to state and local school officials); Lachman v. Ill. State Bd. of Educ., 852 F.2d 290, 297 (7th Cir.1988). As defendant has repeatedly noted, the law does not require that it provide plaintiff a Cadillac, although that is surely what every parent would want. IDEA simply mandates a "basic floor of opportunity" to receive an educational benefit. Rowley, 458 U.S. at 201, 102 S.Ct. 3034. That defendant uses a variety of methodologies does not mean that it has failed to meet the floor.
In sum, the records establishes beyond doubt that plaintiff's parents decided in the fall of 1998 to implement their own program for his education. They became ardent adherents of the Lovaas methodology and did not want any other program implemented. They demanded that defendant's in-home trainers follow their plan and none other. They were of the opinion that the trainers could teach them nothing; therefore, parent training time should be spent at their team meetings so that trainers could be trained in the parents' system. Plaintiff's parents removed him from the PPCB program without giving defendant a fair chance to work with plaintiff. When plaintiff was allowed to attend the pre-kindergarten program, he did very well and received significant educational benefit. There is no reason to believe that he would not have continued to receive significant educational benefit in the kindergarten program. His parents simply refused to allow him to participate.
V.
ORDER
For the reasons discussed herein,
The court ORDERS and DECLARES that defendant complied with the procedures set forth in IDEA; that the IEPs developed through the Act's procedures were reasonably calculated to enable plaintiff to receive educational benefits; and, that plaintiff is not entitled to be reimbursed for his alternative placement.
The court ORDERS that the decision of the hearing officer be, and is hereby, affirmed.
The court further ORDERS that all claims for relief made in this action by plaintiff against defendant be, and are hereby, dismissed.
NOTES
[1] It is ironic that plaintiff points out that the hearing officer refused to take a break when plaintiff's mother began crying during testimony. Her crying occurred during testimony about the behavior of her husband. One could easily surmise that she was crying because she recognized the truth of the testimony. And, the fact that plaintiff's father did not testify would lead one to the conclusion that he did, in fact, behave as described, that is, in a violent and threatening manner at home and at one or more ARD committee meetings.
[2] As a result, the testimony he adduced was not as persuasive as that adduced by defendant.
[3] The record reflects that one member of defendant's staff understood it to be the policy of defendant not to release reports prior to committee meetings so that the reports could be explained when they were distributed.
[4] Granted, some of plaintiff's complaints have merit. It seems, for instance, that plaintiff's mother especially struck a nerve in David Collyer, the Director of Special Education. One could conclude that she made him feel insecure. There is no indication, however, that his unprofessional response to either of plaintiff's parents in any way affected the IEPs developed for plaintiff. The remainder of defendant's staff selflessly devoted themselves to serving plaintiff's best interest despite their discomfort with plaintiff's parents.
|
210 P.3d 552 (2009)
Bradley J. ZENNER and Allason M. Zenner, Plaintiffs-Respondents,
v.
Lance D. HOLCOMB and Jennifer K. Holcomb, d/b/a Holcomb Construction, Defendants-Appellants.
No. 35034.
Supreme Court of Idaho, Lewiston, April 2009 Term.
June 16, 2009.
*553 Edwin Lee Litteneker, Lewiston, argued for appellants.
Clark & Feeney, Lewiston, for respondents. Paul Thomas Clark argued.
*554 BURDICK, Justice.
This appeal arises out of the district court's award of actual attorney fees and costs to Respondents Bradley and Allason Zenner (the Zenners) pursuant to Paragraph 20 of the construction contract entered into between the Appellants Lance and Jennifer Holcomb (the Holcombs) and the Zenners. The Holcombs appeal from the award, arguing the Zenners are not the prevailing party and, therefore, are not entitled to costs and attorney fees under the contract. Alternatively, the Holcombs argue that even if the Zenners are the prevailing party, the district court should have determined the amount of costs and attorney fees to be awarded pursuant to the criteria set forth in I.R.C.P. 54(d) and (e) respectively, rather than awarding them all of their costs and attorney fees pursuant to the contractual language. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
On June 19, 2002, the parties entered into a contract for the Holcombs to build a house on the Zenners' property. After construction was complete, the Zenners were unsatisfied with the house and made a list of several items that were defective or unfinished. Mr. Holcomb returned to the house several months later and addressed some items from the Zenners' list; however, several issues remained unresolved, including the Zenners' claims of deviations from architectural plans and water collection under the house. Mr. Holcomb refused to fix the defects.
On December 30, 2003, the Zenners filed a complaint for breach of contract against the Holcombs and requested costs and attorney fees pursuant to I.C. §§ 12-120 and 12-121. The Zenners later requested attorney fees and costs pursuant to Paragraph 20 of the contract. Paragraph 20 provided: "Attorney's fees. Should any kind of proceeding including litigation or arbitration be necessary to enforce the provisions of this agreement the prevailing party shall be entitled to have it's [sic] attorney's fees and costs paid by the other party." On August 22, 2007, after extensive discovery and mediation attempts, the Holcombs offered judgment for $25,000. The Zenners declined. On September 11, 2007, the Holcombs offered another judgment for $35,000. Again, the Zenners declined. At this point in the case, the Zenners had incurred attorney fees in excess of $46,000.
Trial began on October 1, 2007 and lasted ten days. Although the Zenners sought damages in the amount of $120,000, the jury awarded them only $40,000. On October 18, 2007, the district court entered a judgment on the verdict, ordering the Holcombs to pay the "sum of $40,000.00 with interest thereon at the statutory rate until paid, together with Plaintiff's costs and attorney fees." That same day, the Holcombs filed an objection to the court's judgment, arguing that any award of attorney fees and costs must be pursuant to I.R.C.P. 54(d)(1)(B), 54(d)(1)(F) and 54(e)(1).
On October 24, 2007, the Zenners filed a Memorandum of Costs and Affidavit of Attorney Fees pursuant to I.R.C.P. 54(d)(5). The Zenners requested $107,239.29 in attorney fees pursuant to Paragraph 20 of the contract, $8,075.12 in costs as a matter of right, and $6,140.52 in discretionary costs. In response, the Holcombs filed a Motion to Disallow Attorney Fees and Costs on November 6, 2007. On November 13, 2007, the Zenners filed the supplemental affidavit of Paul Clark, which stated that some of the attorney fees associated with this case were mistakenly entered in their Memorandum of Costs and Affidavit of Attorney Fees. As such, the Zenners amended their request for attorney fees to $106,049.29 while their request for costs remained the same.
On November 21, 2007, a hearing was held regarding the Zenners' request for attorney fees and costs. The district court held that the Zenners were the prevailing party and were entitled to their actual costs and attorney fees pursuant to the contract. Accordingly, the district court signed an amended judgment on the verdict on January 11, 2008, awarding the Zenners the full amount of attorney fees and costs requested. The Holcombs now appeal from the district court's award of attorney fees and costs.
*555 II. ANALYSIS
The Holcombs argue the district court abused its discretion in determining that the Zenners were the prevailing party. Alternatively, the Holcombs argue that even if the Zenners were the prevailing party, the district court should have determined the amount of costs and attorney fees to be awarded pursuant to the criteria set forth in I.R.C.P. 54(d) and (e) rather than awarding them actual costs and attorney fees under the language of the contract. Each issue will be discussed in turn.
A. Prevailing Party
The Holcombs contend the district court erred in determining that the Zenners were the prevailing party. A trial court's determination of whether a party prevailed is a matter of discretion. Lettunich v. Lettunich, 141 Idaho 425, 434-35, 111 P.3d 110, 119-20 (2005). "A district court's exercise of discretion will be upheld absent a showing of abuse of discretion." Schneider v. Howe, 142 Idaho 767, 771, 133 P.3d 1232, 1236 (2006). The boundaries of the district court's discretion are guided by I.R.C.P. 54(d)(1)(B), which provides: "In determining which party to an action is a prevailing party and entitled to costs, the [district] court shall in its sound discretion consider the final judgment or result of the action in relation to the relief sought by the respective parties." To determine whether an abuse of discretion occurred, we consider (1) whether the district court correctly perceived the issue as one of discretion; (2) whether the district court acted within the outer boundaries of its discretion and consistently with the applicable legal standards and (3) whether the district court reached its decision by an exercise of reason. Sun Valley Shopping Ctr., Inc. v. Idaho Power Co., 119 Idaho 87, 94, 803 P.2d 993, 1000 (1991).
The district court began its prevailing party analysis by explaining that, even though I.R.C.P. 68 provides that an unaccepted offer of judgment is deemed withdrawn and is not admissible as evidence except in a proceeding to determine costs, the court could consider the Holcombs' offer of judgment since both parties argued its amount in consideration of whether or not the Zenners were the prevailing party. The district court went on to state:
In exercising ... discretion I consider whether or not the jury decided in the Zenners' favor, how the jury award compared to what was sought, what other damages were recoverable in addition to the jury award, the extent to which the Zenners had a choice in proceeding to trial, and what is fair considering all of these factors.
The court then stated, "[t]here is no question that the Zenners recovered. Mr. Holcomb initially did not want to pay anything for repairs. He argued for minimal damages at trial." In support of its proposition that the Holcombs were seeking minimal damages, the district court referred to the Holcombs' second offer of judgment, which was ultimately rejected by the Zenners. The court pointed out that under Rule 68(a), an offer of judgment includes "all claims recoverable, including any attorneys fees awardable under Rule 54(e)(1), and any costs awardable under Rule 54(d)(1), which have accrued up to the date of the offer of judgment," and the contract provided that the prevailing party was entitled to costs and attorney fees. As such, the district court found that the Holcombs' $35,000 offer of judgment included costs and attorney fees. Because the $35,000 offer of judgment was less than the Zenners' attorney fees alone (which at that point in the case were in excess of $46,000), the district court determined that the Holcombs sought minimal damages.
The Holcombs argue the district court was prohibited from considering their rejected Rule 68 offer of judgment in support of its prevailing party analysis for the purpose of awarding attorney fees. Rule 68 states:
(a) At any time more than 14 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property or to the effect specified in the offer, which offer of judgment shall be deemed to include all claims recoverable, including any attorneys fees awardable under Rule 54(e)(1), and any *556 costs awardable under Rule 54(d)(1), which have accrued up to the date of the offer of judgment. The offer of judgment shall not be filed with the court, except as stated herein. If within 14 days after the service of the offer the offeree serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service thereof, and thereupon the judgment shall be entered for the amount of the offer without costs. An offer not accepted shall be deemed withdrawn and evidence thereof is not admissible except in a proceeding to determine costs. The fact that an offer is made but not accepted does not preclude a subsequent offer. When the liability of one party to another has been determined by verdict, order or judgment, but the amount or extent of the liability remains to be determined by further proceedings, the party adjudged liable may make an offer of judgment, which shall have the same effect as an offer made before trial if it is served within a reasonable time not less than 14 days prior to the commencement of hearings to determine the amount or extent of liability.
(b) In cases involving claims for monetary damages, any costs under Rule 54(d)(1) awarded against the offeree must be based upon a comparison of the offer and the "adjusted award." The adjusted award is defines as (1) the verdict in addition to (2) the offeree's costs under Rule 54(d)(1) incurred before service of the offer of judgment and (3) any attorney fees under Rule 54(e)(1) incurred before service of the offer of judgment. Provided, in contingent fee cases where attorney fees are awardable under Rule 54(e)(1), the court will pro rate the offeree's attorney fees to determine the amount incurred before the offer of judgment in reaching the adjusted award.
If the adjusted award obtained by the offeree is less than the offer, then:
(i) the offeree must pay those costs of the offeror as allowed under Rule 54(d)(1), incurred after the making of the offer;
(ii) the offeror must pay those costs of the offeree, as allowed under Rule 54(d)(1), incurred before the making of the offer; and
(iii) the offeror shall not be liable for costs and attorney fees awardable under Rules 54(d)(1) and 54(e)(1) of the offeree incurred after the making of the offer.
If the adjusted award obtained by the offeree is more than the offer, the offeror must pay those costs, as allowed under Rule 54(d)(1), incurred by the offeree both before and after the making of the offer.
After a comparison of the offer and the adjusted award, in appropriate cases, the district court shall order an amount which either the offeror or the offeree must ultimately pay separate and apart from the amount owed under the verdict. A total judgment shall be entered taking into account both the verdict and the involved costs.
(c) In cases involving claims for relief other than monetary damages, if the judgment, including attorney fees awardable under Rule 54(e)(1) incurred before service of the offer of judgment, and costs incurred before service of the offer of judgment, finally obtained by the offeree is not more favorable than the offer, the offeree must pay the offeror's costs, as allowed under Rule 54(d)(1), incurred after the making of the offer. If the judgment including such attorney fees and costs is more favorable than the offer, the offeror must pay all costs of the offeree allowable under Rule 54(d)(1) both before and after the making of the offer.
(Emphasis added). In support of their argument, the Holcombs cite to Ireland v. Ireland, 123 Idaho 955, 961, 855 P.2d 40, 46 (1993), in which this Court held that I.R.C.P. 68 should not be used to support an award of attorney fees. However, after reviewing Ireland, we determine the Court's holding in that case conflicts with the Idaho Rules of Civil Procedure governing prevailing party status for costs and attorney fees.
Idaho Rule of Civil Procedure 54(d)(1)(B) governs the trial court's prevailing party analysis for the purpose of awarding costs. Rule 54(d)(1)(B) states: "In determining which party to an action is a prevailing party and entitled to costs, the trial court shall in *557 its sound discretion consider the final judgment or result of the action in relation to the relief sought by the respective parties." This Court has held that offers of settlement, including offers of judgment, should be considered in determining the final judgment or result of the action in relation to the relief sought. See Polk v. Larrabee, 135 Idaho 303, 313, 17 P.3d 247, 257 (2000). Although offers of judgment may be considered, we have cautioned that they should not be the only, or even most significant, factor in the trial court's prevailing party analysis. Id.
Furthermore, I.R.C.P. 54(e)(1) governs the trial court's award of attorney fees in a civil action when fees are provided by statute or contract. Rule 54(e)(1) states that the trial court may award reasonable attorney fees to the prevailing party or parties as defined by Rule 54(d)(1)(B). Thus, Rule 54(e)(1) provides that the trial court's prevailing party analysis for costs is the same as its prevailing party analysis for attorney fees.
Yet in Ireland, the Court held that offers of judgment cannot be considered in the trial court's prevailing party analysis for purposes of awarding attorney fees. Ireland, 123 Idaho at 961, 855 P.2d at 46. In support of its holding, the Court stated, "Rule 68 is not intended to provide for an award of attorney fees." Id. The Court also stated "[Rule 68] applies only to judgments obtained by plaintiffs, putting a special burden on prevailing plaintiffs to whom a settlement offer is made to show that they are entitled to costs." Id. However, Ireland did not result in the plaintiff obtaining a judgment. In that case, Marlene Ireland filed a motion for modification of child support payments against her ex-husband Milton Ireland. Before trial, Milton made an offer of judgment that was rejected by Marlene. The trial court determined that there had been no substantial and material change in circumstances and denied Marlene's motion for modification. The trial court also determined that Milton was the prevailing party and granted his request for attorney fees under I.C. § 12-121. The trial court found that Milton substantially prevailed in accordance with his offer of judgment. The trial court stated, "But for the civil disobedience of Christina[1] rejecting this Court's custody decision, the defendant's Offer of Judgment regarding payment of prospective child support under a shared custody arrangement in the amount of $200.00 per month would have been closely approximated by the Court's decision. In that event, the defendant would have prevailed in virtually all aspects of his Offer of Judgment." Although the trial court used the offer of judgment as a factor in support of its finding that Milton was the prevailing party, the trial court never referred specifically to Rule 68 in its prevailing party analysis.
On appeal, the district court reversed Milton's award of attorney fees. The district court found that the offer of judgment was governed by Rule 68 and that Rule 68 was inapplicable because it only applied where "the judgment, including attorney fees and costs, finally obtained by the offeree is not more favorable than the offer...." The district court found no basis in the rule to support the trial court's application of Rule 68 to what the trial court's decision would have been "but for the civil disobedience of Christina." The district court also determined that the trial court's findings did not support the conclusion that the action was brought frivolously, or that Milton was the prevailing party. Furthermore, the district court questioned the applicability of Rule 68 to child support modification proceedings.
Milton appealed the reversal of his award of attorney fees to the Idaho Supreme Court. Milton argued that the trial court did not base its award of attorney fees on Rule 68, but rather awarded attorney fees pursuant to I.C. § 12-121. Milton further argued that the trial court's determination that the action was brought frivolously was supported by the record. This Court held that the trial court should not have used Rule 68 to support an award of attorney fees, but nevertheless upheld the award of attorney fees on the basis of I.C. § 12-121, finding that Marlene's motion was frivolous. Ireland, 123 Idaho at *558 961, 855 P.2d at 46. Although the Court upheld the trial court's award of attorney fees under I.C. § 12-121, it did not discuss how Milton was the prevailing party. Based on our review of Ireland, we find that Rule 68 was inapplicable to the Court's analysis.
An offer of judgment is defined generally as "[a] settlement offer by one party to allow a specified judgment to be taken against the party." Black's Law Dictionary 1114 (8th ed.2004). In Delta Air Lines, Inc. v. August, 450 U.S. 346, 351, 101 S.Ct. 1146, 1149, 67 L.Ed.2d 287, 292 (1981), the United States Supreme Court held "the plain language of Rule 68 confines its effect [to cases] in which the plaintiff has obtained a judgment for an amount less favorable than the defendant's settlement offer."[2] This Court has also held that "[Rule 68] applies only to offers made by the defendant and only to judgments obtained by the plaintiff." Jones v. Berezay, 120 Idaho 332, 334, 815 P.2d 1072, 1074 (1991) (quoting Delta Air Lines, Inc., 450 U.S. at 352, 101 S.Ct. at 1150, 67 L.Ed.2d at 292-93). Thus, Rule 68 is a rule of procedure that places a special burden on prevailing plaintiffs to whom a settlement offer is made to show that they are entitled to costs. Ireland, 123 Idaho at 961, 855 P.2d at 46. Rule 68 does not govern an offer of judgment if it is not made by a defendant and if the offer is not more favorable than the judgment obtained by the plaintiff. Even though Milton made an offer of judgment in Ireland, Rule 68 was inapplicable since Marlene did not prevail. Accordingly, the trial court was not prohibited from considering Milton's offer of judgment as a factor in its prevailing party analysis for an award of attorney fees. In fact, the trial court was required to consider the offer of judgment under Rule 54(d)(1)(B) since Rule 68 was inapplicable. Therefore, we overrule the Court's holding in Ireland in so far as it holds that an offer of judgment may not be used to support a trial court's determination of prevailing party status for the purpose of awarding attorney fees.
Rule 68 is also inapplicable in this case. Although the Holcombs (the defendants) made an offer of judgment and the Zenners (the plaintiffs) prevailed, the verdict was not less favorable than the offer. The purpose of Rule 68 is to encourage settlement in litigation. Delta Air Lines, 450 U.S. at 352, 101 S.Ct. at 1150, 67 L.Ed.2d at 292-93. The defendant is encouraged to make realistic settlement offers since only offers of judgment that are more favorable than the plaintiff's verdict will be considered for purposes of Rule 68. Id. This helps discourage sham offers. Id. Here, the Holcombs' offer of judgment was for $35,000, which the district court found to include costs and attorney fees, and the jury verdict was for $40,000 without costs and attorney fees. Although the district court erred in referring to the Holcombs' offer of judgment as a Rule 68 offer of judgment, we find this error to be harmless. The district court properly considered the Holcomb's second offer of judgment as a factor in its prevailing party analysis. Therefore, we affirm the district court's finding that the Zenners were the prevailing party.
B. Applicability of I.R.C.P. 54(e)
Alternatively, the Holcombs argue that even if the Zenners are the prevailing party, the district court erred by awarding the Zenners actual attorney fees pursuant to the language of the contract, rather than considering the factors under I.R.C.P. 54(e)(3) to determine a reasonable amount of fees and costs to award. The Holcombs argue that, although the contract provision does not state "reasonable" attorney fees, I.R.C.P. 54(e) is nevertheless applicable because it would strain the plain meaning of I.R.C.P. 54(e)(1) to interpret the rule to mean that a contract must provide for "reasonable attorney fees" in order for I.R.C.P. 54(e) to apply.
"The application of [a] procedural rule is a question of law on which we exercise free review." Blaser v. Cameron, 116 Idaho 453, 455, 776 P.2d 462, 464 (Ct.App.1989). Under I.R.C.P. 54(e)(1), a "court may award *559 reasonable attorney fees ... when provided for by ... contract." (Emphasis added). I.R.C.P. 54(e)(3) sets forth the factors the court must consider to determine what amount is reasonable. However, I.R.C.P. 54(e) is only applicable if the reasonableness criteria found in I.R.C.P. 54(e)(3) is not inconsistent with the attorney fees provision in the contract. I.R.C.P. 54(e)(8). I.R.C.P. 54(e)(8) states: "The provisions of this Rule 54(e) relating to attorney fees shall be applicable... to any claim for attorney fees made pursuant ... to any contract, to the extent that the application of this Rule 54(e) to such a claim for attorney fees would not be inconsistent with such other ... contract."
Here, the district court found the contract calls for "actual" attorney fees. The Holcombs failed to appeal that finding, but argue, as a matter of law, the contract provision is subject to I.R.C.P. 54(e). Requiring the court to determine the amount of attorney fees by considering the factors in I.R.C.P. 54(e)(3) would be contrary to the language of the contract and, therefore, contrary to I.R.C.P. 54(e)(8). Due to this inconsistency, I.R.C.P. 54(e) is not applicable. The contract provision does not contemplate the court's involvement in determining whether the fee is reasonable.
Even if the Holcombs had asserted a different interpretation of the contract provision, which they did not, we would "construe the contract most strongly against the person who prepared the contract." Win of Michigan, Inc. v. Yreka United, Inc., 137 Idaho 747, 751, 53 P.3d 330, 334 (2002). The Holcombs cite to various Idaho cases in which this Court applied the I.R.C.P. 54(e) factors to determine the amount of attorney fees to award where the fees were awarded by contract; however, all of these cases are distinguishable from the facts and issues at hand.[3] Therefore, we hold that I.R.C.P. 54(e)(3) is inapplicable because it is inconsistent with the language of the contract.
However, we caution that contractual language such as "its attorney fees" or "all attorney fees" does not give the prevailing party an unqualified right to unlimited attorney fees. The non-prevailing party may still argue that the amount claimed is an unconscionable penalty. Clampitt v. A.M.R. Corp., 109 Idaho 145, 148, 706 P.2d 34, 37 (1985) (holding that a liquidated damages amount set by contract is enforceable where the amount bears a reasonable relation to the damages actually sustained).
The Holcombs also argue the district court should have applied I.R.C.P. 54(e)(3) in determining the amount of fees to award because the Zenners asserted in their pleadings that they were entitled to reasonable attorney fees. This argument appears to bring the parties' expectations concerning the meaning of the contract provision into contention. However, at oral argument, counsel for the Holcombs stated that interpretation of the contract was not an issue in this case. Counsel went on to state "the contract language says what it says." Because the interpretation of the contract is not being challenged, this argument need not be addressed any further.
Finally, the Holcombs argue that I.R.C.P. 54(e) should apply because the district court used I.R.C.P. 54(d)(1) to determine prevailing party status. However, this Court has held that when a "contract provision limits the award of attorney fees to a `prevailing party,' the I.R.C.P. 54(d)(1) definition of `prevailing party' [is] applicable. However, if the... contract sets forth a different standard, the determination of the award of attorney fees [is] based upon the ... contractual standard, not the prevailing party standard of I.R.C.P. 54(d)(1)." Farm Credit Bank of Spokane v. Wissel, 122 Idaho 565, 569 n. 4, 836 P.2d 511, 515 n. 4 (1992). Here, the contract provision used the prevailing party standard and, therefore, I.R.C.P. 54(d)(1) is applicable in determining prevailing party status. However, the contract set forth a different standard for determining the amount of attorney fees to award. Thus, I.R.C.P. 54 is not applicable to the determination of attorney fees, which is "based upon the ... contractual standard." Id. Based on *560 the analysis set forth above, we affirm the district court's award of actual attorney fees pursuant to the language of the contract.
C. Applicability of I.R.C.P. 54(d)
In addition, the Holcombs argue that the district court erred in determining that I.R.C.P. 54(d)(1) is not applicable when determining the amount of costs (as a matter of right and discretionary) to award the Zenners. In support of their argument, the Holcombs refer to their prior arguments regarding the applicability of I.R.C.P. 54 in determining the amount of attorney fees to award.
Under I.R.C.P. 54(d)(1)(A), "costs shall be allowed as a matter of right to the prevailing party or parties, unless otherwise ordered by the court." Idaho Rule of Civil Procedure 54(d)(1)(C) and (D) then distinguishes which costs are mandatory and which are discretionary. Here, the district court determined, "[a] fair reading of the plain meaning of the contract persuades me that it contemplated that the prevailing party would walk away from the courthouse at no cost to himself." In other words, the district court found that the contract was not ambiguous and that the prevailing party would walk away with "no cost to himself." As such, the district court ordered the Holcombs to pay the Zenners' actual costs.
In Farm Credit Bank, we stated that I.C. § 12-120 "does not override a valid agreement...." 122 Idaho at 569, 836 P.2d at 515 (citing Chittenden & Eastman Co. v. Leasure, 116 Idaho 981, 982, 783 P.2d 320, 321 (Ct.App.1989)). Likewise, we hold that the general entitlement to costs under I.R.C.P. 54(d)(1) does not override a valid agreement. This standard also promotes the freedom of contract, which is "a fundamental concept underlying the law of contracts and is an essential element of the free enterprise system." Steiner Corp. v. American Dist. Telegraph, 106 Idaho 787, 791, 683 P.2d 435, 439 (1984) (citing Rawlings v. Layne & Bowler Pump Co., 93 Idaho 496, 499, 465 P.2d 107, 110 (1970)). Therefore, we affirm the district court in its award of actual costs pursuant to the contract.
D. Attorney Fees on Appeal
On appeal, the Holcombs request attorney fees and costs pursuant to Idaho Appellate Rule 41 and I.C. § 12-121. Idaho Code § 12-121 provides that "[i]n any civil action, the judge may award reasonable attorney's fees to the prevailing party...." The Holcombs are not the prevailing party on appeal and, therefore, are not entitled to attorney fees and costs under I.C. § 12-121.
The Zenners request attorney fees and costs on appeal pursuant to the parties' contract. In their contract, the parties contemplated attorney fees and costs for appellate proceedings. Specifically, the contract states: "Should any kind of proceeding including litigation or arbitration be necessary to enforce the provisions of this agreement the prevailing party shall be entitled to have it's [sic] attorney's fees and costs paid by the other party." In Holmes v. Holmes, 125 Idaho 784, 874 P.2d 595 (Ct.App.1994), the Idaho Court of Appeals stated: "Contractual terms providing for recovery of attorney fees incurred in actions to enforce the contract represent an election by the parties to place the risk of litigation costs on the one who is ultimately unsuccessful. Such provisions are ordinarily to be honored by the courts." 125 Idaho at 787, 874 P.2d at 598. Because these provisions are generally honored in Idaho, we hold that the Zenners are the prevailing party on appeal and, therefore, entitled to their actual costs and attorney fees on appeal pursuant to the contract.
III. CONCLUSION
For the reasons set forth above, we affirm the district court's award of actual attorney fees and costs to the Zenners pursuant to the parties' contract. We also award actual attorney fees and costs to the Zenners on appeal pursuant to the parties' contract.
Chief Justice EISMANN and Justices J. JONES, W. JONES and LUSTER, J, pro tem concur.
NOTES
[1] Christina was one of three children born to Milton and Marlene. The civil disobedience the trial court is referring to is when Christina moved from Utah to Boise in February 1990 after the trial court awarded temporary custody to Milton in Utah.
[2] Federal Rule of Civil Procedure 68 is essentially the same as I.R.C.P. 68. Jones v. Berezay, 120 Idaho 332, 334, 815 P.2d 1072, 1074 (1991).
[3] Lettunich v. Lettunich, 141 Idaho 425, 111 P.3d 110 (2005) (The contract clause failed to contain language that was required for actual attorney fees); Decker v. Homeguard Systems, 105 Idaho 158, 666 P.2d 1169 (Ct.App.1983) (The statute in this case called for "reasonable" attorney fees).
|
FILED
NOT FOR PUBLICATION
DEC 24 2015
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KIP O’CONNOR; et al., No. 13-35895
Plaintiffs - Appellants, D.C. No. 3:11-cv-01297-SI
v.
MEMORANDUM*
COUNTY OF CLACKAMAS, OREGON;
et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the District of Oregon
Michael H. Simon, District Judge, Presiding
Argued and Submitted November 5, 2015
Portland, Oregon
Before: KOZINSKI, BERZON, and WATFORD, Circuit Judges.
Kip O’Connor, Lisa Konell, and Big Mountain Co. (“O’Connor”) appeal the
district court’s grant of summary judgment to the County of Clackamas, Oregon
(“County”) and two of its employees. O’Connor challenges the County’s
application of its zoning ordinances to his property, alleging the County and its
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
employees violated his constitutional rights. We affirm for the reasons stated by
the district court.
O’Connor also challenges the district court’s dismissal of his claim for
intentional interference with economic relations against a community planning
organization and its members. We do not reach the question whether O’Connor
could appeal his state law claim against the community planning organization and
its members given that he had not included the claim in his amended pleadings.
Even if O’Connor were able to challenge on appeal the district court’s ruling on his
state law claim, that claim fails on the merits for the reasons stated by the district
court.
AFFIRMED.
2
|
708 So.2d 656 (1998)
Donald T. GOINES, Appellant,
v.
STATE of Florida, Appellee.
No. 97-1573.
District Court of Appeal of Florida, Fourth District.
April 8, 1998.
*657 Richard Joseph Saliba of Wayne R. McDonough P.A., Vero Beach, for appellant.
Robert A. Butterworth, Attorney General, Tallahassee, and Myra J. Fried, Assistant Attorney General, West Palm Beach, for appellee.
FARMER, Judge.
This is the third appeal in this proceeding under rule 3.850 for post conviction relief.[1] Defendant's pro se motion under rule 3.850 alleged numerous grounds. Originally the motion was summarily denied by the trial court. In Goines v. State, 632 So.2d 292 (Fla. 4th DCA 1994), we reversed and remanded for an evidentiary hearing or attachment of record excerpts on defendant's claim of ineffective assistance of counsel. On remand, the judge who presided at trial held an evidentiary hearing but refused a continuance so that defendant could obtain counsel. At the close of that hearing, the trial court entered an order denying the motion. We then reversed that decision, remanding to consider whether he was indigent for the purpose of appointment of counsel. Goines v. State, 670 So.2d 1201 (Fla. 4th DCA 1996). On remand a different judge conducted this hearing, at which defendant was represented by counsel, and entered an order denying any relief under rule 3.850. The present appeal followed in due course.
The issue we address today deals with the failure of original trial counsel to move for the disqualification of the trial judge who presided over the case when defendant was convicted. The following facts are disclosed by the record. In 1985 when Judge Wild was employed by the State Attorney's Office he prosecuted defendant for the sale of narcotics, and that prosecution resulted in a conviction. At the hearing on the rule 3.850 motion, defendant offered into evidence a certified copy of the Information filed by Joe Wild and signed by him as the prosecutor in the 1985 case. In the latest prosecution, the current state attorney gave notice of an intent to seek enhanced punishment under the habitual felony offender (HFO) statute, based in part on the conviction resulting from the prosecution by the future Judge Wild.
This circumstance led defendant to fear that the former prosecutor, now his trial judge, would be biased against him in the current criminal trial. During pretrial proceedings on the new charge of sale of cocaine, defendant personally drafted a hand written motion to have Judge Wild disqualified from presiding over the case.[2] Defendant testified that he gave the original disqualification motion to his original trial attorney and asked him to file it. At a later docket call in this new case, defendant raised his motion for disqualification with the trial judge, but Judge Wild appeared not to be familiar with it, and thus defendant concluded that his lawyer had failed to file the motion. At that docket call, defendant asked for a new attorney, stating that he was dissatisfied with the representation, pointing to counsel's failure to follow through on the disqualification:
"DEFENDANT: Well I put in a motion when I was first (inaudible) to get you off my case because you were my state prosecutor in 1985. He didn't put it in to present it to the Court. He ain't looking out for my best interests.
"COURT: In 1985?
*658 "DEFENDANT: Yes, sir. You was my State Prosecutor.
"COURT: You're saying you put something in the file? There's nothing in the file?
"DEFENDANT: Mr. Whitton [trial counsel] got it, he should have it.
"COURT: Okay. Well, that doesn't have anything to do with your attorney."[3]
According to defendant, his trial counsel was standing next to him during this exchange.
Trial counsel testified that he had no recollection of ever seeing defendant's hand written motion for disqualification and could not locate his case file. He acknowledged that he was present and heard the allegation that defendant had made at the docket call regarding his grounds for fearing bias on the part of the trial judge. He said that he did not follow up on the motion for disqualification. He also testified that recusal in the circumstances presented is "virtually automatic" where a good faith basis is pleaded, and that he would have filed defendant's motion for disqualification if he had been aware of it.
Defendant admitted at the rule 3.850 hearing that the original trial judge did not sentence him to the 30-year, maximum HFO sentence requested by the state, and conceded that he then qualified for HFO sentencing. His actual sentence was 15 years, while his codefendant received the 30 year maximum.
The order denying relief on the disqualification issue does not make any specific finding as to whether trial counsel rendered ineffective assistance by failing to move for disqualification. The trial court denied relief because defendant failed to demonstrate prejudice, i.e., that the outcome of the proceedings would have been different if the motion had been filed. The issue is whether original trial counsel rendered ineffective assistance in failing to present and argue the motion for disqualification of the trial judge.
In Steinhorst v. State, 636 So.2d 498 (Fla. 1994), the court considered a claim raised for the first time in a rule 3.850 motion that the judge who had presided over the defendant's murder case had a conflict caused by his prior involvement as a private attorney in rendering advice about a tort claim that could have been brought by the victim's estate. The court concluded that if there was evidence to support that allegation "such evidence would present grave due process concerns." 636 So.2d at 500. The court emphasized that "proceedings involving criminal charges, and especially the death penalty, must both be and appear to be fundamentally fair." 636 So.2d at 500-01. Consequently, we must decide whether counsel's performance in failing to argue the issue was constitutionally deficient within the holding in Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 2064, 80 L.Ed.2d 674 (1984).
Defendant cites People v. Corelli, 343 N.Y.S.2d 555, 41 A.D.2d 939 (1973), holding that if the motion had been filed by trial counsel disqualification would have been required. There, as here, the trial judge had been the prosecutor in the defendant's earlier case. The court reversed the conviction and ordered a new trial. We note that in Corelli the defendant waived jury trial and that the trial judge acted as finder of fact. Here, defendant was tried by a jury, but was subject to HFO sentencing by the judge, and one of the predicate convictions to be used for an HFO sentence was the prior conviction obtained by this trial judge when he was a prosecutor.
Under Florida decisions, the mere fact that the trial judge had once been employed by the State Attorney would not itself have required disqualification. Chastine v. Broome, 629 So.2d 293, 295 (Fla. 4th DCA 1993) (disqualifying the judge on other grounds). It is also clear that if the judge had any prior involvement with the pending criminal charges, disqualification would have been necessary. Fla.Code Jud. Conduct, Canon 3(E)(1)(b); see also Steinhorst, 636 So.2d 498 (judge disqualified who rendered advice on a civil matter relating to the same crime); Duest v. Goldstein, 654 So.2d 1004 *659 (Fla. 4th DCA 1995) (trial judge who assisted state attorney prosecuting petitioner in original trial disqualified from presiding over resentencing); Roberts v. State, 161 So.2d 877 (Fla. 2d DCA 1964) (as matter of law disqualification required where trial judge had been County Solicitor who filed information in same case).
Disqualification is ordinarily required in any situation where the facts are reasonably sufficient to create a well-founded fear in the mind of the moving party that he will not receive a fair trial. Fischer v. Knuck, 497 So.2d 240, 242 (Fla.1986). In MacKenzie v. Super Kids Bargain Store, Inc., 565 So.2d 1332 (Fla.1990), and Livingston v. State, 441 So.2d 1083, 1086 (Fla.1983), the court has made clear that the legal sufficiency of a motion to disqualify a trial judge turns on whether "the facts alleged would place a reasonably prudent person in fear of not receiving a fair and impartial trial." 565 So.2d at 1335, 441 So.2d at 1087. Further in Michaud-Berger v. Hurley, 607 So.2d 441, 446 (Fla. 4th DCA 1992), we held that the facts underlying the well-grounded fear must be judged from the perspective of the moving party.
We have only recently granted prohibition to disqualify a trial judge under the identical ground raised in this case. In W.I. v. State, 696 So.2d 457 (Fla. 4th DCA 1997), the trial judge had previously prosecuted the same defendant, although more recently than in the present case. In finding this ground sufficient to require disqualification, we said:
"While the fact that the presiding judge prosecuted petitioner in a previous case does not present a direct conflict of interest, it does support petitioner's claim of a well founded fear that he will not receive a fair trial before this judge. Fischer v. Knuck, 497 So.2d 240 (Fla.1986); Fla.R.Jud.Admin. 2.160(d); section 38.10, Fla. Stat. (1995)."
696 So.2d at 458.[4]
In Duest, the trial judge had previously assisted in prosecuting the same defendant while the judge was formerly employed in the state attorney's office. As Judge Warner wrote for this court:
"We hold that the foregoing facts are sufficient to create such a fear. First, according to the affidavit, the trial judge actually assisted in the trial of defendant. Canon 3(C) of the Code of Judicial Conduct states:
(1) A judge should disqualify himself in a proceeding in which his impartiality might reasonably be questioned, including but not limited to instances where... (b) he served as a lawyer in the matter in controversy ....
Not only did the trial judge participate in the proceeding against petitioner, but he was a supervisor at the time the state sought the death penalty in this case, and as supervisor one can infer that he approved or at least concurred in that decision.
In a death penalty case, the question of judicial bias is of particular importance, since the judge will be called upon to make what is literally a life-or-death decision. Chastine v. Broome, 629 So.2d 293, 294 (Fla. 4th DCA 1993) (citing Livingston v. State, 441 So.2d 1083, 1087 (Fla.1983)). To leave that decision to a judge who assisted in securing the death sentence in petitioner's first trial seems to us to create more than a reasonable fear of bias on the part of the judge."
654 So.2d at 1004-05.
In this case, defendant's fear was that the attorney who had six years earlier prosecuted him on drug charges would now preside over his current criminal casealso involving drug charges. Moreover, if the jury should find him guilty this same person would be the one who would sentence him. The state had clearly stated its intention to seek HFO sentencing if a conviction resulted, and it is obvious that in deciding whether to impose a HFO sentence for the current offense *660 the sentencing judge would be considering the facts and circumstances surrounding the previous conviction he had helped to obtain. Although a HFO sentence is not, of course, the equivalent of the death penalty, the consequences of HFO sentencing are amply grave to the one so sentenced. We therefore deem it important in this case. On these facts, therefore, we think a prudent defendant would have a reasonable fear that he might not receive a fair trial or sentencing. We thus conclude that if counsel had filed a proper motion, disqualification would have been required.
We do not end our inquiry at this point, however, because the issue has arisen in the context of a post conviction proceeding claiming ineffective assistance of counsel. In Thompson v. Wainwright, 447 So.2d 383, 385 (Fla. 4th DCA 1984), we explained that even if disqualification would have been required, it does not necessarily follow that counsel's decision not to seek recusal "automatically affords a basis for later attack on counsel's competency." In order to prevail on such a claim under Strickland, defendant must show not only that counsel's performance was deficient, but that the deficient performance prejudiced the defense in some meaningful way.
In Thompson,[5] defense counsel explained that he did not believe that the motion for disqualification would have been successful, so he made a strategic choice not to offend the judge by filing a legally insufficient motion. We were understandably reluctant to second guess an avowed tactical decision by trial counsel. Here, however, counsel made clear that the failure to move for disqualification was not a tactical decision, but was instead the result of a lack of memory of the filing of the motion by his client. We conclude that in the absence of a reasonable tactical decision not to do so, it constitutes ineffective assistance not to seek disqualification on the grounds revealed in this case, which plainly show a reasonable fear of judicial bias.
Strickland holds that the defendant must establish that "counsel's errors were so serious as to deprive the defendant of a fair trial, a trial whose result is reliable." 466 U.S. at 687, 104 S.Ct. at 2064. Florida courts have treated "prejudice" as a showing that the outcome of the proceeding would have been different without counsel's error. See, e.g., Rose v. State, 675 So.2d 567, 570 (Fla.1996) (finding that defendant failed to demonstrate "the probability of a different outcome based on the alleged deficiencies"). But in Lockhart v. Fretwell, 506 U.S. 364, 373, 113 S.Ct. 838, 844, 122 L.Ed.2d 180 (1993) the United States Supreme Court noted that the two standards are not necessarily the same:
"In Strickland, we identified the two components to any ineffective assistance claim: (1) deficient performance and (2) prejudice. Under our decisions, a criminal defendant alleging prejudice must show `that counsel's errors were so serious as to deprive the defendant of a fair trial, a trial whose result is reliable.' Strickland, 466 U.S. at 687, 104 S.Ct. 2052[, at 2064], 80 L.Ed.2d 674; see also Kimmelman v. Morrison, 477 U.S. 365, 374, 106 S.Ct. 2574[, 2582], 91 L.Ed.2d 305 (1986) (`The essence of an ineffective-assistance claim is that counsel's unprofessional errors so upset the adversarial balance between defense and prosecution that the trial was rendered unfair and the verdict rendered suspect').... Thus, an analysis focusing solely on mere outcome determination, without attention to whether the result of the proceeding was fundamentally unfair or unreliable, is defective." [c.o.]
506 U.S. at 368-69, 113 S.Ct. at 842. Lockhart states that the prejudice component of Strickland is concerned with whether counsel's deficient performance "renders the result of the trial unreliable or the proceeding fundamentally unfair."[6] 506 U.S. at 372, 113 S.Ct. at 844. As we noted earlier, the Florida Supreme Court has held that trial before *661 a judge whose impartiality may reasonably be questioned "would present grave due process concerns," because "proceedings involving criminal charges ... must both be and appear to be fundamentally fair." Steinhorst, 636 So.2d at 500-01. We therefore conclude that defendant has satisfied that part of Lockhart defining prejudice as a showing that counsel's error rendered the trial fundamentally unfairin this case because of the appearance and risk of judicial bias.
The state argues that while defendant contends that the discretionary decisions of the judge during the trial and at sentencing might have been affected, he has not demonstrated that the outcome at sentencing would have been different if another judge had been assigned to the case. As we have just seen, Lockhart rejects a reliance on mere outcome as the test for prejudice. We also note that when a legally sufficient basis for judicial disqualification has been shown the law ordinarily does not require that the party seeking disqualification still show that the result would be different before an impartial judge.
The primary evil in having a judge whose impartiality might reasonably be questioned is not in the actual results of that judge's decision making. Rather it is the intolerable appearance of unfairness that such a circumstance imposes on the system of justice. Public acceptance of judicial decision making turns on popular trust in judges as neutral magistrates. The judicial system fails to present a plausible basis for respect when a judge's impartiality can reasonably be questioned.
We therefore reverse with instructions to afford defendant a new trial before a different judge.
GUNTHER and WARNER, JJ., concur.
NOTES
[1] Appellant was convicted of the sale of cocaine and sentenced to a prison term of 15 years as a habitual offender. This court affirmed his conviction without opinion. On appeal, the only issue raised was the sufficiency of the factual findings that supported the habitual offender classification.
[2] The motion was notarized by a jail employee, and the notary authenticated a copy of the motion which was then entered into evidence.
[3] The tape recording of the docket call was played at the rule 3.850 hearing, and a transcript of it was admitted as a defense exhibit.
[4] The interval between the prosecution and the judicial role is greater in the present case than in W.I.; there the period could be measured in months, while here the time is nearly six years. We do recognize that the duration could be so great that an inference of bias might not necessarily be reasonable. Here, however, the span is not so large that we can confidently say that the appearance of impartiality is unimpaired.
[5] Thompson applied the ineffective assistance test established in Knight v. State, 394 So.2d 997 (Fla. 1981), which was issued before the United States Supreme Court opinion in Strickland. In Mikenas v. State, 460 So.2d 359, 362 (Fla. 1984), the court explained that, "[t]he test set forth in [Strickland] does not `differ significantly' with the test espoused by this Court in [Knight]."
[6] The Court disapproved an analysis of prejudice that focuses on the outcome of the criminal case. As the Court said:
"Thus, an analysis focusing solely on mere outcome determination, without attention to whether the result of the proceeding was fundamentally unfair or unreliable, is defective. To set aside a conviction or sentence solely because the outcome would have been different but for counsel's error may grant the defendant a windfall to which the law does not entitle him."
506 U.S. at 369-70, 113 S.Ct. at 842-43.
|
406 N.E.2d 1226 (1980)
Eddie LEWIS, Appellant (Defendant below),
v.
STATE of Indiana, Appellee (Plaintiff below).
No. 3-180A21.
Court of Appeals of Indiana, Third District.
July 15, 1980.
*1227 William J. Muha, Daniel G. Hoebeke, Zandstra, Zandstra & Muha, Highland, for appellant.
Theodore L. Sendak, Atty. Gen., Janis L. Summers, Deputy Atty. Gen., Indianapolis, for appellee.
STATON, Judge.
A jury found Eddie Lewis guilty of Robbery (Class B) and he was sentenced to the Indiana Department of Corrections for a period of ten (10) years. In his appeal to this Court, Lewis raises the following contentions:
(1) Whether the trial court erred when it refused to instruct the jury on the lesser offense of Robbery, Class C?
(2) Whether the trial court erred when it permitted the State to reopen its case for the purpose of an in-court identification of Lewis?
(3) Whether the trial court erred when it permitted the State to introduce a Police Property Receipt for a shotgun, as well as testimony related thereto?
We affirm.
I.
Lesser Included Offense
Lewis contends that the trial court erred when it failed to give an instruction on Robbery Class C. The record reveals that while Lewis objected at trial to the court's failure to give an instruction on Robbery Class C, he did not tender an instruction to the court regarding that offense. The failure to tender an instruction in writing on a lesser offense constitutes a waiver of the right to challenge the court's refusal to instruct the jury on the lesser offense. Miller v. State (1978), 267 Ind. 635, 372 N.E.2d 1168, 1171; Coker v. State (1980), Ind. App., 399 N.E.2d 857, 861.
Even if Lewis had properly preserved the question for review, however, his argument is meritless. Ind. Code Ann. § 35-42-5-1, wherein the crime of robbery and its respective degrees are defined, reads:
"Sec. 1. A person who knowingly or intentionally takes property from another person or from the presence of another person:
"(1) by using or threatening the use of force on any person; or
"(2) by putting any person in fear;
commits robbery, a Class C felony. However, the offense is a Class B felony if it is committed while armed with a deadly weapon, and a Class A felony if it results in either bodily injury or serious bodily injury to any other person."
The statutory element which distinguishes the crime of Robbery Class B, the greater offense, from Robbery Class C, the lesser offense, is the use of a deadly weapon during the commission of the robbery. Robbery Class C is consequently what is characterized as an "inherently" included offense of the greater crime of Robbery Class B; it is, in other words, impossible to commit the latter without first committing the former. Roddy v. State (1979), Ind. App., 394 N.E.2d 1098, 1105.
*1228 The determination that a lesser offense is "included" within the charged crime does not by itself render an instruction on the lesser offense appropriate; a two-step test must be employed to resolve the question whether an instruction on a lesser offense is justified. Lawrence v. State (1978), Ind., 375 N.E.2d 208, 213; Roddy v. State, supra, at 1111. Once the court has determined that a lesser offense is an "included" one, the court must also subject the lesser offense to an evidentiary examination, which we outlined in Roddy v. State:
"B. Methodology:
"1) Examine the evidence which tends to prove or disprove the commission of the elements which comprise the charged and included offenses.
"2) Determine:
"a) Whether there is evidence of probative value to establish the defendant's commission of all elements of the included offense?
"i) If not, no instruction and form of verdict on the included offense should be given. The inquiry ends.
"ii) If so, subject the included offense to step 2(b) of the inquiry.
"b) Whether the evidence reveals a `serious dispute' regarding the defendant's commission of the element(s) which distinguish the greater and lesser included offense?
"i) If not, no instruction and form of verdict on the included offense should be given to the jury.
"ii) If so, an instruction and form of verdict on the lesser included offense should be given to the jury."
394 N.E.2d at 1103, fn. 8.
Here, there was evidence of probative value[1] to indicate Lewis' commission of the elements comprising the lesser offense of Robbery, Class C, as per subsection 2(a) of the Roddy methodology. The evidence does not indicate any dispute, however, concerning Lewis' commission of the element which differentiates Robbery Class B from Robbery Class C the use of a deadly weapon. Rose Marie Dobrinich, the complaining witness, testified that during the course of the robbery, a sawed-off shotgun was pointed at her and her friend. Dobrinich's testimony was not refuted.[2] As per subsection 2(b) of the Roddy methodology, the trial court did not err in its refusal to give an instruction on the lesser, albeit included, offense of Robbery Class C. See also, Feyerchak v. State (1978), Ind., 383 N.E.2d 1023, 1026; Lawrence v. State, supra; Hash v. State (1972), 258 Ind. 692, 284 N.E.2d 770, 773. To have instructed the jury on the lesser offense of Robbery, Class C would have opened the door for a compromise verdict, the very possibility which the evidentiary *1229 test is designed to preclude.[3]Lawrence v. State, supra; Hash v. State, supra.
II.
Reopening of State's Case
Lewis maintains that the trial court erred when it permitted the State to reopen its case so that Rose Marie Dobrinich might make an in-court identification of Eddie Lewis as one of the two men who robbed her. The State's request to elicit the in-court identification occurred almost immediately subsequent to the close of its case; the request was motivated by Lewis' Motion for a Directed Verdict, wherein he argued that there was no evidence to establish that he was one of the two men who had robbed Dobrinich.
In response to Lewis' Motion for a Directed Verdict, the prosecutor first argued that Dobrinich had twice identified Lewis during the course of her testimony. The prosecutor, in response to court questioning, stated that "She [Dobrinich] identified his clothing and where he is seated." In response, counsel for Lewis admitted he "could be wrong" about whether Dobrinich had in fact identified Lewis in court.
Thereafter, the State made its request to reopen its case so that Dobrinich might make a "full identification" of the person who had robbed her. Over Lewis' objection that reopening the case would unduly emphasize Dobrinich's identification, the Court granted the State's request. Dobrinich then unequivocally identified Lewis as one of the men who had robbed her:
"Q I have one question which I forgot to ask on direct. Is the person who you claim assaulted you and took your vehicle and your purse in this courtroom today?
"A Yes, he is.
"Q And can you please describe what he is wearing and where he is sitting?
"A Seated in the front row. He is wearing a dark brown shirt.
"BY ITSIA RIVERA:
Will the record reflect the witness has identified the Defendant, Eddie Lewis, in this case.
* * * * * *
"BY THE COURT:
The record will so reflect the identification."
On appeal, Lewis has again asserted his contention that a Court's granting of the State's request to reopen its case unduly emphasized Dobrinich's in-court identification of him. In so arguing, Lewis points to *1230 the since-transcribed statements of Dobrinich which were made during the State's case-in-chief. He maintains that the identification elicited after the reopening of the State's case constituted a restatement of Dobrinich's earlier testimony. Consequently, he argues, he was prejudiced thereby.
We disagree. Relevant portions of Dobrinich's earlier testimony reads:
"Q Is that person who did that in court today?
"A Yes.
"Q Can you describe what he is wearing, or where he is in the courtroom?
"A He is wearing a dark brown shirt." (Emphasis supplied.).
At other points during Dobrinich's testimony, colloquies between the prosecutor and Dobrinich occurred which, while generally tending to establish Eddie Lewis as the man in the "dark brown shirt", never resulted in an unequivocal in-court identification of Lewis by Dobrinich:
"Q Miss Dobrinich, how many people were at the line-up?
"A Six.
"Q And at the time, did you indicate to anyone that you identified the person that had come to your car with the weapon?
"A After I did the line-up and picked the one out. That assaulted me, I told the Detective.
"Q Did you pick out the same person that you identified today as Eddie Lewis in this courtroom?
"A Yes.
* * * * * *
"Q And just one final question: Are you sure that the person you have identified today was the person who assaulted you?
"BY CHRIS GIELOW:
Objection.
"A Yes, I am.
"BY CHRIS GIELOW:
Going to object. Leading.
"BY THE COURT:
Sustained."
The question whether a party should be permitted to reopen its case is committed to the sound discretion of the trial court. Pawloski v. State (1978), Ind., 380 N.E.2d 1230, 1235. Here, we do not find the abuse of discretion which is necessary to warrant remedial action by this Court. Maxey v. State (1969), 251 Ind. 645, 244 N.E.2d 650, 654.
The question asked of Dobrinich during the State's reopening of its case had not been previously asked and answered, Dobrinich herself had not unequivocally pinpointed Lewis in the courtroom as one of the men who had robbed her. A party should be permitted to reopen its case to submit evidence which, as here, would have been a proper part of its case-in-chief. Wells v. State (1959), 239 Ind. 415, 158 N.E.2d 256, 261. The opportunity for a party to reopen its case includes the chance to cure a claimed insufficiency of evidence. Eskridge v. State (1972), 258 Ind. 363, 281 N.E.2d 490, 493.
Furthermore, we are not confronted here with a situation where the State was permitted to reopen its case after the defense had presented its evidence and rested a situation with greater potential for prejudice to the defendant. Lewis presented no evidence. The State reopened its case immediately subsequent to the close of its case-in-chief; the final witness for the State had been Dobrinich. In these circumstances, the argument that undue emphasis was placed on Dobrinich's in-court identification pales. When confronted with somewhat similar circumstances in Jones v. State (1978), Ind., 381 N.E.2d 1064, our Supreme Court did not find undue prejudice to the defendant or an abuse of discretion by the trial court.
Finally, the court's decision to reopen the case did not affect the outcome of Lewis' Motion for a Directed Verdict; as the previously-quoted testimony indicates, Dobrinich verified her pre-trial line-up identification of Lewis during the State's case-in-chief. That Motion was without merit, regardless of the evidence offered after the State was permitted to reopen its case.
*1231 "A trial is not a game of technicalities, but one in which the facts and truth are sought." Eskridge v. State, supra. Here the trial court's decision to permit the State to reopen its case served those ultimate purposes. We find no abuse of discretion.
III.
Shotgun-related Evidence
Lewis contends that the trial court erred when it admitted a police property receipt and testimony regarding a shotgun which the Lake County Police seized from the automobile Lewis occupied at the time he was apprehended. The shotgun was never admitted into evidence; after it was taken to police headquarters, it was somehow misplaced. The police property receipt was the only tangible evidence of the shotgun's existence which was admitted at trial. Testimony concerning the gun came from Lake County Police Officer Samuel Rodriguez, who described the seizure of the shotgun, his delivery of the gun to the police station, his execution of a property report, and his subsequent attempt to locate the misplaced gun at the station. Lewis specifically argues that the receipt and testimony were inadmissible because there was no evidence to indicate that the shotgun was the weapon used during the robbery.
At trial, however, counsel for Lewis specifically stated that he had "no objection" to the introduction of the property receipt. Consequently, any error concerning the admission of the property receipt has been waived. Harrison v. State (1972), 258 Ind. 359, 281 N.E.2d 98, 99; Winston v. State (1975), 165 Ind. App. 369, 332 N.E.2d 229, 231.
Although Lewis did register an objection at trial to Officer Rodriguez's related testimony, the basis for that objection was different from the grounds now urged on appeal. The objection stated at trial reads:
"Your Honor, Counsel is objecting at this time to any further reference to an item which has been not introduced into evidence. At this point, mainly, the 20 gauge shot gun."
It is well settled that in order to preserve a challenge to the admission of particular evidence, the grounds stated on appeal must be consistent with those argued at trial. Jones v. State (1973), 260 Ind. 463, 296 N.E.2d 407, 409; Hendley v. State (1974), 160 Ind. App. 338, 311 N.E.2d 849, 853. Lewis has consequently waived his right to challenge the admission of the testimony related to the shotgun property receipt.
Finally, we note that Lewis has suggested the doctrine of "fundamental error" bears on the question before us. The applicability of the doctrine to improperly-preserved challenges to the admission of evidence has been rejected. Winston v. State, supra.
The judgment of the trial court is affirmed.
GARRARD, P.J., concurs.
HOFFMAN, J., concurs in result.
NOTES
[1] Dobrinich testified that on March 11, 1979, as she was stopped in her car in front of Bonita Pindiak's home on Barring Avenue in East Chicago, Indiana, two men jumped out of a nearby car and approached her and Pindiak. According to Dobrinich, one man pointed a shotgun at the women and ordered them to exit the car. After the women were outside the automobile, the men fled with Dobrinich's purse. Dobrinich testified that the incident placed her in fear for her life.
[2] Lewis has argued that the fact that Dobrinich's testimony was unrefuted should not be dispositive of the question whether an instruction on Robbery Class C was warranted. Lewis maintains that to make that testimony dispositive is, in effect, to place a defendant in the position whereby he must forego his 5th Amendment right to refuse to testify in order to controvert the evidence regarding the distinguishing element and obtain an instruction on the lesser included offense. We concede that in some instances, among them the circumstances present here, a defendant's 5th Amendment decision not to testify may affect the question whether an instruction is appropriate. At the same time, however, we note that a defendant has no constitutional right to an instruction on a lesser included offense. The propriety of an instruction on a lesser included offense is a matter governed by statute. See Ind. Code Ann. § 35-41-1-2 (West 1978) (present law) and IC 1971, 35-1-39-2, Ind. Ann. Stat. § 9-1817 (Burns Code Ed.) (law prior to October 1, 1977). Our Supreme Court has recently held that the "entitlement to included offenses instruction ... is not a fundamental right... ." Helton v. State, Ind., 402 N.E.2d 1263. Consequently, Lewis was not forced to assert one constitutional right at the expense of another.
[3] We note that Lewis maintains that there was no potential for a "compromise verdict" in the circumstances before us. He argues hypothetically that the jury might have rejected Dobrinich's particular testimony that Lewis was armed with a shotgun, yet believed her testimony that Lewis took her purse by the use of force or fear. The absence of an instruction on the lesser offense, Lewis argues, might consequently have triggered a compromise verdict, for the jury, motivated by a sense of retribution, was compelled to convict him of the only crime on which they received an instruction and form of verdict.
The hypothetical posed by Lewis is not wholly implausible. We cannot, however, assume that a jury acted on the basis of a need to exact retribution rather than in accordance with the instructions of law provided by the court.
Furthermore, under Lewis' rationale, an instruction on the offense of Aiming a Weapon at Another would arguably have been justified, for the jury might have disbelieved Dobrinich's testimony that her purse was taken. Similarly, it could be said that an instruction on Assault was appropriate, for the jury might have chosen to believe only that Lewis attempted simply to injure Dobrinich. Speculation is not, however, a proper vehicle by which a trial court should gauge the propriety of any instruction; although not recognized by Lewis, the fundamental principle which governs that question of law is that an instruction must conform to the evidence. Baker v. Masson (1968), 253 Ind. 348, 242 N.E.2d 513, 515. In the context of the law of lesser included offenses, the principle is effectuated by the rule that, in order for an instruction on a lesser included offense to be warranted, the evidence regarding the element which distinguishes the greater and lesser offenses must be in dispute. Goodpaster v. State (1980), Ind., 402 N.E.2d 1239, 1244; Roddy v. State, supra. The test outlined in Roddy v. State, supra, serves the basic principle and alleviates the need for speculation by our Courts as to the credibility a jury may attach to particular testimony.
|
C-Track E-Filing
The Supreme Court
of Nevada
Appellate Case Management System
C-Track, the browser based CMS for Appellate Courts
Case Search
Participant Search
|
107 U.S. 323 (____)
TREDWAY
v.
SANGER.
Supreme Court of United States.
*324 Mr. A. Chester for the appellants.
Mr. Henry Beard and Mr. Charles H. Armes for the appellee.
MR. CHIEF JUSTICE WAITE delivered the opinion of the court.
There is but a single question presented by this appeal, to wit, whether, if a promissory note, negotiable by the law merchant, is made by a citizen of one State to a citizen of the same State, and secured by a mortgage from the maker to the payee, an indorsee of the note can, since the act of March 3, 1875, c. 137, sue in the courts of the United States to foreclose the mortgage, and obtain a sale of the mortgaged property.
It was held in Sheldon v. Sill, 8 How. 441, that such a suit could not be maintained under the eleventh section of the Judiciary Act of 1789, because in equity the mortgage was but an incident of the debt, and as the indorsee could not sue on the note, he could not sue to enforce the mortgage. The language of Mr. Justice Grier, speaking for the court in that case, is this: "The complainant in this case is the purchaser and assignee of a sum of money, a debt, a chose in action, not of a tract of land. He seeks to recover by this action a debt assigned to him. He is, therefore, the `assignee of a chose in action,' within the letter and spirit of the act of Congress *325 under consideration, and cannot support this action in the Circuit Court of the United States, where his assignor could not." p. 450. This clearly implies that if a suit could be brought on the note, it could for the foreclosure of the mortgage, should there be no other objection to the jurisdiction than the citizenship of the payee and maker.
In the Judiciary Act of 1789 it was expressly provided that the Circuit Courts could not take cognizance of a suit to recover the contents of any promissory note or other chose in action in favor of an assignee, unless a suit might have been prosecuted in such court to recover the contents, if no assignment had been made, except in cases of foreign bills of exchange. The act of 1875, however, removes this restriction in suits on "promissory notes negotiable by the law merchant;" and now the jurisdiction in such suits is made to depend on the citizenship of the parties, as in other cases.
Since, therefore, the indorsee could have sued in the Circuit Court on the note now in question, it follows that, as there is no objection to the jurisdiction other than the citizenship of the original payee, the suit to foreclose the mortgage was properly brought.
Decree affirmed.
|
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 95-20707
_____________________
ANGELA BLACKWELL,
Plaintiff-Appellant
v.
J C PENNEY; KEVIN GEBHARDT,
Defendants-Appellees
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
(CA-H-93-2669)
_________________________________________________________________
July 11, 1996
Before KING, JONES, and DEMOSS, Circuit Judges.
PER CURIAM:*
Angela Blackwell appeals the district court’s dismissal of
her retaliation claim for lack of prosecution and failure to
cooperate in discovery. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
Angela Blackwell (“Blackwell”) brought this action against
her former employer J.C. Penney Company, Inc. and her former
supervisor Kevin Gebhardt (collectively, the “Defendants”),
*
Pursuant to Local Rule 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in Local Rule
47.5.4.
alleging discrimination on the basis of her sex, race, and
age, negligent supervision, breach of contract, intentional
infliction of emotional distress, and retaliation. The district
court granted summary judgment to the Defendants on all claims
except the retaliation claim.1
Before the trial on the retaliation claim, the Defendants
made an oral motion to dismiss for want of prosecution and for
failure to cooperate in discovery. In support of this motion,
the Defendants informed the court that:(1) as of the date of
trial, Blackwell had not presented Defendants with complete
answers to their discovery requests, despite a court ordered
sanction of $482.50 and two court orders compelling conformance
with these discovery requests;(2) Blackwell failed to forward
Defendants copies of her response to their motion for summary
judgment and the affidavits attached thereto; and (3) Blackwell
failed to provide Defendants with a copy of her exhibit and
witness lists although both are required pursuant to local rules.
The district court orally granted the Defendants’ motion. In
a subsequent Memorandum Order, the court held that, by
prosecuting the case in bad faith and engaging in contumacious
conduct, Blackwell had impeded Defendants’ ability to prepare for
trial. The court also stated that lesser sanctions would be
futile because Blackwell disregarded court orders even after the
court had awarded sanctions against her. Blackwell timely
appealed.
1
Blackwell does not appeal the summary judgment.
2
II. DISCUSSION
On appeal, Blackwell contends that the district court has
limited authority to dismiss an action with prejudice and that
the court abused its discretion when it dismissed the case for
want of prosecution and for failure to respond to discovery. She
claims that neither the requisite elements nor the aggravating
factors for a dismissal with prejudice have been met. In
addition, she argues that even if the requisite elements have
been met, the case should not have been dismissed because the
disobedient conduct that resulted in the dismissal was that of
her former counsel and not her own.
The district court’s authority to dismiss under Federal Rules
of Civil Procedure 37 and 41(b) has been well established. See
Link v. Wabash R.R. Co., 370 U.S. 626, 629 (1962); see also Truck
Treads, Inc. v. Armstrong Rubber Co., 818 F.2d 427, 428 (5th Cir.
1987)(dismissal affirmed on basis of district court’s finding of
bad faith failure to comply with previous discovery order);
Bluitt v. Arco Chemical Co., 777 F.2d 188, 189 (5th Cir.
1985)(dismissal affirmed for failure to comply with discovery
orders). This court will uphold a district court’s involuntary
dismissal with prejudice absent an abuse of discretion. Price v.
McGlathery, 792 F.2d 472, 474 (5th Cir. 1986); Morris v. Ocean
Systems, Inc., 730 F.2d 248, 251 (5th Cir. 1984).
Because dismissal is a harsh sanction, an involuntary
dismissal is affirmed only if a clear record of delay or
contumacious conduct by the plaintiff exists and lesser sanctions
3
would not serve the best interests of justice. Price, 792 F.2d
at 474; Sturgeon v. Airborne Freight Corp., 778 F.2d 1154, 1159
(5th Cir. 1985); Callip v. Harris County Child Welfare Dep’t, 757
F.2d 1513, 1519 (5th Cir. 1985). Further, this court has stated
that most of the cases in which dismissals have been affirmed
involved the presence of one or more of the three following
“aggravating factors”: (1) delay attributable directly to the
plaintiff, rather than the attorney; (2) actual prejudice to the
defendant; and (3) delay caused by intentional conduct. Price
792 F.2d at 475; Sturgeon, 778 F.2d at 159; Callip, 757 F.2d at
1519. These aggravating factors, however, are not prerequisites
to dismissal. See Rogers v. Kroger Co., 669 F.2d 317, 320 n.5
(5th Cir. 1982)(“The terms ‘requisite’ and ‘aggravating’ are used
because we assume that the presence of the former can alone
justify dismissal.”); cf. Price 792 F.2d at 475 (the existence of
one aggravating factor, coupled with the record of delay or
contumacious conduct and consideration of lesser sanctions,
supported a dismissal with prejudice).
Under this standard, we find no abuse of discretion. The
district court determined that Blackwell willfully ignored
Defendants’ appropriate requests for information, violated two
orders of the court, and failed to provide Defendants with
witness and trial exhibit lists before trial. In addition,
because Blackwell failed to cooperate in discovery even after the
court awarded monetary sanctions against her, the court concluded
that lesser sanctions would be ineffective. Cf. Damiani v. Rhode
4
Island Hosp., 704 F.2d 12, 15 (1st Cir. 1983)(“There is nothing
in [Rule 37(b)(2)] that states or suggests that the sanction of
dismissal can be used only after all of the other sanctions have
been considered or tried.”) Finally, the court found two of the
aggravating factors present: actual prejudice to the defendant
and delay caused by intentional conduct. Therefore, the district
court did not abuse its discretion in dismising Blackwell’s
claim.
Blackwell also argues that the dismissal unjustly punishes
her for the misconduct of her former counsel. The Supreme Court
has held, however, that a plaintiff is responsible for the
actions of his attorney. Accordingly, the district court did not
abuse its discretion when it attributed the misconduct of
Blackwell’s attorney to Blackwell. See Link, 370 U.S. at 633-34;
see also Pryor v. United States Postal Serv., 769 F.2d 281, 288
(5th Cir. 1985)(holding that mistakes of counsel are chargeable
to the client, particularly in civil litigation).
III. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the
district court.
5
|
785 F.2d 326
Greenv.Department of Army
85-2050
United States Court of Appeals,Federal Circuit.
12/23/85
MSPB, 25 M.S.P.R. 342
Affirmed
|
Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-18-00328-CR
Carlos Omar MARTINEZ RIVERA,
Appellant
v.
The STATE of Texas,
Appellee
From the 229th Judicial District Court, Starr County, Texas
Trial Court No. 05-CRS-324
Honorable Alex William Gabert, Judge Presiding
Opinion by: Liza A. Rodriguez, Justice
Sitting: Rebeca C. Martinez, Justice
Beth Watkins, Justice
Liza A. Rodriguez, Justice
Delivered and Filed: May 15, 2019
AFFIRMED
A jury found appellant Carlos Omar Martinez Rivera (“Martinez Rivera”) guilty of murder
and sentenced him to fifty years’ confinement, plus a fine and court costs. Martinez Rivera appeals
from the trial court’s judgment on the jury verdict. We affirm.
Background
Martinez Rivera was a member of a group of migrants travelling to the United States
without authorization in August 2005. Martinez Rivera and several other members of the migrant
group were members of the Mara Salvatrucha gang, also known as “MS-13.”
04-18-00328-CR
At around 8:00 p.m. on August 9, 2005, coyotes 1 transported the migrant group to a house
in Miguel Alemán, México. When a gang member named Yogi complained to the coyotes at the
house about how the migrants had been transported, the coyotes took him into another room, beat
him, and removed him from the house in a bag or a quilt. Members of the migrant group presumed
the coyotes killed Yogi. One migrant heard Martinez Rivera tell the other gang members: “They
knocked down the hometown boy” or “home boy,” meaning the coyotes “had beat [Yogi] or they
had done something to him.” The gang members, including Martinez Rivera, left the house and
encountered Mexican police, who returned them to the house and then assisted the coyotes in
transporting the migrant group to the river at around 11:30 p.m.
At around midnight, two guides who worked for the coyotes but who had not been at the
house in Miguel Alemán led the migrant group across the river and under a border fence near the
town of Roma, Texas. As the group was walking towards the border fence, one of the guides
walked onto the highway to ensure there were no cars. As the guide did so, one migrant overheard
Martinez Rivera ask another gang member named Julio “why wouldn’t he hit him with a rock?”
Later, just after one of the guides helped Martinez Rivera pass under the border fence, Martinez
Rivera struck the guide on the head with a stick. One witness testified Martinez Rivera struck the
guide first, and Julio “finished throwing [the guide] to the ground.” Another witness testified Julio
first struck the guide two or three times before Martinez Rivera took the stick from Julio’s hands
and struck the guide another two or three times while the guide was on the ground. Several
migrants who observed the incident ran towards Roma and alerted police.
1
The witnesses and counsel referred to the persons who smuggled the migrant group into the United States as
“coyotes.” Some of the witnesses used “coyote” and “guide” interchangeably, while one witness explained a “coyote”
is a boss and a “guide” is a worker.
-2-
04-18-00328-CR
At around 3:00 a.m., Starr County Sheriff’s Investigator Israel Rios was dispatched to the
scene, where he observed the guide’s “severely beaten” deceased body. The Starr County Justice
of the Peace testified the victim’s body was located about twenty yards from the border fence,
inside the United States. The doctor who performed the autopsy testified the victim’s injuries were
consistent with blunt force trauma to the head caused by a stick or a bat.
Later that morning, Border Patrol agents located and arrested Martinez Rivera and another
migrant in Roma. When Martinez Rivera fell asleep while in Border Patrol custody, the other
migrant signaled to a Border Patrol agent and told him Martinez Rivera killed the guide. Both
Martinez Rivera and the other migrant were charged with the guide’s death, but charges against
the other migrant were dropped in exchange for his testimony against Martinez Rivera. The jury
also heard from two other witnesses who were part of the migrant group.
A jury convicted Martinez Rivera of murder and sentenced him to fifty years’ confinement.
Years later, Martinez Rivera filed an application for writ of habeas corpus in the trial court, and
the trial court determined Martinez Rivera, through no fault of his own, was denied his right to
appeal. The trial court granted Martinez Rivera the right to file an out-of-time appeal. This appeal
followed.
Improper Jury Argument
In his first issue, Martinez Rivera argues the trial court erred in permitting the prosecutor
to state his “purely personal opinion . . . that [Martinez Rivera] is guilty” during closing arguments.
In response, the State argues Martinez Rivera failed to preserve his issue for appeal or,
alternatively, the prosecutor’s argument was not improper and did not prejudice Martinez Rivera.
A. Relevant facts
Martinez Rivera argues the following statement made by the prosecutor during his closing
argument was improper:
-3-
04-18-00328-CR
We’re here about this defendant Carlos Omar Martinez Rivera. That’s who we,
that’s who you all have to try. That question. Did he do it? Did he participate? And
ladies and gentlemen, I tell you that he did. Don’t pick and choose that story that
they want you to believe.
Immediately after the prosecutor made the statement, Martinez Rivera’s counsel objected:
Your Honor, we are going to object to that prior statement on using the State of
Texas to, in other words, “I tell you that he did.” That’s improper argument, that’s
putting the State of Texas up on—for credibility and that’s just improper argument.
The trial court responded: “Proceed with the argument, I’ll rule on it after the argument.”
At the conclusion of the prosecutor’s closing argument, Martinez Rivera’s counsel
requested a curative instruction:
Your Honor, I am going to ask that the court instruct the jury—I presume that the
court granted my objections during the argument, uh, and I am going to ask that
you instruct them that his statement that he knows that they did it is not something
that they should consider. He’s in effect testifying. He has pretty much implied to
the jury that he perhaps, as being intimately aware of what goes on in these cases,
he may know something that they were not—that they didn’t hear, and so he has
placed himself as a witness by saying that he knew, and they need to be instructed
that that has no bearing, that it’s not important, that it was a misstatement on his
part, and I ask the court to instruct them as such.
In response, the prosecutor proposed the trial court reiterate to the jury that “what the lawyers say
during argument is not evidence,” and Martinez Rivera’s counsel agreed: “Whatever instructions
you give, even if it’s a repetition of that one, I suppose, it would be something better than nothing.”
The trial court then gave the jury the following additional instruction:
Whatever the attorneys may say to you, as I have said to you in the past, is not
evidence and it’s not to be considered at all for purposes of a determination as to
guilt or innocence. The attorneys never did raise their hands to say I’m telling you
the truth so you have to disregard whatever they may say.
The trial court dismissed the jury to deliberate, and Martinez Rivera’s counsel moved for a mistrial.
The trial court denied the motion.
-4-
04-18-00328-CR
B. Waiver
As an initial matter, we consider whether Martinez Rivera preserved his issue for appellate
review. To preserve a complaint of improper jury argument, a defendant must urge his objection
until he obtains an express or implicit adverse ruling. Hinojosa v. State, 433 S.W.3d 742, 761 (Tex.
App.—San Antonio 2014, pet. ref’d) (citing TEX. R. APP. P. 33.1(a); Mathis v. State, 67 S.W.3d
918, 926–27 (Tex. Crim. App. 2002)). In addition to objecting to the improper statement, the
defendant must request a curative instruction if the error is curable and make a motion for a
mistrial. See id.
The State argues Martinez Rivera failed to preserve his issue because trial counsel’s
objection “was too vague and untimely.” We disagree. Martinez Rivera’s counsel objected during
the prosecutor’s closing argument and again after the prosecutor finished his argument. It is clear
from the record that trial counsel objected on the basis that the prosecutor was testifying to his
personal opinion about Martinez Rivera’s guilt. Trial counsel also properly requested a curative
instruction, which was given, and a mistrial, which was denied. Accordingly, we conclude
Martinez Rivera’s first issue is preserved for appellate review and turn now to the merits.
C. Standard of review and analysis
Where, as here, the trial court implicitly sustains the defense objection to improper jury
argument and grants the requested curative instruction, the only adverse ruling to be reviewed is
the trial court’s denial of the motion for mistrial. Hawkins v. State, 135 S.W.3d 72, 76–77 (Tex.
Crim. App. 2004) (en banc). We review the trial court’s denial of the motion for mistrial for abuse
of discretion and will only reverse in extreme circumstances in which the prejudice was incurable.
Id. at 77.
A prosecutor’s argument is permissible if it is: (1) summation of the evidence; (2)
reasonable deduction from the evidence; (3) an answer to the argument of defense counsel; or (4)
-5-
04-18-00328-CR
a plea for law enforcement. Gallo v. State, 239 S.W.3d 757, 767 (Tex. Crim. App. 2007). However,
“[a] prosecutor may not convey to the jury during argument that [he] possesses specialized
knowledge or expertise about a contested factual issue in the case.” Garcia v. State, 246 S.W.3d
121, 145 (Tex. App.—San Antonio 2008, pet. ref’d) (citing Jackson v. State, 17 S.W.3d 664, 675
(Tex. Crim. App. 2000)). “Such comments pose a danger of influencing the jury’s opinion in
deciding the issue.” Id.
Martinez Rivera argues the prosecutor’s statement—“I tell you that he did it”—was
improper because it is the prosecutor’s personal opinion. The State responds the prosecutor’s
statement was reasonably deduced from the facts and was made in response to Martinez Rivera’s
argument that Julio (not Martinez Rivera) committed the crime. Assuming, as it appears the trial
court did, that the prosecutor’s statement was improper, we consider whether Martinez Rivera was
harmed by balancing three factors: “(1) the severity of the misconduct (prejudicial effect), (2)
curative measures, and (3) the certainty of the punishment assessed absent the misconduct
(likelihood of the same punishment being assessed).” See Hawkins, 135 S.W.3d at 77.
In this case, any prejudicial effect was minimal, given that Martinez Rivera complains of
a single statement “embedded within other remarks that invited the jury to draw a legitimate
inference from” the evidence. See Archie v. State, 340 S.W.3d 734, 741 (Tex. Crim. App. 2011)
(emphasis in original) (holding trial court did not abuse its discretion in denying mistrial based on
prosecutor’s comment on defendant’s failure to testify). Specifically, the prosecutor made the
statement as part of a broader argument that the eye witness testimony demonstrates Martinez
Rivera, with or without the assistance of Julio, murdered the guide. In addition, the trial court
promptly addressed any prejudice with a curative instruction reminding the jury that counsel’s
statements are not evidence and should not be considered.
-6-
04-18-00328-CR
Finally, as will be discussed further below, the weight of the evidence against Martinez
Rivera suggests it is very likely he would have been assessed the same punishment regardless of
the prosecutor’s statement. Several witnesses testified Martinez Rivera was a member of the Mara
Salvatrucha gang and was attempting to enter the United States without authorization when he
struck the victim in retaliation for the presumed murder of another gang member. On this record,
Martinez Rivera has failed to show the jury likely would decide the issue of punishment differently.
Therefore, because Martinez Rivera has not demonstrated harm, we conclude the trial court did
not abuse its discretion in denying Martinez Rivera’s motion for mistrial based on the prosecutor’s
statement.
Martinez Rivera’s first issue is overruled.
Ineffective Assistance of Counsel
In his second issue, Martinez Rivera argues his trial counsel was ineffective for failing to
request a sudden passion instruction during the punishment phase of the trial. The State responds
the silent record on appeal does not support a conclusion that Martinez Rivera’s trial counsel was
ineffective, and, in any event, Martinez Rivera was not entitled to a sudden passion instruction.
A. Standard of review
To prevail on a claim of ineffective assistance of counsel, Martinez Rivera must establish
by a preponderance of the evidence that: (1) trial counsel’s performance fell below an objective
standard of reasonableness; and (2) Martinez Rivera was prejudiced by trial counsel’s defective
performance. Thompson v. State, 9 S.W.3d 808, 812 (Tex. Crim. App. 1999) (citing Strickland v.
Washington, 466 U.S. 668 (1984)). To determine whether trial counsel’s performance was
deficient, we look to the totality of the representation and the particular circumstances of the case.
Id. at 813.
-7-
04-18-00328-CR
B. Analysis
To demonstrate ineffective assistance of counsel based on failure to request a sudden
passion instruction, Martinez Rivera must demonstrate he was entitled to the instruction, there was
no possible trial strategy for not requesting the instruction, and Martinez Rivera was prejudiced.
Newkirk v. State, 506 S.W.3d 188, 192 (Tex. App.—Texarkana 2016, no pet.). “[M]erely showing
that a sudden-passion instruction would have given the jury another sentencing [option] is not
enough to demonstrate prejudice under Strickland.” Id. at 197. Rather, Martinez Rivera “must
demonstrate a reasonable probability that, but for counsel’s failure to request the sudden-passion
instruction, he would have received a less harsh sentence.” Id. at 197–98 (citing Potts v. United
States, 566 F. Supp. 2d 525, 537 (N.D. Tex. 2008)).
Assuming without deciding Martinez Rivera was entitled to a sudden passion instruction
and would have received it had his trial counsel requested it, we consider whether Martinez Rivera
established the jury would have imposed a less harsh sentence. The jury heard the following
evidence. Several members of the migrant group testified Martinez Rivera was a member of the
Mara Salvatrucha gang. One witness testified he heard Rivera tell other gang members, referring
to a gang member who was beaten and presumably killed by the coyotes: “They knocked down
the hometown boy” or “home boy.” Later, the same witness overheard Rivera asking another gang
member “why wouldn’t he hit him [one of the guides] with a rock?”
Each of the migrant witnesses testified the victim was not present at the house in Miguel
Alemán and did not threaten or injure Martinez Rivera or anyone else. One witness testified he did
not believe Martinez Rivera or the other gang members were afraid of the victim, and another
witness testified Martinez Rivera struck the victim for “revenge.” Three witnesses testified they
personally observed Martinez Rivera strike the victim with a stick. Each of these witnesses testified
the victim fell to the ground, and there was no evidence the victim fought back. There also was no
-8-
04-18-00328-CR
evidence that Martinez Rivera sustained any injuries. The victim, in contrast, was “severely
beaten.”
In light of this evidence, we conclude the jury had before it sufficient evidence to determine
a sentence of fifty years’ imprisonment was warranted. See id. at 198–99 (holding evidence that
defendant told others he was going to kill the victim and then did so, lack of evidence of a mutual
struggle, and evidence that victim was retreating when killed was sufficient to conclude defendant
was not prejudiced by lack of sudden passion instruction). Therefore, even assuming Martinez
Rivera was entitled to a sudden passion instruction, Martinez Rivera has failed to establish a
reasonable probability that, but for his trial counsel’s failure to request the instruction, he would
have received a less harsh sentence.
Martinez Rivera’s second issue is overruled.
Conclusion
Because we overrule Martinez Rivera’s issues on appeal, we affirm the trial court’s
judgment.
Liza A. Rodriguez, Justice
DO NOT PUBLISH
-9-
|
685 So.2d 1000 (1997)
STATE of Florida, DEPARTMENT OF REVENUE, OFFICE OF CHILD SUPPORT ENFORCEMENT, on behalf of D.J.N., a child, Appellant,
v.
Patrick REDDING, Appellee.
No. 96-703.
District Court of Appeal of Florida, Third District.
January 8, 1997.
Robert A. Butterworth, Attorney General, and Jon J. Johnson, Assistant Attorney General, for appellant.
Burton D. Greenfield, Miami, for appellee.
Before COPE, GERSTEN and SHEVIN, JJ.
COPE, Judge.
The Florida Department of Revenue appeals an order dismissing a paternity action brought on behalf of the minor child D.J.N. We conclude that the doctrine of res judicata does not bar this action, and return the matter to the trial court for a determination of paternity on the merits.
D.J.N., was born in 1992. In 1993, the Florida Department of Health and Rehabilitative Services, the agency then responsible for child support enforcement, filed a paternity action on relation of Brenda R. Nelson, the mother, against respondent Patrick Redding. Thereafter the mother executed an affidavit in which she recanted her allegation that Patrick Redding was the child's father. In her affidavit she named a different man as the father. Based on the affidavit, the 1993 action was dismissed with prejudice.
In 1994, the Department of Health and Rehabilitative Services refiled a paternity action on relation of Brenda R. Nelson against the respondent, Patrick Redding. The mother asserted that she had been coerced into executing the 1993 affidavit, and maintained that respondent Redding was the father of the child. The trial court sua sponte dismissed *1001 the 1994 action, but held a hearing to determine whether the court should reopen the 1993 action. After taking testimony, the trial court ruled that the mother's claim of coercion lacked credibility. Consequently, the trial court refused to reopen the 1993 litigation.
In 1995, the Florida Department of Revenue, which is currently the agency in charge of child support enforcement, filed this petition for determination of paternity directly on behalf of the minor child D.J.N., against respondent Redding. The father moved to dismiss the petition on the ground of res judicata. The trial court ruled that the 1993 dismissal was res judicata, and dismissed the 1995 action. The Department has appealed.
We conclude that the 1995 action should not have been dismissed. In so holding, we follow precedent from the First, Fourth, and Fifth Districts.
As explained in Department of Health and Rehabilitative Services v. Wyatt, So.2d 1332 (Fla. 5th DCA 1985):
But whatever effect the earlier dismissal had on the right of the mother to bring this action, an issue we do not decide, it did not affect the rights of the child. An illegitimate child has an independent right to support from its father. The mother merely serves as a conduit for such support benefits due the child, thus, the mother cannot contract away the child's rights or release the father from his obligation to support the child. In addition to the right of support, the child has other interests, such as the right to be an heir of its natural father, and thus has rights independent of the mother's which can be adjudicated by an action for paternity....
Because the child was not a party to the [earlier filed] action, her rights were not affected by the judgment entered therein and are not barred by res judicata. In order for res judicata to bar a suit, four identities must be present:
(1) Identity of the thing sued for;
(2) Identity of the cause of action;
(3) Identity if persons and parties;
(4) Identity of the quality or capacity of the persons for or against whom the claim is made.
Here, the parties are different as is the quality or identity of the persons for whom the claim is made. Thus two of the identities are missing.
Id. at 1333-34 (citations omitted); accord State of Wisconsin v. Martorella, 670 So.2d 1161 (Fla. 4th DCA 1996); Department of Health and Rehabilitative Services v. Griffin, 620 So.2d 241, 242 (Fla. 1st DCA 1993); see also Settle v. Beasley, 309 N.C. 616, 308 S.E.2d 288 (1983); In re the Paternity of Amber J.F., 205 Wis.2d 505, 557 N.W.2d 84 (Wis.Ct.App.1996); Restatement (Second) of Judgments § 31, comment f, illustration 3 (1982).[1] In paternity matters, "the tendency is to hold open the possibility of establishing... the right to support against any judgment except one which is based on full and fair litigation of the question and which involves the child himself as a party." Restatement (Second) of Judgments § 31, comment a, at 312.[2]
The putative father argues that the trial court ruling should be sustained on grounds of collateral estoppel. The putative father argues that the mother's 1993 affidavit should be viewed as establishing, as an adjudicated fact, that respondent Redding is not *1002 the father of the child. We disagree. To begin with, "[u]nless both parties are bound by the prior judgment, neither may use it in a subsequent action." Khan v. Simkins Industries, Inc., 687 So.2d 16, 17 (Fla. 3d DCA 1996). Further, there was no blood testing and no trial of the merits of the paternity issue in the 1993 proceeding. "Collateral estoppel prevents identical parties from relitigating issues that have previously been fully litigated and which resulted in a final decision of a court with competent jurisdiction." R.D.J. Enterprises, Inc. v. Mega Bank, 600 So.2d 1229, 1231 (Fla. 3d DCA) (citations omitted), rev. denied, 609 So.2d 40 (Fla.1992). The mother's 1993 affidavit is properly viewed, at best, as a unilateral attempt by the mother to waive the minor child's right to support from the putative father. "[T]he mother could not waive the right of the children to support even if such was her intention." Strickland v. Strickland, 344 So.2d 931, 932 (Fla. 2d DCA 1977) (citation omitted).
Finally, we agree with the First District that a paternity action cannot be viewed as if it were simply ordinary litigation between private parties. Locklear v. Sampson, 478 So.2d 1113, 1115 (Fla. 1st DCA 1985). Important considerations of public policy are involved as well.
As this court stated in another paternity case presenting comparable circumstances:
[W]e note the Florida Supreme Court's holding that "the [res judicata] doctrine will not be invoked where it will work an injustice ...." deCancino v. Eastern Airlines, Inc., 283 So.2d 97 (Fla.1973) (footnote omitted); see also Universal Construction Co. v. City of Fort Lauderdale, 68 So.2d 366, 369 (Fla.1953) ("Indeed, this very Court, among others, has announced the salutary principle that the doctrine of res judicata should not be so rigidly applied as to defeat the ends of justice."); Wallace v. Luxmoore, 156 Fla. 725, 24 So.2d 302, 304 (1946) ("Stare decisis and res judicata are perfectly sound doctrines, approved by this court, but they are governed by well-settled principles and when factual situations arise that to apply them would defeat justice we will apply a different rule."); Flesche v. Interstate Warehouse, 411 So.2d 919, 924 (Fla. 1st DCA 1982).
While we are exceedingly aware of the need for finality and repose in litigation, we are confronted here with a rare and compelling situation. It is the recognized public policy of this state that children be provided support....
... The effect of affirming the judgment will be to deprive a child of needed support for the remainder of his minority, while bestowing a gift on [defendants]. Assuming those to be the facts, we think the case falls within the manifest injustice exception set forth above.
Hernandez v. Marsarm Corp., 613 So.2d 914, 916 (Fla. 3d DCA 1992), rev. denied, 624 So.2d 267 (Fla.1993) (citations omitted).
The minor child is entitled to have the paternity issue determined on the merits, after appropriate blood testing. The dismissal order is reversed and the cause remanded for further proceedings consistent herewith.
NOTES
[1] The Restatement illustration states:
3. M. brings an action for divorce against F, seeking support for a child, C, of whom M claims F to be the father. No representative for C is designated in the action. F denies that he is the father of C. A judgment for F denying M support for C does not preclude an action by C against F for parental support.
Id. See also comment q, illustration 9.
[2] The putative father relies on State Department of Health and Rehabilitative Services v. Ricks, 530 So.2d 370 (Fla. 2d DCA 1988), but that reliance is misplaced. In Ricks the Second District held that section 742.011, Florida Statutes, allows a paternity action to be brought by a child or other person only if there has been no previous adjudication of the merits of the paternity claim. 530 So.2d at 371. In Ricks there had been a final judgment after trial of the merits. The Second District applied res judicata to bar a second paternity action.
The present case is not like Ricks. There has been no trial of the merits of the paternity claim. Even if we were to follow Ricks, there would be no bar to the present paternity action.
|
COURT OF APPEALS OF VIRGINIA
Present: Judges Humphreys, Clements and Haley
Argued at Chesapeake, Virginia
TIMOTHY LANCE WESTFALL
MEMORANDUM OPINION * BY
v. Record No. 0067-07-1 JUDGE ROBERT J. HUMPHREYS
JANUARY 22, 2008
DEBORAH SUE WESTFALL 1
FROM THE CIRCUIT COURT OF THE CITY OF SUFFOLK
Westbrook J. Parker, Judge
Charles H. Staples (Benchmark Legal Services, on brief), for
appellant.
Cheshire I’Anson Eveleigh (Wolcott Rivers Gates, P.C., on brief),
for appellee.
Timothy L. Westfall (“husband”) appeals the terms of a final decree of divorce between
him and Deborah Sue Westfall (“wife”), entered by the Circuit Court of the City of Suffolk
(“trial court”). Husband argues that: (1) the trial court erred in its failure to appoint a guardian
ad litem, (2) the trial court improperly calculated wife’s post-separation mortgage payments in
dividing and distributing the parties’ marital property, (3) the trial court erred in considering
husband’s adultery as grounds for an unequal distribution of marital property, (4) the trial court
erred in deviating from the presumptive child support amount in calculating husband’s child
support obligations, and (5) the trial court erred in ordering husband to have no contact with his
children, unless initiated by the children themselves. For the reasons that follow, we affirm the
judgment of the trial court, and award wife the cost of attorney’s fees on appeal.
*
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
1
Appellee’s brief reflects that she is currently known as Deborah Sue Zirpolo.
ANALYSIS
A. Standard of Review
We review the evidence in the light most favorable to wife as the party who prevailed
below. Farley v. Farley, 9 Va. App. 326, 328, 387 S.E.2d 794, 795 (1990). We review the trial
court’s decision for abuse of discretion in advancing the best interests of the children. See id. at
327-28, 387 S.E.2d at 795 (“In matters of custody, visitation, and related child care issues, the
court’s paramount concern is always the best interests of the child.”). A trial court’s
determination of the children’s best interests is not reversible on appeal unless the trial court
abuses its discretion in making that determination, or the decision lacks supporting evidence.
See M.E.D v. J.P.M., 3 Va. App. 391, 398, 350 S.E.2d 215, 220 (1986). Furthermore, an
appellate court will not reverse a trial court’s equitable distribution unless it ‘“has not considered
or has misapplied one of the statutory mandates, or . . . the evidence fails to support the findings
of fact underlying [its] resolution of the conflict in the equities.’” von Raab v. von Raab, 26
Va. App. 239, 246, 494 S.E.2d 156, 159 (1997) (quoting Robinette v. Robinette, 10 Va. App.
480, 486, 393 S.E.2d 629, 633 (1990)).
B. The Appointment of a Guardian Ad Litem
Husband argues that the trial court erred in its failure to appoint a guardian ad litem for
his children because an appeal “was very likely.” Rule 5A:18 provides in pertinent part that
“[n]o ruling of the trial court . . . will be considered as a basis for reversal unless the objection
was stated together with the grounds therefor at the time of the ruling, except for good cause
shown or to enable the Court of Appeals to attain the ends of justice.” Husband concedes in his
designation of questions presented that this issue was not preserved for appeal and asks us to
invoke the ends of justice exception. However, husband’s concession is a concession of law, by
which we are not bound. Jiron-Garcia v. Commonwealth, 48 Va. App. 638, 652, 633 S.E.2d
-2-
744, 751 (2006). Husband made several motions for the trial court to appoint a guardian ad
litem, both orally and in written form. The trial court denied all of husband’s motions. Because
“the trial court and [the] opposing party [were] given the opportunity to intelligently address,
examine, and resolve [this] issue[] in the trial court,” Andrews v. Commonwealth, 37 Va. App.
479, 493, 559 S.E.2d 401, 408 (2002), we are satisfied that husband preserved this issue for
appeal. Accordingly, we address the merits of this issue without invoking the ends of justice
exception. See Rule 5A:18.
“Although no statute expressly prohibits, permits, or requires a circuit court to appoint a
guardian ad litem for a child involved in a contested custody dispute, Virginia courts have
frequently done so.” Verrocchio v. Verrocchio, 16 Va. App. 314, 316-17, 429 S.E.2d 482, 484
(1993). “The established practice is that a guardian ad litem may be appointed after a trial judge
makes a preliminary finding that the best interests of the child require such appointment.” Id. at
317, 429 S.E.2d at 484. “This practice is necessitated by the reality that the interests of a parent
in a volatile custody dispute are not always consistent with those of the child.” Id.
The trial court stated that it preferred to appoint a guardian ad litem when children in
divorce cases “hav[e] trouble understanding what is going on and don’t have somebody they can
trust.” The trial court found that the children “[o]bviously . . . trust[ed] Mrs. Doucette.” Thus,
the trial court found that the best interests of the children did not require the appointment of a
guardian ad litem.
Husband argues that the trial court should have appointed a guardian ad litem because an
appeal “was very likely.” In support of his argument, husband cites Farley, 9 Va. App. 326, 397
S.E.2d 794. However, the issue in Farley involved the Virginia Uniform Child Custody
Jurisdiction Act and had nothing to do with the appointment of a guardian ad litem. We know of
-3-
no reason why a trial court should be required to appoint a guardian ad litem simply because an
appeal “was very likely.”
Husband also argues that the trial court should have appointed a guardian ad litem
because Dr. Zwemer, in his expert opinion, stated that Doucette had a conflict of interest in
serving as therapist for both husband and wife and the children. “[I]t is well established that the
trier of fact ascertains [an expert] witness’ credibility, determines the weight to be given to their
testimony, and has the discretion to accept or reject any of the witness’ testimony.” O’Rourke v.
Vuturo, 49 Va. App. 139, 150, 628 S.E.2d 124, 129 (2006) (quoting Piatt v. Piatt, 27 Va. App.
426, 435, 499 S.E.2d 567, 571 (1998)). Thus, the trial court was free to give little weight to
Zwemer’s testimony or reject it completely. In any event, husband offers no authority
suggesting that a trial court should be required to appoint a guardian ad litem for this reason
alone, especially given the fact that Doucette resigned her role as family therapist for husband
and wife, thus ending any supposed conflict of interest. 2 Accordingly, we hold that the trial
court did not err in its refusal to appoint a guardian ad litem and affirm the judgment of the trial
court.
C. The Valuation of the Marital Home
Husband next argues that the trial court erred in calculating wife’s post-separation
mortgage payments in the division and distribution of the parties’ marital home. Specifically,
husband argues that the trial court erred in its classification of the home based on the date of the
parties’ evidentiary hearing, rather than the date of the parties’ separation. Therefore, husband
contends, the trial court improperly considered wife’s post-separation mortgage payments as her
separate property.
2
At oral argument, husband also argued that the fact that he represented to the trial court
that an appeal was likely required the appointment of a guardian ad litem. Husband cited no
authority for this assertion, and we know of none.
-4-
Code § 20-107.3(A)(2) provides in pertinent part that:
Marital property is . . . [a]ll . . . property . . . acquired by either
spouse during the marriage, and before the last separation of the
parties, if at such time or thereafter at least one of the parties
intends that the separation be permanent[.]
(Emphasis added.) Furthermore, the legislature left the date of classification up to the
determination of the courts, but in “most cases the appropriate date” is the date of separation.
Price v. Price, 4 Va. App. 224, 231-32, 355 S.E.2d 905, 909 (1987). The purpose of classifying
the property as of the date of separation is to allow the trial court to divide only that property
stemming from the marital partnership. Brett R. Turner, Equitable Distribution of Property
§ 5:28, at 427-28 (3d ed. 2005).
Husband argues that the trial court improperly classified the marital home from the date
of the equitable distribution hearing. Thus, husband argues that wife’s post-separation mortgage
payments improperly created a separate property interest in the residence. Had the trial court
properly classified the home as of the separation date, husband contends that it would have
classified the home as marital, as opposed to part marital, part separate, or “hybrid property.”
In making this argument, husband mischaracterizes the trial court’s classification of the
marital home. In our view, the trial court did, in fact, use husband and wife’s separation date as
the classification date and classified the marital home as marital property as of that time.
Because wife made the subsequent mortgage payments from her own salary, the trial court
considered these mortgage payments as wife’s separate property. Thus, the trial court ultimately
classified the marital residence as hybrid property. 3 Under the circumstances of this case, we
3
Code § 20-107.3(A)(3)(d) states, in pertinent part:
When marital property and separate property are commingled by
contributing one category of property to another, resulting in the
loss of identity of the contributed property, the classification of the
contributed property shall be transmuted to the category of
property receiving the contribution. However, to the extent the
-5-
find no error in this classification. To hold otherwise would be to entitle husband to the benefits
of wife’s separate mortgage payments, which occurred after the separation and did not derive
from the marital partnership. Thus, we affirm the judgment of the trial court in this regard, as
well.
D. Adultery as Grounds for Unequal Distribution of Property
Husband’s third argument on appeal is that the trial court erred in using his adultery as
grounds for uneven distribution of marital property, when there was clear evidence of wife’s
condonation of his adultery for a substantial period of time prior to the separation. Husband
concedes that this issue was not preserved for appeal and again asks us to invoke the ends of
justice exception to Rule 5A:18.
“Application of the ends of justice exception requires proof of an error that was ‘clear,
substantial and material.’” Herring v. Herring, 33 Va. App. 281, 287, 532 S.E.2d 923, 927
(2000) (quoting Brown v. Commonwealth, 8 Va. App. 126, 132, 380 S.E.2d 8, 11 (1989)). “The
record ‘must affirmatively show that a miscarriage of justice has occurred, not that a miscarriage
might have occurred.’” Id. (quoting Redman v. Commonwealth, 25 Va. App. 215, 221, 487
S.E.2d 269, 272 (1997)). Upon our review of the record, we are unconvinced that a miscarriage
of justice has occurred and decline to invoke the ends of justice exception. Accordingly, we do
not address this issue.
E. Child Support
Husband next argues that the trial court erred in deviating upward from the presumptive
child support guidelines contained in Code § 20-108.2 in establishing his child support
contributed property is retraceable by a preponderance of the
evidence and was not a gift, such contributed property shall retain
its original classification.
(Emphasis added.)
-6-
obligations. Specifically, husband argues that the deviation was based on projected private
school tuition costs and was thus not supported by “relevant evidence,” as required by Code
§ 20-108.1.
Under Rule 5A:18, a specific argument must be made to the trial court at the appropriate
time, or the allegation of error will not be considered on appeal. “A general argument or an
abstract reference to the law is not sufficient to preserve an issue.” Edwards v. Commonwealth,
41 Va. App. 752, 760, 589 S.E.2d 444, 448 (2003) (en banc) (citations omitted). “Making one
specific argument on an issue does not preserve a separate legal point on the same issue for
review.” Id. Thus, “though taking the same general position as in the trial court, an appellant
may not rely on reasons which could have been but were not raised for the benefit of the lower
court.” West Alexandria Properties, Inc. v. First Va. Mortgage & Real Estate Inv. Trust, 221 Va.
134, 138, 267 S.E.2d 149, 151 (1980).
In objecting to the terms of the final divorce decree, husband only stated that he
“object[ed] . . . to the Court’s award of child support on the grounds that it deviated [upwards]
from the presumptive amount calculated in accordance with [Code] § 20-108.2 . . . and place[d]
an extremely unfair burden on [him], which he [could not] afford.” Husband also objected to the
child support award because it required payment for “clubs, projects, field trips, uniforms, fees
and costs[,]” as opposed to the basic expenses of private school tuition. Essentially, husband
objected to the trial court’s child support award simply on the grounds that it was too high, and
he could not afford it. He mentioned nothing about the deviation being unsupported by “relevant
evidence,” nor did he mention Code § 20-108.1. Because husband did not raise this specific
argument in the trial court, this issue is not preserved for appeal. Furthermore, unlike husband’s
other questions presented, he does not ask us to invoke the ends of justice exception to Rule
5A:18. We will not consider the ends of justice exception sua sponte. Edwards, 41 Va. App. at
-7-
761, 589 S.E.2d at 448. Accordingly, we refrain from addressing this question presented, as
well.
F. Visitation
Husband’s final argument on appeal is that the trial court erred in denying husband
court-ordered visitation, issuing a “no contact” order against him, and barring him from the
premises of the children’s school. Husband essentially argues that the trial court’s decision gave
too much weight to the children’s wishes and “unduly penalized” him for his erratic behavior,
given his fundamental rights as a parent. We disagree. 4
The “paramount consideration for a trial court,” on the issue of determining custody is
the child’s best interest. Farley, 9 Va. App. at 329, 387 S.E.2d at 796. However, the ‘“liberty
interest at issue in this case – the interest of parents in the care, custody, and control of their
children – is perhaps the oldest of the fundamental liberty interests recognized by this Court.’”
Griffin v. Griffin, 41 Va. App. 77, 82, 581 S.E.2d 899, 901 (2003) (quoting Troxel v. Granville,
530 U.S. 57, 65 (2000)). “Custody and visitation disputes between two fit parents involve one
parent’s fundamental right pitted against the other parent’s fundamental right. The discretion
afforded trial courts under the best-interests test, Code § 20-124.3, reflects a finely balanced
4
Wife argues that this issue was not preserved for appeal, because, in his objection to the
final divorce decree, husband did not mention his erratic behavior, which he specifically labels as
“social functioning personality deficits.” Husband objected to the decree on the grounds that it
improperly gave the children “control over any visitation with the parent[, and] deprive[d]
[husband] of exercising a parental relationship[.]” Although this objection is vaguely worded,
we consider it sufficient to alert the trial court to the nature of husband’s argument. Accordingly,
we address the merits of husband’s argument.
-8-
judicial response to this parental deadlock.” Id. at 83, 581 S.E.2d at 902. 5 Consequently, in a
custody dispute between two parents, a trial court is required to place a greater emphasis on the
5
Code § 20-124.3 provides:
In determining best interests of a child for purposes of
determining custody or visitation arrangements including any
pendente lite orders pursuant to § 20-103, the court shall consider
the following:
1. The age and physical and mental condition of the child, giving
due consideration to the child’s changing developmental needs;
2. The age and physical and mental condition of each parent;
3. The relationship existing between each parent and each child,
giving due consideration to the positive involvement with the
child’s life, the ability to accurately assess and meet the emotional,
intellectual and physical needs of the child;
4. The needs of the child, giving due consideration to other
important relationships of the child, including but not limited to
siblings, peers and extended family members;
5. The role that each parent has played and will play in the
future, in the upbringing and care of the child;
6. The propensity of each parent to actively support the child’s
contact and relationship with the other parent, including whether a
parent has unreasonably denied the other parent access to or
visitation with the child;
7. The relative willingness and demonstrated ability of each
parent to maintain a close and continuing relationship with the
child, and the ability of each parent to cooperate in and resolve
disputes regarding matters affecting the child;
8. The reasonable preference of the child, if the court deems the
child to be of reasonable intelligence, understanding, age and
experience to express such a preference;
9. Any history of family abuse as that term is defined in
§ 16.1-228. If the court finds such a history, the court may
disregard the factors in subdivision 6; and
10. Such other factors as the court deems necessary and proper to
the determination.
-9-
best interests of the child than on the rights of the parents. See Piatt v. Piatt, 27 Va. App. 426,
432, 499 S.E.2d 567, 570 (1998). Furthermore, “[a]s long as the trial court examines the
[statutory] factors [of Code § 20-124.3], it is not ‘required to quantify or elaborate exactly what
weight or consideration it has given to each of the statutory factors.’” Sargent v. Sargent, 20
Va. App. 694, 702, 460 S.E.2d 596, 599 (1995) (quoting Woolley v. Woolley, 3 Va. App. 337,
345, 349 S.E.2d 422, 426 (1986)).
The record supports the trial court’s conclusion that court-ordered visitation with husband
was not in the children’s best interests. Doucette reported that the children were “extremely
angry and very fearful of their father . . . and his reactions to what [was] going on in the home.”
In fact, Doucette stated that she had been in practice for twenty-five years in the area of divorce,
and had never before witnessed the type of resistance to unsupervised visitation that one of the
Westfall daughters exhibited. While husband asserts that “[his son] clearly enjoyed his contacts
with his father and valued their relationship,” the parties’ son in fact complained of stomach
aches before a visit and had difficulty sleeping during his visits with his father. Furthermore,
husband would often come to his daughters’ athletic events after his daughters had asked him not
to and approach them without a supervisor present. An athletic coach at the children’s school
stated that the children appeared attentive and focused when their father was not present at their
athletic events, but would become withdrawn and sullen when he arrived. See Code
§ 20-124.3(3) (“[t]he relationship existing between each parent and each child, giving due
consideration to the positive involvement with the child’s life, the ability to accurately assess and
meet the emotional, intellectual and physical needs of the child”).
The judge shall communicate to the parties the basis of the
decision either orally or in writing.
- 10 -
Husband also repeatedly violated court orders and was not cooperative in family therapy
sessions with his children. See Code § 20-124.3(7) (“[t]he relative willingness and demonstrated
ability of each parent to maintain a close and continuing relationship with the child, and the
ability of each parent to cooperate in and resolve disputes regarding matters affecting the child”).
Husband frequently wandered the marital home nude after being asked not to, viewed
pornography while the children were nearby, and consumed alcohol when the children were
getting ready for school. See Code § 20-124.3(5) (“[t]he role that each parent has played and
will play in the future, in the upbringing and care of the child”). Finally, husband attempted to
convince his son to take sides during the divorce proceedings. See Code § 20-124.3(6) (“[t]he
propensity of each parent to actively support the child’s contact and relationship with the other
parent, including whether a parent has unreasonably denied the other parent access to or
visitation with the child”).
While acknowledging that he wandered the house nude, viewed pornography, and drank
alcohol in the presence of his children, husband stresses that this behavior was caused by his
“social functioning personality deficits” as mentioned by Zwemer. At oral argument, in fact,
husband’s counsel characterized him as a “square peg in a round world.” Husband, therefore,
appears to argue that, as a matter of law, his “personality deficits” excuse his erratic behavior in
regards to the trial court’s custody determination. Husband offers no authority for this
proposition, and we accordingly find this argument to be without merit. 6
6
Husband also cites our holding in Denise v. Tencer, 46 Va. App. 372, 617 S.E.2d 413
(2005), in which we stated:
“Without a finding of harm to the child, a court may not impose its
subjective notions of ‘best interests of the child’ over the united
objection of the child’s parents without violating the constitutional
rights of these parents. In this regard, the parents’ constitutional
rights take precedence over the ‘best interests’ of the child.”
- 11 -
The record supports the trial court’s finding that court-ordered visitation is not in the
children’s best interests. Accordingly, we affirm the judgment of the trial court.
G. Attorney’s Fees
The final issue before us is wife’s request for attorney’s fees on appeal. In determining
the propriety of such an award, we “view the record in its entirety and determine whether the
appeal is frivolous or whether other reasons exist for requiring additional payment.” O’Loughlin
v. O’Loughlin, 23 Va. App. 690, 695, 479 S.E.2d 98, 100 (1996).
Two of husband’s questions presented are procedurally defaulted. Husband makes many
of his other arguments either citing no authority or relying on out-of-context interpretations of
existing authority. In general, his arguments are largely frivolous. Furthermore, husband created
a six-volume joint appendix in excess of 3,000 pages, the vast majority of which has nothing to
do with the issues on appeal. 7 Despite the length of the joint appendix designated by husband,
husband makes very few citations to the record in his statement of facts and almost no citations
to the record in his statement of the case. Finally, husband misstates several material facts from
the record in his arguments. Because the litigation did not “address[] appropriate and substantial
issues[,]” Estate of Hackler v. Hackler, 44 Va. App. 51, 75, 602 S.E.2d 426, 438 (2004), we
grant wife’s request for attorney’s fees and costs on appeal.
Id. at 386, 617 S.E.2d at 420 (quoting Williams v. Williams, 24 Va. App. 778, 785, 485 S.E.2d
651, 654 (1997)). However, Denise dealt with the issue of grandparent visitation over the
objection of the natural parent, and has no application to this case. Indeed, the quotation
husband cites refers to the “united objection of the child’s parents” against third party visitation.
Thus, we find husband’s argument in this regard meritless as well.
7
For example, the joint appendix contained an article about tantric sex.
- 12 -
CONCLUSION
For the foregoing reasons, we hold that the trial court did not err in the entry of its final
decree of divorce between husband and wife. Accordingly, we affirm the judgment of the trial
court. We remand this case to the trial court for a determination of wife’s attorney’s fees.
Affirmed and remanded.
- 13 -
|
ACCEPTED
14-15-00086-CV
FOURTEENTH COURT OF APPEALS
HOUSTON, TEXAS
10/30/2015 4:19:45 PM
CHRISTOPHER PRINE
CLERK
No. 014-15-00086-CV
______________________________________
FILED IN
IN THE 14th COURT OF APPEALS
FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS
HOUSTON, TEXAS 10/30/2015 4:19:45 PM
CHRISTOPHER A. PRINE
______________________________________ Clerk
AMERIGROUP TEXAS, INC.
Appellant
v.
TRUE VIEW SURGERY CENTER, L.P., d/b/a
TOWN PARK SURGERY CENTER
Appellee
______________________________________
BRIEF OF APPELLEE
______________________________________
Strasburger & Price, LLP
CHARLES “SCOTT” NICHOLS
State Bar No. 14994100
JACK G. CARNEGIE
State Bar No. 03826100
909 Fannin Street, Suite 2300
Houston, Texas 77010
Telephone: (713) 951-5600
Facsimile: (713) 951-5660
[email protected]
[email protected]
ATTORNEYS FOR APPELLEE
Appeal from Cause No. 2012-73820, in the
157th Judicial District of Harris County,
Texas
ORAL ARGUMENT REQUESTED
2155944.4/SPH/27768/0101/103015
TABLE OF CONTENTS
Page No.
TABLE OF CONTENTS ............................................................................................i
TABLE OF AUTHORITIES ....................................................................................iv
STATEMENT REGARDING ORAL ARGUMENT ..............................................ix
NOTE REGARDING RECORD CITATIONS ........................................................ix
ISSUES PRESENTED............................................................................................... x
I. STATEMENT OF FACTS .............................................................................. 1
II. SUMMARY OF ARGUMENT ....................................................................... 6
III. ARGUMENT AND AUTHORITIES ............................................................. 9
A. Standard of Review ............................................................................... 9
B. Amerigroup’s Claims Are Barred By The Statute Of Frauds. ............ 10
1. The sole basis for Amerigroup’s claims is an alleged oral
agreement. ................................................................................. 11
2. Town Park has never admitted that the contract alleged
by Amerigroup, or anything remotely similar, exists. .............. 18
3. The agreement alleged by Amerigroup is barred by the
statute of frauds because a contract “relating to medical
care” made by a “health care provider” must be in
writing. ...................................................................................... 21
(a) Town Park is a “health care provider.” .......................... 21
(b) The alleged oral agreement “relates to medical
care.” ............................................................................... 22
(c) Amerigroup’s attempts to avoid the statute of
frauds fail. ....................................................................... 24
(i) Amerigroup ignores the plain language of
the statute. ............................................................. 24
(ii) Amerigroup has no “history” or case law
supporting its argument. ....................................... 27
i
2155944.4/SPH/27768/0101/103015
(iii) Town Park’s argument does not lead to
“absurd results.” ................................................... 28
(iv) Amerigroup’s “performance” is inconsistent
with the alleged oral agreement. .......................... 31
(v) Town Park’s invoices do not satisfy the
statute of frauds. ................................................... 33
(vi) Amerigroup’s “voidable, not void”
argument is frivolous. ........................................... 34
4. The agreement alleged by Amerigroup involves an
alleged promise by one to answer for the debt of another
and is therefore barred by the statute of frauds......................... 35
(a) Amerigroup was answering for the debt of another. ...... 36
(b) The “leading object” doctrine does not apply. ............... 37
C. Amerigroup Cannot Recover Because the Alleged Agreement
Was Not Entered Into by Someone With Actual or Apparent
Authority to Make a Blanket Fee Agreement On Behalf of
Town Park. .......................................................................................... 39
1. The burden of proof was on Amerigroup to prove actual
or apparent authority. ................................................................ 40
2. Amerigroup presented no evidence that the unidentified
person who supposedly entered into the alleged blanket
fee agreement had actual or apparent authority to do so
on behalf of Town Park............................................................. 42
(a) No evidence of actual authority. ..................................... 42
(b) No evidence of apparent authority. ................................ 45
D. Amerigroup Cannot Recover For Breach Of Contract Because
Town Park Did Not Fail To Comply With Any Alleged
Contract Term...................................................................................... 50
1. The alleged agreement does not address reimbursement
of overpayments. ....................................................................... 50
2. The alleged agreement does not address billing
methodology.............................................................................. 51
E. The Trial Court Did Not Err in Granting Summary Judgment
Based on the Statute of Limitations as to the Additional 109
Claims on Which Amerigroup First Sought Recovery in 2014. ......... 54
ii
2155944.4/SPH/27768/0101/103015
F. Amerigroup Has Abandoned Its Equitable Causes of Action
and Waived Any Claimed Error in Granting Summary
Judgment on Those Causes of Action. ................................................ 56
G. The Trial Court Did Not Err in Granting Summary Judgment on
Amerigroup’s Equitable Claims Based on the Statute of
Limitations........................................................................................... 57
1. Unjust enrichment and money had and received are
governed by the two-year statute of limitations. ...................... 57
2. The statute of limitations began to run when the money
was paid..................................................................................... 59
IV. CONCLUSION AND PRAYER ................................................................... 60
CERTIFICATE OF COMPLIANCE ....................................................................... 61
CERTIFICATE OF SERVICE ................................................................................ 62
iii
2155944.4/SPH/27768/0101/103015
TABLE OF AUTHORITIES
Page(s)
CASES
2616 S. Loop L.L.C. v. Health Source Home Care, Inc.,
201 S.W.3d 349 (Tex. App.—Houston [14th Dist.] 2006, no pet.) ................... 42
American Bank & Trust Co v. Freeman,
560 S.W.2d 444 (Tex. Civ. App.—Beaumont 1977, writ ref’d n.r.e.) ............... 41
Amoco Prod. Co. v. Smith,
946 S.W.2d 162 (Tex. App. – El Paso 1997, no pet.) ........................................ 59
Banfield v. Davidson,
201 S.W. 442 (Tex. Civ. App.—Galveston 1918, no writ) ................................ 35
Buck v. Blum,
130 S.W.3d 285 (Tex. App. – Houston [14th Dist.] 2004, no pet.) .................... 26
Capstone Healthcare Equipment Services, Inc. v. Quality Home Health
Care, Inc.,
295 S.W.3d 696 (Tex.App.-Dallas 2009, pet. denied) ....................................... 55
City of Keller v. Wilson,
168 S.W.3d 802 (Tex. 2005) ................................................................................ 9
Cohen v. McCutchin,
565 S.W.2d 230 (Tex. 1978) ........................................................................11, 33
Cooper Petroleum Co. v. LaGloria Oil & Gas Co.,
436 S.W.2d 889 (Tex. 1969) .............................................................................. 38
Cox Engineering, Inc. v. Funston Mach. and Supply Co.,
749 S.W.2d 508 (Tex. App.—Fort Worth, 1988, no writ) ................................. 33
Dracopoulas v. Rachal,
411 S.W.2d 719 (Tex. 1967) .............................................................................. 20
Dynegy, Inc. v. Yates,
345 S.W.3d 516 (Tex. App.—San Antonio 2011, pet. granted), rev’d on
other grounds, 422 S.W.3d 638 (Tex. 2013) ...................................................... 35
iv
2155944.4/SPH/27768/0101/103015
Dynegy, Inc. v. Yates,
422 S.W.3d 638 (Tex. 2013) .............................................................................. 35
Eland Energy, Inc. v. Rowan Oil & Gas, Inc.,
914 S.W.2d 179 (Tex. App.—San Antonio 1995, writ denied) ......................... 34
Elledge v. Friberg-Cooper Water Supply Corp.,
240 S.W.3d 869 (Tex. 2007) .............................................................................. 58
Evans v. Shaw,
268 S.W. 1037 (Tex. Civ. App.—Waco 1925, no writ) ..................................... 35
Exxon Corp. v. Breezevale, Ltd.,
82 S.W.3d 429 (Tex. App.—Dallas 2002, pet. denied)...................................... 32
First Nat. Bank v. Slaton Independent School Dist.,
58 S.W.2d 870 (Tex.Civ.App. –Amarillo 1933, writ dism’d)............................ 41
Four Seasons Nursing Center v. Weber Medical Systems, LLC,
04-74614 (E. D. Mich. September 28, 2005) ..................................................... 26
Gaffar v. Kamal,
No. 05-10-00560-CV, 2011 Tex. App. LEXIS 5714 (Tex. App.-Dallas
July 27, 2011, no pet.)......................................................................................... 59
Gaines v. Kelly,
235 S.W.3d 179 (Tex. 2007) .............................................................................. 46
Haas Drilling Co. v. First Nat’l Bank,
456 S.W.2d 886 (Tex. 1970) .............................................................................. 38
Hancock v. Chicago Title Ins. Co.,
635 F.Supp.2d 539 (N.D. Tex. 2009) ................................................................. 58
Hermann Hosp. v. MEBA Medical & Benefits Plan,
845 F.2d 1286 (5th Cir. 1988) ...................................................................... 19, 30
IRA Res., Inc. v. Griego,
221 S.W.3d 592 (Tex. 2007) .............................................................................. 41
Jeffery v. Walden,
899 S.W.2d 207 (Tex.App. —Dallas 1993), rev’d in part on other
grounds, 907 S.W.2d 446 (Tex. 1995) ............................................................... 25
v
2155944.4/SPH/27768/0101/103015
Kinney v. Palmer,
No. 04-07-00091-CV, 2008 Tex. App. LEXIS 4632; 2008 WL 2515696
(Tex. App. – San Antonio 2008, no pet.)............................................................ 56
Kirby Highland Lakes Surgery Ctr., L.L.P. v. Kirby,
183 S.W.3d 891 (Tex. App.—Austin 2006, no pet.) .......................................... 26
LeTourneau Lifelike Orthotics & Prosthetics, Inc. v. Wal-Mart Stores, Inc.,
298 F.3d 348 (5th Cir. 2002) .............................................................................. 31
Lincoln Nat. Life Ins. v. Brown Schools,
757 S.W.2d 411 (Tex. Civ. App.—Houston [14th Dist.]
1988, no writ) ..........................................................................................30, 31, 51
Lippincott v. Whisenhunt,
462 S.W.3d 507 (Tex. 2015) .............................................................................. 28
Mercer v. Daoran Corp.,
676 S.W.2d 580 (Tex. 1984) .............................................................................. 19
Merry Homes, Inc. v. Luc Dao,
359 S.W.3d 881 (Tex. App.-Houston [14th Dist.] 2012, no pet.) ................58, 59
Mission Linen Supply, Inc. v. Sandy's Signals, Inc.,
2-07-014-CV, 2007 Tex. App. LEXIS 5968; 2007 WL 2152070 (Tex.
App.-- Fort Worth, July 26, 2007) ...................................................................... 41
Morales v. Trans World Airlines, Inc.,
504 U.S. 374, 112 S.Ct. 2031 (1992).................................................................. 26
Rakowski v. Committee to Protect Clear Creek Village Homeowners’ Rights,
252 S.W.3d 673 (Tex.App.-Houston [14th Dist.] 2008, pet. denied) ................ 19
Robertson v. Melton,
131 Tex. 325, 115 S.W.2d 624, 118 A.L.R. 1505 (1938) .................................. 20
Rourke v. Garza,
530 S.W.2d 794 (Tex. 1975) .............................................................................. 46
Stovall & Assocs. v. Hibbs Fin. Ctr., Ltd.,
490 S.W.3d 790 (Tex. App.—Dallas 2013, no pet.) ....................................31, 32
Sw. Elec. Power Co. v. Grant,
73 S.W.3d 211 (Tex. 2002)............................................................................. 9, 10
vi
2155944.4/SPH/27768/0101/103015
Tanglewood Terrace, Ltd. v. City of Texarkana,
996 S.W.2d 330 (Tex. App.-Texarkana 1999, no pet.) ...................................... 59
Tenaska Frontier Partners, Ltd. v. Sullivan,
273 S.W.3d 734 (Tex.App.-Houston [14th Dist.] 2008, no pet.) ....................... 27
Texas Dept. of Public Safety v. Abbott,
310 S.W.3d 670 (Tex.App.-Austin 2010, no pet.).............................................. 26
TGS-NOPEC Geophysical Co. v. Combs,
340 S.W.3d 432 (Tex. 2011) .............................................................................. 28
Thomas Reg’l Directory Co., v. Dragon Prods., Ltd.,
196 S.W.3d 424 (Tex. App.—Beaumont 2006, pet. denied) .......................45, 46
Tran v. Luu,
No. 12-06-19,092-CV, 2014 Tex. App. LEXIS 3956; 2014 WL 1410345
(Tex. App. -- Waco 2014, no pet.) ...................................................................... 56
Verizon Employee Benefits Committee v. Frawley,
655 F.Supp.2d 644 (N.D. Tex. 2008) ................................................................. 59
Verizon Employee Benefits Committee v. Frawley,
No. 3:05-CV-2105-P ECF, 2007 WL 2051113 (N.D. Tex. 2007) ..................... 59
Walker Ins. Servs. v. Bottle Rock Power Corp.,
108 S.W.3d 538 (Tex. App.—Houston [14th Dist.] 2003, no pet.) ................... 42
White v. Harrison,
390 S.W.3d 666 (Tex. App.--Dallas 2012, no pet.) ............................................ 20
Williams v. Unifund CCR Partners,
264 S.W.3d 231 (Tex. App.—Houston [1st Dist.] 2008, no pet.) ...................... 50
York Group, Inc. v. Horizon Casket Group, Inc.,
2007 U.S. Dist. LEXIS 49778 (S.D. Tex. July 10, 2007) .................................. 34
STATUTES
29 U.S.C. § 1132(a)(1)(B) .................................................................................29, 31
TEX. BUS. & COM. CODE ANN. § 2.201 .................................................................... 33
TEX. BUS. & COM. CODE § 26.001 ........................................................................... 33
vii
2155944.4/SPH/27768/0101/103015
TEX. BUS. & COM. CODE § 26.001(a) ....................................................................... 10
TEX. BUS. & COM. CODE § 26.01(a)(1) .................................................................... 35
TEX. BUS. & COM. CODE § 26.01(b)(2) ..........................................x, 8, 11, 35, 36, 37
TEX. BUS. & COM. CODE § 26.01(b)(8) ............................. x, 8, 11, 21, 24, 25, 26, 27
TEX. CIV. PRAC. & REM. CODE § 16.003(a) ............................................................. 57
TEX. CIV. PRAC. & REM. CODE § 16.004............................................................54, 58
TEX. CIV. PRAC. & REM. CODE §74.001................................................................... 26
TEX. CIV. PRAC. & REM. CODE § 74.001(11)(A) ..................................................... 22
TEX. CIV. PRAC. & REM. CODE § 74.001(12) .....................................................22, 25
TEX. CIV. PRAC. & REM. CODE § 74.001(19) .....................................................22, 23
TEX. CIV. PRAC. & REM. CODE § 74.001(a)(13) ....................................................... 26
TEX. CIV. PRAC. & REM. CODE§ 16.068.............................................................54, 55
TEX. OCC. CODE § 151.002 ................................................................................22, 23
TEX. OCC. CODE § 151.002(13) ............................................................................... 23
RULES
TEX. R. CIV. P. 65 .................................................................................................... 56
Tex. R. Civ. P. 166a(i) ............................................................................................... 9
Tex. R. Civ. P. 166a(c)............................................................................................. 10
viii
2155944.4/SPH/27768/0101/103015
STATEMENT REGARDING ORAL ARGUMENT
Appellee, Town Park, respectfully submits that oral argument is
unnecessary. The facts and law are straightforward. Amerigroup alleges Town
Park orally agreed to accept a particular amount for certain a medical procedure
performed on Amerigroup’s policyholders and breached by failing to reimburse
supposed overpayments. There was no such agreement. But even if there were,
(1) the alleged agreement would be unenforceable under the statute of frauds; (2)
there was no evidence the alleged agreement was entered into by anyone with
authority to enter into such a blanket fee agreement; (3) there is no allegation or
evidence that the alleged agreement included a term requiring reimbursement of
overpayments; therefore it would not be a breach of contract to fail to return
claimed overpayments. Any potential remedies would be equitable and those have
been abandoned and are barred by the statute of limitations.
NOTE REGARDING RECORD CITATIONS
A number of the materials were filed in the trial court under seal. The
original Clerk’s Record did not contain the sealed materials and had to be
supplemented. As a result, the record is somewhat fragmented.
For example, Appellee’s Second Motion for Summary Judgment at issue in
this appeal is located at CR 501, but only with Exhibits A, C and D. The motion is
also located in the Supplemental Clerk’s Record beginning in Volume III, p. 165,
with Exhibits B, E, and G in Volume IV, p. 190-250, and Exhibits F and H in
ix
2155944.4/SPH/27768/0101/103015
Volume V, p. 259-264. Similarly, Appellee’s first Motion for Summary Judgment
is located at CR 127 with Exhibits A, D, E, F and G, and in the Supplemental
Clerk’s Record beginning in Volume I, p. 16, with Exhibits B and C at Volume II
p. 30-82.
Appellee has attempted to include citations to all relevant portions of the
record to assist the Court in identifying the complete documents.
ISSUES PRESENTED
Did the trial court err in granting summary judgment in favor of Town Park?
Does the alleged oral agreement for Amerigroup to pay, and Town Park to
accept, a certain dollar amount for Town Park’s facilities fee for a particular
surgical procedure constitute an “an agreement, promise, [or] contract … relating
to medical care … made by a … health care provider as defined in Section 74.001,
Civil Practice and Remedies Code,” such that it falls within the Statute of Frauds,
TEX. BUS. & COM. CODE § 26.01(b)(8)?
Does the alleged verbal agreement for Amerigroup to pay, on behalf of its
insureds, Town Park’s facilities fee for services rendered to those insureds,
constitute “a promise by one person to answer for the debt … of another person”
(i.e. the patients to whom the services were rendered) such that it falls within the
Statute of Frauds, TEX. BUS. & COM. CODE § 26.01(b)(2)?
Did Amerigroup present sufficient evidence to raise a genuine issue of
material fact as to whether the unidentified person who supposedly entered into the
x
2155944.4/SPH/27768/0101/103015
alleged verbal agreement on behalf of Town Park had actual or apparent authority
to enter into a blanket fixed fee agreement for an indefinite term?
When a party pays less than the amount charged, but later contends that it
mistakenly paid more than it intended to pay, is it a breach of contract for the other
party to fail to refund the alleged overpayment when there is no contractual term
addressing reimbursement of alleged overpayments?
Are plaintiff’s breach of contract claims barred by the four year statute of
limitations to the extent they relate to individual payments made for particular
patients more than four years before the claims were added to the lawsuit?
Did plaintiff abandon all claims other than breach of contract, and waive any
claimed error in granting summary judgment on those other claims, by filing an
amended pleading that included no causes of action except breach of contract?
Are plaintiff’s claims for equitable relief barred by the two-year statute of
limitations?
xi
2155944.4/SPH/27768/0101/103015
I. STATEMENT OF FACTS
Amerigroup Texas, Inc. (“Amerigroup”) is a publicly-traded, for-profit
health maintenance organization that has contracted with the Texas Health &
Human Services Commission, or “Texas Medicaid,” to manage payments for
members’ healthcare services. Because Amerigroup is a for-profit entity,
Amerigroup alone, and not Texas Medicaid, determines the amount it pays on any
given claim. While Amerigroup may opt to use the Medicaid fee schedule as a
guide for reimbursements, it is under no obligation to do so and its decision of how
much to pay has no effect on Medicaid or the taxpayers. Supp. CR 62-63 (Second
MSJ, Ex. B at p. 116. ll. 20-25, p. 117, ll. 1-22). Amerigroup reimburses different
providers for the same services at rates that differ from the Medicaid fee schedule
and differ among providers. Supp. CR 59-60 (Second MSJ, Ex. B at p. 110, ll. 1-7,
p. 111, ll. 1-21).
True View Surgery Center, L.P. d/b/a Town Park Surgery Center (“Town
Park”) is a licensed ambulatory surgical center that furnishes the facility services
where various medical procedures are performed, including the dental surgery
procedures at issue in this case. Supp. CR 259, 262 (Second MSJ at Ex. F). These
services include arranging the anesthesiologists’ services and providing the
operating room, labs, supplies, and nursing—essentially everything except the
dentist’s services. Supp. CR 66-67 (Second MSJ at Ex. B at p. 127, ll. 1- 17, p.
128, ll. 1- 2).
1
2155944.4/SPH/27768/0101/103015
Generally speaking, health care providers, including both doctors and
facility providers like Town Park, can be characterized as being “in-network” or
“out-of-network.” It is important to understand this distinction. An “in-network”
provider is one that has contracted with a health insurer like Amerigroup to accept
pre-agreed amounts for particular services. Although an in-network provider
typically agrees to accept a discounted rate, it benefits by receiving an increased
volume of procedures.
An out-of-network provider has no contract with the insurer to accept a pre-
agreed rate for particular services, and invoices at its own chosen rate for services
rendered. That is not to say insurers pay the provider’s invoiced rate; the amount
insurers pay for services rendered to their insureds by out-of-network providers is
based on the terms of the insurance plan with the insureds, and not on any
contractual agreement with the provider.
It is undisputed that Town Park was out-of-network with Amerigroup; Town
Park had not contracted to accept a pre-agreed rate. See Appellant’s Br. at 6-7.
Between 2006 and 2010, a number of Amerigroup policyholders underwent
dental surgery at Town Park. The procedure was referred to as the “41899”
procedure, after the procedure code assigned to it.1 Amerigroup alleges that the
1
CR 527 (Ex. A at ¶ 8). 41899 is the code for “unlisted procedure, dentoalveolar structures,”
which for these claims means dental surgery including the treatment of teeth and sometimes
treatment of abscess and replacement with implants. The procedures for these claims were
performed by a dental surgeon, the patients required anesthesia, and they occurred in a surgery
center which provided the nursing care, among other things.
2
2155944.4/SPH/27768/0101/103015
41899 procedures were performed by several dentists, and that Dr. Patrick Ralph
performed the majority of the procedures at issue. CR 527, Supp. CR 64-65
(Second MSJ at Ex. A at ¶ 8; Ex. B at p. 123, ll. 23 – 25, p. 124, ll. 1 – 7). Town
Park furnished the facility services necessary for the procedures to be performed.
Town Park had its patients sign a Patient Authorization & Responsibility
Form under which the patients acknowledged that they were financially
responsible for the charges, but Town Park billed Amerigroup directly. Supp. CR
259-61. Town Park’s billed charges ranged from $6000 to $9000 per procedure
and Town Park submitted its invoices directly to Amerigroup. Amerigroup then
determined the amount payable.
Amerigroup never paid Town Park’s full billed charges. Instead, it
reimbursed Town Park anywhere from $1,800 to $4,800 less than Town Park’s
invoices. According to Amerigroup’s latest petition, 239 of Amerigroup’s insured
members underwent the “41899” dental procedure from December 21, 2008
through September 2010, and Amerigroup paid $4,200.00 for 25 patients, $5040
for one patient, $6,142.50 for 18 patients and $6300 for the remaining 194 patients.
CR 497 (Fourth Amended Petition ¶11). Around the same time, however,
Amerigroup’s average per-claim payment to another provider for the same 41899
code was $12,820. Supp. CR 58-59 (Second MSJ at Ex. B at p. 108, ll. 8-10, p.
110, ll. 5-13).
3
2155944.4/SPH/27768/0101/103015
On March 21, 2011, long after the original claims and reimbursements,
Amerigroup began sending letters to Town Park demanding that Town Park refund
most of what it had been paid for the procedures during the prior three years.
Amerigroup vaguely claimed the amounts had been “paid in error.” See, e.g., CR
13, 18, 23, 28. None of the letters claimed that there had been any prior agreement
by Town Park to accept a particular pre-agreed rate for its services in connection
with the 41899 procedures. On the contrary, Amerigroup recognized that Town
Park was a “non-participating [i.e. out-of-network] facility.” CR 28.
On December 18, 2012, Amerigroup filed suit against Town Park claiming
that, “due to a clerical oversight,” it had overpaid Town Park for 130 “41899”
procedures. CR 2-3, 7-8. Amerigroup alleged that “[t]he ‘99’ code indicates a
nonspecific code, which only requires reimbursement off the state fee schedule,”
and sought to recoup all but $611 per procedure. Id. While the Original Petition
alleged that “Amerigroup reimbursed Town Park at this reduced flat rate for
years,” the reality is that Amerigroup had never reimbursed Town Park based on
the Medicaid fee schedule. Supp. CR 44-45 (Ex. B p. 29, ll. 1-16, p. 30, l. 1.) In
fact, from 2006 through the end of 2008, the time period pre-dating the claims at
issue in this suit, Amerigroup typically reimbursed Town Park anywhere from
$3412 to $6142. See Supp. CR 1059.2
2
Reimbursements generally increased over time as one might expect due to inflation.
4
2155944.4/SPH/27768/0101/103015
By its Third Amended Petition, Amerigroup sought to recover all but $630
per procedure and had modified its legal theories to include breach of contract,
money had and received, recoupment, and unjust enrichment. CR 100-103.
Town Park moved for summary judgment in January 2014 contending,
among other things, that Amerigroup’s unjust enrichment and money had and
received claims were barred by the statute of limitations, and that its claim for
recoupment failed because Town Park had not sued Amerigroup for damages
against which Amerigroup’s claims may be offset. CR 127. See also Supp. CR.
16 (MSJ), Supp. CR. 31, 81 (Exhibits B and C), CR 291 (Reply to Response). The
trial court granted partial summary judgment on the unjust enrichment and money
had and received claims, and noted that Amerigroup had withdrawn its recoupment
claim. CR 327. This left only Amerigroup’s breach of contract claim.
On November 14, 2014, Amerigroup filed its Fourth Amended Petition
eliminating all causes of action except breach of contract, but adding another 109
claims dating back to December 2008. CR 495. The same day, Town Park filed a
Third Amended Answer adding additional affirmative defenses. CR 492. By this
point, Amerigroup claimed that, at some unknown time “before September 2009,”
some unidentified person at Town Park verbally agreed by telephone to accept
100% of the Medicaid reimbursement rate for the 41899 procedures on patients
covered by Amerigroup, but that on 239 separate occasions between 2008 and
5
2155944.4/SPH/27768/0101/103015
2010, Amerigroup “mistakenly reimbursed Town Park at an inflated rate ….” CR
496-97 (Fourth Amended Petition ¶¶ 9, 11).
Town Park then filed its Second Motion for Summary judgment addressing
Amerigroup’s breach of contract claim. CR 501 (with Exhibits A, C and D). See
also Supp. CR 165; Supp. CR 190-250 (sealed Exhibits B, E, and G); Supp. CR
250-265 (Exhibits F-H); CR 594 (reply to response). After an oral hearing, the
court granted summary judgment. CR 641.
II. SUMMARY OF ARGUMENT
Amerigroup’s claims are founded solely on an alleged oral agreement for
Amerigroup to pay, and Town Park to accept, 100% of the Medicaid rate for all
41899 procedures performed on patients insured by Amerigroup. There was no
such agreement. CR 538 (Ex. B); Supp. CR 254-55 (Ex. G at p. 211, ll. 15, p. 212,
ll. 15). While Amerigroup consistently reimbursed Town Park anywhere from
$1,800 to $4,800 less than the amount Town Park invoiced, Amerigroup never paid
the amount it now claims was agreed. Supp. CR 44-45 (Ex. B p. 29, ll. 1-16, p. 30,
l. 1.) Thus, this is not a case of a few “mistaken overpayments.”
By Amerigroup’s own account, the single telephone call during which the
agreement allegedly was made originated simply to obtain authorization for one
dental surgeon, Dr. Ralph, to perform a single procedure on a single patient on a
single date of service. Supp. CR 231, 234 (Ex. E at p. 38 ll. 3-23, p. 41, ll. 9-13).
The call was not initiated to obtain a blanket agreement to accept Medicaid rates.
6
2155944.4/SPH/27768/0101/103015
Supp. CR 231, 234 (Ex. E at p. 38 ll. 3-23, p. 41, ll. 9-13). Somehow Amerigroup
contends this alleged conversation, which took place at an unknown time with an
unknown person at Town Park, created a blanket contract for Town Park to accept
the Medicaid rate for all 41899 procedures for the indefinite future.
Amerigroup has no idea when the alleged telephone call took place. It has
no documentation of the supposed agreement. Supp. CR 222 (Second MSJ at Ex.
B at p. 188, ll. 1-6.) And, although Amerigroup sued to recover payments as far
back as December 2008, its petition vaguely alleged only that the agreement was
made “[s]ometime before September 2009.” CR 496 (Fourth Amended Petition
¶9). Amerigroup witnesses, however, could not even state what year the supposed
agreement was made. Supp. CR 230-31 (Second MSJ at Ex. E at p. 37 ll. 1 - 25, p.
38 ll. 1 - 3.)
Amerigroup also has no idea who made this supposed agreement on behalf
of Town Park. Not only is it unable to identify the person by name, it cannot state
the position or title of the person, or even the department where he supposedly
worked. Supp. CR 230-31, 243 (Second MSJ at Ex. E at p. 37 ll. 1 - 25, p. 38 ll. 1
– 3, p. 100 ll. 4-16.).
Thus, there is no evidence that the alleged agreement exists or was made by
someone with authority at Town Park to enter into a blanket fee agreement. Even
if such an agreement had been made, however, it would be unenforceable under
two separate provisions of the statute of frauds.
7
2155944.4/SPH/27768/0101/103015
First, the alleged agreement is one made by a health care provider relating to
medical care. Such agreements fall within the statute of frauds, and fail as a matter
of law when there is no written memorandum complete in every material detail
signed by the party to be charged. TEX. BUS. & COM. CODE § 26.01(b)(8). There is
no such written document.
Second, Town Park rendered services to its patients and payment for those
services was owed by the individual patients. An alleged agreement for
Amerigroup to pay the debt of another (i.e. the patients) also falls within the statute
of frauds. TEX. BUS. & COM. CODE § 26.01(b)(2).
Amerigroup’s claim is also precluded because the alleged agreement was not
made by anyone with actual or apparent authority to make such an agreement.
The only person with authority to make a blanket agreement to accept a particular
rate for specified procedures was Mr. Kraig Killough, who testified that he made
no such agreement. Supp. CR 254-55 (Ex. G at p. 211, ll. 15, p. 212, ll. 15).
Amerigroup cannot refute that testimony because none of Amerigroup’s witnesses
could identify who supposedly made the alleged agreement on behalf of Town
Park. Thus, even assuming someone purported to make such an agreement, it was
not someone with actual or apparent authority to do so.
Amerigroup’s breach of contract claim also fails for other equally
fundamental reasons. The only claimed breach is Town Park’s failure to reimburse
the alleged mistaken overpayments, yet there is no allegation or evidence of any
8
2155944.4/SPH/27768/0101/103015
contract term addressing reimbursement of overpayments. (Notably, in-network
agreements often do contain such terms, but the oral agreement alleged by
Amerigroup does not.) In the absence of such a contract term, the failure to
reimburse overpayments is not a breach of contract as a matter of law.
At best, Amerigroup would be relegated to equitable theories for recovering
claimed mistaken overpayments. Amerigroup, however, abandoned its equitable
legal theories, and waived any claimed error in granting summary judgment on
those causes of action, when it eliminated them from its Fourth Amended Petition.
Even apart from the abandonment, those causes of action are barred by the statute
of limitations in any event.
III. ARGUMENT AND AUTHORITIES
A. Standard of Review
A defendant is entitled to summary judgment on no-evidence grounds if
there is no evidence of an essential element of the plaintiff’s claims. See Tex. R.
Civ. P. 166a(i); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). An
appellate court will affirm a no-evidence summary judgment if the record shows:
(1) there is no evidence on the challenged element; (2) the evidence offered to
prove the challenged element is no more than a scintilla; (3) the evidence
establishes the opposite of the challenged element; or (4) the court is barred by law
or the rules of evidence from considering the only evidence offered to prove the
challenged element. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005).
9
2155944.4/SPH/27768/0101/103015
A defendant is entitled to summary judgment on traditional grounds if it
conclusively negates an essential element of each of the plaintiff’s causes of action.
See Tex. R. Civ. P. 166a(c); Grant, 73 S.W.3d at 215.
B. Amerigroup’s Claims Are Barred By The Statute Of Frauds.
Town Park never verbally agreed to accept Medicare rates for all 41899
procedures as alleged by Amerigroup. But even if there were such an agreement, it
would be barred by the statute of frauds.
Section 26.001(a) of the Business & Commerce Code states:
§ 26.01. Promise Or Agreement Must Be In Writing
(a) A promise or agreement described in Subsection (b) of this
section is not enforceable unless the promise or agreement, or a
memorandum of it, is
(1) in writing; and
(2) signed by the person to be charged with the promise or
agreement or by someone lawfully authorized to sign for him.
TEX. BUS. & COM. CODE ANN. §26.01(a). Section (b) of the statute describes the
types of contracts that must be in writing. Subsections b(2) and b(8) apply here.
Those sections state:
(b) Subsection (a) of this section applies to:
***
(2) a promise by one person to answer for the debt, default, or
miscarriage of another person;
***
10
2155944.4/SPH/27768/0101/103015
(8) an agreement, promise, contract, or warranty of cure relating to
medical care or results thereof made by a physician or health care
provider as defined in Section 74.001, Civil Practice and Remedies
Code. This section shall not apply to pharmacists.
TEX. BUS. & COM. CODE § 26.01(b)(2), (8).
Subsection (b)(2) applies because Amerigroup alleges an agreement between
Amerigroup and Town Park under which Amerigroup is to pay Town Park
specified amounts owed to Town Park by its patients. Thus Amerigroup alleges an
agreement to answer for the debt of another, specifically the debt the individual
patients owed to Town Park for services provided to those patients.
Subsection (b)(8) applies because the claim is based on “an agreement [or]
contract … relating to medical care … made by a … health care provider as
defined in Section 74.001, Civil Practice and Remedies Code.” Town Park is a
“health care provider” and the alleged contract clearly relates to medical care;
specifically, the 41899 dental surgeries.
1. The sole basis for Amerigroup’s claims is an alleged oral
agreement.
To satisfy the statute of frauds, “there must be a written memorandum which
is complete within itself in every material detail, and which contains all of the
essential elements of the agreement, so that the contract can be ascertained from
the writings without resorting to oral testimony.” Cohen v. McCutchin, 565
S.W.2d 230, 232 (Tex. 1978). In the present case, there is no written
11
2155944.4/SPH/27768/0101/103015
memorandum of the alleged agreement, much less a writing sufficient to satisfy
this standard.
The testimony of Amerigroup’s Corporate Representative, Edmund
Chidester, as well as its witness Nancy Jones, the individual who allegedly had the
conversation underlying Amerigroup’s claims, is crystal clear that the supposed
agreement to accept Medicaid rates was entirely verbal.3 As told by Ms Jones, the
agreement was made in a single telephone call with an unidentified person, after
Dr. Ralph requested authorization to perform a procedure at Town Park. Supp.
CR. 231 (Ex. E at p. 38 ll. 3-23). She testified that the alleged agreement
“originated from an authorization for a single procedure for a single patient on a
single date of service.” Supp. CR. 233 (Ex. E at p. 41, ll. 9-13). Amerigroup
contends this lone conversation established an agreement to accept the specified
Medicaid rate for all patients in the future.
Specifically, Jones testified that she first spoke with Dr. Ralph’s employee
“Rose” about Dr. Ralph’s request for authorization to perform surgery at Town
Park, and asked Rose if Town Park accepted Medicaid rates. Supp. CR. 232 (Ex.
E at p. 39, ll. 2-12). Rose said she did not know and referred Jones to “JoAnn” at
Town Park. Id. at p. 39, ll. 13 - 20. Jones testified she then called JoAnn and
asked if Town Park accepted Medicaid rates. JoAnn told her that was not within
3
See generally, Supp. CR. 190, 224 (Ex. B and E; Depositions of Edmund Chidester and Nancy
Jones).
12
2155944.4/SPH/27768/0101/103015
“her scope” and referred Jones to another person. Supp. CR. 233-34 (Ex. E at p.
40, l. 16 – 41, l. 5). Jones said she then called “that other person” and explained
what she needed to find out. Id. at p. 41, ll. 6-13. Jones, however, could not
identify the other person:
Q. Okay. And so it’s your testimony that on one occasion you had a
conversation with somebody at Town Park Surgery Center and that
person accepted the Texas Medicaid fee schedule and you
documented that?
A. Yes.
Q. Do you know the person’s name?
A. I don't remember.
Supp. CR. 228 (Ex. E at p. 34, ll. 9-15). Although Jones claimed she documented
the conversation, Amerigroup’s corporate representative testified he had not been
able to locate any such documentation. Supp. CR 43-44 (Ex. B. at p. 28, l. 18 – 29,
l. 3). Jones described the conversation with the “other person” as follows:
Q. You don't remember the exact conversation [with the “other
person”]?
A. I remember explaining who I was with and that we had a request
for surgery -- for dental surgery to be done at Town Park. I said, “I
need to find out if you-all would accept the Texas Medicaid fee
schedule.” He agreed. We had a few seconds in there where he
verbalized his gratitude that we were able to work something out and
to be able to approve the request coming from Dr. Ralph because they
were dealing with him quite a bit. That’s about all I remember about
a telephone call.
Q. Okay. And so the call originated because you had gotten a request
from Dr. Ralph --
A. Right.
13
2155944.4/SPH/27768/0101/103015
Q. -- for authorization to do the procedure at Town Park Surgery
Center?
A. Right.
Q. Is that correct?
A. Yes.
Supp. CR 231 (Ex. E at p. 38, ll. 4-23).
Q. All right. And then tell me what you told him [the “other person”].
A. Well, I explained who I was and that I needed to find out if they
would accept the Texas Medicaid fee schedule. I needed to know that
before proceeding any further as to needing a single case rate
agreement. And he said that, “No, they would accept 100 percent of
Medicaid rates.” Normally, the thing is a 100 percent Medicaid fee
schedule minus the service area discount. I always left that service
area discount off.
Q. So instead of 95 percent, you were giving them 100 percent?
A. Right.
Supp. CR 234-35 (Ex. E at p. 41, l. 19 – 42, l. 6) (emphasis added).
Thus, by Jones’ own testimony, the alleged call was only to obtain “a single
case rate agreement,” not a blanket rate agreement for the indefinite future. There
is no evidence that there was a meeting of the minds, or understanding on Town
Park’s part, that this alleged conversation related to anything more than a single
procedure, or even that the unidentified person with whom Ms Jones supposedly
spoke would have authority to establish a broader agreement.
Jones went on to testify that this was the only conversation she recalled
“regarding the rates at which Amerigroup would reimburse Town Park”:
14
2155944.4/SPH/27768/0101/103015
Q. I mean, your statement [in your affidavit] leaves open the
possibility there is only one [conversation with the “other person”]. I
just want to clarify. It says “After this preliminary agreement was
reached, there were not many, if any, additional conversations
between me and Town Park regarding the rates at which Amerigroup
would reimburse Town Park.”
A. I was going on memory. I know I had the first conversation with
them. I don't know when I would have had a second conversation
with them.
Q. Okay. As we sit here today under oath and for the jury, you
remember one conversation?
A. Yes.
Q. And none other?
A. Yes.
***
Q. So you have to swear to it, so just one?
A. One.
Supp. CR 240-41 (Ex. E at p. 83, l. 18 – 84, l. 14). Amerigroup’s corporate
representative Edmund Chidester also testified there was only one such
conversation. Supp. CR 49-50 (Ex. B at p. 36, l. 13 – 37, l. 15).
Chidester admitted Amerigroup’s entire suit was based on this supposed
verbal agreement between Nancy Jones and the unidentified “other person” at
Town Park:
Q. … The agreement to accept the flat fee based on a Texas Medicaid
fee schedule is based upon what Nancy Jones reports to you about a
conversation she had with a man who was supposedly employed by
Town Park, whose name she can’t remember, one time?
A. Correct.
15
2155944.4/SPH/27768/0101/103015
Supp. CR 221 (Ex. B at p. 187, ll. 18 – 25).
Q. Okay. Well, I just want to be clear. If -- if -- if my client did not, in
fact, hypothetically accept to be reimbursed at the Texas Medicaid fee
rate, then there would be no such basis for your lawsuit, correct?
A. Correct.
Supp. CR 205 (Ex. B at p. 32, ll. 5-10).
Chidester further admitted there was no documentation of the alleged
agreement:
Q. All right. You'll agree there’s no notation anywhere in the notes
about her [Jones’] discussion with an employee from Town Park?
Would you agree with that?
A. That’s correct.
Q. Okay. So the long-standing agreement between Amerigroup and
Town Park is based upon a conversation that Nancy Jones tells you
she had with somebody at Town Park who gave the phone to a man
who had authority at Town Park --
A. That's correct.
Q. -- is that correct? But that’s not documented anywhere; is that
correct?
A. It's not in the notes that we looked at today, no.
Q. Is it documented anywhere else that we haven’t talked about
today?
A. Not that I have seen.
Supp. CR 218 (Ex. B at p. 176, l. 10 – 177, l. 3).
Q. And to the best of our knowledge, based on the review of all the
documents, there is no notation in any record regarding his [the “other
person’s”] name --
A. That’s correct.
16
2155944.4/SPH/27768/0101/103015
Q. -- or even the agreement, itself, with him [the “other person”]?
A. Correct.
Supp. CR 222 (Ex. B at p. 188, ll. 1-6).
Chidester went on to admit there is no written contract between Amerigroup
and Town Park under which Town Park agreed to accept Medicaid rates:
Q. The -- the request for admissions state, “Admit that Amerigroup
and Town Park have never executed a written contract.” And
Amerigroup’s answer was, “Admit to the extent that Amerigroup and
Town Park have never executed a Participating Provider Agreement.
Otherwise, denied.”
And so I think we're in agreement that there was no Participating
Provider Agreement between Amerigroup and Town Park, but you've
denied it as to any other kind of a contract. Has Amerigroup and
Town Park entered into any other kind of contract that you're aware
of? Written --
A. No.
Supp. CR 219 (Ex. B at p. 184, ll. 11 – 23).
Q. Okay. And the next one is Request for Admission Number 4. And
it states, “Admit that no written contract exists between Amerigroup
and Town Park in which Town Park states its agreement to accept a
flat fee for the Procedure.” And again, you wrote -- or Amerigroup
did – “Admit to the extent that Amerigroup and Town Park have
never executed a Participating Provider Agreement. Otherwise,
denied.” Do you see that?
A. I do.
Q. An accurate answer to that request for admission would have just
been “admit,” correct?
A. Correct.
Supp. CR 220 (Ex. B at p. 185, ll. 8 – 20).
17
2155944.4/SPH/27768/0101/103015
In summary, Amerigroup’s own witnesses, including its Corporate
Representative, establish that Amerigroup is basing its lawsuit solely on an alleged
telephone conversation between Nancy Jones and an unidentified person allegedly
at Town Park to obtain authorization for a single procedure by Dr. Ralph.
2. Town Park has never admitted that the contract alleged by
Amerigroup, or anything remotely similar, exists.
In its first defense to the statute of frauds, Amerigroup does not dispute the
statute of frauds applies, but instead argues the oral agreement is nonetheless
enforceable because “Town Park admits a contract exists.” Appellant’s Br. at 25.
Town Park does not and never has admitted the existence of a contract
remotely like the one alleged by Amerigroup in which Town Park supposedly
agreed to accept indefinitely the Medicaid rate for all 41899 procedures. Town
Park merely acknowledged certain undisputed facts: The 41899 procedures were
performed at Town Park’s facilities, Town Park submitted invoices for each patient
to Amerigroup, Amerigroup tendered amounts that were uniformly lower than
Town Park’s invoiced amounts, and Town Park accepted those tendered amounts.
Given those facts, one could conceivably argue that a series of individual
patient-specific agreements was formed under which Town Park agreed to accept
the amount actually tendered in satisfaction of Town Park’s invoice for the
particular patient. In first-year contract terms, Town Park’s invoice might be
viewed as an “offer,” Amerigroup’s tender of a different amount could be viewed
18
2155944.4/SPH/27768/0101/103015
as a “counteroffer,” and Town Park’s acceptance of the amount tendered could be
viewed as acceptance of the counteroffer with respect to the particular services
rendered to the particular patient. But even assuming that to be the case, the
invoices and payments do not constitute “a written memorandum which is
complete within itself in every material detail, and which contains all of the
essential elements of the agreement” alleged by Amerigroup. Those documents
flatly contradict the agreement alleged by Amerigroup.
Of course, another more legally correct way to construe this exchange of
invoices and payments is that no contract was formed; Amerigroup was simply
paying pursuant to the terms of its insuring agreement with its members. Town
Park accepted the tendered amount precisely because it had no contract under
which it could require Amerigroup to pay the full invoiced amount. The fact that
the out-of-network provider is not a party to the insuring agreement, or any other
contract with the insurer, is why the provider generally lacks standing to sue the
insurer without an assignment from the patient. See Hermann Hosp. v. MEBA
Medical & Benefits Plan, 845 F.2d 1286 (5th Cir. 1988).4
This Court need not decide whether the exchange of invoices and payments
created a series of individual patient-specific contracts because, even assuming it
4
The testimony relied on by Amerigroup for the legal conclusion that there was a “contract or
agreement” is “no evidence” and does not raise a fact issue that will defeat summary judgment.
Mercer v. Daoran Corp., 676 S.W.2d 580, 583 (Tex. 1984). Accord Rakowski v. Committee to
Protect Clear Creek Village Homeowners’ Rights, 252 S.W.3d 673, 683 n.9 (Tex.App.-Houston
[14th Dist.] 2008, pet. denied). Based on the facts, the Court can determine the legal issue of
whether there is one or more contracts and, if so, what those contracts may be.
19
2155944.4/SPH/27768/0101/103015
did, those contracts are nothing like the contract alleged by Amerigroup.
Moreover, any such contracts would be within §26.01(b)(2) and (b)(8) of the
statute of frauds because they involve Amerigroup paying the patients’ debts and
because they relate to medical care. Contracts that are within the statute of frauds
and required to be in writing may not be orally modified, much less transformed
into an entirely different agreement like the contract alleged by Amerigroup; i.e. a
blanket contract to accept the Medicaid rate for all 41899 procedures for an
indefinite time:
Parties to a written contract that is within the provisions of the statute
of frauds:
“* * * may not by mere oral agreement alter one or more of the
terms thereof and thus make a new contract resting partly in
writing and partly in parol, the reason for the rule being that,
when such alteration is made, part of the contract has to be
proven by parol evidence, and the contract is thus exposed to all
the evils which the statute was intended to remedy.” Robertson
v. Melton, 131 Tex. 325, 115 S.W.2d 624, 118 A.L.R. 1505
(1938).
Dracopoulas v. Rachal, 411 S.W.2d 719, 721 (Tex. 1967). See White v. Harrison,
390 S.W.3d 666, 674 (Tex. App.--Dallas 2012, no pet.) (“an oral modification of a
written contract is enforceable under the Statute of Frauds only if the modification
does not materially alter the obligations imposed by the underlying agreement.”)5
In the present case, the oral agreement claimed by Amerigroup is undeniably
materially different than any series of individual patient-specific contracts that
5
There are extremely limited exceptions to this rule, none of which apply here.
20
2155944.4/SPH/27768/0101/103015
conceivably could have been created by an exchange of invoices and payments; it
would require Town Park to refund some 90% of the amounts previously paid by
Amerigroup. Thus, the mere exchange of invoices and payments will not allow
Amerigroup to circumvent the statute of frauds.
3. The agreement alleged by Amerigroup is barred by the
statute of frauds because a contract “relating to medical
care” made by a “health care provider” must be in writing.
Section 26.01(b)(8) of the statute of frauds bars Amerigroup’s claims
because Amerigroup seeks to enforce “an agreement . . . relating to medical care
… made by a health care provider as defined in Section 74.001, Civil Practice and
Remedies Code.” See TEX. BUS. & COM. CODE § 26.01(b)(8).
(a) Town Park is a “health care provider.”
Amerigroup does not dispute that Town Park is a “health care provider” as
defined by Section 74.001 of the Civil Practice & Remedies Code. Section
74.001(12) defines “health care provider,” in part, as follows:
(A) “Health care provider” means any person, partnership,
professional association, corporation, facility, or institution duly
licensed, certified, registered, or chartered by the State of Texas to
provide health care, including:
(i) a registered nurse;
(ii) a dentist;
***
(vii) a health care institution….
21
2155944.4/SPH/27768/0101/103015
TEX. CIV. P. & REM. CODE § 74.001(12). The term “health care institution”
includes “an ambulatory surgery center.” TEX. CIV. P. & REM. CODE §
74.001(11)(A). Town Park is an ambulatory surgical center duly licensed,
certified, registered and/or chartered by the State of Texas to provide health care.
See Supp. CR 259, 262 (Ex. F, F-2). Thus, Town Park is a “health care provider”
and the alleged oral agreement on which Amerigroup bases its suit is an
“agreement … made by a health care provider.”
(b) The alleged oral agreement “relates to medical care.”
The oral agreement alleged by Amerigroup is “an agreement … relating to
medical care” because it relates to the dental surgery and anesthesia performed on
Amerigroup’s insureds, as well as to Town Park furnishing anesthesiologists,
nursing, and other medical services, to those patients in connection with those
surgeries. This medical care could not have been provided without the facilities
and services provided by Town Park.
The Civil Practice & Remedies Code defines “medical care” as follows:
“Medical care” means any act defined as practicing medicine under
Section 151.002, Occupations Code, performed or furnished, or which
should have been performed, by one licensed to practice medicine in
this state for, to, or on behalf of a patient during the patient's care,
treatment, or confinement.
TEX. CIV. P. & REM. CODE § 74.001(19). Thus, for example, the anesthesiologists
provided by Town Park were rendering medical care when they provided the
anesthesia for the 41899 procedures.
22
2155944.4/SPH/27768/0101/103015
Section 151.002 of the Occupations Code defines “practicing medicine”:
“Practicing medicine” means the diagnosis, treatment, or offer to treat
a mental or physical disease or disorder or a physical deformity or
injury by any system or method, or the attempt to effect cures of those
conditions, by a person who:
(A) publicly professes to be a physician or surgeon; or
(B) directly or indirectly charges money or other compensation for
those services.
TEX. OCC. CODE § 151.002(13).
The dental surgeons performing the surgeries, the physicians performing the
anesthesia for the surgeries under their contract with Town Park,6 and the nurses
and other staff employed by Town Park all are engaged in the “treatment” of a
“physical disease or disorder or a physical deformity.” These activities fall within
the broad definition of “practicing medicine” under TEX. OCC. CODE §
151.002(13), and constitute “medical care” under TEX. CIV. P. & REM. CODE §
74.001(19). The agreement alleged by Amerigroup “relates to” this “medical care”
because the services provided by Town Park facilitated this medical care.
Thus, Amerigroup’s alleged oral agreement regarding payment for Town
Park’s services in connection with the 41899 procedures is “an agreement . . .
6
See Supp. CR 790-97 (Contract between Town Park and Association Anesthesiologists P.A. to
provide “the essential anesthesia services at [Town Park] through its physicians
(‘Anesthesiologists’) for all patients of [Town Park] in support of [Town Park’s] operating
rooms…”.) While the anesthesiologists billed for their services separately, arranging for and
providing these anesthesiologists were part of the services Town Park provided.
23
2155944.4/SPH/27768/0101/103015
relating to medical care … made by a health care provider” and is unenforceable
under § 26.01(b)(8) of the statute of frauds.
(c) Amerigroup’s attempts to avoid the statute of frauds
fail.
(i) Amerigroup ignores the plain language of the
statute.
Unsupported by any authority, Amerigroup argues that §26.01(b)(8) does
not apply where “an out-of-network entity … merely provides the facilities …
where a third-party physician or surgeon provides medical care.” Appellant’s Br.
30. It concludes that:
[T]he parties’ agreement would only be subject to Section 26.01(b)(8)
if someone at Town Park: (i) carried a medical license; (ii) publicly
professed to be a surgeon or physician; and (iii) agreed to treat or
diagnose an Amerigroup member’s disease, disorder, deformity, or
injury.
Id. Notably, the anesthesiologists under contract to Town Park who provided the
anesthesia for the surgeries fit this description perfectly. See Supp. CR 790-97.
Thus, even under Amerigroup’s overly restrictive reading, §26.01(b)(8) applies.
Amerigroup’s argument is wrong in any event.
By its terms §26.01(b)(8) does not apply only to licensed physicians; it
explicitly applies more broadly to agreements made “made by a physician or
health care provider ….” (Emphasis added). Amerigroup’s argument would
render meaningless the statute’s broad reference to “health care provider,” which
includes not only “health care institutions” like Town Park but also, for example,
24
2155944.4/SPH/27768/0101/103015
registered nurses, dentists, and optometrists. See TEX. CIV. P. & REM. CODE §
74.001(12). Amerigroup’s own case law recognizes that §26.01(b)(8) applies to
dentists even though they are licensed separately from physicians. See Jeffery v.
Walden, 899 S.W.2d 207, 212 (Tex.App. —Dallas 1993), rev’d in part on other
grounds, 907 S.W.2d 446 (Tex. 1995) (applying §26.01(b)(8), and noting that
“Texas statutes define dentists as health care providers.”)
The statute also expressly states that it “shall not apply to pharmacists.” If
the statute applied only to licensed physicians, this explicit exclusion of
pharmacists would be unnecessary surplusage.
Equally important, §26.01(b)(8) does not require Town Park to provide
“medical care” itself or “practice medicine” or employ the individuals providing
the medical care. It requires only that the alleged contract is one “relating to”
medical care. As Amerigroup admits, Town Park provided the operating room,
labs, supplies, and nursing, and even arranged the anesthesiologists’ services—
essentially everything except the dentist’s services—for the surgical procedures at
issue. Supp. CR 66-67 (Second MSJ at Ex. B at p. 127, ll. 1- 17, p. 128, ll. 1- 2).
As matter of law, any agreement for Amerigroup to pay a particular rate for these
services, which were essential to perform the surgeries, “relates to” medical care.
The term “relates to” is broadly construed:
The terminology “relates to” is very broad in its ordinary usage, and
we must presume that the legislature used such a broad formulation
25
2155944.4/SPH/27768/0101/103015
purposely. To conclude otherwise would be to judicially truncate the
ordinary meaning of the words “relates to.”
Texas Dept. of Public Safety v. Abbott, 310 S.W.3d 670, 675 (Tex.App.-Austin
2010, no pet.) Cf Buck v. Blum, 130 S.W.3d 285, 291 (Tex. App. – Houston [14th
Dist.] 2004, no pet.) (claim that institute failed to follow procedures that would
reduce the potential for assault by doctor performing examination was a claim
“relating to medical care.”)7 Indeed, §74.001 of the Civil Practice and Remedies
Code, which governs health care liability claims and is directly referenced in
§26.01(b)(8) of the statute of frauds, recognizes that something as tangential as
“administrative services” may be “directly related to health care.” See TEX. CIV.
P. & REM. CODE § 74.001(a)(13) (defining “health care liability claim” to include
claims based on “administrative services directly related to health care”). See also
Four Seasons Nursing Center v. Weber Medical Systems, LLC, 04-74614 (E. D.
Mich. September 28, 2005) (alleged oral agreement between Nursing Center and
medical system provider to supply and install hemodialysis unit was barred by the
statute of frauds because it was an agreement “relating to medical care.”)
7
See also Kirby Highland Lakes Surgery Ctr., L.L.P. v. Kirby, 183 S.W.3d 891, 897-98 (Tex.
App.—Austin 2006, no pet.) (the term “relates to” in the arbitration context has been interpreted
to mean anything “having a significant relationship to the contract regardless of the label
attached to the dispute” or that “touch” matters covered by the contract); Morales v. Trans World
Airlines, Inc., 504 U.S. 374, 383-84, 112 S.Ct. 2031 (1992) (in the context of statutory
preemption, “The ordinary meaning of [relating to] is a broad one – ‘to stand in some relation; to
have bearing or concern; to pertain; refer; to bring into association with or connection with,’ …--
and the words thus express a broad preemptive purpose.… We have said, for example, that the
‘breadth of [that provision’s] preemptive reach is apparent from [its] language,’…; that it has a
‘broad scope,’ … and an ‘expansive sweep,’…; and that it is ‘broadly worded,’ …’deliberately
expansive,’… and ‘conspicuous for its breadth,’”) (citations omitted).
26
2155944.4/SPH/27768/0101/103015
In sum, the alleged agreement “relates to” medical care as a matter of law.
(ii) Amerigroup has no “history” or case law
supporting its argument.
Amerigroup claims that “Town Park’s interpretation of §26.01(b)(8)
contradicts the statute’s history,” but Amerigroup cites neither statutory “history”
nor any case law contradicting Town Park’s position. See Appellant’s Br. 32-33.
Instead, it cites three cases holding that claims based on an oral warranty of cure
would be barred by § 26.01(b)(8) and argues that, because it has found no case law
on point, the statute must be limited “to situations where a doctor or healthcare
provider makes a representation of specific results.” Id. None of the cases cited by
Amerigroup suggest any such limitation; nor is its argument consistent with the
statutory language, which is not limited to “warranties of cure.” See § 26.01(b)(8).
Amerigroup’s argument that “it is unlikely the Texas Legislature intended
that all contracts relating to medical care … had to be in writing,” simply ignores
the language of the statute. There is no qualifier limiting the application of the
statute to only some contracts relating to medical care, other than the requirement
that the contract be made by “a physician or health care provider.” The
legislature’s omission of other limiting terms is presumed to have been done
purposefully. See Tenaska Frontier Partners, Ltd. v. Sullivan, 273 S.W.3d 734,
738 (Tex.App.-Houston [14th Dist.] 2008, no pet.) (cited by Amerigroup) (“we
must presume that every word excluded from a statute (such as ‘some’ qualifying
27
2155944.4/SPH/27768/0101/103015
‘postage prepaid’) was excluded for a purpose.”). Accord TGS-NOPEC
Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011) (“We presume that
the Legislature chooses a statute’s language with care, including each word chosen
for a purpose, while purposefully omitting words not chosen.”) “A court may not
judicially amend a statute by adding words that are not contained in the language
of the statute. Instead, it must apply the statute as written.” Lippincott v.
Whisenhunt, 462 S.W.3d 507, 508 (Tex. 2015).
(iii) Town Park’s argument does not lead to
“absurd results.”
Contrary to Amerigroup’s “absurd results” argument, it is not “Town Park’s
view” that “every payor must have a written agreement with any provider.”
Appellants’ Br. 35. Nor does Town Park’s position “oblitierat[e] a fundamental
difference in the health care industry between in-network and out-of-network
providers.” Id. On the contrary, Amerigroup’s argument that it had an agreement
for Town Park to accept a pre-agreed rate for all 41899 procedures destroys this
“fundamental difference” and contradicts its unequivocal admission that Town
Park was out-of-network.
The very essence of being “in-network” is the existence of an agreement to
accept a pre-agreed rate for particular procedures. Amerigroup’s argument that
there was an enforceable oral blanket agreement to accept a pre-agreed rate for all
41899 procedures is equivalent to alleging a verbal agreement making Town Park
28
2155944.4/SPH/27768/0101/103015
“in-network” for those procedures. Thus, Amerigroup tries to make Town Park
“in-network” while at the same time admitting that Town Park was in fact “out-of-
network.”
Nothing about Town Park’s position requires other payors to “overhaul their
business approach.” See id. Nor could they do so. As recognized by Amerigroup,
most cases involve group health plans, such as those provided by Blue Cross Blue
Shield. In those situations, payment obligations are governed by the terms of the
plan and are enforceable under ERISA by the “participant or beneficiary.” See 29
U.S.C. § 1132(a)(1)(B). Out-of-network providers set their own rates at which
they bill their patients. The amount the insurer pays is determined by the terms of
the insurance agreement (which typically constitutes an ERISA plan) between the
insurer and the patient because there is no separate agreement between the insurer
and the provider.8
Nothing requires any “overhaul.” The insurers simply pay in accord with
the terms of their plan. If the insurer fails to pay, the provider may collect from the
patient and the patient may recover from the insurer. The out-of-network provider
has no standing to recover directly from the insurer absent an assignment from the
8
It makes no difference whether the provider bills the patient and the patient seeks
reimbursement from their insurer or the provider, with the patient’s agreement, bills the insurer
directly as a courtesy to the patient. In either case the insurer is paying an amount it owes under
its policy to cover a portion of the patient’s debt to the provider. The payment to an out-of-
network provider is not being made pursuant to any contract with the provider.
29
2155944.4/SPH/27768/0101/103015
patient because there is no contract between the provider and the insurer. See, e.g.,
Hermann Hosp. v. MEBA Medical & Benefits Plan, 845 F.2d 1286 (5th Cir. 1988).
Amerigroup’s statement that a payor makes payment to an out-of-network
provider “at its own peril since no enforceable contract exists” makes no sense
because the payor makes payment for known medical procedures at a rate
governed by its own plan with its insured.9 If the insurer overpays, it has no
contractual right to recover from the provider because it has no contract with the
provider. Depending on the facts of the case, the insurer may or may not have an
equitable right to recover an overpayment. For example, in Lincoln Nat. Life Ins.
v. Brown Schools, this Court affirmed summary judgment denying an insurer
restitution for mistaken overpayments to a hospital. This Court pointed out that the
insurer “knew its own policy payment provisions” and that the provider “has no
responsibility to determine if an insurance carrier is properly tending to its
business.” Lincoln Nat. Life Ins. v. Brown Schools, 757 S.W.2d 411, 414 (Tex.
Civ. App.—Houston [14th Dist.] 1988, no writ).
Amerigroup’s assertion that if an insurer paid nothing to an out-of-network
provider such as Town Park, the provider “would have no recourse” is equally
nonsensical. Appellant’s Br. 36. The provider’s normal recourse is to collect from
the patient who owes the debt for services rendered in the first place. If the
9
Amerigroup’s argument also implies that all providers must have a contract with the payor,
which would do away with the entire out-of-network category of providers who, by definition,
have no such contract.
30
2155944.4/SPH/27768/0101/103015
procedure should have been covered, a suit may be filed under ERISA by or on
behalf of the patient to recover benefits due under the terms of the plan. See 29
U.S.C. § 1132(a)(1)(B). Absent an enforceable agency or assignment agreement,
however, an out-of-network provider has no standing to assert a direct claim
against the patient’s insurer because, again, there is no contract between the
provider and the insurer. See, e.g., LeTourneau Lifelike Orthotics & Prosthetics,
Inc. v. Wal-Mart Stores, Inc., 298 F.3d 348 (5th Cir. 2002).
While ERISA is not applicable here because Amerigroup is managing
payments for members of Texas Medicaid, the principles outlined above are the
same. Amerigroup’s agreement is with the patient. Amerigroup itself determined
the amount to pay Town Park and it typically paid thousands less than Town
Park’s invoiced amount. Those payments were made pursuant to Amerigroup’s
agreement with its members and not pursuant to any contract with Town Park. It
therefore has no contractual basis for recouping those payments from Town Park
years after the fact. Brown Schools, 757 S.W.2d at 415.
(iv) Amerigroup’s “performance” is inconsistent
with the alleged oral agreement.
Amerigroup argues that the alleged oral agreement falls outside the statute of
frauds “because Amerigroup (over)performed.” Appellant’s Br. 36. An oral
agreement may be enforceable despite the statute of frauds if the contract has been
performed, but only to the extent of that performance. See Stovall & Assocs. v.
31
2155944.4/SPH/27768/0101/103015
Hibbs Fin. Ctr., Ltd., 490 S.W.3d 790, 799 (Tex. App.—Dallas 2013, no pet.). To
enforce an agreement on that basis, the actions asserted to constitute performance
must be “unequivocally referable” to the alleged oral agreement and corroborate
the existence of that agreement; the actions “must be such as could have been done
with no other design than to fulfill the particular agreement sought to be enforced.”
Id. (citing Exxon Corp. v. Breezevale, Ltd., 82 S.W.3d 429, 439 (Tex. App.—
Dallas 2002, pet. denied).
Amerigroup’s performance is not “unequivocally referable” to the
agreement it alleges. Amerigroup’s “performance” flatly contradicts any alleged
agreement to accept Medicaid rates because Amerigroup consistently paid higher
rates. Indeed, Amerigroup’s own reference to “(over)performance” demonstrates
that the alleged performance differs from the terms of the alleged agreement and,
therefore, is not unequivocally referable to it.10
In addition, Amerigroup’s performance with respect to individual patients is
not unequivocally referable to any sort of agreement to accept Medicaid rates on a
blanket basis for all patients going forward. Thus, Amerigroup cannot use
performance to escape the statute of frauds.
10
If anything, Amerigroup’s performance is referable to its insuring agreement with its own
members.
32
2155944.4/SPH/27768/0101/103015
(v) Town Park’s invoices do not satisfy the statute
of frauds.
Town Park’s invoices do not satisfy the statute of frauds for an obvious
reason: They do not evidence an agreement to accept Medicaid rates. Thus they
do not constitute “a written memorandum which is complete within itself in every
material detail, and which contains all of the essential elements of the [alleged]
agreement, so that the contract can be ascertained from the writings without
resorting to oral testimony.” Cohen v. McCutchin, 565 S.W.2d at 232.
Cox Engineering, Inc. v. Funston Mach. and Supply Co., 749 S.W.2d 508
(Tex. App.—Fort Worth, 1988, no writ), cited by Amerigroup, is not to the
contrary. First, Cox involved the “merchant’s exception” to the statute of frauds
contained in article 2 of the UCC, which provides that a written confirmation of an
oral agreement may be sufficient unless a written notice of objection to its contents
is given within ten days. TEX. BUS. & COM. CODE ANN. §2.201. That exception
has no application to §26.001 of the Business & Commerce Code, which applies
here. Second that exception applies to “written confirmations” of an oral contract.
Town Park’s invoices in no way confirm the oral contract alleged by Amerigroup.
All of the invoices are for substantially more than Medicaid rates and therefore
directly contradict the alleged agreement.
33
2155944.4/SPH/27768/0101/103015
(vi) Amerigroup’s “voidable, not void” argument is
frivolous.
Amerigroup’s argument that, under the statute of frauds, the agreement it
alleges would be voidable, not void, and is therefore enforceable unless and until
Town Park “rejects” or “repudiates” the alleged contract and returns the
consideration received is incomprehensible and frivolous. See Appellant’s Br. 38.
Amerigroup cites absolutely no case law standing for the proposition that a party
must “repudiate” an agreement that it contends does not exist before the statute of
frauds may be applied as a defense.11 Indeed, Amerigroup’s argument is circular
because it presumes the existence of the alleged agreement such that it could be
“repudiated” or “rescinded.”
There was no agreement like the one alleged by Amerigroup and, if there
were, such an oral agreement would be unenforceable under the statute of frauds.
The payments made by Amerigroup were not made pursuant to any contract with
Town Park; Town Park was admittedly out-of-network. The payments were made
pursuant to Amerigroup’s contractual obligations to its own insureds to pay their
medical expenses. Town Park is not required to “repudiate” a non-existent
agreement to have the statute of frauds bar the alleged verbal agreement.
11
In Eland Energy, Inc. v. Rowan Oil & Gas, Inc., 914 S.W.2d 179, 186 (Tex. App.—San
Antonio 1995, writ denied), cited by Amerigroup, there was a written agreement but one party
alleged that the description of land in the agreement was too vague to be enforced. The court
found the land was adequately described. York Group, Inc. v. Horizon Casket Group, Inc., 2007
U.S. Dist. LEXIS 49778 (S.D. Tex. July 10, 2007), cited by Amerigroup for its “repudiation”
argument, does not involve the statute of frauds at all.
34
2155944.4/SPH/27768/0101/103015
4. The agreement alleged by Amerigroup involves an alleged
promise by one to answer for the debt of another and is
therefore barred by the statute of frauds.
The statute of frauds also applies to a “promise by one person to answer for
the debt … of another person.” Such an agreement must be in writing and signed
by the party to be charged to be enforceable. See TEX. BUS. & COM. CODE §
26.01(a)(1), (b)(2); Dynegy, Inc. v. Yates, 422 S.W.3d 638, 641-42 (Tex. 2013);
Dynegy, Inc. v. Yates, 345 S.W.3d 516, 523-24 (Tex. App.—San Antonio 2011,
pet. granted), rev’d on other grounds, 422 S.W.3d 638 (Tex. 2013) (citing Banfield
v. Davidson, 201 S.W. 442, 443 (Tex. Civ. App.—Galveston 1918, no writ) and
Evans v. Shaw, 268 S.W. 1037, 1037-39 (Tex. Civ. App.—Waco 1925, no writ).
In Dynegy, Yates, an attorney, alleged the existence of a verbal agreement
under which Dynegy agreed to pay the legal expenses for one of Dynegy’s former
officers who was represented by Yates. Dynegy, 422 S.W.3d at 642. The Supreme
Court found the agreement subject to the statute of frauds and unenforceable as a
matter of law. Id. at 643. Similarly here, Amerigroup’s breach of contract claim
falls within § 26.01(b)(2) of the statute of frauds because it seeks to enforce an
alleged agreement between Amerigroup and Town Park under which Amerigroup
would pay the medical expenses incurred by Town Park’s patients (like the
agreement between Dynegy and Yates to pay the legal expenses of Yates’ client),
at a certain specified rate in the Medicaid fee schedule. Thus, Amerigroup’s
breach of contract claim is barred by the statute of frauds under § 26.01(b)(2).
35
2155944.4/SPH/27768/0101/103015
(a) Amerigroup was answering for the debt of another.
Amerigroup’s argument that the amounts it paid were not “the debt of
another person” is circular. Indeed, it affirmatively demonstrates that the original
debt belongs to the patient because the patient is relieved of responsibility for that
debt only when the services are actually covered. See Appellant’s Br. at 26
(Arguing that under the Texas Administrative Code, patients “are not responsible
for paying for covered services.”)12 If Amerigroup claimed the patient was not
covered and did not pay, the patient would undeniably remain responsible for
paying because it is the patient’s debt in the first instance. Thus the amount owed
for health care services rendered to Town Park’s patients is, at its core, the
patient’s debt.
This is not significantly different than private insurance. An in-network
provider has an agreement with the insurer under which the provider agrees to
accept a pre-defined amount for particular procedures. When the procedure is
covered, the insurer should pay and the patient will be relieved of the debt.
Similarly, when a provider is out-of-network, it cannot recover from the patient
amounts covered and paid by the insurer because the provider is not entitled to be
paid twice. This in no way suggests that the debt does not belong to the patient in
12
The Texas Administrative Code does not apply to Amerigroup’s claims. Indeed, Amerigroup
has no standing to assert violations. See Texas Admin. Code § 371.1653(5) and (6) (permitting
administrative actions or sanctions). Further, Chapter 353 of the TAC cited by Amerigroup
addresses obligations of managed care organizations (Amerigroup), not providers (Town Park).
36
2155944.4/SPH/27768/0101/103015
the first place because, whether Medicaid or private insurance is involved, the
patient must pay if the insurer does not.13
The “Patient Authorization & Responsibility Form,” which is used for
Medicaid and non-Medicaid patients alike, recognizes this fact. It contains an
acknowledgement that the debt for services rendered belongs to the patients and
that they will be responsible for payment if the insurer does not provide coverage:
“I agree that I am financially responsible to pay for any charges not covered by my
insurance company and/or co-insurance, deductible, co-pay amounts that are
outstanding.” Supp. CR 261. This recognizes that the original debt belongs to the
patient such that if Medicaid or a private insurer does not pay, the patient remains
responsible.
In sum, much like the agreement alleged in Yates, the verbal agreement
alleged by Amerigroup is one which purportedly establishes a direct obligation to
Town Park to pay the patients’ debts for services rendered by Town Park.
Accordingly, the alleged agreement is barred by the statute of frauds.
(b) The “leading object” doctrine does not apply.
Amerigroup’s argument that it can avoid the §26.001(b)(2) under the
“leading object” doctrine is nothing more than an assertion that because
Amerigroup is in business to make a profit, the statute of frauds does not apply to
13
The one difference between patients covered by Medicaid and patients covered by ordinary
private insurance is that, under Medicaid, out-of-network providers are prohibited from “balance
billing” the patient for the portion of the full charge Medicaid does not pay. That, however, does
not change the fact that the original debt is the patient’s debt.
37
2155944.4/SPH/27768/0101/103015
it. If that were the case, no commercial surety agreement would be within the
statute of frauds because all commercial sureties are in business to make a profit.
As Amerigroup’s own authority points out, “The theory of the main purpose
rule is that where the promise is made for the promisor’s own benefit and not at all
for the benefit of the third person, the reason for the statutory provision fails and
the promise should be enforced.” Cooper Petroleum Co. v. LaGloria Oil & Gas
Co., 436 S.W.2d 889, 895 (Tex. 1969). It is a narrow exception that applies only
when the main object of the arrangement subserves the promisor’s main purpose.
For example, in Haas Drilling Co. v. First Nat’l Bank, the court held that
where a bank foreclosed on a debtor’s oil lease, the bank’s oral promise to pay the
drilling company the amount the debtor owed for gas produced, so the company
would continue producing gas, was enforceable because the main purpose of doing
so was “to protect the value of the property which it had bought in at the
foreclosure sale.” Haas Drilling Co. v. First Nat’l Bank, 456 S.W.2d 886, 891
(Tex. 1970). There is nothing like that here. Instead, the “main purpose” of the
alleged oral agreement was simply to obtain authorization for dentists to perform
the 41899 procedures at Town Park’s facility; a benefit to Amerigroup’s insureds,
not to Amerigroup. Indeed, by the testimony of Amerigroup’s own witness, the
telephone conversation in which the agreement was allegedly made was initiated to
obtain authorization for Dr. Ralph to perform a procedure at Town Park, not to
obtain any direct benefit for Amerigroup. Supp. CR. 231 (Ex. E at p. 38 ll. 3-23).
38
2155944.4/SPH/27768/0101/103015
C. Amerigroup Cannot Recover Because the Alleged Agreement
Was Not Entered Into by Someone With Actual or Apparent
Authority to Make a Blanket Fee Agreement On Behalf of Town
Park.
Town Park’s Second Motion for Summary Judgment proved that the only
person with authority to make a blanket fee agreement on behalf of Town Park at
the relevant time was Kraig Killough, and he never made an agreement with
Amerigroup like the one alleged. Mr. Killough testified as follows:
Q. And because they’re out of network, there’s no agreement in place;
but that out-of-network provider -- that insurance company -- says up
front, “Hey, before we authorize this, we need to reach an agreement
on a rate.”
A. Uh-huh.
Q. You with me?
A. Yes.
Q. And they’ll ask, “Hey, Town Park, what’s your fully billed charge
for this service?” And you say, “$10,000.”
A. Okay.
Q. The out-of-network insurance company says, “I want to negotiate
something south of $10,000 in order to get my business.” Who had
authority in 2009, 2010 to have that conversation?
A. Myself.
Q. And that’s it?
A. That’s it.
Q. No one else in 2009, 2010 had that authority, from Town Park’s
perspective?
A. Correct.
39
2155944.4/SPH/27768/0101/103015
Q. And I believe you testified earlier that nobody -- no out-of-network
insurance company actually had that conversation with you?
A. Correct.
Supp. CR 254-55 (Ex. G at p. 211, ll. 15, p. 212, ll. 15). Similarly, the affidavit of
Sourabh Sanduja, who is the Senior Vice President of Altus Healthcare
Management, L.P.,14 and Administrative Director of Town Park, states:
Town Park has never entered into written or verbal agreements with
Plaintiff Amerigroup Texas, Inc. (“Amerigroup”) to accept
reimbursements based on the Medicaid fee schedule or any other
schedule. There has never been any male employee at Town Park who
entered into such an agreement.
CR 538 (Ex. B).
This evidence is sufficient to grant summary judgment in favor of Town
Park. Amerigroup presented no controverting evidence to raise a genuine issue of
material fact.
1. The burden of proof was on Amerigroup to prove actual or
apparent authority.
In attempting to overcome summary judgment based on lack of authority,
Amerigroup first contends that lack of authority is an affirmative defense and
therefore may not be the subject of a no-evidence summary judgment.
Amerigroup’s argument is moot because, as shown above, Town Park did not rely
simply on a lack of evidence supporting Amerigroup’s position; it affirmatively
proved the lack of authority through the testimony of Mr. Killough and Mr.
14
Altus Healthcare Management provides billing and management services to Town Park. Supp.
CR 259 (Killough Aff’t).
40
2155944.4/SPH/27768/0101/103015
Sanduja. Amerigroup presented no evidence to overcome that testimony and raise
a genuine issue of material fact.
Amerigroup is wrong in any event. The case law is clear that lack of actual
or apparent authority is not an affirmative defense. As Town Park pointed out in
its Second Motion for Summary Judgment, Amerigroup had the burden of proving
authority; there is no presumption of an agency relationship. See Supp. CR 180;
IRA Res., Inc. v. Griego, 221 S.W.3d 592, 597 (Tex. 2007). See also American
Bank & Trust Co v. Freeman, 560 S.W.2d 444 (Tex. Civ. App.—Beaumont 1977,
writ ref’d n.r.e.) (“While this authority may be express or apparent, the burden of
proof is upon him who alleges authority; in the absence of proof no presumption of
authority will be indulged.”); First Nat. Bank v. Slaton Independent School Dist.,
58 S.W.2d 870, 875 (Tex.Civ.App. –Amarillo 1933, writ dism’d) (“The burden of
proof is upon him who alleges authority; in the absence of proof no presumption of
authority will be indulged.”); Mission Linen Supply, Inc. v. Sandy's Signals, Inc., 2-
07-014-CV, 2007 Tex. App. LEXIS 5968 *10; 2007 WL 2152070 (Tex. App.--
Fort Worth, July 26, 2007) (“the burden of proof is on the party relying on the
doctrine of apparent authority to bind a principal to prove facts that will establish
apparent authority.”).15
15
Amerigroup cites no authority holding that lack of actual or apparent authority is an
affirmative defense and instead relies solely on the fact that, out of an abundance of caution,
Town Park pleaded lack of actual or apparent authority as a defense. See Appellant’s Br. at 40.
41
2155944.4/SPH/27768/0101/103015
Because the burden to prove actual or apparent authority was on
Amerigroup, the lack of actual or apparent authority could properly have been the
subject of a no evidence motion for summary judgment.
2. Amerigroup presented no evidence that the unidentified
person who supposedly entered into the alleged blanket fee
agreement had actual or apparent authority to do so on
behalf of Town Park.
(a) No evidence of actual authority.
Actual authority includes both express and implied authority and generally
represents the authority a principal intentionally confers upon an agent,
intentionally allows the agent to believe he possesses, or by want of due care
allows the agent to believe he possesses. 2616 S. Loop L.L.C. v. Health Source
Home Care, Inc., 201 S.W.3d 349, 356 (Tex. App.—Houston [14th Dist.] 2006, no
pet.). Actual authority is based on the principal’s written or spoken words or
conduct communicated to the purported agent. Walker Ins. Servs. v. Bottle Rock
Power Corp., 108 S.W.3d 538, 549-50 (Tex. App.—Houston [14th Dist.] 2003, no
pet.).
Amerigroup presented no evidence that the unidentified “other person” with
whom Nancy Jones supposedly spoke had actual authority to bind Town Park to an
agreement to accept reimbursement for its billed charges at Medicaid rates for any
patient, much less for all future patients.
Nancy Jones admitted this supposed “agreement” is based only on “one
conversation” with an unidentified male.
42
2155944.4/SPH/27768/0101/103015
Q. Okay. And so it’s your testimony that on one occasion you had a
conversation with somebody at Town Park Surgery Center and that
person accepted the Texas Medicaid fee schedule and you
documented that?
A. Yes.
Q. Do you know the person’s name?
A. I don’t remember.
Supp. CR 228 (Ex. E at p. 34, ll. 9-15).
Ms. Jones allegedly spoke with this unidentified man after dialing a phone
number and extension given to her by JoAnn, another Town Park employee, but
she does not know this man’s title, role, or even in which department he worked. 16
Nor could she state an approximate time, week, month, or even year during which
this conversation may have taken place.
Q. Okay. And you said “I would have talked – I would have called
her. I want to know what your actual recollection is, not what your
practice is. Those are two different things, both of which are fine. But
let me talk about your actual recollection of the call that you had with
JoAnn Deases that resulted in what you say to be acceptance of the
Texas Medicaid fee schedule. And let’s -- let me just clarify.
A. Okay.
Q. You don't know what year it was; is that correct?
A. (Shakes head.)
Q. You don't know what month it was?
16
There is no dispute that JoAnn did not have authority to make such an agreement. See CR
264. Ms. Jones and Mr. Chidester both acknowledge that fact. Supp. CR 237 (Ex. E at p. 45 ll.
5-11); Supp. CR 242 (Ex. E at p. 85 ll. 4-18). See also Supp. CR 201-03 (Ex. B at p. 27, ll. 13 –
25, p. 28, ll. 1- 25, p. 29, ll. 1- 3).
43
2155944.4/SPH/27768/0101/103015
A. No.
Q. You don't know what day of the week it was?
A. No.
Q. You don't know what time of the day it was?
A. No.
Q. You don't know who you ultimately spoke with --
A. No.
Q. -- by name --
A. No.
Q. -- or title?
A. No.
Q. Is that correct?
A. Yes.
Q. Or department?
A. Right.
Supp. CR 230-31 (Ex. E at p. 37 ll. 1 - 25, p. 38 ll. 1 - 3). See also Supp. CR 229,
238-39 (Ex. E at p. 36, ll. 8-18, p. 67, ll. 8-25, p. 68, ll. 1-18).
Ms. Jones did not even ask what the unnamed man’s role at Town Park was
-- although she acknowledges this information would be pertinent -- much less
whether he had authority to enter into reimbursement contracts on behalf of Town
Park.
Q. His role or title would be important, wouldn’t it, so that you would
know that this person actually had authority to bind Town Park
Surgery Center to this fee schedule?
44
2155944.4/SPH/27768/0101/103015
A. Yes, it probably was pertinent. I can’t say that I was thinking that
when I was documenting it.
Supp. CR 236-37 (Ex. E at p. 44 ll. 1- 22, p. 45 ll. 1- 4). See also Supp. CR 243
(Ex. E at p. 100, ll. 4 -16).
In any event, there is no male at Town Park who would have accepted
Amerigroup’s lowball reimbursement; not on a one-time basis, and certainly not
for the indefinite future. CR 537-38 (Ex. B). There was only one person with such
authority at Town Park during the time period Amerigroup alleges this verbal
agreement came into existence—Kraig Killough. Mr. Killough did not have any
conversations with anyone from Amerigroup regarding Amerigroup’s
reimbursement rate. Supp. CR 253-55 (Ex. G at p. 210, ll. 24-25, p. 211, ll. 1-25,
p. 212, ll. 1-15).
There is thus no evidence the unnamed male who Ms. Jones alleges
answered the phone at Town Park and accepted reimbursement at the Medicaid fee
schedule had actual authority to enter into such an agreement on behalf of Town
Park. The only evidence is that he did not.
(b) No evidence of apparent authority.
There also is no evidence that the unnamed male had apparent authority to
bind Town Park to an agreement relating to reimbursements. Apparent authority
arises when a principal intentionally or negligently induces a party to believe that a
person is the principal’s agent though the principal has not conferred authority on
that person. Thomas Reg’l Directory Co., v. Dragon Prods., Ltd., 196 S.W.3d 424,
45
2155944.4/SPH/27768/0101/103015
427 (Tex. App.—Beaumont 2006, pet. denied). “Because apparent authority is
based on estoppel, the principal’s conduct must be that which would lead a
reasonably prudent person to believe that authority exists.” Id. at 428. In making
the determination of whether apparent authority exists, only the conduct of the
principal is relevant. Gaines v. Kelly, 235 S.W.3d 179, 182 (Tex. 2007). The
purported agent cannot confer apparent authority on himself. “[T]he standard is
that of a reasonably prudent person, using diligence and discretion to ascertain the
agent’s authority. Thus, to determine an agent’s apparent authority we examine the
conduct of the principal and the reasonableness of the third party’s assumptions
about authority.” Id. at 182-83.
Moreover, because the doctrine of apparent authority is based on estoppel, it
is essential “that the person claimed to be estopped have had knowledge of all
material facts at the time of the conduct alleged to constitute the basis of the
estoppel.” Rourke v. Garza, 530 S.W.2d 794, 803 (Tex. 1975). For example, in
Rourke, the principal’s superintendent did not have apparent authority to enter into
an indemnity agreement where the principal did not have knowledge that the
delivery ticket the superintendent signed contained an indemnity. Similarly, here,
there is no evidence that any principal of Town Park was made aware that Jones
was seeking a blanket fee agreement from the unidentified “other person.” On the
contrary, Jones testified she called asking about a single case rate agreement for a
single procedure by Dr. Ralph. Nor is there any evidence that Town Park was
46
2155944.4/SPH/27768/0101/103015
aware of the unidentified person purporting to enter into a blanket fee agreement
for all 41899 procedures.
Amerigroup argues that apparent authority may be created “when an
employer places an employee ‘in a position in an industry or setting in which
holders of the position customarily have authority of a specific scope,’ a third party
can rely on this authority absent notice to the contrary.” Appellant’s Br. 41.
However, there is no evidence that Town Park placed the unidentified person in
such a position; there is no evidence of what position, if any, the unidentified
person held, much less that it was a position in which the individual would
customarily have authority to enter into blanket heavily discounted fee agreements.
Town Park, the principal, did not intentionally or negligently lead Ms. Jones
to believe the unnamed male had authority to bind it to a blanket agreement to
accept reimbursement at the Medicaid fee schedule. Jones testified only that when
she called JoAnn about a “single case rate agreement” for Dr. Ralph, JoAnn
referred her to the unnamed male. But that will not suffice to create apparent
authority to enter into a blanket fee agreement. JoAnn is not Town Park, Jones
knew JoAnn merely worked in the scheduling department and did not have
authority over such agreements, and Jones never informed JoAnn that she was
seeking a blanket fee agreement. Supp. CR 237, 242 (Ex. E at p. 45, ll. 5 -11; p.
85, ll. 4 -18). JoAnn, who had no authority herself, cannot have created apparent
authority for the unnamed male to bind Town Park to a blanket fee agreement.
47
2155944.4/SPH/27768/0101/103015
Amerigroup cites three documents, which it contends are evidence that
Sourabh Sanduja was the person who supposedly entered into the alleged
agreement. The first is an internal Amerigroup e-mail string dated in January
2011, which does not even mention Mr. Sanduja. Supp. CR 900-01. It adds
nothing to Nancy Jones’ testimony that she supposedly talked to some unidentified
person who supposedly agreed to accept Medicaid rates.17
The second is simply an organizational chart showing Mr. Sanduja below
Kraig Killough. Supp. CR 1019. As noted, Mr. Killough was the only person
authorized to enter into blanket fee agreements. Mr. Sanduja did not have such
authority.
The third is a screen shot for a particular individual patient dated in April
2010. The entry dated April 8, 2010 states, “It is unknown whether or not this
provider [Town Park] accepts 100% Medicare rates. It is unknown whether or not
this provider accepts 100% Medicaid rates.” Supp. CR. 1017. Thus,
Amerigroup’s own internal documents show there was no blanket agreement to
accept Medicaid rates. In fact, if there were such a blanket agreement there would
have been no need for Amerigroup to seek authorization to pay Medicaid rates for
this particular individual.
17
Notably it states that Jones talked to “an administrator there at Town Park when we started the
95% OON rates and Town Park accepted.” Thus it differs materially from her testimony that she
talked with someone who agreed to accept 100% of Medicaid rates. There is no evidence that
this note made in 2011 even refers to the same alleged conversation on which Amerigroup bases
its claim for reimbursement going back to 2008.
48
2155944.4/SPH/27768/0101/103015
Beyond all this, Amerigroup did nothing as a reasonably prudent person to
exercise diligence and discretion to ascertain the supposed agent’s authority.
Amerigroup does not know the anonymous male’s name, title, role, or any other
identifiable information indicating he would have authority to bind Town Park to a
verbal agreement over the phone regarding heavily discounted reimbursement rates
indefinitely in the future. Not only did Ms. Jones fail to confer with anyone who
qualified at Town Park, she admits that she did not even bother to ask the
unidentified person this information.
Q. And you said you talked to an administrator there but just to
confirm, your testimony is that you actually don’t know what that
person’s role was; is that correct?
A. That’s correct.
Q. You were assuming it was an administrator?
A. Yes.
Q. You didn’t ask him if he was?
A. No.
Q. And he didn’t tell you that he was?
A. No.
Q. Is that correct?
A. Correct.
Supp. CR 243 (Ex. E at p. 100 ll. 4 -16).
The trial court properly granted summary judgment on Amerigroup’s breach
of contract claim because there is no evidence that the “other person” to whom Ms.
49
2155944.4/SPH/27768/0101/103015
Jones allegedly spoke had authority to bind Town Park to a blanket agreement to
accept reimbursement at the Medicaid fee schedule and no principal of Town Park
did anything to confer apparent authority on that unidentified “other person.”
D. Amerigroup Cannot Recover For Breach Of Contract Because
Town Park Did Not Fail To Comply With Any Alleged Contract
Term.
1. The alleged agreement does not address reimbursement of
overpayments.
To prove an action for breach of contract, the plaintiff must establish: (1) the
existence of a valid contract; (2) performance or tendered performance by the
plaintiff; (3) breach of contract by the defendant; and (4) damages sustained as a
result of the breach. See Williams v. Unifund CCR Partners, 264 S.W.3d 231, 235-
36 (Tex. App.—Houston [1st Dist.] 2008, no pet.). Thus, the party must identify
the term of the contract that was breached.
Because Amerigroup’s claim is that Town Park breached the alleged
agreement by failing to reimburse it for overpayments, it must establish the
existence of a contract term obligating Town Park to make such reimbursements.
In-network arrangements between providers and insurers sometimes include
provisions whereby insurers have the right to audit providers’ billing, and
providers are required to reimburse insurers where such audits evidence
overpayment. Town Park, however, was an out-of-network provider and, when
Ms. Jones was asked to recount her conversation with the “other person” who
supposedly made the agreement, she said nothing about any term addressing
50
2155944.4/SPH/27768/0101/103015
reimbursement of overpayments. See Supp. CR 231, 234-35 (Ex. E at p. 38, ll. 4-
23; p. 41, l. 19 – 42, l. 6) (quoted above). Thus, in contrast to the type of in-
network arrangement described above, there is no allegation or evidence that the
alleged agreement contained any provision under which Town Park agreed to
reimburse Amerigroup for overpayments made by mistake. Amerigroup admits
that fact when it argues “the trial court should have inferred [such a] term.”
Appellant’s Br. 47.
In the absence of any contractual term requiring reimbursement of claimed
“overpayments” it cannot be a breach of contract to refuse to return alleged
overpayments. That is not to say there is never a remedy for a mistaken
overpayment but, in the absence of a controlling contract term, any such remedy is
governed by rules of equity. See Lincoln Nat. Life Ins. Co. v. Brown Schools, Inc.,
757 S.W.2d 411 (Tex.App. —Houston [14th Dist.] 1988, no writ).
2. The alleged agreement does not address billing
methodology.
In its brief, Amerigroup also suggests that Town Park is somehow
responsible for Amerigroup’s claimed mistake because Town Park used an SG
“modifier” rather than an EP “modifier” with the 41899 procedure code in its
invoices. This argument is a red herring for a number of reasons.
Just as there is no evidence of a reimbursement term in the alleged contract,
there also is no evidence of a term addressing the format of Town Park’s invoices.
51
2155944.4/SPH/27768/0101/103015
If there was, Amerigroup could simply have rejected the invoices until they were
submitted as Amerigroup required.
Amerigroup is not alleging that any of Town Park’s invoices were fraudulent
or misleading. Amerigroup’s corporate representative Edmund Chidester testified:
Q. And you're not alleging fraud in this case?
A. No.
Q. And you don't believe there is any fraud?
A. No.
Q. Is that correct?
A. Correct.
Supp. CR 419 (Chidester Dep. p 63, l. 22 – 63, l. 2). He further admitted
Amerigroup’s case is solely dependent on the alleged oral agreement, which, as
noted, never mentioned billing format. Supp. CR 205 (Ex. B at p. 32, ll. 5-10).
Moreover, use of the SG modifier was entirely appropriate. The SG
modifier simply indicates that Town Park is a surgery center which, of course,
Town Park is. CR 315 (Chidester Dep. p 61, ll. 18 - 22). Contrary to
Amerigroup’s assertion, the Medicare Claims Processing Manual does not
preclude the use of the SG modifier after January 1, 2008. It states only that
ambulatory surgical centers are not required to use the modifier after January 1
2008. CR 631 (“Beginning January 1, 2008, ASCs no longer are required to
52
2155944.4/SPH/27768/0101/103015
include the SG modifier on facility claims in Medicare.”)18 The EP modifier
merely indicates that the service is associated with “THSteps,” or Texas Health
Steps which is a children’s program under Texas Medicaid that provides medical
and dental preventive care and treatment. Supp. CR 1031. Neither modifier
determines the amount of reimbursement.
Finally, use of the SG modifier did not cause Amerigroup to overpay.
Before January 1, 2008, when even Amerigroup admits use of the SG modifier was
appropriate, Amerigroup did not pay the Medicaid rate; it routinely paid from
$3412 to $5460 per procedure. See Supp. CR 1059. Conversely, Amerigroup did
not pay the Medicare rate when the EP modifier was used.19 This is true both
before and after January 1, 2008. Thus, Amerigroup cannot tie any claimed coding
issue to the alleged overpayments.
The most Chidester could say was that because of the use of the SG
modifier, Amerigroup processed Town Park’s invoices manually. Thus, an
individual at Amerigroup reviewed the invoices for the particular procedures and
18
Amerigroup does not cite to the actual Medicare Claims Processing Manual when it claims
that use of the SG modifier is inappropriate after January 1, 2008. It cites to WPS Medicare,
which is Wisconsin Physicians Service Insurance Corporation. See Supp. CR 1034. In light of
the Medicare Claims Processing Manual, the statement relied on by Amerigroup reflects only
that the use of the SG modifier is unnecessary, not that it is improper.
19
When Town Park used the EP modifier, Amerigroup typically paid nothing (which even
Amerigroup does not claim was proper). See Supp. CR 1059. On at least two occasions,
however, Amerigroup paid $1500 and $4200 when an EP modifier was used. See Supp. CR.
1059, 1070. Amerigroup did not pay the Medicaid rate until sometime in 2011 after it began
making reimbursement demands, and then it did so even when no modifier was used.
53
2155944.4/SPH/27768/0101/103015
made a conscious decision as to the appropriate payment amount in each case. CR
315-16 (Chidester Dep. p 61, l. 23 – 62, l. 17).
The use of the SG modifier was not a breach of the alleged oral agreement,
was not improper under any applicable regulation, did not determine the
appropriate amount of payment, and did not cause any overpayment.
E. The Trial Court Did Not Err in Granting Summary Judgment
Based on the Statute of Limitations as to the Additional 109
Claims on Which Amerigroup First Sought Recovery in 2014.
Amerigroup filed its Fourth Amended Petition on November 14, 2014
adding 109 more claims dating from December 21, 2008 through September 11,
2010, and alleging that Town Park committed a breach of contract by failing to
reimburse Amerigroup for overpayments when they occurred. CR 495. Each of
these claims accrued more than 4 years before being made a part of this suit.
Accordingly they are barred by the 4 year statute of limitations. TEX. CIV. PRAC. &
REM. CODE § 16.004.
Section 16.068 of the Civil Practice and Remedies Code does not cause
these claims to “relate back.” That section states:
If a filed pleading relates to a cause of action, cross-action,
counterclaim, or defense that is not subject to a plea of limitation
when the pleading is filed, a subsequent amendment or supplement to
the pleading that changes the facts or grounds of liability or defense is
not subject to a plea of limitation unless the amendment or
supplement is wholly based on a new, distinct, or different transaction
or occurrence.
54
2155944.4/SPH/27768/0101/103015
TEX. CIV. PRAC. & REM. CODE § 16.068. Amerigroup did not merely “change the
facts or grounds of liability.” Each of the 109 new claims is “wholly based on a
new, distinct, or different transaction or occurrence.”
The payment for each patient constitutes a separate and distinct transaction.
Put simply, the billing and payment for services rendered to patient Jane Doe is a
completely distinct and different transaction or occurrence than the billing and
payment for services rendered to patient Ron Roe. The two have nothing to do
with each other. By adding 109 separate and distinct claims relating to different
patients, Amerigroup brought wholly new, distinct and different transactions into
the suit. These claims do not relate back to the filing of the original petition.
It does not matter that Amerigroup alleges an overarching continuing
contract to accept Medicaid rates: “if the terms of a continuing contract call for
fixed, periodic performance during the course of the agreement, a cause of action
for the breach of the agreement may arise at the end of each period, before the
contract is completed. … The injured party has four years from each breach to
bring suit.” Capstone Healthcare Equipment Services, Inc. v. Quality Home Health
Care, Inc., 295 S.W.3d 696, 701 (Tex.App.-Dallas 2009, pet. denied) (citations
omitted). Thus, a party may not allow repeated breaches to continue accruing
indefinitely, file suit 3 years 364 days after the last breach, and then add all prior
breaches claiming that they relate back indefinitely.
55
2155944.4/SPH/27768/0101/103015
F. Amerigroup Has Abandoned Its Equitable Causes of Action and
Waived Any Claimed Error in Granting Summary Judgment on
Those Causes of Action.
When Amerigroup filed its Fourth Amended Petition after the trial court
granted summary judgment on Amerigroup’s equitable claims (see CR 327), the
only cause of action it alleged was breach of contract. CR 495. It dropped all of
the previously alleged equitable claims such as money had and received.
Amerigroup has therefore abandoned all of those equitable claims, and waived any
error associated with the court’s grant of summary judgment on those claims, as its
live pleading does not allege those causes of action. TEX. R. CIV. P. 65. See Tran
v. Luu, No. 12-06-19,092-CV, 2014 Tex. App. LEXIS 3956 *6-7, 2014 WL
1410345 (Tex. App. -- Waco 2014, no pet.) (“by amending her pleading and
eliminating her trespass, negligence, and nuisance claims, Tran effectively
abandoned her trespass, negligence, and nuisance claims and, thus, waived any
error concerning the trial court’s action in granting summary judgment as to these
claims.”); Kinney v. Palmer, No. 04-07-00091-CV, 2008 Tex. App. LEXIS 4632
*7; 2008 WL 2515696 (Tex. App. – San Antonio 2008, no pet.) (“by amending
their pleading and eliminating the DTPA, negligent misrepresentation, and fraud
references, the Kinneys abandoned those claims and have waived any error
concerning the trial court’s action in granting Palmer’s motion for partial summary
judgment as to these claims.”)
56
2155944.4/SPH/27768/0101/103015
Accordingly, this Court need not address the trial court’s summary judgment
as to those claims on the merits.
G. The Trial Court Did Not Err in Granting Summary Judgment on
Amerigroup’s Equitable Claims Based on the Statute of
Limitations.
Because the alleged oral contract – even as described by Amerigroup’s own
witnesses – did not include a term requiring reimbursement of alleged
overpayments, Amerigroup alleged equitable theories of unjust enrichment and
money had and received to recover the alleged mistaken payments.
If this Court sustains the summary judgment based on the statute of frauds,
lack of authority, or waiver defenses discussed above, it need not address
Amerigroup’s argument that the court erred in granting summary judgment on
Amerigroup’s equitable claims based on the statute of limitations. If there is no
enforceable agreement limiting payment to Medicaid rates then there has been no
overpayment, and no cause of action for money had and received or unjust
enrichment exists.
In any event, the court did not err in granting summary judgment on these
claims based on the statute of limitations.
1. Unjust enrichment and money had and received are
governed by the two-year statute of limitations.
Both unjust enrichment and money had and received are governed by the 2
year limitations period for “taking or detaining the personal property of another.”
TEX. CIV. PRAC. & REM. CODE § 16.003(a). They are not suits on a “debt”
57
2155944.4/SPH/27768/0101/103015
governed by the 4 year statute of limitations in TEX. CIV. PRAC. & REM. CODE §
16.004.
The Texas Supreme Court has held unequivocally that the statute of
limitations for an unjust enrichment claim is two years:
The most logical reading of sections 16.003 and 16.004 is to treat
“debt” actions under section 16.004 as breach-of-contract actions that
fall under the four-year statute of limitations for such claims, … while
construing the two-year statute’s reference to actions for “taking or
detaining the personal property of another” as applicable to extra-
contractual actions for unjust enrichment. This construction
harmonizes the two statutes and gives meaning to each.
Elledge v. Friberg-Cooper Water Supply Corp., 240 S.W.3d 869, 871-72 (Tex.
2007) (citations omitted).
Amerigroup does not appear to dispute the fact that its unjust enrichment
claim is subject to the 2 year statute of limitations; its argument that the 4 year
statute of limitations applies addresses only its money had and received claim. See
Appellant’s Br. at 51. Money had and received, however, is simply one legal
theory for claiming unjust enrichment.20 Significantly, every case Amerigroup
cites for its argument that the 4 year statute applies to money had and received
predates Elledge.
This Court has squarely held that the statute of limitations for money had
and received claims is two years. Merry Homes, Inc. v. Luc Dao, 359 S.W.3d 881,
20
See Hancock v. Chicago Title Ins. Co., 635 F.Supp.2d 539, 560 (N.D. Tex. 2009) (“[U]njust
enrichment is a theory of liability that a plaintiff can pursue through several equitable causes of
action, including money had and received.”) Thus, like any other theory for claiming unjust
enrichment it falls within Elledge.
58
2155944.4/SPH/27768/0101/103015
882 (Tex. App.-Houston [14th Dist.] 2012, no pet.). In doing so, this Court
considered and rejected Amoco Prod. Co. v. Smith, 946 S.W.2d 162 (Tex. App. –
El Paso 1997, no pet.), the primary authority cited by Amerigroup, in light of the
Supreme Court’s later decision in Elledge. See Merry Homes, 359 S.W.3d at 884.
The most recent case Amerigroup cites for the proposition that the 4 year
statute applies to money had and received is Verizon Employee Benefits Committee
v. Frawley, No. 3:05-CV-2105-P ECF, 2007 WL 2051113 (N.D. Tex. 2007). After
being made aware of the Elledge decision, however, that court reversed its own
prior ruling and, like this Court, held that the 2 year statute of limitations applies.
Verizon Employee Benefits Committee v. Frawley, 655 F.Supp.2d 644, 646
(N.D.Tex. 2008) (“In light of the recent Texas Supreme Court opinion which
speaks to and likely resolves this issue, the split over the limitations period
applicable to an action for money had and received should be resolved in favor of a
two-year limitations period.”). Thus the opinion relied on by Amerigroup is no
longer good law.
2. The statute of limitations began to run when the money was
paid.
Amerigroup’s causes of action for unjust enrichment and money had and
received accrued when Town Park received the alleged overpayments. Tanglewood
Terrace, Ltd. v. City of Texarkana, 996 S.W.2d 330, 337 (Tex. App.-Texarkana
1999, no pet.); Gaffar v. Kamal, No. 05-10-00560-CV, 2011 Tex. App. LEXIS
59
2155944.4/SPH/27768/0101/103015
5714, at *6-7 (Tex. App.-Dallas July 27, 2011, no pet.). All of the payments at
issue were received more than two years before suit was filed. Accordingly
recovery is barred by the statute of limitations.
IV. CONCLUSION AND PRAYER
Appellee True View Surgery Center, L.P. d/b/a Town Park Surgery Center
respectfully requests that the judgment of the trial court be affirmed and that Town
Park be granted such other relief to which it may be entitled.
Respectfully Submitted,
STRASBURGER & PRICE, LLP
By: /s/ Jack G. Carnegie
CHARLES “SCOTT” NICHOLS
State Bar No. 14994100
JACK G. CARNEGIE
State Bar No. 03826100
909 Fannin Street, Suite 2300
Houston, Texas 77010
Telephone: (713) 951-5600
Facsimile: (713) 951-5660
[email protected]
[email protected]
ATTORNEYS FOR APPELLEE
60
2155944.4/SPH/27768/0101/103015
CERTIFICATE OF COMPLIANCE
I hereby certify that this brief is in compliance with the rules governing the
length of briefs prepared by electronic means. The brief was prepared using
Microsoft Word 2013. According to the software used to prepare this brief, the
total word count, including footnotes, but not including those sections excluded by
rule, is 14,854. The brief was prepared using “Times New Roman” 14-point font.
/s/ Jack G. Carnegie
JACK G. CARNEGIE
61
2155944.4/SPH/27768/0101/103015
CERTIFICATE OF SERVICE
The undersigned counsel certifies that on the 30th day of October, 2015, a
true and correct copy of the foregoing was forwarded to all known counsel of
record via facsimile and e-mail in compliance with Rules 21 and 21a of the Texas
Rules of Civil Procedure, as follows:
Ray T. Torgerson
David W. Salton
Joshua W. Wolfshohl
1000 Main St., 36th Floor
Houston, Texas 77002
Telephone: (713) 226-6650
Facsimile: (713) 226-6250
[email protected]
[email protected]
/s/ Jack G. Carnegie
JACK G. CARNEGIE
62
2155944.4/SPH/27768/0101/103015
|
United States Court of Appeals
For the Eighth Circuit
___________________________
No. 12-2568
___________________________
United States of America
lllllllllllllllllllll Plaintiff - Appellee
v.
Gabe Key
lllllllllllllllllllll Defendant - Appellant
____________
Appeal from United States District Court
for the District of Minnesota - St. Paul
____________
Submitted: January 14, 2013
Filed: January 25, 2013
[Unpublished]
____________
Before BYE, MELLOY, and SMITH, Circuit Judges.
____________
PER CURIAM.
Gabe Key appeals a twenty-four month sentence imposed by the district court1
after Key violated the terms of his supervised release. Key claims the twenty-four
1
The Honorable Patrick J. Schiltz, United States District Judge for the District
of Minnesota.
month sentence is substantively unreasonable. Key also appeals the district court's
imposition of an additional year of supervised release, contending the district court
lacked authority to impose an additional term of supervised release because the
twenty-four month sentence was the maximum authorized revocation sentence the
district court could have imposed. See United States v. Brings Plenty, 188 F.3d 1051,
1053 (8th Cir. 1999) (per curiam) ("Under § 3583(h), if the court revokes supervised
release and sentences the defendant to the maximum authorized prison term, it may
not impose an additional term of supervised release.").
Reviewing the substantive reasonableness of Key's sentence for an abuse of
discretion, United States v. Growden, 663 F.3d 982, 984 (8th Cir. 2011) (per curiam),
we find no abuse of discretion. The sentence was within the advisory guidelines range
and therefore presumed reasonable on appeal. See, e.g., United States v. Petreikis,
551 F.3d 822, 824 (8th Cir. 2009). In addition, the record shows the district court
adequately considered the factors set forth at 18 U.S.C. § 3553(a) and sufficiently
explained its reasons for imposing a twenty-four month sentence. Specifically, the
district court noted the seriousness of the supervised release violation (selling crack
cocaine), and the fact that Key showed a pattern of noncompliance by committing
three violations of supervised release in a span of ten months.
We also reject Key's reliance upon Brings Plenty to contend the district court
lacked authority to impose an additional year of supervised release. As we recently
noted in United States v. Zoran, 682 F.3d 1060 (8th Cir. 2012), § 3583(h) has been
amended since we decided Brings Plenty. The amended version of § 3583(h) governs
Key's sentence and did not prohibit the district court from imposing an additional year
of supervised release. Zoran, 682 F.3d at 1063.
We affirm the judgment of the district court in all respects.
______________________________
-2-
|
488 F.2d 321
Michael and Cynthia PRIDE, minors, by their mother and nextfriend Bulena Pride, et al., Plaintiffs-Appellants,v.The COMMUNITY SCHOOL BOARD OF BROOKLYN, NEW YORK SCHOOLDISTRICT #18, a body corporate, et al.,Defendants-Appellees.
No. 293, Docket 73-2223.
United States Court of Appeals,Second Circuit.
Argued Oct. 3, 1973.Decided Nov. 21, 1973.
Doron Gopstein, New York City (Norman Redlich, Corp. Counsel of the City of New York, and Michael B. Rosen, Brooklyn, N. Y., on the brief), for defendants-appellees.
James I. Meyerson, N.A.A.C.P., New York City (Nathaniel R. Jones, N.A.A. C.P., New York City, I. Frederick Shotkin and Delson & Gordon, New York City, on the brief), for plaintiffs-appellants.
Before HAYS, FEINBERG and TIMBERS, Circuit Judges.
HAYS, Circuit Judge:
1
This is our second encounter with the dispute concerning the placement in New York City public schools of children from the Tilden Houses of Brooklyn.1 In this phase of the litigation plaintiffs moved for a preliminary injunction against an order by the City Board of Education assigning Tilden House children first entering public school to districts other than District 18. The United States District Court for the Eastern District of New York denied the motion. The court found that plaintiffs had failed to show probability of success and irreparable harm or that the balance of hardships weighed decidedly in their favor. We affirm.
I. THE FACTS
2
The Tilden Houses are located in the predominantly black and Puerto Rican section of Brooklyn known as Brownsville. To the south and southeast of Brownsville lie the racially mixed neighborhood of East Flatbush and the predominantly white neighborhood of Canarsie. In 1962 the Board of Education, in an effort to promote integration, rezoned the Tilden House children from the neighborhood Brownsville schools, which subsequently became part of District 23, into schools in East Flatbush, which has become part of District 18.
3
In 1970 much of the authority for governing the elementary and junior high schools of New York City was transferred from the City Board of Education to Community District School Boards pursuant to New York's School Decentralization Law (New York Education Law, Article 52-A, Sec. 2590 et seq. [McKinney's 1970 Consol.Laws, c. 820]).
4
In May, 1971 the Community School Boards of Districts 18 and 23 entered into an agreement whereby Tilden House children would be zoned into their neighborhood schools in District 23 for the school year beginning September 1971. School Chancellor Scribner rejected this agreement, and the City Board of Education and the Commissioner of Education sustained the Chancellor's decision.
5
Further difficulties developed when the District 18 Community Board refused to assign Tilden House children to Junior High School 285, the junior high school in District 18 which Tilden House children had previously attended. Chancellor Scribner again reversed the Community Board and ordered it "to assign the Tilden Housing children at the junior high school level either to J-285 . . . and/or to other schools in your district where integrated education would be possible." The Community Board refused to follow this directive, and Chancellor Scribner superseded the Community Board and ordered that the Tilden House children be given the option of attending Junior High Schools 285, 211 or 68, all within District 18. He also ordered the Community Board to devise a plan designed ". . . more nearly to equalize integration in these schools starting with the 1973-74 school year."
6
In January, 1973 the Community Board presented its plan. At this time the ethnic compositions of the three junior high schools were as follows:
7
School Others (white) Black and Puerto Rican
---------- -------------- ----------------------
J.H.S. 68 98% 2%
J.H.S. 211 66% 34%
J.H.S. 285 42% 58%
8
The three schools are in the Canarsie section of District 18. JHS 285 is closest to East Flatbush, while JHS 68 is furthest from East Flatbush and Brownsville. The Community Board projected the following figures for 1975 if the existing zoning continued:
9
School Others (white) Black and Puerto Rican
---------- -------------- ----------------------
J.H.S. 68 85% 15%
J.H.S. 211 70% 30%
J.H.S. 285 50% 50%
10
The Community Board's plan provided for zoning the Tilden House children into other districts, though it did not indicate which districts.
11
In January, 1973 Chancellor Scribner accepted the Community Board's plan with an amendment providing that the Tilden House children would continue to attend junior high schools in District 18, subject to future review in light of changing population patterns.
12
The Community Board appealed the decision of the Chancellor to the City Board of Education. The City Board conducted hearings and on March 30, 1973 issued its decision holding that neither the Community Board's plan nor the Chancellor's plan fully considered that:
13
"[m]assive ethnic changes are taking place in many of the elementary schools, particularly those into which the Tilden House pupils are zoned. It is clear that the residential changes in these school zones have resulted in the 'other' enrollment becoming the minority. Obviously the changes at the elementary school level have major impact on the junior high schools which are the subject of this appeal.
14
"This Board finds that neither the plan presented by Community School Board 18 nor the . . . modification of this plan by the Chancellor fully takes these changes into account. The policy of this Board is and continues to be to encourage quality integrated education to the extent feasible.
15
"The use of children as pawns in boycots and other pressure tactics is demagogic and irresponsible and can have no influence whatever on the decision of the Board of Education. On the other hand, the Board feels that it would be just as irresponsible and demagogic to continue to send out of district minority group youngsters indefinitely into schools with rapidly growing minority registers under the guise of promoting quality integrated education."
The City Board ordered that:
16
"commencing in September 1973 Tilden House children newly entering the first grade who would have entered District 18 schools are to be zoned and permitted options to attend schools in other districts. . . ."2
17
Acting Chancellor Irving Anker later implemented the order by directing that newly entering Tilden House children be zoned into Districts 20, 21 and 22, with parents of each child to select among the designated schools within such districts.
18
The racial mix and utilization levels of the schools in Districts 18, 20, 21 and 22 are as follows:
19
Elementary Black Puerto Rican Other (White) Utilization
------------------ ----- ------------ ------------- -----------
District 20 9% 11% 78% 73%
District 21 16% 11% 72% 73%
District 22 16% 3% 80% 78%
District 18 35% 6% 58% 89%
Junior High School
------------------
District 20 14% 13% 72% 100%
District 21 16% 9% 74% 87%
District 22 15% 1% 82% 101%
District 18 47% 7% 45% 105%
20
In May, 1973 the Chancellor submitted a list of "designated" schools within Districts 20, 21 and 22 which the Tilden House children were eligible to attend. Of the 37 designated schools all have an "other" enrollment of over 60%, 36 have an "other" enrollment of over 80%, and 12 have an "other" enrollment of over 90%. The five elementary schools in District 18 which the Tilden House children had attended prior to the March 30 order had shown the following ethnic compositions:
21
Black Puerto Rican Other
----- ------------ -----
PS 135 57.9% 11.4% 30.7%
PS 244 49.9 11.4 38.7
PS 235 57.7 11.2 31.1
PS 233 53.2 12.1 34.7
PS 268 73.6 7.8 18.6
22
Within District 18 seven elementary schools had "other" enrollments over 60%; in three of these the "other" enrollment was over 90%.
II. THE PRELIMINARY INJUNCTION STANDARD
23
In our earlier opinion in this case [Pride I] this court stated as follows the standard by which the district court must be guided in deciding upon a motion for a preliminary injunction:
24
"We repeatedly have emphasized the heavy burden on a party seeking the extraordinary remedy of preliminary injunctive relief. The standard that has evolved is that the moving party 'assume[s] the burden of demonstrating either a combination of probable success and the possibility of irreparable injury or that [it has] raised serious questions going to the merits and that the balance of hardships [tips] sharply in [its] favor.' Stark v. New York Stock Exchange, 466 F.2d 743, 744 (2 Cir. 1972) (emphasis added); Checker Motors Corp. v. Chrysler Corp., 405 F.2d 319, 323 (2 Cir.), cert. denied, 394 U.S. 999 [,89 S.Ct. 1595, 22 L.Ed.2d 777] (1969). We find that standard to be particularly appropriate here where there is a strong public interest in the outcome of the dispute. See, e. g., Gulf & Western Industries, Inc. v. Great Atlantic & Pacific Tea Co., 476 F.2d 687, 692-693, 698-699 (2 Cir. 1973); Exxon Corp. v. City of New York, 480 F.2d 460 (2 Cir. 1973).
25
"With this standard in mind, we turn to an examination of the evidence adduced at the hearing below, recognizing that in reviewing the denial of a motion for a preliminary injunction our role is limited. 'A clear abuse of discretion . . . must be shown to an appellate court in order to obtain a reversal of the trial court's denial of temporary injunctive relief.' Checker Motors Corp. v. Chrysler Corp., supra, 405 F.2d at 323; Dino de Laurentiis Cinematografica, S.p.A. v. D-150, Inc., 366 F.2d 373, 374-375 (2 Cir. 1966)."
26
482 F.2d at 264 (footnote omitted).
III. PROBABILITY OF SUCCESS
27
The district court considered both the intent and the effect of the March 30 plan of the City Board and found it not discriminatory in either respect. We agree.
28
(A) Discriminatory Intent
29
Absence of a discriminatory intent does not necessarily bar a successful equal protection action. Wright v. Council of the City of Emporia, 407 U.S. 451, 461-462, 92 S.Ct. 2196, 33 L.Ed.2d 51 (1972); Chance v. Board of Examiners, 458 F.2d 1167, 1175-1176 (2d Cir. 1972). On the other hand proof of discriminatory intent does not by itself render an act violative of equal protection. Palmer v. Thompson, 403 U.S. 217, 224-225, 91 S.Ct. 1940, 29 L.Ed.2d 438 (1971). This court recognized the limited significance of intent or motive in its earlier opinion in this case. Pride I, 482 F.2d at 265-267. But a discriminatory motive "may add to the discriminatory effect of the action by intensifying the stigma of implied racial inferiority." Wright v. Council of the City of Emporia, 407 U.S. at 461, 92 S.Ct. at 2203. Where a discriminatory intent exists a court may scrutinize more carefully the proffered justification for the allegedly discriminatory act. Id.; cf. Green v. County School Board, 391 U.S. 430, 439, 88 S.Ct. 1689, 20 L.Ed.2d 716 (1968). Moreover, the motivation for a particular act may be part of the "historical context" within which we must examine the act itself. Reitman v. Mulkey, 387 U.S. 369, 373, 87 S.Ct. 1627, 18 L.Ed.2d 830 (1967). Thus the district court acted properly in receiving evidence on discriminatory intent without considering the issue controlling.
30
Appellants have emphasized here and in the court below that the City Board reviewed the decision of the Chancellor while under intense pressure from the Community Board of District 18 and from the white residents of Canarsie. They claim this demonstrates that the City Board capitulated to this pressure in reversing the Chancellor and that the March 30 order therefore resulted from an intent to discriminate. The plaintiffs' evidence on this point consists primarily of a showing that the members of the City Board were aware of the racial animosity in District 18. Rarely can a plaintiff expect to find more direct evidence in a case like this: even if the Board members were infected by prejudice they would hardly be inclined to announce the fact publicly. We are bound to view the act in light of its "historical context." Reitman v. Mulkey, supra. But the awareness of the Board members of conditions in District 18 and their subsequent decision to zone the Tilden House children out of District 18 do not by themselves conclusively prove discriminatory intent. Other reasons, non-discriminatory in nature, could have persuaded the Board. Defendants introduced evidence, including the testimony of Board President Joseph Monserrat and the March 30 statement by the Board (see page 429, supra), that racial animosity did not sway the Board's decision.
31
The district court faced an issue of fact. It resolved the issue by finding that the City Board "was unaffected by the local racial prejudice of the residents of District 18," that the plaintiffs had failed to show intent to segregate, and indeed that the plan showed affirmatively an intent to integrate and that the object of the plan was
32
"to slow down or reverse the history of the increase of blacks and minority groups in the schools located in the East Flatbush section of District 18 for the purpose of establishing a stable racial mix in said schools."
33
In light of the heavy burden of proof borne by a party seeking a preliminary injunction and of the fact that the district court's conclusions of fact depended in large part on the evaluation of the credibility of viva voce testimony, we cannot say that these conclusions were clearly erroneous. F.R.Civ.P. 52(a).
34
(B) Discriminatory Effect
35
As indicated above, the finding of an absence of discriminatory intent is not fatal to plaintiffs' action. Plaintiffs can still prevail if they can show that the March 30 order had the effect of discriminating against them in violation of the equal protection clause. In this case, however, the relevant facts showed no discriminatory effect.
36
A comparison of the ethnic compositions of District 18 and Districts 20, 21 and 22, see tables supra, shows that the former has a lower percentage of white students. In particular, the East Flatbush schools which the Tilden House children previously attended have a much lower proportion of white enrollment than Districts 20, 21 and 22. Moreover, at the time the City Board acted the East Flatbush schools were rapidly becoming more extensively segregated. Thus, in numerical terms the March 30 plan offered the Tilden House children schooling in a more integrated setting.
37
Numbers alone do not determine whether an act violates equal protection. In Pride I this court considered an act reassigning several Tilden House children from a school with an "other" enrollment of 46% to one with an "other" enrollment of 36%. We upheld the plan on the ground that the Community Board had acted to balance the sizes of first grade classes and that the plan effectuated the objective because the transferee school was less utilized than the transferor school. Pride I 482 F.2d at 267-269. In the instant case Districts 20, 21 and 22 are less utilized than District 18. See tables supra. This would seem to confirm that the opportunities of the Tilden House children for quality integrated education will not deteriorate, and may improve, under the March 30 plan.
38
Based on these facts the district court found the March 30 plan to be an "integrative procedure." We agree. Factors other than ethnic composition and utilization may be significant in determining whether a school assignment plan is discriminatory. But plaintiffs in this action offered no evidence either to rebut the facts referred to above or to show that for any other reason the schooling in Districts 20, 21 and 22 would be any worse than in District 18. We can therefore find no discriminatory effect in the March 30 plan.
39
(C) The Legal Test Applied by the District Court
40
Notwithstanding the conclusion that the March 30 plan is intended to improve integration, appellants insist that we reverse because the district court failed to subject the plan to the "compelling necessity" test. Noting that the Board's plan assigns the Tilden House children to schools on the basis of race, appellants seek to invoke the authority of the cases subjecting state action based on race to the compelling necessity test. They argue further, citing the opinion of the three-judge district court in Lee v. Nyquist, 318 F.Supp. 710, 719-720 (W.D.N.Y.1970), aff'd, 402 U.S. 935, 91 S.Ct. 1618, 29 L.Ed.2d 105 (1971) (mem.), that the plan must fall because defendants have failed to demonstrate that the professed objectives of the plan cannot be accomplished by alternative means which appellants find preferable.
41
First, appellants misconstrue the function of the compelling necessity test. Cases applying that standard invariably involve state action having a segregatory or discriminatory effect. No court has applied the test where state action has had the effect and objective of reducing discrimination and segregation. See Porcelli v. Titus, 302 F.Supp. 726 (D.N.J.1969), aff'd, 431 F.2d 1254 (3d Cir. 1970); Offermann v. Nitkowski, 378 F.2d 22 (2d Cir. 1967); Deal v. Cincinnati Board of Education, 369 F.2d 55, 61 (6th Cir. 1966), cert. denied, 389 U.S. 847, 88 S.Ct. 39, 19 L.Ed.2d 114 (1967); Springfield School Committee v. Barksdale, 348 F.2d 261, 266 (1st Cir. 1965); cf. Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1, 16, 91 S.Ct. 1267, 28 L.Ed.2d 554 (1971).3
42
Appellants misconstrue Lee v. Nyquist, 318 F.Supp. 710 (W.D.N.Y. 1970), and the significance of alternatives in equal protection cases. In Lee the court considered a statute which prohibited an appointed (as opposed to an elected) board of education from carrying out any plan of school integration. The court found that this served to continue segregation by making it more difficult to deal with racial imbalance. 318 F.Supp. at 716-720. Defendants there argued that the object and effect of the statute would be to promote the community acceptance necessary for the effectuation of local school desegregation. The Court responded:
43
"In any event, the defendants have failed to show that the purpose they impute to the statute could not be accomplished by alternative methods, not involving racial distinctions. See Hunter v. Erickson, supra, 393 U.S. [385,] at 392, 89 S.Ct. 557 [, 21 L.Ed. 2d 616]." 318 F.Supp. at 720.
44
In both Lee and Hunter the consideration of alternatives followed a finding that the state action in question had a discriminatory effect. In the instant case the March 30 plan has been found to have an integrative effect. No court has required a party to show the absence of preferable alternatives in such a case. School boards possess wide discretion in all aspects of school administration. See Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1, 16, 91 S.Ct. 1267, 28 L.Ed.2d 554 (1971); Pride I, 482 F.2d at 268-269; Deal v. Cincinnati Board of Education, 369 F.2d 55, 61 (6th Cir. 1966). This discretion may not be exercised to transgress constitutional limitations. But where this discretion is exercised within constitutional limits we have no power to substitute for it our own preferences or those of appellants.4
IV. IRREPARABLE HARM
45
The district court held that "[p]laintiff has failed to show . . . that irreparable harm will accrue through denial of this motion." Appellants contend that this finding is clearly erroneous. They do not contend that Districts 20, 21 and 22 are segregated or that the quality of education there is in any way inferior to that in District 18. But they argue that the Tilden House children will see that their parents have lost a struggle involving intense racial animosities to keep them in District 18 and that this will generate feelings of inferiority. They invoke the holding in Brown v. Board of Education, 347 U.S. 483, 494, 74 S.Ct. 686, 98 L.Ed. 873 (1954), that to separate black children solely on the basis of race may cause them irreparable harm.
46
In Pride I we recognized "the anguish and frustrations that have been present throughout this controversy," 482 F.2d at 269, but still found no irreparable harm. Although the facts of this case are different, the distinctions observed in Pride I between that case and Brown apply equally in this case: the March 30 plan does not create or maintain school segregation and the academic quality of Districts 20, 21 and 22 is comparable to or better than that of District 18. We note also that Tilden House children who have attended District 18 schools will continue there under the March 30 plan, with only children newly enrolled to be affected. Thus we face here no dislocation from students having to switch schools. See Pride I, 482 F.2d at 269. With respect to these factors plaintiffs suffer no irreparable harm.
47
As to the emotional effect on the Tilden House children of reassignment in the wake of the District 18 dispute the lower court faced an issue of fact. Especially in light of the heavy burden borne by appellants in seeking a preliminary injunction we cannot say that the finding of no irreparable harm was clearly erroneous.
V. BALANCE OF HARDSHIPS
48
The same factors which persuaded us in Pride I that the balance of hardships did not tip sharply in favor of appellants dictate a similar finding in this case. Pride I, 482 F.2d at 269. As in Pride I, many of the factors to be considered are the same as were considered with respect to irreparable harm. Although granting a temporary injunction might not impose great hardship on defendants, neither does denial of the injunction create any hardship for plaintiffs. As stated in Pride I:
49
"'[t]he children have not been wrenched from a school earlier attended by them. A temporary injunction would not restore them to "status quo." It is a fair inference that their education will not be advanced by a mid-semester transfer to a different class conducted by a different teacher in a different school.' And that is reinforced by the passage of time since the district court's decision." 482 F.2d at 270-271.
50
Plaintiffs have failed to show a probability of success on the merits at trial. They have also failed to show that they will suffer irreparable harm from denial of the preliminary injunction or that the balance of hardships weighs decidedly in their favor. Therefore, we hold that the district court properly declined to grant a preliminary injunction.
51
Affirmed.
1
In an earlier phase of this case plaintiffs were denied a preliminary injunction against a plan to reassign Tilden House children from one elementary school in District 18 to another in the same district. Pride v. Community School Board of Brooklyn, New York School District # 18, 482 F.2d 257 (2d Cir. 1973)
2
The March 30 plan required assignment of Tilden House children entering the 7th grade to Junior High School 68. Plaintiffs do not challenge this part of the plan
3
Our recent decision in Otero v. New York City Housing Authority, 484 F.2d 1122 (1973), does not help appellants. In Otero the defendant refused to apply to blacks and Puerto Ricans its own regulation requiring it to offer new public housing first to original residents who had been displaced from the site during construction. The Authority sought to justify this discrimination on the ground that the new housing in question was located in a neighborhood which had experienced a steady decline in percentage of white residents and that it had an affirmative duty to prevent the neighborhood from becoming segregated. We accepted the validity of this justification in theory but remanded to the district court for a determination of whether such action was in fact necessary to maintain an integrated neighborhood. 484 F.2d at 1135. We declared further that the evidence must be "convincing" and that the Authority's burden is a "heavy one." Id
Appellants argue that the same standards must apply here, but the two cases are very different. Although integration was the object of the action in Otero, the method by which it was achieved was outright denial of new public housing to non-white persons on account of race. The dangers inherent in such action clearly justify the "heavy" burden. In the instant case, however, plaintiffs continue to receive an education at least as good as and more integrated than they had previously received. Under such circumstances no danger of discrimination is present.
4
Appellants have contended that the Tilden House children could also receive a quality integrated education by further integrating the schools within District 18
|
581 P.2d 1 (1978)
Phil STAUDINGER, Plaintiff and Appellant,
v.
Kenneth DeVRIES, and Carl DeVries, Defendants and Respondents.
No. 14099.
Supreme Court of Montana.
Submitted on Briefs May 17, 1978.
Decided June 19, 1978.
Joseph E. Mudd, Bridger, for plaintiff and appellant.
Loren Tucker, Red Lodge, for defendants and respondents.
HARRISON, Justice:
This is an appeal by plaintiff Phil Staudinger from a judgment of the District Court, Carbon County, decreeing that Kenneth and Carl DeVries own a prescriptive easement for a road right-of-way and enjoining plaintiff from interfering. This cause was classified according to this Court's rules of internal operations as a case to be submitted on briefs without argument.
The road involved runs across the Southeast Quarter of the Southwest Quarter (SE 1/4 SW 1/4) of Section 10 and the South Half of the Southeast Quarter (S 1/2 SE 1/4) of Section 10, Township 5 South, Range 21 East, M.P.M., in Carbon County. Testimony indicates the road has been in continuous use and existence since 1942 and for an undetermined period prior thereto. A number of predecessors in title to the property of both plaintiff and defendants indicated they had continuously and without interruption had access to their farm and ranch lands and residences via the road, without restriction. Floyd Huddleston, from whom plaintiff purchased his property in 1965, had owned the property since 1942. He testified that people used the road throughout his ownership without restriction and prior owners of defendants' property split the cost of maintenance with him.
Defendants' predecessors in title testified they used the road prior to 1942 and continued to do so without permission from Huddleston during his ownership period and continued to do so after plaintiff purchased the property, until he put a chain across the road. Also, defendants' predecessors in title cut down trees at the edge of the roadway and placed livestock "passes" in fences across the road without Huddleston's permission, when he owned the property.
Plaintiff purchased his property in 1969 and sometime later he erected a sign at the juncture of the road in issue and U.S. Highway No. 212 which read "No Trespassing Without Permission." The defendants gave no heed to the sign and plaintiff commenced this action.
While there is a county road that can be used part of the year, the testimony indicated that a steep hill leading to that road required a 4-wheel drive vehicle and in the winter months the road would not be useable. The trial court found there was no other access to a public road from the defendants' home and lands during the winter months.
*2 Plaintiff presents three issues for consideration which we combine into one issue Did the trial court properly find that defendants had acquired a prescriptive right to use the road by openly, notoriously and without the owner's consent use the road over the statutory period?
Plaintiff cites and relies upon Wilson v. Chestnut, (1974), 164 Mont. 484, 525 P.2d 24; Ewan v. Stenberg, (1975), 168 Mont. 63, 541 P.2d 60; Harland v. Anderson, (1976), 169 Mont. 447, 548 P.2d 613; White v. Kamps, (1946), 119 Mont. 102, 171 P.2d 343; Scott v. Weinheimer, (1962), 140 Mont. 554, 560, 374 P.2d 91. Except for the case of Scott v. Weinheimer, supra, we find none of the cited cases controlling. Factually the cases are not in point for here the testimony clearly shows that Huddleston, predecessor to plaintiff, allowed passage over the road and even permitted trees to be cut and fences changed without his permission.
This Court in O'Connor v. Brodie, (1969), 153 Mont. 129, 454 P.2d 920, stated the legal proposition that the landowner's knowledge of use without objection creates a presumption of acquiescence rather than a grant of license by permission. The Court held:
"`Where the claimant has shown an open, visible, continuous, and unmolested use of the land of another for the period of time sufficient to acquire title by adverse possession, the use will be presumed to be under a claim of right, and not by license of the owner. In order to overcome this presumption, thereby saving his title from the incumbrance of an easement, the burden is upon the owner to show that the use was permissive.' Glantz v. Gabel, 66 Mont. 134, 141, 212 P. 858, 860." 153 Mont. 137, 454 P.2d 925.
In the instant case we find the testimony clearly established the necessary requirements of a prescriptive easement as set forth in Scott v. Weinheimer, supra, including "open, notorious, exclusive, adverse, continuous and uninterrupted use" by the defendants. The two cases are nearly exact on the facts. In both cases travel occurred over the road without permission by persons who thought they had a legal right to do so and who performed maintenance work on the road. In both cases the road was used by the public and owners of the property had not prevented anyone from using it. Indeed, no testimony showed anyone asked for permission to use the road. In this record it is clear that there was substantial evidence to support the District Court's findings of fact, conclusions of law and judgment.
We affirm.
HASWELL, C.J., and DALY, SHEA and SHEEHY, JJ., concur.
|
940 F.2d 1529
Durkinv.Romano*
NO. 90-3432
United States Court of Appeals,Fifth Circuit.
JUL 31, 1991
1
Appeal From: E.D.La.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
|
FILED
NOT FOR PUBLICATION JUL 13 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
RICARDO MONTESINOS-BONILLA; No. 07-73868
et al.,
Agency Nos. A070-153-956
Petitioners, A200-022-675
A200-022-676
v. A200-022-677
ERIC H. HOLDER, Jr., Attorney General,
MEMORANDUM *
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Submitted June 29, 2010 **
Before: ALARCÓN, LEAVY, and GRABER, Circuit Judges.
Ricardo Montesinos-Bonilla and his family, natives and citizens of El
Salvador, petition for review of the Board of Immigration Appeals’ (“BIA”) order
dismissing their appeal from an immigration judge’s decision denying their
application for asylum and withholding of removal. We have jurisdiction under
*
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).
8 U.S.C. § 1252. We review de novo questions of law, Cerezo v. Mukasey, 512
F.3d 1163, 1166 (9th Cir. 2008), except to the extent that deference is owed to the
BIA’s determination of the governing statutes and regulations, Simeonov v.
Ashcroft, 371 F.3d 532, 535 (9th Cir. 2004). We review factual findings for
substantial evidence. Zehatye v. Gonzales, 453 F.3d 1182, 1184-85 (9th Cir.
2006). We deny the petition for review.
We reject petitioners’ claim they are eligible for asylum and withholding of
removal based on their membership in a particular social group. See
Velasco-Cervantes v. Holder, 593 F.3d 975, 978 (9th Cir. 2010) (rejecting as a
particular social group “former material witnesses for the United States
government”); see also Soriano v. Holder, 569 F.3d 1162, 1166 (9th Cir. 2009)
(rejecting a proposed particular social group of “government informants”).
Accordingly, because petitioners failed to demonstrate that they were or will be
persecuted on account of a protected ground, we deny the petition as to their
asylum and withholding of removal claims. See Soriano, 569 F.3d at 1166-67.
PETITION FOR REVIEW DENIED.
2 07-73868
|
UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
RODNEY HAITH, DOCKET NUMBER
Appellant, NY-0752-13-0239-X-1
v.
DEPARTMENT OF VETERANS DATE: January 16, 2015
AFFAIRS,
Agency.
THIS FINAL ORDER IS NONPRECEDENTIAL 1
John P. Varachi, Esquire, White Plains, New York, for the appellant.
William Davis, Montrose, New York, for the appellant.
Jack P. Di Teodoro, Esquire, Brooklyn, New York, for the agency.
BEFORE
Susan Tsui Grundmann, Chairman
Anne M. Wagner, Vice Chairman
Mark A. Robbins, Member
FINAL ORDER
¶1 This compliance proceeding was initiated by the appellant’s October 21,
2013, petition for enforcement of the settlement agreement. On December 11,
1
A nonprecedential order is one that the Board has determined does not add
significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
but such orders have no precedential value; the Board and administrative judges are not
required to follow or distinguish them in any future decisions. In contrast, a
precedential decision issued as an Opinion and Order has been identified by the Board
as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
2
2013, the administrative judge issued an initial decision recommending that the
Board find the agency in partial compliance with the final decision, and the
agency’s noncompliance was referred to the Board for consideration. 2 See MSPB
Docket No. NY-0752-13-0239-C-1, Compliance File (CF), Tab 13, Initial
Decision (ID). After fully considering the filings in this appeal, and based on the
following points and authorities, we find the agency in compliance with the
settlement agreement. We DISMISS the appellant’s petition for enforcement,
based on our finding the agency in compliance. 5 C.F.R. § 1201.114(e), (g).
¶2 In the December 11, 2013 compliance initial decision, the administrative
judge ordered the agency to take the following actions to be in compliance with
the settlement agreement: (1) inform the Office of Personnel Management (OPM)
in writing that the appellant’s separation for medical disability was not the result
of a resignation from his position; and (2) provide the appellant, his attorney, and
the Board with a copy of the information that it forwarded to OPM. ID at 6. On
January 15, 2014, the agency submitted a letter to the Board claiming that it
informed OPM that the appellant’s separation for medical disability was not the
result of a resignation. MSPB Docket No. NY-0752-13-0239-X-1, Compliance
Referral File (CRF), Tab 1 at 1-4. The agency’s submission included a copy of
the information purportedly sent to OPM. Id. at 3-4. However, the agency’s
letter did not include any evidence showing that the agency actually provided this
information to OPM. Id. On November 4, 2014, the agency supplemented its
submission with unrebutted evidence that it had, in fact, provided the required
information to OPM on January 13, 2014, as claimed. CRF, Tab 5 at 3-5.
Accordingly, we find that the agency is now in full compliance with the terms of
the settlement agreement.
2
The appellant filed a petition for review of the portion of the initial decision finding
the agency in compliance with the decision. CF, Tab 1. On July 29, 2014, we affirmed
the initial decision in a separate Final Order. Haith v. Department of Veterans Affairs,
MSPB Docket No. NY-0752-13-0329-C-1, Final Order (July 29, 2014).
3
¶3 With respect to the appellant’s request for monetary sanctions, we DENY
the request. The Board’s sanction authority is limited to the sanctions necessary
to obtain compliance with a Board order. Mercado v. Office of Personnel
Management, 115 M.S.P.R. 65, ¶ 8 (2010) (stating that the Board’s ability to
award sanctions is a means to enforce compliance and once compliance has been
demonstrated it would be inappropriate to impose sanctions). Here, because the
agency did comply with the settlement agreement, we are without authority to
impose sanctions in this matter.
¶4 Nevertheless, even if the Board did have authority to issue sanctions in this
matter, such an action would be inappropriate under the circumstances. The
appellant seeks monetary sanctions due to the agency’s prior noncompliance
causing a delay in the adjudication of his disability retirement with OPM, but
such monetary sanctions are unnecessary. In the event that OPM grants the
appellant’s disability retirement application, his disability annuity will commence
“on the day after the [appellant] separates or the day after pay ceases and the
employee meets the requirements for title to an annuity.” See 5 C.F.R. § 844.301.
Accordingly, if his application is granted, his annuity will include any retroactive
pay he is entitled to and will eliminate any loss of funds stemming from the
agency’s actions.
¶5 Therefore, the Board finds that the agency is in compliance and
DISMISSES the petition for enforcement. This is the final decision of the Merit
Systems Protection Board in this compliance proceeding. Title 5 of the Code of
Federal Regulations, section 1201.183(b) (5 C.F.R. § 1201.183(b)).
NOTICE TO THE APPELLANT REGARDING
YOUR FURTHER REVIEW RIGHTS
You have the right to request review of this final decision by the United
States Court of Appeals for the Federal Circuit. You must submit your request to
the court at the following address:
4
United States Court of Appeals
for the Federal Circuit
717 Madison Place, N.W.
Washington, DC 20439
The court must receive your request for review no later than 60 calendar
days after the date of this order. See 5 U.S.C. § 7703(b)(1)(A) (as rev. eff. Dec.
27, 2012). If you choose to file, be very careful to file on time. The court has
held that normally it does not have the authority to waive this statutory deadline
and that filings that do not comply with the deadline must be dismissed. See
Pinat v. Office of Personnel Management, 931 F.2d 1544 (Fed. Cir. 1991).
If you need further information about your right to appeal this decision to
court, you should refer to the federal law that gives you this right. It is found in
Title 5 of the United States Code, section 7703 (5 U.S.C. § 7703) (as rev. eff.
Dec. 27, 2012). You may read this law as well as other sections of the United
States Code, at our website, http://www.mspb.gov/appeals/uscode/htm.
Additional information is available at the court's website, www.cafc.uscourts.gov.
Of particular relevance is the court's "Guide for Pro Se Petitioners and
Appellants," which is contained within the court's Rules of Practice, and Forms 5,
6, and 11.
If you are interested in securing pro bono representation for your court
appeal, you may visit our website at http://www.mspb.gov/probono for a list of
attorneys who have expressed interest in providing pro bono representation for
Merit Systems Protection Board appellants before the court. The Merit Systems
5
Protection Board neither endorses the services provided by any attorney nor
warrants that any attorney will accept representation in a given case.
FOR THE BOARD: ______________________________
William D. Spencer
Clerk of the Board
Washington, D.C.
|
822 F.Supp. 21 (1993)
PUBLIC CITIZEN, Sierra Club, and Friends of the Earth, Plaintiffs,
v.
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Defendant.
Civ. A. No. 92-2102 (CRR).
United States District Court, District of Columbia.
June 30, 1993.
As Amended July 1, 1993.
*22 Patti Goldman, with Alan B. Morrison and Paul R.Q. Wolfson, of the Public Citizen Litigation Group, for plaintiffs.
Bradley M. Campbell, with Samuel C. Alexander of the U.S. Dept. of Justice, Environmental and Natural Resources Div., and Roger B. Clegg, Acting Asst. Atty. Gen. and Benedict S. Cohen, Acting Deputy Asst. Atty. Gen., for defendant.
CHARLES R. RICHEY, District Judge.
I. INTRODUCTION
Before the Court are the parties' Cross Motions for Summary Judgment in the above-captioned case. In their Complaint, the Plaintiffs allege that the Defendant has failed to comply with the National Environmental Policy Act ("NEPA"), 42 U.S.C. § 4321 et seq., in the negotiation and conclusion of the North American Free Trade Agreement ("NAFTA"). More specifically, the Plaintiffs challenge the Defendant's failure to prepare an environmental impact statement ("EIS") on the NAFTA and request that the Court order the Defendant to produce an EIS on the NAFTA before the President submits it to Congress. The NEPA requires that all federal agencies prepare an EIS for "every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment." 42 U.S.C. § 4332(2)(C).
The Court held oral argument on the motions on May 25, 1993. After careful consideration of the papers filed by the parties, the arguments of counsel at the hearing, the underlying law, and the entire record in this action, the Court shall grant the Plaintiffs' Motion for Summary Judgment.
II. BACKGROUND
In 1991, the United States began trilateral negotiations with Canada and Mexico with the goal of establishing a North American free trade zone. See 56 Fed.Reg. 32, 454-55 (July 16, 1991). These negotiations resulted in the NAFTA, a comprehensive document affecting every aspect of trade among the three countries. The NAFTA was signed by the trade representatives of the United States, Mexico and Canada on October 7, 1992.[1]
*23 The NAFTA is subject to the provisions of the Trade Act of 1974, as amended. See 19 U.S.C. § 2101 et seq. ("the Trade Acts"). The Trade Acts provide that the Defendant United States Office of the Trade Representative ("OTR") shall serve as the President's chief negotiator in trade matters. Id. § 2171(c). The NAFTA will be submitted to Congress under the "fast track" approval process.[2]See 19 U.S.C. §§ 2191-2194, 2902-2903. Under the fast track process, the President submits the NAFTA to Congress along with implementing legislation and an explanation of the changes in the current law. 19 U.S.C. § 2903(a)(1)(B). The NAFTA must be approved by both Houses of Congress before it can become effective, and such approval occurs when the NAFTA's implementing legislation has been enacted by both the Senate and the House of Representatives. 19 U.S.C. § 2903(a)(1). Under the fast track process, once the NAFTA has been submitted to Congress, Congress has only 60 legislative days to approve or reject the agreement, id. § 2191(c) and (e); legislative debate is limited to 20 hours in each House, id. § 2191(f) and (g); and Congress may not change the implementing legislation or the Agreement. Id. § 2191(d). The President has no obligation to submit the NAFTA to Congress for ratification; however, he is expected to do so some time this fall. See John Dillin, Kantor Says NAFTA Will Bring More Jobs, Christian Science Monitor, June 23, 1993, at 2 (United States Trade Representative Mickey Kantor says that NAFTA should be ready for Congress in September.)
As noted earlier, the NEPA requires an EIS for "every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment." 42 U.S.C. § 4332(2)(C). The Plaintiffs are three nonprofit groups that have taken an active interest in the environment: Public Citizen, the Sierra Club, and the Friends of the Earth. They contend that the Defendant United States Trade Representative and the NAFTA are subject to the NEPA and bring this action for declaratory relief to compel the Defendant to prepare an EIS on the NAFTA before it is submitted to Congress. The Plaintiffs allege that this Court has jurisdiction in this suit under the Administrative Procedures Act ("APA"), 5 U.S.C. § 701 et seq., which provides for judicial review of a final agency action by a party adversely affected or aggrieved by agency action within the meaning of a relevant statute, here the NEPA.
As the Defendant admits no EIS was prepared on the NAFTA, the question before the Court is whether the NEPA and the APA provide relief to the Plaintiffs under these circumstances. In other words, the issue before the Court is whether the NEPA and the APA properly apply to the NAFTA and the OTR's action in negotiating, drafting and ultimately approving the NAFTA on behalf of the United States. As to these issues, the Defendant claims that: 1) there is no jurisdiction over this suit under the APA; 2) the Plaintiffs have no standing in this action; and 3) the NEPA does not apply to the NAFTA. However, the Court concludes that the plain language and policies of the APA and the NEPA apply to the NAFTA and the OTR. Furthermore, the Court finds that there is jurisdiction here under the APA and that the Plaintiffs' allegations of environmental harm are sufficient for purposes of standing under the NEPA. Finally, the Court determines that the Defendant has ignored the clear language and the legislative mandate of the NEPA in failing to prepare an EIS of the NAFTA, and, therefore, the Court shall grant summary judgment for the Plaintiffs.
III. THIS COURT HAS JURISDICTION OVER THIS ACTION UNDER THE APA BECAUSE THE DEFENDANT HAS TAKEN FINAL AGENCY ACTION IN ITS PREPARATION AND FINALIZATION OF THE NAFTA.
As a threshold matter, the Court concludes that it has subject matter jurisdiction under *24 the APA for the Plaintiffs' claims under the NEPA.
The same Plaintiffs filed an earlier challenge to the NAFTA in August 1991. At that time, the negotiations for the NAFTA had not yet been concluded and no agreement had been finalized. That action was dismissed by the district court. Public Citizen v. Office of United States Trade Representative, 782 F.Supp. 139 (D.D.C.1992) (June Green, J.). The Court of Appeals affirmed the dismissal of that action, holding that there was no jurisdiction under the APA because there had not been any final agency action under section 704 of the APA. Public Citizen v. Office of United States Trade Representative, 970 F.2d 916 (D.C.Cir.1992). The Circuit noted that there was no event triggering the agency's obligation to prepare an EIS because no final NAFTA agreement had been reached, as only incomplete drafts had been prepared. Id. at 919. Under these circumstances, our Court of Appeals believed that a suit challenging the NAFTA was premature. Id. The Plaintiffs now properly assert that the OTR has taken final action as to the NAFTA and there is jurisdiction under the APA in the instant action.
The Court begins, as our Court of Appeals did in the prior case, in analyzing the question of final agency action by examining the "NEPA itself, for it specifically identifies the time when an agency's action is sufficiently concrete to trigger the EIS requirement." Id. at 918. Our Court of Appeals explicitly stated that in order to challenge the NAFTA, the "[P]laintiffs must point to a specific proposal for legislation or other action `at least arguably triggering the agency's obligation to prepare an impact statement.'" Id. at 918-19, quoting Foundation on Economic Trends v. Lyng, 943 F.2d 79, 85 (D.C.Cir.1991). In rejecting the Plaintiffs' earlier claim, our Court of Appeals explicitly noted that no final agreement had yet been produced in NAFTA negotiations and that it was unclear whether the negotiations would ever produce a final agreement. Id.
However, it is undisputed that the NAFTA agreement has now been finalized and signed by the United States, Canada, and Mexico. It is also undisputed that the NAFTA signed by the three countries is the same agreement that will be sent to Congress. Furthermore, under the fast track procedure, the agreement itself cannot be changed after it has been sent to the Congress for ratification. 19 U.S.C. § 2191(d).[3] Therefore, the Court concludes that the NAFTA agreement constitutes final agency action under the APA for purposes of this lawsuit.
A. THIS COURT HAS APA JURISDICTION BECAUSE THE DEFENDANT OFFICE OF TRADE REPRESENTATIVE IS AN AGENCY UNDER THE APA AND BECAUSE THE DEFENDANT HAS HAD SIGNIFICANT INVOLVEMENT IN THE PREPARATION, NEGOTIATION, AND DRAFTING OF THE NAFTA.
However, this does not end the Court's inquiry under the APA as the Defendant raises a related argument regarding jurisdiction that must be addressed as a threshold matter. The Defendant contends that there is no APA jurisdiction in this case because the President, and not the Defendant, is responsible for any final agency action on the NAFTA and there is no APA jurisdiction to review actions by the President. Defendant's Memorandum in Support of its Motion, at 15; see Armstrong v. Bush, 924 F.2d 282 (D.C.Cir.1991) (no APA jurisdiction to challenge the actions of the President). More specifically, the Defendant claims that APA jurisdiction is improper here because: 1) the NAFTA is actually a result of the President's efforts, and not that of the OTR for purposes of the APA and the NEPA; 2) the final agency action with regard to the NAFTA is its submission to Congress by the President and not simply its negotiation and the production of a final agreement; and 3) the President has no obligation to submit the NAFTA to Congress. However, the Court is not persuaded that *25 such arguments preclude APA jurisdiction in this case and believes that the Defendant's arguments misread the language of the applicable statutes and the case law. The Court shall address each of these arguments in turn.
First, the Court concludes that the NAFTA is, in substantial part, a result of the work of the Defendant OTR and therefore reviewable under the APA and the NEPA. The Defendant Office of the United States Trade Representative is charged by statute with the responsibility for conducting international trade negotiations, developing and coordinating United States trade policy and imposing any retaliatory trade sanctions on other countries. See 19 U.S.C. §§ 2171, 2411-2417. It is undisputed that the Defendant OTR has, in substantial part, negotiated and drafted the NAFTA.
The Court again looks to the language and case law under the NEPA in order to understand whether the Defendant's actions regarding the NAFTA constitute final agency action under the APA. Under the NEPA, a federal agency is still required to prepare an EIS even if a project or proposal is not exclusively a federal agency endeavor. See Colorado River Indian Tribes v. Marsh, 605 F.Supp. 1425 (C.D.Cal.1985); cf. Sierra Club v. Marsh, 769 F.2d 868 (1st Cir.1985) (where U.S. Corps of Engineers granted a permit for part of a construction project, an EIS was required on the entire project). Furthermore, the Council for Environmental Quality ("CEQ"), which was established by the NEPA, has issued regulations pertaining to the NEPA and its interpretation of the NEPA is entitled to substantial deference. Andrus v. Sierra Club, 442 U.S. 347, 358, 99 S.Ct. 2335, 2341, 60 L.Ed.2d 943 (1979) (citations omitted); Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 355, 109 S.Ct. 1835, 1848, 104 L.Ed.2d 351 (1989). The CEQ's regulations specifically provide that, for purposes of the NEPA, legislation:
includes a bill or legislative proposal to Congress developed by or with the significant cooperation and support of a federal agency.... The test for significant cooperation is whether the proposal is in fact predominately that of the agency rather than another source.... Proposals for legislation include requests for ratification of treaties.
40 C.F.R. § 1508.17 (1992); see Andrus, 442 U.S. at 357, 99 S.Ct. at 2341. The Court also notes that the CEQ regulations provide that major federal actions under NEPA include projects and programs entirely or partially conducted by federal agencies. 40 C.F.R. § 1508.18(a) (1992). Therefore, the significant actions taken by the Defendant OTR in negotiating and drafting the NAFTA are sufficient to trigger the EIS under the NEPA.[4]
Second, the Court concludes that the mere fact that the President submits the NAFTA to Congress does not bar review under the APA in this case. The Defendant principally relies on the Supreme Court's recent decision in Franklin v. Massachusetts, ___ U.S. ___, 112 S.Ct. 2767, 120 L.Ed.2d 636 (1992), for its argument that the President's submission of the NAFTA to Congress prevents APA jurisdiction here. In Franklin, the Supreme Court held that there was no final agency action, and thus no jurisdiction under the APA, for the Secretary of Commerce's actions regarding the census. Under the automatic reapportionment statute at issue in that case, the Secretary of Commerce supervises the taking of the census, compiles the data and reports that information to the President. After receiving the Secretary's *26 report, the President then has the statutory responsibility for transmitting a statement to Congress showing the results of the census and the number of Representatives to which each state is entitled. Id. at ___, 112 S.Ct. at 2771. The Court in Franklin concluded that there was no APA jurisdiction of the Secretary of Commerce's actions because the President took the final action in reporting the census figures to Congress and such executive action was not reviewable under the APA.
The Defendant analogizes the President's submission of the census to the Congress to his submission of the NAFTA. However, such an analogy is misplaced. In Franklin, the Court reasoned that "[t]he core question is whether the agency has completed its decision making process, and whether the result of that process is one that will directly affect the parties." Id. at ___, 112 S.Ct. at 2773. The Court concluded that no decision making process was completed where the census figure supplied by the Secretary to the President was actually a "moving target, even after the Secretary reports to the President." Id. at ___, 112 S.Ct. at 2774. The Court noted that, even after the Secretary submits his report to the President, the census information can be amended before being transmitted to Congress, the President could instruct that the census be reformed, and that, in fact, the President was not required to adhere to the policy decisions reflected in the Secretary's report. Id. at ___, 112 S.Ct. at 2774-75. Thus, the census report in Franklin was "more like a tentative recommendation than a final and binding determination." Id. at ___, 112 S.Ct. at 2774. On the other hand, the NAFTA is in stark contrast to the census report in Franklin because the NAFTA is a complete and, most importantly, a final product that will not be changed before submission to Congress. The NAFTA that was negotiated and signed by the Trade Representative is the same document that shall be submitted to Congress and which is the subject of this suit.
Third and finally, the fact that the President is under no obligation to submit the NAFTA to the Congress is not a bar to APA jurisdiction. Once again, a reference to the NEPA demonstrates why the actions by the Defendant here are final for purposes of APA jurisdiction and the preparation of an EIS. As discussed earlier, the NEPA requires that an EIS must be prepared for legislative proposals. See Izaak Walton League of America v. Marsh, 655 F.2d 346 (D.C.Cir.), cert. denied, 454 U.S. 1092, 102 S.Ct. 657, 70 L.Ed.2d 630 (1981). The case law is clear that an EIS must be prepared once such a proposal is completed and that its submission to Congress is not required. Trustees for Alaska v. Hodel, 806 F.2d 1378 (9th Cir.1986) (noting that once Congress acts on a proposal, the aggrieved party may lose its right to judicial review). As the NEPA unambiguously requires an EIS on "proposals for legislation," 42 U.S.C. § 4332(2)(C), the Court concludes that an EIS on the NAFTA is required.
IV. THE EXERCISE OF APA JURISDICTION UNDER THE APA IN THIS CASE IS NOT A VIOLATION OF SEPARATION OF POWERS BECAUSE THE NAFTA HAS ALREADY BEEN DRAFTED AND APPROVED BY THE THREE COUNTRIES AND THE PREPARATION OF AN EIS WILL NOT INTERFERE WITH THE PRESIDENT'S AUTHORITY.
The Defendant further argues that an exercise of APA jurisdiction in this case would violate separation of powers by infringing on the Executive's right and ability to conduct foreign policy. Defendant's Memorandum in Support of its Motion, at 20. However, such an argument is not persuasive in this case.
The Court concludes that the separation of powers doctrine does not bar the Plaintiffs' claims because an exercise of jurisdiction in this case under the APA and the NEPA is not an infringement of the powers of the President. In arguing that the EIS requirement will impede the President's power to conduct foreign policy, the Defendant conveniently ignores the fact that the power to regulate commerce with foreign nations is given to the Congress under the Constitution. See Constitution, Art. 1, Sec. 8, cl. 3.
*27 Furthermore, assuming arguendo that the EIS requirement here raises a separation of powers question, the circumstances surrounding this lawsuit demonstrate that an application of the NEPA to the NAFTA will not impede the President's power in any meaningful way. The NAFTA is a completed document which has been signed and agreed to by the three heads of state for the United States, Canada, and Mexico. The only remaining step to be taken regarding the NAFTA is a domestic one, specifically, the submission of the NAFTA for approval by the Congress for possible ratification. The EIS requirement is, therefore, a domestic issue, where an agency must inform the relevant decision makers, in this case the Congress, of the environmental consequences of a proposal for legislation. See 42 U.S.C. § 4332(2)(C). Given the current posture of the NAFTA, the Court does not believe that the EIS requirement would so infringe on the President's power as to be a violation of the doctrine of separation of powers.[5]
V. THE PLAINTIFFS HAVE STANDING TO CHALLENGE THE DEFENDANT'S FAILURE TO PREPARE AN EIS FOR THE NAFTA BECAUSE THE PLAINTIFFS ALLEGE SUFFICIENT AND COGNIZABLE INJURY.
The Plaintiffs claim that they have standing because the NAFTA, by its terms, will result in changes to federal and state law and policy in a variety of health and environmental matters and that these changes will have an environmental impact on them. Furthermore, the Plaintiffs argue that NAFTA will result in environmental changes to certain geographical areas, such as the area on the border between the United States and Mexico. Under these circumstances, the Plaintiffs contend that "the Court can determine whether NAFTA is likely to harm plaintiffs." Plaintiffs' Reply Brief at 9. The Court finds that the Plaintiffs' allegations, and the affidavits submitted in support thereof, establish standing under the NEPA.
It is clearly established law that:
[t]he procedural and informational thrust of [the] NEPA gives rise to cognizable injury from denial of its explanatory process, so long as there is a reasonable risk that environmental injury may occur.
City of Los Angeles v. National Highway Traffic Safety Admin., 912 F.2d 478, 492 (D.C.Cir.1990).[6] The Court agrees with the Plaintiffs that the NAFTA will create binding obligations on state and federal agencies to conform with its terms. The NAFTA, by its very terms, sets forth criteria that may form a basis for challenging various domestic health and environmental laws. See e.g. Plaintiffs' Exhibit A (NAFTA, Chapter 7). Those laws that are found to be contrary to the NAFTA's free trade provisions either cannot be applied or can become the basis of trade sanctions.[7] In addition, by virtue of the Supremacy Clause, a state law that conflicts with the NAFTA is preempted by the NAFTA. See id. (NAFTA, Article 105 (countries must "ensure that all necessary measures are taken" to comply with the *28 NAFTA, including compliance by "state and provincial governments")). Thus, changes in federal and state law to conform with the NAFTA may very likely result in environmental injuries to certain members of the Plaintiff organizations, particularly those in California and Wisconsin. See Claybrook Affidavit ¶¶ 6-8; McCloskey Affidavit ¶ 5; Wallach Affidavit ¶¶ 53-57.[8] For example, the NAFTA could serve as a basis to challenge federal and state laws, such as the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 348(c)(3)(A) & 376(b)(2), as well as California's Proposition 65, Cal.Health & Safety Code §§ 25249.5 et seq., that prohibit certain carcinogens in water and food. See Wallach Affidavit ¶¶ 34, 55-56.
Furthermore, the Court notes that the allegations of possible environmental harm as a result of the NAFTA to members of the Plaintiff organizations who live on the United States-Mexico border region are sufficiently concrete as to establish standing. See Audley Affidavit ¶¶ 6, 13-20, 39-47; Perkins Affidavit ¶ 12. In particular, the Court notes that a limited free trade zone along the United States-Mexican border, known as the Maquilardora program, demonstrates that the Plaintiffs' environmental concerns are not speculative. The Maquiladora program has resulted in grave environmental problems to those people living on either side of the border. See Audley Affidavit ¶ 21-26. These problems are so severe that the area has been called a "virtual cesspool and breeding ground for infectious diseases...." Plaintiffs' Exhibit T, (Council on Scientific Affairs, "A Permanent USMexico Border Environmental Health Commission," 263 JAMA 3319, 3320 (1990)). The Plaintiffs also make claims as to the air quality on behalf of their members in specific metropolitan areas, such as San Diego, California, and El Paso, Texas, and allege that air quality in these cities will suffer as a result of the NAFTA. See e.g., Claybrook Affidavit ¶ 8.
In fact, as part of its work on the NAFTA, the Defendant prepared a Review of U.S.-Mexico Environmental Issues ("the Review"), which identifies numerous environmental issues related to the NAFTA. See Plaintiffs' Exhibit D. The Review confirms that the NAFTA will have significant environmental effects and acknowledges that NAFTA may worsen the environmental problems already existing in the United States-Mexico border area. Id., (Executive Summary at 3-7).[9] Such allegations of injury are sufficient for standing purposes. See Public Citizen v. National Highway Traffic Safety Admin., 848 F.2d 256 (D.C.Cir.1988); National Wildlife Federation v. Hodel, 839 F.2d 694 (D.C.Cir.1988); Oregon Environmental Council v. Kunzman, 817 F.2d 484 (9th Cir.1987).
The Defendant complains that many of the alleged environmental effects of the NAFTA are too widespread to be confined to a particular geographical location.[10] However, the absence of a geographical nexus does not defeat a claim of standing because that "would mean that the most injurious and widespread Government actions could be questioned by nobody." United States v. *29 SCRAP, 412 U.S. 669, 688, 93 S.Ct. 2405, 2416, 37 L.Ed.2d 254 (1973).[11]
Thus, the Court concludes that standing is proper where allegation of environmental harms to particular members of the Plaintiff organizations are sufficiently concrete.[12]
VI. REQUIRING THE PREPARATION OF AN ENVIRONMENTAL IMPACT STATEMENT ON THE NAFTA BEFORE ITS SUBMISSION TO CONGRESS IS REQUIRED BY THE CLEAR LANGUAGE OF THE NEPA AND IS CONSISTENT WITH THE POLICIES BEHIND IT.
Having determined that the APA and the NEPA apply to the NAFTA, the plain language of the NEPA makes it a foregone conclusion that the OTR must prepare an EIS on the NAFTA.[13] The NEPA requires that all federal agencies "include in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment" an environmental impact statement setting forth the environmental impact of the proposed action. 42 U.S.C. § 4332(2)(C).[14] Furthermore, it is established law that "the policies, regulations and public laws of the United States shall be interpreted and administered with the policies of NEPA `to the fullest extent possible.'" Trustees for Alaska v. Hodel, 806 F.2d 1378, 1382 (9th Cir.1986) (quoting 42 U.S.C. § 4332; citing Lathan v. Brinegar, 506 F.2d 677, 687 (9th Cir.1974) (en banc)).
There is a narrow exception to the NEPA's EIS requirement only where compliance with the NEPA would result in a "clear and fundamental conflict of statutory authority." Flint Ridge Development Co. v. Scenic Rivers Ass'n., 426 U.S. 776, 791, 96 S.Ct. 2430, 2439, 49 L.Ed.2d 205 (1976). However, such an exception is narrowly construed. See Jones v. Gordon, 792 F.2d 821 (9th Cir.1986) (a 90-day time limit for issuing permits under the Marine Mammal Protection Act did not excuse compliance with the NEPA's EIS requirement). There is nothing in the fast track procedures or the Trade *30 laws that specifies that the NEPA shall not apply to the NAFTA. The Court also note that other governmental entities, most notably the State Department, prepare EISs for international treaties. 22 C.F.R. §§ 161.5(d), 161.7(d)(2) (1992). Furthermore, as the timetable for the NAFTA's submission to Congress is not explicit, the statutes here can be reconciled with the EIS requirement contained in the NEPA.[15]
Finally, the Court notes that the House of Representatives unanimously passed a resolution stating that "Congress will not approve legislation to implement any trade agreement if such agreement jeopardizes United States health, safety, labor, or environmental laws." H.R.Res. 246, 102nd Cong., 2nd Sess. (1992), and that certain Senators have requested that an EIS be prepared on the NAFTA.[16] Such events confirm that Congress is interested in the environmental effects of the NAFTA and would be aided by the preparation of an EIS.
VII. CONCLUSION
The NEPA, and the policies under it, clearly require that a federal agency prepare an environmental impact statement on every proposal for legislation significantly affecting the quality of the human environment. 42 U.S.C. § 4332(2)(C). The Court finds that the Plaintiffs have demonstrated that there is a reasonable risk that the NAFTA may cause environmental injury and the Court concludes that the actions of the Defendant Office of the United States Trade Representative in negotiating, drafting, and signing the NAFTA are subject to review under the APA and NEPA. Therefore, the Court shall enter summary judgment for the Plaintiffs and order that the Defendant prepare an environmental impact statement on the NAFTA with all deliberate speed.
The Court notes that this agreement was negotiated by President Bush and his Trade Representative Carla A. Hill, and thus this lawsuit should not be construed as a failure of the present Administration. However, such an impact statement is essential for providing the Congress and the public the information needed to assess the present and future environmental consequences of, as well as the alternatives to, the NAFTA when it is submitted to the Congress for approval. See Natural Resources Defense Council v. Morton, 337 F.Supp. 165 (D.D.C.) (Richey, J.), aff'd, 458 F.2d 827 (D.C.Cir.1972) (Leventhal, J.).
The Court shall enter an Order of even date herewith in accordance with this Opinion.
ORDER
Before the Court are the parties' Cross Motions for Summary Judgment in the above-captioned case. After careful consideration of the parties' Motions, all the papers filed in this case, and the applicable law, and for the reasons articulated in the Opinion of the Court of even date herewith, it is, by the Court, this 30th day of June, 1993,
ORDERED that the Plaintiffs' Motion for Summary Judgment shall be, and hereby is, GRANTED; and it is
FURTHER ORDERED that the Defendant's Motion for Summary Judgment shall be and hereby is DENIED; and it is
FURTHER ORDERED that the Defendant Office of the United States Trade Representative *31 has acted contrary to law under the Administrative Procedures Act, 5 U.S.C. § 701 et seq., by failing to prepare an Environmental Impact Statement on the North American Free Trade Agreement as required by the National Environmental Policy Act; and it is
FURTHER ORDERED that the Plaintiffs shall have a Declaratory Judgment that the Defendant Office of the United States Trade Representative must prepare an Environmental Impact Statement on the North American Free Trade Agreement pursuant to the National Environmental Policy Act, 42 U.S.C. § 4332; and it is
FURTHER ORDERED that the Defendant shall prepare such an Environmental Impact Statement forthwith, and that the Court retains jurisdiction to determine an appropriate schedule for the issuance of the aforementioned Environmental Impact Statement if there is a dispute between the parties as to a reasonable timetable for its preparation; and it is
FURTHER ORDERED that the above-captioned case shall be, and hereby is, DISMISSED from the dockets of this Court.
NOTES
[1] The NAFTA addresses, inter alia, barriers to trade, intellectual property rights, and trade in goods. It also provides an exhaustive tariff schedule to govern trade between the three countries.
[2] The fast track procedures are not statutory requirements but have been adopted as an exercise of the rule making power of the House of Representatives and the Senate. See 19 U.S.C. § 2191(a)(1).
[3] Various side agreements are being negotiated by the three countries on topics related to the NAFTA. However, the Defendant does not claim that the NAFTA itself is not a final agreement by virtue of the negotiation of these side agreements.
[4] The Office of the United States Trade Representative has a separate statutory basis for its authority and has many separate responsibilities aside from assisting and advising the President, see 19 U.S.C. § 2171, and thus, the OTR is an agency subject to the APA. See Soucie v. David, 448 F.2d 1067 (1971) (a component with substantial independent authority in the exercise of its functions is an agency); see also Energy Research Foundation v. Defense Nuclear Facilities Safety Bd., 917 F.2d 581 (D.C.Cir.1990).
Furthermore, the Court notes that this finding is supported by the fact that the appointment of the OTR's top officials are subject to the advice and consent of the Senate, thus making them somewhat independent of the executive branch. 19 U.S.C. § 2171(b). In addition, the OTR is an agency under the Freedom of Information Act and the Privacy Act. See 15 C.F.R. §§ 2004, 2005 (1993).
[5] The Defendant's argument concerning separation of powers had more force in the prior suit regarding the NAFTA because the Plaintiffs were requesting that an EIS be completed before the conclusion of the NAFTA negotiations. See Public Citizen v. Office of United States Trade Representative, 782 F.Supp. 139 (D.D.C.1992) (June Green, J.). However, such a suit was dismissed on other grounds and thus no infringement of Executive power occurred.
[6] In the prior suit brought by the Plaintiffs, the district court dismissed the action, holding that the Plaintiffs did not establish standing under the NEPA. Public Citizen v. Office of U.S. Trade Representative, 782 F.Supp. 139, 142 (D.D.C. 1992). More specifically, Judge June Green found that the Plaintiffs failed to establish standing derivatively through its members because it could not show that members' environmental or recreational interests would be harmed by a particular agency action. Id. However, as discussed earlier, no final NAFTA agreement had been reached when that suit was pending and thus any allegations of harm were premature. Public Citizen v. Office of the United States Trade Representative, 970 F.2d 916, 919 (D.C.Cir.1992). In addition, our Court of Appeals did not reach the issue of standing in affirming the district court's dismissal. Id.
[7] The Plaintiffs set forth numerous health and environmental measures which may be set aside as contrary to the NAFTA, thus leading to injury. These include, inter alia, pesticide residue standards, chemical bans, bans on seafood imports based on certain environmental criteria, and pollution controls. See Wallach Affidavit.
[8] History demonstrates that the conflict between the NAFTA and other federal and local laws is far from hypothetical. For example, a dispute panel under the General Agreement on Tariffs and Trade, commonly referred to as GATT, has recently ruled that the Marine Mammal Protection Act impermissibly restricts Mexican trade in violation of GATT. See Plaintiffs' Exhibit C (GATT Panel Report, United StatesRestrictions on Imports of Tuna, at 40-42, 45-47 (1991)). The Marine Mammal Protection Act is an environmental statute that prohibits tuna imports from countries that use fishing methods that kill dolphins in greater numbers than domestic companies are permitted by the statute. 16 U.S.C. § 1371; see Committee for Humane Legislation, Inc. v. Richardson, 414 F.Supp. 297 (D.D.C.), aff'd, 540 F.2d 1141 (1976).
[9] The Environmental Review was a general study conducted on the possible ramifications of the NAFTA but the Defendant does not contend that it qualifies as an EIS under the NEPA. It does not qualify as a EIS because it does not analyze the effect of the actual NAFTA, or identify and analyze other alternatives. 42 U.S.C. § 4332(2)(C); see Natural Resources Defense Council v. Morton, 337 F.Supp. 165 (D.D.C.) (Richey, J.), aff'd, 458 F.2d 827 (D.C.Cir.1972) (Leventhal, J.).
[10] Such claims include the allowance of pesticides on food imports from Mexico.
[11] In addition, the Plaintiffs allege that certain NAFTA provisions will cause a wide variety of other pervasive and adverse environmental effects. For example, they claim that NAFTA's reduction of trade barriers will cause a reduction in prices for domestic agricultural and meat products, thus creating pressure to intensify domestic production methods which will have a detrimental effect on the environment. See Plaintiffs' Exhibit A (NAFTA, Chapter 7); Ritchie Affidavit ¶¶ 4-8. In addition, the Plaintiffs allege that NAFTA's energy incentives for oil and gas exploration will encourage the use of nonrenewable energy resources. See Plaintiffs' Exhibit A (NAFTA, Chapter 6); Wallach ¶ 65. Finally, they claim that the NAFTA may have "pollution haven effects" in that domestic companies will move their operations to Mexico to avoid more stringent U.S. environmental laws. See Plaintiffs' Exhibit D (Review, Executive Summary at 7). While the Court does not rely on these allegations for purposes of standing, it does note that an EIS would help to clarify the extent and scope of the environmental impact of the NAFTA. See infra Section VI.
[12] The Court also notes that the Plaintiffs also allege standing on the basis of an injury to their organizational interests by claiming that they are unable to keep their members adequately informed. The Supreme Court has stated that such injury is within the zone of interest that the NEPA was designed to protect. Lujan v. National Wildlife Federation, 497 U.S. 871, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990). Such claims of informational standing have been rejected where a plaintiff has been unable to identify any particular agency action as the source of injury. Foundation on Economic Trends v. Lyng, 943 F.2d 79 (D.C.Cir.1991) (no EIS required for a federal agency's day-to-day operations). However, the Court is not convinced that such informational standing is wholly improper where the Plaintiffs are challenging a specific proposal for legislation such as the NAFTA.
[13] The purposes of the NEPA are to "declare a national policy which will encourage productive and enjoyable harmony between man and his environment; to promote efforts which will prevent or eliminate damage to the environment and biosphere and stimulate the health and welfare of man; [and] to enrich the understanding of the ecological systems and natural resources important to the Nation...." 42 U.S.C. § 4321.
[14] The Court also notes that CEQ regulations require an EIS where federal actions "establish a precedent for future actions with significant effects or represent[] a decision in principle about a future consideration," 40 C.F.R. § 1508.27(b)(6), or "threaten[] a violation of Federal, State, or local law or requirements imposed for the protection of the environment," id. § 1508.27(b)(10), especially where those effects are "likely to be highly controversial." Id. § 1508.27(b)(4).
[15] The Defendant argues that requiring an EIS at this juncture will be unduly burdensome because there is inadequate time available for its preparation. However, the Court notes that the OTR could have very easily begun the EIS process earlier in the NAFTA negotiation process and thus any tight timetable for the preparation of an EIS on the NAFTA is entirely the result of the inaction by the prior administration.
In addition, our Court of Appeals noted that Congress retains the power to change its rules governing the fast track process and extend the statutory limit on its consideration of the NAFTA if it wishes to postpone such consideration until an EIS has been prepared. Public Citizen v. Office of the United States Trade Representative, 970 F.2d 916, 922 (D.C.Cir.1992). Furthermore, it would be manifestly unjust to deny relief in this case on the grounds that there was inadequate time to prepare an EIS because the Plaintiffs brought their prior lawsuit specifically to ensure that they could obtain judicial review with ample time for the OTR to complete an EIS. See Public Citizen v. Office of the United States Trade Representative, 782 F.Supp. 139 (D.D.C. 1992) (June Green, J.); Plaintiffs' Brief in Support of its Motion for Summary Judgment, at 13.
[16] See e.g., Plaintiffs' Exhibit Z (Letter from Senator Patrick Leahy to Carla A. Hills, dated March 26, 1992, at 3).
|
98 F.3d 1335
NOTICE: Fourth Circuit Local Rule 36(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 Fourth Circuit.Julian Edward ROCHESTER, Plaintiff--Appellant,v.STATE of South Carolina; J. Arthur Robinson; K. Green; R.Divine, Mr., of the Education Department; M. Dease; J.Byrd; A. Joyner, Mr.; M. Devaughn, Ms.; W. Ratliff, Mr.;R. Pratt, Mr.; W.L. Eagleton, Associate Warden; William R.Davis, Warden; R. Drake, Mr.; Mr. Dawkins; South CarolinaDepartment of Corrections, Defendants--Appellees.
No. 96-6093.
United States Court of Appeals, Fourth Circuit.
Submitted Sept. 20, 1996.Decided Oct. 3, 1996.
Julian Edward Rochester, Appellant Pro Se. David Leon Morrison, John Thomas Lay, Jr., ELLIS, LAWHORNE, DAVIDSON & SIMS, P.A., Columbia, South Carolina; Merl Floyd Code, Sr., CODE, WESTON & MOSLEY, Greenville, South Carolina, for Appellees.
Before NIEMEYER, HAMILTON, and MOTZ, Circuit Judges.
PER CURIAM:
1
Appellant appeals from the district court's order denying relief on his 42 U.S.C. § 1983 (1994) complaint. We have reviewed the record and the district court's opinion and find no reversible error. Accordingly, we affirm on the reasoning of the district court. Rochester v. South Carolina, No. CA-93-3344-2-21AJ (D.S.C. Dec. 28, 1995). 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.
2
AFFIRMED.
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
STANLEY J. JAKUBIAK,
Plaintiff-Appellant,
v.
No. 97-2062
WILLIAM PERRY, SECRETARY OF
DEFENSE,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
T. S. Ellis, III, District Judge.
(CA-95-722-A)
Submitted: May 29, 1998
Decided: July 17, 1998
Before LUTTIG and HAMILTON, Circuit Judges, and
BUTZNER, Senior Circuit Judge.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
Edward J. Tolchin, FETTMANN, TOLCHIN & MAJORS, P.C., Fair-
fax, Virginia, for Appellant. Helen F. Fahey, Arthur E. Peabody, Jr.,
Assistant United States Attorney, Alexandria, Virginia; Jenifer Schall,
Assistant General Counsel, Washington, D.C., for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Stanley Jakubiak appeals the district court's order granting sum-
mary judgment for his employer, the United States Department of
Defense [the Department], in his reverse gender discrimination action
brought pursuant to Title VII of the Civil Rights Act of 1964, 42
U.S.C.A. §§ 2000e - 2000e-17 (West 1994 & Supp. 1998). Upon de
novo review, we affirm.
Jakubiak is a white male who unsuccessfully sought the position of
Deputy Director, Space and Nuclear Forces Command, Control and
Communications in the Department. Jakubiak alleges that the Depart-
ment promoted a less qualified female applicant for the position, in
violation of Title VII. The district court determined that Jakubiak
failed to establish a prima facie case of reverse gender discrimination
and that, moreover, he did not show that the Department's legitimate,
non-discriminatory reason for hiring the female applicant was pretex-
tual.
We review an award of summary judgment de novo. See Higgins
v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1167 (4th Cir.
1988). Summary judgment is appropriate when the record taken as a
whole establishes "that there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment as a matter
of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986).
In ruling on a motion for summary judgment, a court must assess the
evidence in the light most favorable to the party opposing the motion.
See Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir.
1979).
In a promotion case where a job is filled in an allegedly discrimina-
tory manner, a plaintiff must ultimately show that he or she was sub-
ject to an adverse employment action, which was more likely than not
2
motivated by plaintiff's gender. See Evans v. Technologies Applica-
tions & Serv., Co., 80 F.3d 959-60 (4th Cir. 1996). A plaintiff raises
an inference of reverse discrimination when he proves the following:
(1) that he belongs to a protected class; (2) that he applied for and was
qualified for a job; (3) that he was rejected for the job; and (4) that
he was rejected under circumstances giving rise to an inference of
unlawful discrimination.* See id.; Holmes v. Bevilacqua, 794 F.2d
142, 147 (4th Cir. 1986). If the plaintiff succeeds in proving the prima
facie case, the burden shifts to the defendant to show a legitimate,
nondiscriminatory reason for the challenged decision. See Page v.
Bolger, 645 F.2d 227, 230-31 (4th Cir. 1981). Then, if the defendant
carries this burden, the plaintiff must show that the proffered reasons
were a pretext for discrimination. See Texas Dep't of Community
Affairs v. Burdine, 450 U.S. 248, 256 (1981). A pretext exists only if
the plaintiff shows that the defendant's proffered reason is false and
that discrimination was the actual reason for the decision. See Jiminez
v. Mary Washington College, 57 F.3d 369, 378 (4th Cir. 1995) (citing
St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502 (1993)).
We find that even if Jakubiak established a prima facie case of fail-
ure to promote, the Department demonstrated a legitimate, nondis-
criminatory reason for promoting Cynthia Raiford, a white female,
over him. The record indicates that both Jakubiak and Raiford were
qualified. Out of the ten criteria used to make the selection, Raiford
and Jakubiak ranked equally in the four technical criteria, and Raiford
ranked highest overall in the six management skill criteria. Jakubiak
failed to produce probative evidence that the Department's proffered
reason for its employment decision was pretextual or based on Jaku-
biak's sex.
We agree with the district court that Jakubiak failed to show that
the Department's reason was pretextual. Further, contrary to Jaku-
biak's allegations, we agree with the district court that the record evi-
dences that the Department complied with procedures and policies in
_________________________________________________________________
*We do not need to resolve the issue of whether Jakubiak is entitled
to the same inference of discrimination as a female plaintiff when he
proves a prima facie case of gender discrimination because even under
this less demanding test, Jakubiak cannot prevail. See Lucas v. Dole, 835
F.2d 532, 534 (4th Cir. 1987).
3
making the selection, that the selection decision was not based on an
affirmative action program in effect providing for quotas, goals, or
preferences for women, and that the selector was not biased in making
the selection. Thus, we find summary judgment was appropriately
granted for the Department on Jakubiak's claim of reverse gender dis-
crimination. We dispense with oral argument because the facts and
legal issues are adequately presented in the materials before the court
and argument would not significantly aid the decision process.
AFFIRMED
4
|
41 F.3d 1511
NOTICE: Seventh Circuit Rule 53(b)(2) states unpublished orders shall not be cited or used as precedent except to support a claim of res judicata, collateral estoppel or law of the case in any federal court within the circuit.UNITED STATES of America, Plaintiff-Appellee,v.Jorge ASTORGA, Defendant-Appellant.
No. 93-3810.
United States Court of Appeals, Seventh Circuit.
Argued Nov. 8, 1994.Decided Nov. 14, 1994.
Before COFFIN,* CUMMINGS and EASTERBROOK, Circuit Judges.
ORDER
1
Jorge Astorga was apprehended with two kilograms of cocaine in his truck. He says that the evidence is insufficient to convict him of conspiring to possess and distribute this drug, but the jury was entitled to believe that Astorga well knew what was in the package and what role he was playing. Astorga drove his truck to the scene of a drug transaction that others had arranged. When the buyer approached the truck, Astorga let him look at the package and, after the buyer had sniffed the contents, asked him whether "it" was "good." The buyer answered yes and said that he would return with the money within five minutes. Astorga replied: "All right." Reasonable jurors could believe that Astorga was a willing participant in the delivery of drugs.
2
Having denied guilt at trial and put the prosecution to its proof--and having argued on appeal that the evidence is insufficient to support the conviction--Astorga inconsistently argues that he is entitled to a two-level reduction for acceptance of responsibility. As we remarked recently, United States v. Gomez, 24 F.3d 924, 926 (7th Cir.1994), such a contention has no chance of success. It does not succeed today.
3
Finally, Astorga contends that as a "mere courier" he is entitled to a two-level reduction for a minor role in the offense. The district judge disagreed, and our review is deferential. United States v. Rosalez-Cortez, 19 F.3d 1210, 1218 (7th Cir.1994). Astorga may have been a minor player in a larger enterprise that had promised to deliver drugs in quantity after the success of the initial sale. But he was not a minor participant in that sale. The only cocaine attributed to him in the sentencing calculation was that in his truck when he was arrested. The judge excluded an additional kilogram that the sellers had agreed to deliver, but that according to another participant was unavailable because the man transporting the cocaine had made a mistake and had brought only two kilos. Whatever the right approach might have been had Astorga been held responsible for the larger quantities this drug ring promised at the time (three kilograms) or for the future (much larger quantities), there was no clear error or abuse of discretion in holding him fully responsible for the inventory on hand at the time of the arrest.
4
AFFIRMED.
*
Of the First Circuit, sitting by designation
|
740 F.2d 964
U.S.v.Mount
83-6409
United States Court of Appeals,Fourth Circuit.
7/27/84
1
E.D.Va.
AFFIRMED
|
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
IN RE: MUSICAL INSTRUMENTS AND No. 12-56674
EQUIPMENT ANTITRUST LITIGATION,
D.C. No.
3:09-md-02121-
JOSHUA RAMSEY; DAVID LAB-DHB
GIAMBUSSO; DWAYNE WIGGINS;
JASON PARADISE; KATE
MACWILLIAMSON; NIRANJAN OPINION
PARIKH; PAULA JENNINGS; RYAN J.
BIGG; MARK O’LEARY; CYNTHIA
SEPULVEDA; RUSSELL D. MELTON;
JERRY JOST; KEVIN GAGNEPAIN;
JOSH PEARSON; JOHN PEARSON;
MARY PEARSON; COLBY GILES;
DAVID KEEL; WILLIAM S. POFF;
ALLEN HALE; DANIEL T. SMITH;
GERALD LOGSDON; AUGUSTIN
CERVANTES; BENN FELTHEIMER;
BRYAN ROACH; BRANDON
ARMSTRONG; RICHARD TABAS;
ALLEN HALE; KENNETH MANYIN;
RUSSELL D. MELTON; JON BANDISH;
MARK O’LEARY; ALEX TELLER;
SCOTT COOK; JOSHUA SEILER;
JOHAN EDWARD RIGOR; WALTER
WITHERSPOON; ROBERT LESKO;
SUZANNE ONDRE; LISA PRITCHETT,
Plaintiffs-Appellants,
2 IN RE: MUSICAL INSTRUMENTS
v.
NATIONAL ASSOCIATION OF MUSIC
MERCHANTS, INC.; GUITAR CENTER,
INC.; GUITAR CENTER STORES, INC.;
FENDER MUSICAL INSTRUMENTS
CORP.; YAMAHA CORPORATION OF
AMERICA; GIBSON GUITAR
CORPORATION; HOSHINO, U.S.A.,
INC.; KAMAN MUSIC CORPORATION,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of California
Larry A. Burns, District Judge, Presiding
Argued and Submitted
October 6, 2014—Pasadena, California
Filed August 25, 2015
Before: Harry Pregerson, Richard C. Tallman,
and Carlos T. Bea, Circuit Judges.
Opinion by Judge Bea;
Dissent by Judge Pregerson
IN RE: MUSICAL INSTRUMENTS 3
SUMMARY*
Antitrust
The panel affirmed the district court’s dismissal of a
claim under § 1 of the Sherman Act, alleging a price-fixing
conspiracy among guitar manufacturers.
A putative class of guitar and guitar amplifier purchasers
alleged that certain guitar manufacturers each adopted similar
advertising policies under circumstances suggesting that they
agreed among themselves to adopt those policies. They thus
alleged a hybrid horizontal and vertical agreement, or
“hub-and spoke” agreement. The panel held that the
respective parts of a hub-and-spoke conspiracy are analyzed
separately, the vertical components under the rule of reason
and the horizontal components as violations per se.
The panel stated that the key agreements here were those
among the defendant manufacturers. Plaintiffs’ allegations of
parallel conduct, in conjunction with several “plus” factors,
were insufficient to provide a plausible basis from which to
infer the existence of these alleged horizontal agreements.
Accordingly, plaintiffs failed to state a claim under § 1.
Dissenting, Judge Pregerson wrote that plaintiffs pleaded
enough factual matter (taken as true) to suggest that a
horizontal agreement existed between defendants.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4 IN RE: MUSICAL INSTRUMENTS
COUNSEL
Daniel C. Girard, Elizabeth C. Pritzker, Amanda Steiner,
Scott M. Grzenczyk (argued), Girard Gibbs LLP, San
Francisco, California, for Plaintiffs-Appellants.
Margaret M. Zwisler (argued), J. Scott Ballenger, Latham &
Watkins LLP, Washington, D.C.; Christopher S. Yates,
Latham & Watkins LLP, San Francisco, California, for
Defendant-Appellee Guitar Center, Inc.
Daniel A. Sasse, Chahira Solh, Crowell & Moring LLP,
Irvine, California, for Defendant-Appellee Yamaha
Corporation of America.
Paul C. Cuomo, Stephen Weissman, Baker Botts LLP,
Washington, D.C.; Robert G. Abrams, Baker & Hostetler
LLP, Washington, D.C., for Defendant-Appellee National
Association of Music Merchants, Inc.
Neil G. Epstein, Keith E. Smith, Eckert Seamans Cherin &
Mellott, LLC, Philadelphia, Pennsylvania; Christopher M.
Young, DLA Piper LLP (US), San Diego, California, for
Defendant-Appellee Hoshino (U.S.A.), Inc.
Lawrence G. Scarborough, J. Alex Grimsley, Bryan Cave
LLP, Phoenix, Arizona, for Defendants-Appellees Fender
Musical Instruments Corporation and Kaman Music Corp.
Tim Harvey, Riley Warnock & Jacobson, PLC, Nashville,
Tennessee, for Defendant-Appellee Gibson Guitar Corp.
DBA Gibson U.S.A.
IN RE: MUSICAL INSTRUMENTS 5
OPINION
BEA, Circuit Judge:
Where a large musical-instrument retailer pressures
individual guitar manufacturers to set the lowest prices at
which the manufacturers will permit any retailer to advertise
the manufacturers’ products—and each manufacturer
acquiesces—can we infer the manufacturers conspired among
themselves to fix prices?
Plaintiffs ask us to answer this question in the affirmative.
They claim it is plausible to infer a price-fixing conspiracy
based only on allegations that certain guitar manufacturers
each adopted similar advertising policies (“parallel conduct”)
under circumstances that suggest the manufacturers agreed
among themselves to adopt those policies (“plus factors”).
But plaintiffs’ plus factors are no more consistent with an
illegal agreement than with rational and competitive business
strategies, independently adopted by firms acting within an
interdependent market. Plaintiffs’ allegations of “merely
parallel conduct that could just as well be independent action”
are insufficient to state a claim under § 1 of the Sherman Act,
15 U.S.C. § 1. Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
557 (2007). And because plaintiffs’ plus factors add nothing,
we affirm the judgment of the district court dismissing
plaintiffs’ § 1 claim.
I
Plaintiffs, a putative class, purchased guitars and guitar
amplifiers from defendant Guitar Center, Inc. (“Guitar
Center”), the largest retail seller of musical instruments in the
6 IN RE: MUSICAL INSTRUMENTS
United States.1 The guitars and amplifiers were manufactured
by five major manufacturers, defendants Fender Music
Instruments Corp., Gibson Guitar Corp., Yamaha Corp. of
America, Hoshino U.S.A., Inc., and Kaman Music Corp.
(“manufacturer defendants”). In their present complaint,
plaintiffs allege that between 2004 and 2009, Guitar Center
and the manufacturer defendants—along with defendant trade
association National Association of Music Merchants
(NAMM)—conspired to implement and enforce minimum-
advertised-price policies (“MAP policies”) that fixed the
minimum price at which any retailer could advertise the
manufacturers’ guitars and guitar amplifiers. According to
plaintiffs, these MAP policies tended to raise retail prices and
restrain competition. Plaintiffs allege that each manufacturer
agreed with Guitar Center to adopt MAP policies and that the
manufacturers agreed among themselves to adopt the MAP
policies proposed by Guitar Center. Plaintiffs claim this
collection of agreements violates § 1 of the Sherman Act and
the antitrust laws of Massachusetts and California.
Prior Federal Trade Commission Investigation and
Settlement
In 2007, before plaintiffs filed any of the cases that now
constitute this consolidated litigation, the Federal Trade
Commission (FTC) initiated a nonpublic investigation into
price fixing in the music-products industry. The FTC alleged
that
1
Plaintiffs allege that Guitar Center exercises considerable market
power in the musical-instruments industry—especially the market for
guitars and guitar amplifiers—controlling nearly one third of all retail
sales in the United States; Guitar Center also serves as the largest retailer-
customer of many of its instrument manufacturers.
IN RE: MUSICAL INSTRUMENTS 7
[b]etween 2005 and 2007, NAMM organized
various meetings and programs at which
competing retailers of musical instruments
were permitted and encouraged to discuss
strategies for implementing minimum
advertised price policies, the restriction of
retail price competition, and the need for
higher retail prices. . . . At these NAMM-
sponsored events, competitors discussed the
adoption, implementation, and enforcement of
minimum advertised price policies; the details
and workings of such policies; appropriate
and optimal retail prices and margins; and
other competitively sensitive issues.
Complaint, In re National Association of Music Merchants,
Inc., No. C-4255, at ¶ 5. The FTC further alleged that the
exchange of information among NAMM members (which
include Guitar Center and the manufacturer defendants)
“served no legitimate business purpose” and “had the
purpose, tendency, and capacity to facilitate collusion and to
restrain competition unreasonably.” Id. at ¶¶ 6–7. Neither
Guitar Center nor the manufacturer defendants were parties
to this FTC proceeding.
The FTC and NAMM resolved the dispute through a
consent decree. In the consent decree, the FTC ordered
NAMM to cease and desist from “urging, encouraging,
advocating, suggesting, coordinating, participating in, or
facilitating in any manner the exchange of information
between or among Musical Product Manufacturers or Musical
Product Dealers relating to . . . Price Terms, margins, profits,
or pricing policies, including but not limited to Minimum
Advertised Price Policies.” Decision and Order, In re
8 IN RE: MUSICAL INSTRUMENTS
National Association of Music Merchants, Inc., No. C-4255,
at *4. NAMM must also file periodic compliance reports and
make a statement before each NAMM trade show informing
members of the organization’s and members’ obligations
under the antitrust laws. Id. at *5–7. NAMM neither admitted
nor denied the FTC’s allegations, and the FTC did not levy
any monetary fine.
Proceedings Below
After the FTC issued its consent decree, numerous
plaintiffs filed complaints alleging that defendants agreed to
fix the retail prices of musical instruments in violation of § 1
of the Sherman Act and state antitrust laws. The Judicial
Panel on Multidistrict Litigation centralized twenty-eight of
these cases in the Southern District of California.
Defendants moved to dismiss plaintiffs’ first consolidated
class-action complaint under Federal Rule of Civil Procedure
12(b)(6). Defendants argued that plaintiffs’ allegations were
insufficiently detailed to satisfy the requirements of
specificity and plausibility that the Supreme Court had
recently outlined in Twombly. The district court granted the
motion to dismiss in part but permitted plaintiffs to amend
their complaint. The district court found that plaintiffs failed
to identify in their complaint “who is alleged to have
conspired with whom, what exactly they agreed to, and how
the alleged conspiracy was organized and carried out.” Nor
did plaintiffs “plead enough of the [MAP policies’] terms to
show how they restrained competition.” The district court
gave plaintiffs a chance to remedy these problems by
permitting some discovery. But because the district court
agreed with defendants that “remarks at open panel
discussions attended by many people at trade shows cannot
IN RE: MUSICAL INSTRUMENTS 9
reasonably constitute the terms of an illegal agreement in
these circumstances,” the court “limited [discovery] to who
attended or participated in meetings alleged in the amended
consolidated complaint and what was said or agreed to
there.”2
Following this limited discovery, plaintiffs filed the
operative complaint. Defendants again moved to dismiss the
complaint for its failure to state a claim. The district court
granted defendants’ motion and dismissed plaintiffs’ § 1
claim with prejudice for failure to satisfy the pleading
standard set forth in Twombly. Plaintiffs timely appealed.
II
We exercise appellate jurisdiction under 28 U.S.C.
§ 1291. We review de novo the district court’s dismissal of a
complaint for failure to state a claim. See Ecological Rights
Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 507 (9th Cir.
2013). When conducting this review, we accept as true all
nonconclusory factual allegations in the complaint. Id. (citing
Rowe v. Educ. Credit Mgmt. Corp., 559 F.3d 1028, 1029–30
(9th Cir. 2009)).
2
Discovery consisted of document requests and interrogatories served
on each defendant; plaintiffs also deposed NAMM’s CEO and seven
employees or former employees of the manufacturer defendants and
Guitar Center.
10 IN RE: MUSICAL INSTRUMENTS
III
A
The antitrust laws of the United States aim to protect
consumers by maintaining competitive markets. To that end,
§ 1 of the Sherman Act prohibits agreements that
unreasonably restrain trade by restricting production, raising
prices, or otherwise manipulating markets to the detriment of
consumers. See 15 U.S.C. § 1; State Oil Co. v. Khan,
522 U.S. 3, 10 (1997); Apex Hosiery Co. v. Leader, 310 U.S.
469, 493 (1940).
In analyzing the reasonableness of an agreement under
§ 1, the Supreme Court has distinguished between agreements
made up and down a supply chain, such as between a
manufacturer and a retailer (“vertical agreements”), and
agreements made among competitors (“horizontal
agreements”). The Supreme Court has recognized that certain
horizontal agreements “always or almost always tend to
restrict competition and decrease output.” Broadcast Music,
Inc. v. CBS, 441 U.S. 1, 19–20 (1979). Classic examples
include agreements among competitors to fix prices, divide
markets, and refuse to deal. See, e.g., United States v. Trenton
Potteries Co., 273 U.S. 392, 397–98 (1927) (horizontal price
fixing); United States v. Topco Assocs., 405 U.S. 596, 608
(1972) (horizontal market division); Nw. Wholesale
Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S.
284, 293–94 (1985) (concerted refusal to deal). Such
inherently anticompetitive horizontal agreements violate the
Sherman Act per se. Once the agreement’s existence is
established, no further inquiry into the practice’s actual effect
on the market or the parties’ intentions is necessary to
establish a § 1 violation. See N. Pac. Ry. v. United States,
IN RE: MUSICAL INSTRUMENTS 11
356 U.S. 1, 5 (1958). Vertical agreements, on the other hand,
are analyzed under the rule of reason, whereby courts
examine “the facts peculiar to the business, the history of the
restraint, and the reasons why it was imposed,” to determine
the effect on competition in the relevant product market.
Nat’l Soc’y of Professional Eng’rs v. United States, 435 U.S.
679, 692 (1978). That analysis takes into account the fact that
some vertical restraints may have procompetitive
justifications that benefit consumers. See Leegin Creative
Leather Prods. v. PSKS, Inc., 551 U.S. 877, 889–92 (2007)
(noting that vertical price restraints can have the
procompetitive effect of increasing interbrand competition).
But the line between horizontal and vertical restraints can
blur. One conspiracy can involve both direct competitors and
actors up and down the supply chain, and hence consist of
both horizontal and vertical agreements. Plaintiffs here allege
one such hybrid form of conspiracy, sometimes called a “hub-
and-spoke” conspiracy. Although other circuits have
recognized the existence of “hub-and-spoke” conspiracies in
the antitrust context, see, e.g., Howard Hess Dental Labs. Inc.
v. Dentsply Int’l, Inc., 602 F.3d 237, 255 (3d Cir. 2010)
(explaining the configuration of a hub-and-spoke conspiracy);
Toys “R” Us, Inc. v. FTC, 221 F.3d 928, 934 (7th Cir. 2000)
(describing a hub-and-spoke conspiracy without calling it
such), we have not. We write to clarify the analysis of such
conspiracies under § 1.
A traditional hub-and-spoke conspiracy has three
elements: (1) a hub, such as a dominant purchaser; (2) spokes,
such as competing manufacturers or distributors that enter
into vertical agreements with the hub; and (3) the rim of the
wheel, which consists of horizontal agreements among the
spokes. See Howard Hess, 602 F.3d at 255. According to
12 IN RE: MUSICAL INSTRUMENTS
plaintiffs, Guitar Center (the hub) pressured each of the
manufacturer defendants (the spokes) to adopt MAP policies,
and the manufacturer defendants, in turn, each agreed among
themselves to adopt the policies (the rim). NAMM acted to
facilitate these illegal agreements by encouraging adoption of
MAP policies—a role that may be illegal but lacks an obvious
wheel analogue (might we suggest “lug nuts”?).
Of course, homespun metaphors for complex economic
activities go only so far. Section 1 prohibits agreements that
unreasonably restrain trade, no matter the configuration they
take or the labels we give them. A hub-and-spoke conspiracy
is simply a collection of vertical and horizontal agreements.
And once the conspiracy is broken into its constituent parts,
the respective vertical and horizontal agreements can be
analyzed either under the rule of reason or as violations per
se.3 See Toys “R” Us, 221 F.3d at 933, 940 (endorsing the
3
Some courts have distinguished between “rimmed” and “rimless” hub-
and-spoke conspiracies. See, e.g., Dickson v. Microsoft Corp., 309 F.3d
193, 203–04 & n.13 (4th Cir. 2002). In Dickson, the Fourth Circuit
characterized a rimless hub-and-spoke conspiracy as one in which
“various defendants enter into separate agreements with a common
defendant, but where the defendants have no connection with one another
other than the common defendant’s involvement in each transaction.” Id.
at 203. The extension of the wheel metaphor here may mislead: a rimless
hub-and-spoke conspiracy is not a hub-and-spoke conspiracy at all (for
what is a wheel without a rim?); it is a collection of purely vertical
agreements. But such a conspiracy may yet unreasonably restrain trade.
See, e.g., Leegin, 551 U.S. at 898–99 (recognizing that purely vertical
restraints may unreasonably restrain trade in violation of § 1).
We note, however, one key difference between a rimless hub-and-
spoke conspiracy (i.e., a collection of purely vertical agreements) and a
rimmed hub-and-spoke conspiracy (i.e., a collection of vertical agreements
joined by horizontal agreements): courts analyze vertical agreements
under the rule of reason, see id., whereas horizontal agreements are
IN RE: MUSICAL INSTRUMENTS 13
FTC’s analysis of the vertical components of a hub-and-spoke
conspiracy under the rule of reason while treating the
horizontal agreements as violations per se).
Here, the key agreements are those among the defendant
manufacturers. Plaintiffs made it clear both before the district
court and on appeal that their theory of the case depends on
establishing those horizontal agreements.4 The question
before us is whether plaintiffs have pleaded sufficient facts to
provide a plausible basis from which we can infer the alleged
agreements’ existence. See Twombly, 550 U.S. at 556–57,
560.
B
Because plaintiffs lack direct evidence of horizontal
agreements among the manufacturers,5 they plead that the
violations per se, see United States v. Socony-Vacuum Oil Co., 310 U.S.
150, 223–24 (1940). This distinction provides strong incentives for
plaintiffs to plead a horizontal conspiracy (either alone or as part of a
rimmed hub-and-spoke conspiracy). The prospect of establishing a
violation per se is much more appealing to plaintiffs than the potential
difficulty and costliness of proving a § 1 claim under the rule of reason.
4
Plaintiffs stated at oral argument that they did not claim the vertical
agreements between the manufacturers and Guitar Center to adopt MAP
policies to be unreasonable vertical restraints under § 1, nor do they
challenge the MAP policies themselves. Plaintiffs’ other allegations (e.g.,
that Guitar Center and NAMM conspired to facilitate and keep in place
the agreements among the manufacturers) are predicated on the existence
of the horizontal agreements among the manufacturers.
5
Even after the limited discovery permitted by the district court,
plaintiffs still do not plead facts in answer to the district court’s questions:
“who is alleged to have conspired with whom, what exactly they agreed
14 IN RE: MUSICAL INSTRUMENTS
defendant manufacturers’ parallel conduct in adopting MAP
policies, in conjunction with several “plus factors,” plausibly
suggests the existence of horizontal agreements. They argue
that the plus factors “nudge[]” their allegations of horizontal
agreements “across the line from conceivable to plausible.”
Id. at 570.
Under Twombly, parallel conduct, such as competitors
adopting similar policies around the same time in response to
similar market conditions, may constitute circumstantial
evidence of anticompetitive behavior. 550 U.S. at 553–54.
But mere allegations of parallel conduct—even consciously
parallel conduct—are insufficient to state a claim under § 1.
Plaintiffs must plead “something more,” “some further
factual enhancement,” a “further circumstance pointing
toward a meeting of the minds” of the alleged conspirators.
Id. at 557, 560.
In this way, Twombly takes into account the economic
reality that mere parallel conduct is as consistent with
agreement among competitors as it is with independent
conduct in an interdependent market. See id. at 554 (“The
inadequacy of showing parallel conduct or interdependence,
without more, mirrors the ambiguity of the behavior:
consistent with conspiracy, but just as much in line with a
wide swath of rational and competitive business strategy
unilaterally prompted by common perceptions of the
market.”). In an interdependent market, companies base their
actions in part on the anticipated reactions of their
competitors. And because of this mutual awareness, two firms
may arrive at identical decisions independently, as they are
cognizant of—and reacting to—similar market pressures. In
to, and how the alleged conspiracy was organized and carried out.”
IN RE: MUSICAL INSTRUMENTS 15
other words, competitors’ behavior may be consciously
parallel. Recognizing that parallel conduct may arise on
account of independent business decisions rather than an
illegal agreement, Twombly requires that when allegations of
parallel conduct are set out to make a § 1 claim, plaintiffs
must plead enough nonconclusory facts to place that parallel
conduct “in a context that raises a suggestion of a preceding
agreement.” Id. at 557. “Allegations of facts that could just as
easily suggest rational, legal business behavior by the
defendants as they could suggest an illegal conspiracy” are
insufficient to plead a § 1 violation. Kendall v. Visa U.S.A.,
Inc., 518 F.3d 1042, 1049 (9th Cir. 2008) (citing Twombly,
550 U.S. at 553–58 & n.5); see also Iqbal v. Ashcroft,
556 U.S. 662, 668 (2009) (“Where a complaint pleads facts
that are merely consistent with a defendant’s liability, it stops
short of the line between possibility and plausibility of
entitlement to relief.” (quoting Twombly, 550 U.S. at 557)
(internal quotation marks omitted)).6
This court has distinguished permissible parallel conduct
from impermissible conspiracy by looking for certain “plus
factors.” See, e.g., In re Citric Acid Litig., 191 F.3d 1090,
1102 (9th Cir. 1999) (“Parallel pricing is a relevant factor to
be considered along with the evidence as a whole; if there are
sufficient other ‘plus’ factors, an inference of conspiracy can
be reasonable.”). Whereas parallel conduct is as consistent
with independent action as with conspiracy, plus factors are
economic actions and outcomes that are largely inconsistent
6
The requirement that plaintiffs allege nonconclusory facts means that
plaintiffs cannot plead merely parallel conduct and allege conspiracy.
Conspiracy is a legal conclusion. See Kendall, 518 F.3d at 1047. Rather,
plaintiffs must plead evidentiary facts: “who, did what, to whom (or with
whom), where, and when.” Id. at 1048.
16 IN RE: MUSICAL INSTRUMENTS
with unilateral conduct but largely consistent with explicitly
coordinated action. See Twombly, 550 U.S. at 557 n.4. If
pleaded, they can place parallel conduct “in a context that
raises a suggestion of preceding agreement.” Id. at 557; cf. In
re Citric Acid Litig., 191 F.3d at 1102.7
Plaintiffs in their briefs and at oral argument identified the
following six plus factors alleged in the operative complaint:
(1) defendants shared a common motive to conspire; (2) the
manufacturer defendants acted against their self-interest;
(3) the manufacturer defendants simultaneously adopted
substantially similar MAP policies; (4) the FTC’s
investigation and consent decree; (5) the defendants’
participation in NAMM; and (6) retail prices for guitars and
guitar amplifiers rose during the class period as the number
of units sold fell.
We consider each purported plus factor in turn and
cumulatively to determine whether plaintiffs have alleged
nonconclusory facts sufficient to state a claim under § 1.
Common Motive
Plaintiffs allege that the manufacturer defendants shared
a similar motive to collude. But common motive does not
suggest an agreement. Any firm that believes that it could
7
In In re Citric Acid Litigation, we recognized that circumstantial
evidence in the form of plus factors could support the reasonable inference
of an agreement and thus raise a genuine issue of material fact to defeat
a defendant’s motion for summary judgment. 191 F.3d at 1102, 1108
(affirming the district court’s grant of defendant’s motion for summary
judgment, in part because of a lack of plus factors). The same principle
obtains in the context of a motion to dismiss. Plus factors coupled with
parallel conduct can take a complaint from merely possible to plausible.
IN RE: MUSICAL INSTRUMENTS 17
increase profits by raising prices has a motive to reach an
advance agreement with its competitors.8 Thus, alleging
“common motive to conspire” simply restates that a market
is interdependent (i.e., that the profitability of a firm’s
decisions regarding pricing depends on competitors’
reactions). Interdependence, however, does not entail
collusion, as interdependent firms may engage in consciously
parallel conduct through observation of their competitors’
decisions, even absent an agreement. And allegations of
parallel conduct—though recast as common motive—is
insufficient to plead a § 1 violation. See Twombly, 550 U.S.
at 556–57.
Action Against Self-Interest
Plaintiffs allege that defendant manufacturers acted
against self-interest by adopting MAP policies with Guitar
Center. Again, plaintiffs fail to account for conscious
parallelism and the pressures of an interdependent market. An
action that would seem against self-interest in a competitive
market may just as well reflect market interdependence
giving rise to conscious parallelism. For example, each firm
in an interdependent market expects that a widely unfollowed
price increase will be rescinded. But so long as prices can be
easily readjusted without persistent negative consequences,
8
We note that there are (at least) two ways for firms to increase profit.
They can compete to capture greater market share, carving out a bigger
piece of the existing pie. Or they can keep their market share the same
while increasing prices. If all firms increase prices, they have managed to
grow the pie, though their individual slices remain proportionally the
same. In a competitive market, attempts to grow the pie by charging
supracompetitive prices will be tempered by price competition as
individual firms attempt to capture greater market share. But common
motive for increased profits always exists.
18 IN RE: MUSICAL INSTRUMENTS
one firm can risk being the first to raise prices, confident that
if its price is followed, all firms will benefit. By that process
(“follow the leader”), supracompetitive prices and other
anticompetitive practices, once initiated, can spread through
a market without any prior agreement.
More extreme action against self-interest, however, may
suggest prior agreement—for example, where individual
action would be so perilous in the absence of advance
agreement that no reasonable firm would make the challenged
move without such an agreement. Here, if no reasonable
manufacturer would have entered into a MAP policy without
assurances that all other manufacturers would enter into
similar agreements, that would suggest collusion. But the
complaint itself, perhaps maladroitly, provides ample
independent business reasons why each of the manufacturers
adopted and enforced MAP policies even absent an
agreement among the defendant manufacturers. Plaintiffs
allege that each manufacturer was “pressured by Guitar
Center” to adopt MAP policies that were advantageous to
Guitar Center, and the complaint concedes that each
manufacturer “responded to Guitar Center’s pressure and
coercion” by adopting MAP policies “in exchange for Guitar
Center’s agreement to purchase large volumes of the
manufacturer’s product stock.” Manufacturers’ decisions to
heed similar demands made by a common, important
customer do not suggest conspiracy or collusion. They
support a different conclusion: self-interested independent
parallel conduct in an interdependent market. See id.
Simultaneous Adoption of MAP Policies
Plaintiffs allege that the manufacturer defendants
simultaneously implemented and enforced MAP policies with
IN RE: MUSICAL INSTRUMENTS 19
similar terms. Cf. id. at 557 n.4 (“[C]omplex and historically
unprecedented changes in pricing structure made at the very
same time by multiple competitors and made for no other
discernible reason would support a plausible inference of
conspiracy.”). But according to the complaint, the
manufacturer defendants adopted the policies over a period of
several years, not simultaneously. Allegations of such slow
adoption of similar policies does not raise the specter of
collusion. Cf. In re Text Messaging Antitrust Litig., 630 F.3d
662, 628 (7th Cir. 2010) (finding persuasive plaintiffs’
allegation of parallel conduct “all at once”).
Even assuming that the progressive adoption of similar
policies across an industry constitutes simultaneity, that fact
does not reveal anything more than similar reaction to similar
pressures within an interdependent market, or conscious
parallelism. All of the manufacturer defendants were dealing
with the same important customer, Guitar Center, which
ostensibly exercised its considerable market power to demand
similar terms from each manufacturer for its own benefit.9
The manufacturers’ similar response to this market pressure
is a hallmark of independent parallel conduct—not collusion.
The FTC’s Investigation of NAMM
Plaintiffs argue that the FTC’s investigation of NAMM
suggests an agreement was made. The FTC alleged violations
of § 5 of the Federal Trade Commission Act (FTC Act),
9
The operative complaint does not allege Guitar Center violated § 2 of
the Sherman Act (or any provisions of the Federal Trade Commission Act)
in any attempted monopolization of the retail guitar and amplifier market;
nor do plaintiffs allege that the MAP policies themselves are illegal
vertical agreements in restraint of trade under § 1.
20 IN RE: MUSICAL INSTRUMENTS
15 U.S.C. § 45, which prohibits “unfair methods of
competition.” But unlike § 1 of the Sherman Act, a violation
of § 5 of the FTC Act does not require allegation and proof of
a contract, combination, or conspiracy. An organization may
violate § 5 of the FTC Act without violating § 1 of the
Sherman Act. See FTC v. Sperry & Hutchinson Co., 405 U.S.
233, 239–44 (1972).10 And neither the FTC complaint nor the
consent decree alleged that any company or group actually
conspired or agreed to adopt MAP policies, nor do they
suggest such an agreement was made.
Defendants’ Attendance of NAMM Meetings
Plaintiffs allege that Guitar Center advocated for the
concerted adoption of anticompetitive MAP policies at
NAMM meetings. But mere participation in trade-
organization meetings where information is exchanged and
strategies are advocated does not suggest an illegal
agreement. As we recognized in In re Citric Acid Litigation:
Gathering information about pricing and
competition in the industry is standard fare for
trade associations. If we allowed conspiracy
to be inferred from such activities alone, we
would have to allow an inference of
conspiracy whenever a trade association took
almost any action. As the Supreme Court has
10
The cases plaintiffs cite as supporting their assertion that government
investigations “bolster the plausibility analysis,” all involved ongoing
criminal investigations into alleged conspiratorial price fixing under § 1
of the Sherman Act. See, e.g., In re Packaged Ice Antitrust Litig., 723 F.
Supp. 2d 987, 1009 (E.D. Mich. 2010). Those cases are inapposite here,
where the FTC complaint was based on § 5 of the FTC Act, 15 U.S.C.
§ 45, which does not require allegation of an agreement or conspiracy.
IN RE: MUSICAL INSTRUMENTS 21
recognized, however, trade associations often
serve legitimate functions, such as providing
information to industry members, conducting
research to further the goals of the industry,
and promoting demand for products and
services.
191 F.3d at 1098.11
Moreover, plaintiffs allege that the industry had
encouraged the adoption of MAP policies as in each
manufacturer’s self-interest for years before the class period.
Such an allegation does not suggest agreement; it provides a
context for “merely parallel conduct that could just as well be
independent action.” Twombly, 550 U.S. at 557.
Rising Prices
Plaintiffs allege that the average retail price of guitars and
guitar amplifiers rose during the class period as the total
number of units sold fell. The dissent asserts that these
“allegations that prices rose despite falling demand” are
“perhaps most suggestive of collusion.” Dissent at 27–28. We
are not convinced.
First, plaintiffs do not allege that the average retail price
of guitars and amplifiers manufactured by defendants rose
11
In this our law differs from the suspicions of Adam Smith, written at
a time before the enactment of the Sherman Act: “People of the same trade
seldom meet together, even for merriment and diversion, but the
conversation ends in a conspiracy against the public, or in some
contrivance to raise prices.” Adam Smith, An Inquiry into the Nature and
Causes of the Wealth of Nations, vol. 1, bk. 1, ch. 10 (1776).
22 IN RE: MUSICAL INSTRUMENTS
during the class period. They allege an increase in the average
retail price of all guitars and guitar amplifiers sold, including
products outside the relevant product market, like low-cost
imports. The same can be said of the alleged drop in sales.12
But even if plaintiffs had alleged that retail prices of
defendants’ guitars and amplifiers rose in tandem as sales
dropped, such a price increase is no more suggestive of
collusion than it is of any other potential cause.13 Plaintiffs do
not allege any facts connecting the purported price increase
to an illegal agreement among competitors. And without such
a connection, there is simply no basis from which we can
infer an agreement. In this regard, parallel price increases,
without more, are no different from other forms of parallel
conduct. They are “merely consistent with a defendant’s
liability” but “stop[] short of the line between possibility and
plausibility of entitlement to relief.” Iqbal, 556 U.S. at 668
12
Plaintiffs admitted in their initial complaint that the data recited by the
dissent is—to put it mildly—“over-inclusive.” Whereas the complaint
defines the relevant product market as the market for “High-end Guitars
and Guitar Amplifiers,” plaintiffs’ data “include[] products outside of the
relevant product market(s), such as low-cost imports.” As far as we can
tell from the complaint, retail prices of defendants’ products actually
might have fallen during the class period as the average retail price for all
guitars and guitar amplifiers rose. Plaintiffs make no allegation either way.
13
Plaintiffs make no allegation as to the cause of the increase in price or
the decrease in units sold, aside from noting the data recited are
“[c]onsistent with the formation of the alleged conspiracy.” But
allegations that are merely consistent with conspiracy are not enough. See
Twombly, 550 U.S. at 557. Any manner of economic variables may have
contributed to these fluctuations in prices and sales, from external market
pressures to permissible conscious parallelism. For example, if the cost of
materials or labor rose, prices could rise irrespective of a decrease in units
sold. Indeed, in such a scenario, we would expect a price hike to be
accompanied by a drop in sales.
IN RE: MUSICAL INSTRUMENTS 23
(quoting Twombly, 550 U.S. at 557) (internal quotation marks
omitted).14
* * *
The dissent urges that, “when analyzed together,”
plaintiffs’ purported plus factors provide a context that
plausibly suggests that “an illicit horizontal agreement was
made between the manufacturer defendants.” Dissent at 29.
We disagree. Plaintiffs have indeed provided a context for the
manufacturers’ adoption of MAP policies, but not one that
plausibly suggests they entered into illegal horizontal
agreements. Instead, the complaint tells a different story, one
in which Guitar Center used its substantial market power to
pressure each manufacturer to adopt similar policies, and
each manufacturer adopted those policies as in its own
interest. Such conduct may be anticompetitive—and perhaps
even violate the antitrust laws—but it does not suggest the
manufacturers illegally agreed among themselves to restrain
competition.
14
We find plaintiffs’ allegations here to be readily distinguishable from
those considered by the Seventh Circuit in In re Text Messaging Antitrust
Litigation. There, the four defendants operated in an extremely
concentrated market, in which they controlled 90% of text-messaging
services in the United States. 630 F.3d at 628. Plaintiffs in that case
alleged not merely that prices had risen; they alleged that “all at once the
defendants changed their pricing structures, which were heterogeneous
and complex, to a uniform pricing structure, and then simultaneously
jacked up their prices by a third.” Id. Such uniformity and simultaneity are
lacking here. Plaintiffs do not allege that defendants’ prices rose (in
concert or otherwise); they allege the average price of all guitars and
guitar amplifiers rose. And plaintiffs do not allege these changes occurred
“all at once”; they allege defendants adopted MAP policies over the
course of three years.
24 IN RE: MUSICAL INSTRUMENTS
IV
Plaintiffs have failed to allege enough nonconclusory
facts to support the plausible inference that any agreement
among the manufacturers was made. For that reason, their § 1
claim must be dismissed.
AFFIRMED.
PREGERSON, Circuit Judge, dissenting:
I respectfully dissent. Bell Atlantic Corp. v. Twombly
requires plaintiffs in an antitrust action to plead “enough
factual matter (taken as true) to suggest that an agreement
was made.” 550 U.S. 544, 556 (2007) (emphasis added). In
the “hub-and-spoke” conspiracy alleged here, plaintiffs
pleaded enough factual matter (taken as true) to suggest that
a horizontal agreement existed between defendants Fender
Musical Instruments Corp.; Gibson Guitar Corp.; Hoshino
U.S.A., Inc.; Kaman Music Corp.; and Yamaha Corporation
of America (“manufacturer defendants”).
Plaintiffs point to six different “plus factors” to support
their claim of an agreement among the manufacturer
defendants: (1) the manufacturer defendants shared a
common motive to conspire; (2) the manufacturer defendants
acted against their own individual self-interest; (3) the
manufacturer defendants adopted substantially similar
Minimum Advertised Price (“MAP”) policies; (4) the Federal
Trade Commission (“FTC”) investigation of the National
Association of Music Merchants, Inc. (“NAMM”) for price
fixing; (5) the manufacturer defendants participated in
IN RE: MUSICAL INSTRUMENTS 25
NAMM functions; and (6) the retail prices for guitars and
guitar amplifiers climbed despite falling demand.
“[W]hen allegations of parallel conduct are set out in
order to make a [Sherman Act] § 1 claim, they must be placed
in a context that raises a suggestion of a preceding argument.”
Twombly, 550 U.S. at 557. Although the majority opinion
purports to address the six plus factors as a whole, it actually
focuses on each factor individually. Maj. Op. 16–23. After
dissecting each factor individually, the majority opinion
summarily concludes that, though the plaintiffs “provided a
context for the manufacturers’ adoption of MAP policies,”
that context does not “plausibly [suggest that the
manufacturer defendants] entered into illegal horizontal
agreements.” Maj. Op. 23.
When truly analyzed together, the six plus factors
strongly suggest that the manufacturer defendants reached an
illegal horizontal agreement, which “nudge” plaintiffs’
allegations “from conceivable to plausible.” Twombly,
550 U.S. at 570.
First, although a common motive to conspire does not by
itself suggest an agreement, this motive combined with the
other plus factors suggests the manufacturer defendants made
an illegal agreement.
Second, the manufacturer defendants adopted policies
such as limiting online advertisement of prices and discounts,
all while increasing prices and conditioning dealer
authorizations upon strict compliance with the MAP terms.
These policies increased prices even though demand for their
products decreased, which went against each company’s
individual self-interest. Although this factor alone may be
26 IN RE: MUSICAL INSTRUMENTS
insufficient to plead a violation, when viewed together with
the other plus factors, this suggests an agreement was made
between the manufacturer defendants.
Third, the manufacturer defendants adopted substantially
similar MAP policies. The majority opinion correctly notes
that the manufacturer defendants adopted MAP policies over
the course of several years, but the majority opinion fails to
appreciate that the manufacturer defendants adopted
substantially similar MAP policies over the course of this
relatively short—three-year—period. Both the district court
and the majority opinion fault plaintiffs for being unable to
show agreement between the manufacturer defendants by
pinpointing the exact terms of the MAP policies and the exact
timing of their adoption. Because plaintiffs have not been
afforded an opportunity to discover these confidential and
proprietary policies, it is unfair to require this level of
specificity at the pleading stage.1 While the specific terms
and exact timing of the MAP policies may be an issue at the
summary judgment stage, a plaintiff at the pleading stage is
not required to “allege ‘specific facts’ beyond those necessary
to state his claim and the grounds showing entitlement to
relief.” Id.
Fourth, the FTC investigation and settlement regarding
alleged price fixing in the music-products industry,
specifically at NAMM-sponsored events, during the time
period at issue here, tends to suggest that an illegal agreement
was made between the manufacturer defendants. The FTC
complaint stated that “[t]he exchange of information between
1
While plaintiffs were allowed limited discovery on the “closed door”
meetings at NAMM-sponsored events, they were explicitly barred from
inquiring about specific terms of the MAP policies.
IN RE: MUSICAL INSTRUMENTS 27
NAMM members [including the manufacturer defendants],
as alleged herein, had the purpose, tendency, and capacity to
facilitate collusion and to restrain competition unreasonably.”
In the Matter of National Association of Music Merchants,
Inc., No. C-4255, at ¶ 7. Although the FTC investigation and
settlement concerned violations of Section 5 of the Federal
Trade Commission Act, 15 U.S.C. § 45, which does not
require allegations of an illegal agreement, the FTC
investigation and settlement make it more plausible that there
was an illegal agreement between the manufacturer
defendants. In general, mere involvement with a trade
organization does not necessarily suggest the existence of
illegal activity; however, allegations by the FTC that a certain
trade association’s meetings “had the purpose, tendency, and
capacity to facilitate collusion” makes it more
plausible—especially when considering all six plus factors—
that an illegal agreement was made.
Fifth, representatives of the manufacturer defendants
attended NAMM-sponsored events where they discussed and
promoted specific MAP pricing structures. In In Re Text
Messaging Antitrust Litigation, 630 F.3d 622, 628 (7th Cir.
2010), the Seventh Circuit held that the defendants—four
United States telecommunications companies accounting for
90% of the text messaging services in the United States—
participated in trade association meetings where specific
pricing structures were discussed, which, among other
allegations, suggested collusion. Similarly here, discussions
at NAMM-sponsored events of specific mutually agreeable
terms are a “circumstance pointing toward a meeting of the
minds[.]” Twombly, 550 U.S. at 557.
Sixth—and perhaps most suggestive of collusion—
despite falling demand for guitars and guitar amplifiers, the
28 IN RE: MUSICAL INSTRUMENTS
average retail price of these items increased substantially
from 2005 to 2007. In 2006, for example, the number of
electric and acoustic guitars sold decreased 9.62% from the
year before. Yet, despite the decline in demand, the average
retail price for each unit rose 6.13% from the year before.
Similarly, despite a decline of 12% in the number of amplifier
units sold in 2006 from the previous year, the average retail
price of each unit increased 3.13%. The majority opinion
attributes these statistics to “[a]ny manner of economic
variables.” Maj. Op. at 22 n.13. Nevertheless, the allegations
that prices rose despite falling demand demonstrates that it is
plausible that something outside normal market conditions
was at work: in this case, collusion. See In Re Text
Messaging, 630 F.3d at 628–29 (finding the allegations that
defendant communications companies’ anomalous behavior
of rapidly increasing prices despite falling costs, among other
things, suggested collusion was plausible).
The majority opinion found that each of these plus factors
can be attributed to permissible parallel conduct and that, in
“context,” they do not plausibly suggest that an illegal
horizontal agreement was made. Maj. Op. at 23. Yet the
standard under Twombly requires that the plaintiffs’
allegations must only raise “plausible grounds to infer an
agreement,” which “simply calls for enough facts to raise a
reasonable expectation that discovery will reveal evidence of
illegal agreement.” 550 U.S. at 556 (emphasis added). I
simply cannot agree with the majority opinion that the
plaintiffs’ inference of an agreement is implausible,
especially where the litigation is at the motion to dismiss
stage, not the summary judgment stage.
Moreover, the majority opinion is based on numerous
assumptions of the guitar and guitar amplifier retail market.
IN RE: MUSICAL INSTRUMENTS 29
For example, the majority opinion states that “so long as
prices can be easily readjusted without persistent negative
consequences, one firm can risk being the first to raise prices,
confident that if its price is followed, all firms will benefit.
By that process (‘follow the leader’), supracompetitive prices
and other anticompetitive practices, once initiated, can spread
through a market without any prior agreement.” Maj. Op. at
17–18. This assumes that (1) retail prices in the guitar and
guitar amplifier business can be easily readjusted,
(2) competent business firms are willing to place their
products at a competitive disadvantage in a highly
competitive market, (3) competitive business firms are
independently confident that price increases will be followed
by competitors, and (4) no agreement (either tacit or express)
was ever reached between the manufacturer defendants.
These are a lot of assumptions to make without providing
plaintiffs the opportunity to conduct full discovery.
Here, plaintiffs’ allegations of parallel conduct raise
plausible grounds to infer that an illicit horizontal agreement
was made between the manufacturer defendants. Plaintiffs
allege six plus factors which, when analyzed together,
“nudge[] their [allegations of a horizontal agreement] across
the line from conceivable to plausible[.]” Twombly, 550 U.S.
at 570. Therefore, I would reverse the district court’s
dismissal of plaintiffs’ Sherman Act claim and remand for
further proceedings.
|
864 P.2d 1031 (1993)
Michael WESTMARK, Appellant (Defendant),
v.
The STATE of Wyoming, Appellee (Plaintiff).
No. 93-86.
Supreme Court of Wyoming.
December 9, 1993.
*1032 Leonard D. Munker, State Public Defender, Deborah Cornia, Appellate Counsel, Cheyenne, Bobbi Renner, Laramie, for appellant.
Michael J. Westmark, pro se.
Joseph B. Meyer, Atty. Gen., Sylvia Lee Hackl, Deputy Atty. Gen., Mary B. Guthrie, Sr. Asst. Atty. Gen., and Barbara L. Boyer, Sr. Asst. Atty. Gen., for appellee.
Before THOMAS, CARDINE, GOLDEN and TAYLOR, JJ., and BROWN, J. (Retired).
BROWN, Justice (Retired).
Appellant Michael Westmark was given permission to go from his usual place of residence, the Wyoming State Penitentiary, to Casper, Wyoming, to transact personal business. He failed to return to the penitentiary at the time specified and pleaded guilty to the charge of escape.
He appeals from the conviction, judgment, and sentence and raises the following issues:
ISSUE I
Did the district court lack jurisdiction to enter a judgment of guilty of escape against appellant when appellant absconded from parole?
ISSUE II
Did the trial court err when it refused to allow the appellant to withdraw his guilty plea?
We affirm.
Appellant, a long-time and trusted resident of the penitentiary, was allowed to journey to Casper on personal business. One of the terms of his temporary leave was that the leave would commence at 7:30 a.m. on May 31, 1991, and would terminate at 10:30 p.m. on the same day.
Unfortunately, appellant's leave was memorialized on WSP form 180, captioned "Temporary Parole Agreement." We will discuss this form later. Suffice it to say at this juncture, the printed portions of the form were mostly inconsistent with appellant's real status.
The ostensible purpose of appellant's sojourn to Casper was so that he could confer with an attorney about a worker's compensation claim and talk to the administration at Casper College. After arriving in Casper, according to appellant, he experienced "extreme back pain." Instead of consulting a medical doctor about his condition, appellant consulted Dr. John Barleycorn and became inebriated. Fearful of being punished back at the penitentiary for drinking, he quit the scene. He never returned; no, he never returned, and his fate was unlearned until December 4, 1992. On that date, he turned himself in to authorities in Green River, Wyoming. Appellant pleaded guilty to the charge of escape and was sentenced to serve a term in the penitentiary, which term was to run consecutive to the sentence he was serving at the time of his escape. Before sentencing, appellant made a motion to withdraw his guilty plea, which motion was denied.
I.
In the first issue on appeal, appellant contends that his action did not constitute the crime of "escape" as contemplated by the Wyoming statutes. Appellant was charged and convicted under Wyo.Stat. § 6-5-206(a)(i) (1988). This statute merely states: "A person commits a crime if he escapes from official detention." The remainder of the statute pertains to penalty and is not relevant in this case. Wyo.Stat. § 6-5-201(a)(ii) (1988) provides:
(ii) "Official detention" means arrest, detention in a facility for custody of persons under charge or conviction of crime or alleged or found to be delinquent, detention for extradition or deportation, or detention in any manner and in any place for law enforcement purposes. "Official detention" does not include supervision on probation or parole or constraint incidental to release on bail[.]
We do not believe that § 6-5-206(a)(i) and § 6-5-201(a)(ii) standing alone are determinative in this case.
Appellant was assigned to the work release program from January 1991 until his *1033 escape on May 31, 1991. Included in the Work Release Act (Wyo.Stat. §§ 7-16-301 to -311 (1988 & Supp.1993)) is § 7-16-309, which provides:
The intentional act of an inmate of absenting himself without permission from either the place of employment or the designated place of confinement within the time prescribed constitutes an escape from the custody of the institution. Upon apprehension the inmate is subject to return to the institution and criminal prosecution for escape.
Section 7-16-302(a)(vi) provides in part: "`Work release' is not parole as defined by W.S. 7-13-401 but constitutes an extension of the limits of confinement beyond the boundaries of the institution." (Emphasis added.) The definition of parole in Wyo.Stat. § 7-13-401(a)(vii) (Supp.1993)[1] does not seem to correspond with the circumstances of this case. The circumstances here are more nearly a species of work release. Appellant states that he was assigned to the work release program in January of 1991. Between January 1991 and the time of his escape, he experienced back problems and had surgery in March. As a result of his back surgery and some complications, appellant worked, as he stated, "maybe, eight days the whole five months I was on work release." In the proceedings held before the district court, appellant stated that he was in a work release program on May 31, 1991, and that he knew he was in official detention. A short leave to talk to an attorney about a worker's compensation claim is not outside the work release program and is associated with, and could be anticipated under, the work release program. Seeing a lawyer about a worker's compensation claim was an extension of the limits of appellant's confinement, being substantially the same as if he were performing some type of more traditional work. It matters not that he left for the consultation from his usual place of residence rather than from a job site.
In determining the true status of appellant when he left the penitentiary, we must consider the intent of both the prison authorities and appellant. We must also consider the understanding of the escapee. He signed a form captioned "Temporary Parole Agreement" before he was released. Merely signing a form with such a title does not convert a leave of absence or furlough into parole. A leave of absence by any other name does not change the character of the leave. The form used by the penitentiary, "WSP180," does not fit the circumstances of appellant's leave. For example, among other restrictions, the form provided that the person signing would "not enter into marriage, purchase an automobile, incur indebtedness, or execute contracts for merchandise or property requiring installment payments." This does not fit the terms of appellant's leave. This form apparently is used as an expedient by the penitentiary in a variety of circumstances.
Whether appellant was on a leave of absence, furlough, or whatever, he did not return to his nest at 10:30 p.m. (aptly referred to by the State as the "witching hour") on May 31, 1991. At this magic hour, appellant was in the constructive custody of the penitentiary in that the limits of his confinement had been extended.
The statutes we have referred to are general in nature. Every conceivable type of leave from the penitentiary cannot be specifically provided for in detail by legislation. For example, the statutes do not specify the status of an inmate who has been given leave to see an attorney or a doctor. Therefore, we must fit the circumstances of this case into general statutes, if we can. As we understand it, appellant is saying that at the time of arraignment he thought he had escaped from official detention; however, after further reflection and consultation with appointed counsel and in-house counsel, he changed his mind and now believes that his conduct was only a parole violation.
*1034 In Peper v. State, 768 P.2d 26 (Wyo. 1989), this Court crafted principles which are applicable to this case. In Peper, the appellant walked away from a community correctional facility and was charged with escape under § 6-5-206. Peper claimed, as does appellant here, that he was not in "official detention." In Peper, the appellant disregarded the fact that departure from a community correction facility is governed by § 6-5-206. The Court held in that case that placement in a community correction facility falls within the definition of "official detention." We hold here, consistent with the holding in Peper, that placement in the work release program falls within the definition of "official detention." We conclude, therefore, that the circumstances here more nearly resemble a part of the work release program than they resemble traditional parole.
II.
In the second issue raised by appellant, he contends that it was error for the court to refuse to allow him to withdraw his guilty plea. The main thrust of this argument is that there was not a factual basis for a guilty plea in that the facts described in court did not constitute the crime of escape. In our discussion of the first issue, we determined that appellant's actions did in fact amount to escape under § 6-5-206(a)(i). That determination answers the main thrust of appellant's argument on the second issue.
Appellant filed a seemingly scholarly pro se brief with respect to the second issue. He attacks the alleged improvident guilty plea from a slightly different angle. In the pro se brief, appellant discusses his lack of knowledge that he was in "official detention." He states that he was told he was on parole. There is no record citation for this advice. He further states that he was without knowledge that he was not on parole and, therefore, could not have knowingly and intentionally committed the crime of escape. In his brief, appellant discusses "mens rea," "scienter," "culpable mental state," "guilty mind," and other awesome terms. Appellant, in his pro se brief, has not cited authority or favored us with cogent argument to demonstrate how these terms have any application in this case.
It may be argued that, when appellant admitted he was in "official detention" and in the work release program on May 31, 1991, he was making conclusions only. However, the uncontroverted facts we have related justify these conclusions. Misinterpreting the law before entering his plea of guilty is not a basis for withdrawing his guilty plea. In Peper, the court stated:
Appellant also asserts that the district court erred in denying his motion to withdraw his plea. To prevail on this point he must establish that such a denial was an abuse of discretion, and he must provide a "plausible reason" for granting the motion. Chorniak v. State, 715 P.2d 1162, 1164 (Wyo.1986). That is, he must show that fairness and justice require the withdrawal of his guilty plea, as would be the case where the record demonstrates that the plea was made in the face of a meritorious defense or continued assertions of innocence. Wright v. State, 703 P.2d 1102, 1104 (Wyo.1985). Such is not the case here where appellant premises his alleged innocence, and/or his alleged defense, solely on an erroneous interpretation of the statute under which he was charged. Furthermore, this misinterpretation was conceived after the court had properly informed him of the charge and had determined that he pled voluntarily. Although the grant or denial of a motion to withdraw a guilty plea is a reviewable exercise of the district court's discretion, there can be no abuse of that discretion where the record shows that the plea was voluntary and made with a full understanding of the consequences, and where the trial court found a factual basis for that plea.
768 P.2d at 30.
The record demonstrates that the district court substantially complied with W.R.Cr.P. 11. Appellant does not contend otherwise except for his contention that *1035 there was not a factual basis for a plea of guilty. We addressed this concern in the first issue. There was a factual basis for appellant's plea of guilty. His actions constituted the crime of escape. Furthermore, the court did not abuse its discretion in denying appellant's motion to withdraw his guilty plea.
Affirmed.
NOTES
[1] "`Parole' means permission to leave the confines of the institution in which a person is confined under specified conditions." Section 7-13-401(a)(vii).
|
[Cite as State v. Plummer, 2016-Ohio-7548.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
WARREN COUNTY
STATE OF OHIO, :
CASE NO. CA2016-03-019
Plaintiff-Appellee, :
OPINION
: 10/31/2016
- vs -
:
JACOB P. PLUMMER, :
Defendant-Appellant. :
CRIMINAL APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS
Case No. 15CR30934
David P. Fornshell, Warren County Prosecuting Attorney, Kathryn Horvath, 520 Justice Drive,
Lebanon, Ohio 45036, for plaintiff-appellee
Diehl & Hubbell, LLC, Martin Hubbell, 304 East Warren Street, Lebanon, Ohio 45036, for
defendant-appellant
S. POWELL, J.
{¶ 1} Defendant-appellant, Jacob P. Plummer, appeals from his conviction in the
Warren County Court of Common Pleas after a jury found him guilty of violating a domestic
violence civil protection order ("DVCPO"). For the reasons outlined below, we affirm.
{¶ 2} On May 26, 2015, the Warren County Grand Jury returned an indictment
charging Plummer with violating a DVCPO in violation of R.C. 2919.27(A)(1), a fifth-degree
Warren CA2016-03-019
felony in accordance with R.C. 2919.27(B)(3). The charges stemmed from allegations
Plummer contacted his former live-in girlfriend, A.B., through a series of text messages as
prohibited by a DVCPO issued against him on February 3, 2015. Following a jury trial,
Plummer was found guilty and sentenced to serve a ten-month prison term.
{¶ 3} Plummer now appeals from his conviction, raising two assignments of error for
review. For ease of discussion, Plummer's two assignments of error will be addressed
together.
{¶ 4} Assignment of Error No. 1:
{¶ 5} APPELLANT'S CONVICTION WAS BASED ON INSUFFICIENT EVIDENCE.
{¶ 6} Assignment of Error No. 2:
{¶ 7} APPELLANT'S CONVICTION WAS AGAINST THE MANIFEST WEIGHT OF
THE EVIDENCE.
{¶ 8} In his two assignments of error, Plummer argues his conviction for violating the
DVCPO by contacting A.B. was not supported by sufficient evidence and was otherwise
against the manifest weight of the evidence. We disagree.
{¶ 9} When reviewing the sufficiency of the evidence underlying a criminal conviction,
an appellate court examines the evidence in order to determine whether such evidence, if
believed, would convince the average mind of the defendant's guilt beyond a reasonable
doubt. State v. Intihar, 12th Dist. Warren No. CA2015-05-046, 2015-Ohio-5507, ¶ 9. The
relevant inquiry is "whether, after viewing the evidence in a light most favorable to the
prosecution, any rational trier of fact could have found the essential elements of the crime
proven beyond a reasonable doubt." State v. Jenks, 61 Ohio St.3d 259 (1991), paragraph
two of the syllabus. In other words, "the test for sufficiency requires a determination as to
whether the state has met its burden of production at trial." State v. Boles, 12th Dist. Brown
No. CA2012-06-012, 2013-Ohio-5202, ¶ 34, citing State v. Wilson, 12th Dist. Warren No.
-2-
Warren CA2016-03-019
CA2006-01-007, 2007-Ohio-2298, ¶ 33. When evaluating the sufficiency of the evidence,
this court must "defer to the trier of fact on questions of credibility and the weight assigned to
the evidence." State v. Kirkland, 140 Ohio St.3d 73, 2014-Ohio-1966, ¶ 132.
{¶ 10} On the other hand, a manifest weight of the evidence challenge examines the
"inclination of the greater amount of credible evidence, offered at a trial, to support one side
of the issue rather than the other." State v. Barnett, 12th Dist. Butler No. CA2011-09-177,
2012-Ohio-2372, ¶ 14. To determine whether a conviction is against the manifest weight of
the evidence, the reviewing court must look at the entire record, weigh the evidence and all
reasonable inferences, consider the credibility of the witnesses, and determine whether in
resolving the conflicts in the evidence, the trier of fact clearly lost its way and created such a
manifest miscarriage of justice that the conviction must be reversed and a new trial ordered.
State v. Morgan, 12th Dist. Butler Nos. CA2013-08-146 and CA2013-08-147, 2014-Ohio-
2472, ¶ 34. An appellate court will overturn a conviction due to the manifest weight of the
evidence only in extraordinary circumstances when the evidence presented at trial weighs
heavily in favor of acquittal. State v. Blair, 12th Dist. Butler No. CA2014-01-023, 2015-Ohio-
818, ¶ 43.
{¶ 11} As noted above, Plummer was convicted of violating a DVCPO by contacting
his former live-in girlfriend, A.B., through a series of text messages in violation of R.C.
2919.27(A)(1). Pursuant to that statute, "[n]o person shall recklessly violate the terms of * * *
[a] protection order issued or consent agreement approved pursuant to section 2919.26 or
3113.31 of the Revised Code[.]" It is undisputed that the DVCPO in this case was issued
pursuant to R.C. 3113.31 and prohibited Plummer from contacting A.B. through text
message.
{¶ 12} Plummer argues his conviction should be reversed because the state failed to
prove he was the person who actually sent the text messages to A.B. However, the record
-3-
Warren CA2016-03-019
firmly establishes that the text messages sent to A.B. originated from Plummer's phone and
included a "pet name" that Plummer often called A.B. throughout their two-year relationship,
a name A.B. testified only she and Plummer knew. Albeit circumstantial, this fully supports
the jury's finding of guilt for it is well-established that "[a] conviction based on purely
circumstantial evidence is no less sound than a conviction based on direct evidence." State
v. Conley, 12th Dist. Warren No. CA2013-06-055, 2014-Ohio-1699, ¶ 16. Therefore,
because the state presented evidence from which the jury, as the trier of fact, could find all
the elements of the offense proven beyond a reasonable doubt, Plummer's conviction was
supported by sufficient evidence and was otherwise not against the manifest weight of the
evidence. Accordingly, Plummer's two assignments of error lack merit and are overruled.
{¶ 13} Judgment affirmed.
M. POWELL, P.J., and PIPER, J., concur.
-4-
|
48 Ill. App.3d 589 (1977)
363 N.E.2d 97
KAISER-DUCETT CORPORATION, Petitioner-Appellant,
v.
HOUSEWRIGHTS, INC., Respondent-Appellee.
No. 76-319.
Illinois Appellate Court First District (1st Division).
Opinion filed May 2, 1977.
Rehearing denied May 25, 1977.
*590 Francis P. Smith, of Shaheen, Lundberg, Callahan & Burke, of Chicago, for appellant.
Forrest D. Serblin, of Peoria, for appellee.
Appeal dismissed.
Mr. PRESIDING JUSTICE GOLDBERG delivered the opinion of the court:
Kaiser-Ducett Corporation (petitioner) as general contractor entered into a written agreement for building of a nursing home. Petitioner then entered into a written agreement with a subcontractor, Housewrights, Inc. (respondent). A dispute arose between the parties. Respondent instituted proceedings before the American Arbitration Association and obtained an award of $5268.50. Petitioner filed suit in the circuit court praying that the award be vacated (Ill. Rev. Stat. 1975, ch. 10, par. 112(a)(5)) and also seeking to modify and clarify the award by including findings of the arbitrator (par. 113). The circuit court confirmed the award and reduced it to judgment. Petitioner has appealed.
*591 Petitioner urges that the contract between the parties is silent on the question of arbitration so that the trial court lacked jurisdiction to confirm the award and to enter judgment thereon. Consequently the award should have been vacated and the arbitrator was without jurisdiction to enter the award. Respondent contends that the contract is not silent on the subject of arbitration but rather created an agreement to arbitrate disputes arising out of the contract; and that the trial court had jurisdiction to confirm the award and reduce it to judgment.
The respondent has made a motion to dismiss this appeal on the ground that this court lacks jurisdiction. We have taken this motion with the case.
The written subcontract between these parties provided:
"All claims, disputes and other matters in question arising out of, or relating to, this Contract, or the breach thereof, shall be decided by arbitration in the same manner and under the same procedure as provided in the Contract Documents with respect to disputes between the Owner and the Contractor except that a decision by the Architect shall not be a condition precedent to arbitration."
Strange to relate, the original agreement entered into by petitioner, as general contractor, contained no provision whatever for arbitration. Respondent filed a written demand upon petitioner for arbitration with the Association. Petitioner filed written objection with the Association taking the position that the dispute was not subject to arbitration. Petitioner made the same objection before the arbitrator and was overruled.
The initial issue raised by petitioner is whether the trial court had jurisdiction. Petitioner cites general language from Harrison F. Blades, Inc. v. Jarman Memorial Hospital Building Fund, Inc. (1969), 109 Ill. App.2d 224, 230-31, 248 N.E.2d 289, appeal denied (1969), 42 Ill.2d 583, which in turn cites Flood v. Country Mutual Insurance Co. (1968), 41 Ill.2d 91, 242 N.E.2d 149, to the effect that where the contract is silent on the issues sought to be arbitrated, there is no contract and the arbitrator lacked jurisdiction to enter the award while the trial court lacked jurisdiction to confirm it. Petitioner cites and relies upon the language of the Uniform Arbitration Act as currently in force in Illinois that "[a] written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, * * *." (Ill. Rev. Stat. 1975, ch. 10, par. 101.) Petitioner argues, in a deductive fashion from the language of this statute as a major premise, to the minor premise that there is no written agreement to arbitrate between these parties and consequently arrives at the result of lack of jurisdiction. We disagree.
1 The Constitution of Illinois grants to the circuit court "original jurisdiction of all justiciable matters except * * *" as to certain specified *592 fields reserved to the original and exclusive jurisdiction of the supreme court. (Ill. Const. 1970, art. VI, § 9.) In the pertinent Illinois statute, the word "court" is defined as meaning "any circuit court of this State." The same section expressly confers jurisdiction on the court to enforce the arbitration agreement and to enter judgment on an award thereunder. (Ill. Rev. Stat. 1975, ch. 10, par. 116.) This court has recently defined jurisdiction of the subject matter as the power of a particular court to hear the type of case before it. (Alfaro v. Meagher (1975), 27 Ill. App.3d 292, 295, 326 N.E.2d 545, appeal denied (1975), 60 Ill.2d 595, and cases there cited.) Thus, it seems beyond dispute that if this contract situation between the parties amounts in law to a written agreement providing for arbitration, the circuit court has jurisdiction of the subject matter.
2, 3 The Illinois Uniform Arbitration Act "empowers courts of general jurisdiction, upon application of a party, to compel or stay arbitration, or to stay court action pending arbitration." It further empowers courts to vacate arbitrators' awards setting forth grounds and procedures for such action. (Flood v. Country Mutual Insurance Co. (1968), 41 Ill.2d 91, 93, 242 N.E.2d 149, citing Ill. Rev. Stat. 1967, ch. 10, pars. 102 and 112.) The Illinois statute on arbitration must be deemed a part of the contract between the parties as though expressly referred to or incorporated therein. Goble v. Central Security Mutual Insurance Co. (1970), 125 Ill. App.2d 298, 302, 260 N.E.2d 860.
4 This analysis leads to the conclusion that the jurisdiction of the circuit court depended upon the existence of a written contract for arbitration between these parties. The law is fixed, established and settled that "the question of whether there was a contract was not arbitrable; but, rather, was an issue of law determinable only by the court." (People ex rel. Delisi Construction Co. v. Board of Education (1975), 26 Ill. App.3d 893, 896, 326 N.E.2d 55, citing Harrison F. Blades, Inc. v. Jarman Memorial Hospital Building Fund, Inc. (1969), 109 Ill. App.2d 224, 248 N.E.2d 289; Paschen Contractors, Inc. v. John J. Calnan Co. (1973), 13 Ill. App.3d 485, 489, 300 N.E.2d 795; In re Matter of Arbitration (1972), 3 Ill. App.3d 913, 916, 278 N.E.2d 818; County of Stephenson v. Bradley & Bradley, Inc. (1971), 2 Ill. App.3d 421, 425, 275 N.E.2d 675.) To this list of cases must be added the case cited and relied upon by plaintiff, Harrison F. Blades, Inc. v. Jarman Memorial Hospital Building Fund, Inc. (1969), 109 Ill. App.2d 224, 229, 248 N.E.2d 289 where the court held that the limits of jurisdiction to arbitrate "should be determined at the earliest possible moment and should be controlled by judicial guidelines." Petitioner expressly recognized this by seeking assistance from the circuit court in filing its suit based specifically upon two sections of the Illinois Arbitration Act.
This view of the law is not surprising. It would be unheard of and *593 impermissible to arrive at any conclusion other than the principle that every court has inherent power to determine the existence and limits of its own jurisdiction and such determination once made is binding unless reversed on appeal. (People ex rel. Adamowski v. Dougherty (1960), 19 Ill.2d 393, 399, 167 N.E.2d 181. See also Lambert v. Conrad (7th Cir.1976), 536 F.2d 1183, 1185, citing United States v. United Mine Workers (1947), 330 U.S. 258, 292 n. 57, 91 L.Ed. 884, 912 n. 57, 67 S.Ct. 677, 695 n. 57.) As shown, the trial court ruled that it had jurisdiction and plaintiff has appealed. This determination by the circuit court that it had jurisdiction of the subject matter may have been voidable or erroneous but it was not a void judgment. Therefore the controlling issue is whether or not this court has jurisdiction to review the judgment of the circuit court.
The pertinent chronology here is:
December 6, 1974 The trial court denied the application of petitioner to vacate the award.
March 5, 1975 The court ordered the award reduced to judgment.
October 30, 1975 The court found by an additional order that the order of March 5, 1975, was final and that there was no just reason to delay enforcement of or appeal from that order.
December 12, 1975 Petitioner filed a petition to vacate the preceding order based generally on the same grounds as the original suit; a denial of the existence of jurisdiction in the trial court. This petition was denied on December 19, 1975, and petitioner's notice of appeal was filed January 8, 1976.
5-7 After entry on October 30, 1975, of the final order confirming the award, plaintiff had 30 days within which to file a notice of appeal or to file a motion attacking the order to obtain an extension of time within which to do so. The filing on December 12, 1975, of the petition to vacate the previous judgment was not timely. Petitioner cannot, by filing a notice of appeal within 30 days after December 19, 1975, when the court denied its petition to vacate, obtain review of the preceding orders. This result is required by Fultz v. Haugan (1971), 49 Ill.2d 131, 135, 273 N.E.2d 403.
8 It follows that this court has no jurisdiction to review the matter before us. We lack power and authority to determine if the judgments of the circuit court confirming the award and reducing it to judgment are or are not erroneous. Our only remaining course of action is to allow the motion of respondent to dismiss the appeal.
Appeal dismissed.
McGLOON and O'CONNOR, JJ., concur.
|
212 F.2d 130
BAKERv.GREAT ATLANTIC & PACIFIC TEA CO.
No. 14720.
United States Court of Appeals, Fifth Circuit.
April 15, 1954.
Sam E. Murrell, Sam E. Murrell, Jr., Robert G. Murrell, Orlando, Fla., for appellant.
Heskin A. Whittaker, Orlando, Fla., for appellee.
Before STRUM and RIVES, Circuit Judges, and DAWKINS, District Judge.
STRUM, Circuit Judge.
1
This is an action at law brought by an employee against his employer to recover damages for personal injuries. The appeal is from a judgment below in favor of the defendant employer, based upon a jury verdict.
2
Plaintiff was an experienced carpenter, employed by the defendant. At the time in question, he was engaged in sawing some large plywood boards into smaller panels, using for this purpose a 10" power driven circular saw furnished by defendant. The saw blade was mounted vertically on a smooth top steel table, so that most of the blade was beneath the table, but the perimeter extended an inch or more above the top of the table through a narrow slot in the table top. When in use the saw revolved very rapidly.
3
Without stopping the saw, plaintiff attempted to remove with his bare hand a small fragment of wood left from a board he had been sawing, which was lying on the table top near the revolving blade. The fragment struck the saw, in some manner throwing plaintiff's hand into it, lacerating the thumb and forefinger of plaintiff's right hand, which later resulted in serious complications.
4
The defendant employer had elected not to accept the provisions of the Florida Workmen's Compensation Law, which is optional, thereby exposing itself to an action at law by an injured employee, and depriving itself of the defenses of negligence of a fellow servant, assumption of risk, and contributory negligence. The defenses of no actionable negligence, and that the negligence of the plaintiff was the sole cause of his injury, are still open to such an employer, however, and those were the defenses here relied upon.
5
Plaintiff contends that the trial court erred in refusing to give certain instructions requested by plaintiff defining the duty of an employer under sec. 440.56(1) of the Act, F.S.A. When, however, as here, an employer has rejected the Act pursuant to the provisions thereof, Cf. Chamberlain v. Florida Power Corp., 144 Fla. 719, 198 So. 486, he rejects the entire Act, including sec. 440.56. He thereby stands upon his common law liability, but deprives himself of the three above mentioned defenses. It was therefore not error to refuse to charge upon the duties of an employer under the Act, as those duties are not here involved. However, the duties prescribed for an employer by sec. 440.56(1) closely parallel the common law duties of an employer, as to which the trial judge fully and accurately charged the jury in this case. McGee v. C. Ed De Brauwere & Co., 117 Fla. 859, 162 So. 510; Stearns & Culver Lumber Co. v. Fowler, 58 Fla. 362, 50 So. 680; Kreigh v. Westinghouse etc., 214 U.S. 249, 29 S.Ct. 619, 53 L.Ed. 984. Cf. Great A. & P. Tea Co. v. McConnell, 5 Cir., 199 F.2d 569.
6
Appellant also assigns as error that the trial judge refused to charge that contributory negligence on the part of the plaintiff would not bar a recovery, that being one of the defenses relinquished by a non-assenting employer under sec. 440.06 of the Act.
7
We find, however, that the trial judge charged the jury: "* * * even though you find from the evidence in this case that the plaintiff was guilty of contributory negligence in bringing about his injuries, such contributory negligence on the part of the plaintiff should be disregarded by you, as such contributory negligence would not bar him from recovery, nor would his damages be reduced by reason of contributory negligence." That charge sufficiently covers the question of contributory negligence as applied to this case.
8
Appellant also complains of the refusal of the trial court to charge the jury that assumption of risk is not a defense here. Assumption of risk was neither pleaded nor argued as a specific defense. A charge on that doctrine therefore would have been inappropriate. The trial court made it quite clear, however, that only two defenses were open to the employer: (1) that the employer was entirely free of negligence which caused, or contributed to causing, plaintiff's injury; and (2) that the injury was caused solely by plaintiff's negligence. This presented the issues appropriately.
9
The trial court submitted to the jury interrogatory No. 6: "Did the defendant fail to furnish plaintiff with a reasonably safe place to work, and reasonably safe appliances and equipment with which to work, considering the age, experience and skill of plaintiff?" Appellant complains of the phrase "considering the age, experience and skill of plaintiff" in that interrogatory, and also of the court's general charge that those elements may be considered in determining whether or not the defendant has performed its duty as an employer. Whether or not the master has exercised due care to furnish his servant a reasonably safe place to work, and reasonably safe tools with which to work, necessarily involves consideration of the age, experience and skill of the employee. It is obvious that a rip saw furnished an employee with which to do his work might be entirely safe for an experienced saw operator, but unsafe for a novice. 56 C.J.S., Master and Servant, § 203, p. 908.
10
Whether or not it is required by due care that an employer cover a saw such as this so as to protect the operator's hands, and whether such a covering would unduly interfere with the functioning of the saw when used to cut up large plywood sheets, are questions of fact for the jury. In this case, they were resolved adversely to plaintiff. If the employer was guilty of no negligence, or if the employee's own negligence was the sole proximate cause of his injury, there can be no recovery. Skinner v. Smith, Ky., 255 S.W.2d 621.
11
Other matters assigned by appellant as error have been considered, but no reversible error found.
12
Affirmed.
|
Matter of Alves v New York City Hous. Auth. (2020 NY Slip Op 01250)
Matter of Alves v New York City Hous. Auth.
2020 NY Slip Op 01250
Decided on February 20, 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 February 20, 2020
Gische, J.P., Webber, Oing, Singh, JJ.
11072 151600/17
[*1] In re Dennis Alves, Petitioner,
vNew York City Housing Authority, Respondent.
Carbonaro Law, PC, New York (Joseph W. Carbonaro of counsel), for petitioner.
Kelly D. MacNeal, New York (Jane E. Lippman of counsel), for respondent.
Determination of respondent, dated February 10, 2017, which, after a hearing, sustained charges of misconduct brought against petitioner and terminated his employment, unanimously confirmed, the petition denied, and the proceeding brought pursuant to CPLR article 78 (transferred to this Court by order of Supreme Court, New York County [Nancy M. Bannon, J.], entered May 18, 2018), dismissed, without costs.
The determination is supported by substantial evidence (see generally 300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176, 180-181 [1978]). Petitioner did not contest one of the two charges of misconduct. Concerning the other charge, the testimony of petitioner's supervisor established that petitioner left a work assignment without authorization and then refused to return to the location when instructed to do so. The supervisor's testimony and time records submitted at the hearing also showed that the supervisor called petitioner shortly after petitioner left the work location, that petitioner was either still at the location or nearby at the time of the call, and that petitioner was dishonest when he said he was already at another work location approximately 40 minutes away and could not return.
Respondent's consideration of uncharged conduct to refute petitioner's defense, that he left the work location in good faith to perform work at another location closer to his home, was not improper (see Matter of Rounds v Town of Vestal, 15 AD3d 819, 822 [3d Dept 2005]). Respondent properly considered such conduct when assessing petitioner's motivation for leaving the work location without authorization, lying to his supervisor about his whereabouts, and then refusing to return (see Matter of Rodriguez v State Bd. for Professional Med. Conduct, 110 AD3d 1268, 1272-1273 [3d Dept 2013]).
The termination of petitioner's employment does not shock one's sense of fairness (see generally Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222, 233 [1974]). The sustained charges against petitioner involved findings of dishonesty and either neglect of petitioner's job [*2]responsibilities or refusal to report to a work assignment. For one of the two charges, petitioner's misconduct resulted in a hazardous condition that posed a significant risk of physical danger to residents or visitors at respondent's building.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: FEBRUARY 20, 2020
CLERK
|
NOTE: This order is nonprecedential
United States Court of AppeaIs
for the FederaI Circuit
DAMIAN L. BROWN,
Petiti0ner,
V.
UNITED STATES POSTAL SERVICE,
Resp0ndent.
2012-3002
§
Petition for review of the Merit Syste1nS Protection
Board in case no. CH0752080818-I-2.
ON MOTION
ORDER
Damian L. BroWn moves for leave to proceed in forma
pauperis.
Upon consideration thereof
I'r ls 0RDERED THA'1‘:
The motion is g'.ranted.
BROWN V. USPS
DEC 28 2011
Date
cox Damian L. Brown
2
FoR THE CoURT
lsi J an Horbaly
Jan Horba1y
C1erk
R0bert C. Big1er, Esq. F"_E
s21
. 0U§l 0F A&EAi.S ma
o S:|'gE F DERAL 61 RCUlT
DEC 2 8 2011
.|AN HORBALY
CLERK
|
Case: 09-10727 Document: 00511159327 Page: 1 Date Filed: 06/30/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 30, 2010
No. 09-10727
Summary Calendar Lyle W. Cayce
Clerk
ROBERT RICH,
Petitioner-Appellant
v.
REBECCA TAMEZ, Warden, FCI - Ft Worth,
Respondent-Appellee
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 4:09-CV-172
Before KING, STEWART, and HAYNES, Circuit Judges.
PER CURIAM:*
In 1990, Robert Rich, federal prisoner # 19351-077, was convicted of
conducting a continuing criminal enterprise (CCE), conspiring to possess and
possession with intent to distribute amphetamine, and use of a telephone to
facilitate a drug offense. In 2009, Rich filed a 28 U.S.C. § 2241 petition in the
district court. Citing the Supreme Court’s decision in Richardson v. United
States, 526 U.S. 813, 824 (1999), Rich argued that the jury instruction for his
CCE offense impermissibly enlarged the indictment.
*
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: 09-10727 Document: 00511159327 Page: 2 Date Filed: 06/30/2010
No. 09-10727
Rich appeals the district court’s dismissal of his petition. He argues that
the district court erred by relying on the savings clause test set forth in Reyes-
Requena v. United States, 243 F.3d 893, 904 (5th Cir. 2001). Our review is de
novo. See Jeffers v. Chandler, 253 F.3d 827, 830 (5th Cir. 2001).
In Reyes-Requena, 243 F.3d at 900-04, we held that in order to bring a
§ 2241 petition under the savings clause, the petitioner must set forth a claim
(i) that is based on a retroactively applicable Supreme Court decision which
establishes that the petitioner may have been convicted of a nonexistent offense
and (ii) that was foreclosed by circuit law at the time when the claim should
have been raised in the petitioner’s trial, appeal, or first § 2255 motion. Rich
argues that rather than the test set forth in Reyes-Requena, we should employ
the savings clause test set forth by the Seventh Circuit in In re Davenport, 147
F.3d 605, 611 (7th Cir. 1998).
Rich has not shown that the facts of his case are not controlled by Reyes-
Requena. Absent an en banc decision by this court or intervening Supreme
Court decision explicitly or implicitly overruling Reyes-Requena, we are bound
by the precedent established in Reyes-Requena. See United States v. Rodriguez-
Jaimes, 481 F.3d 283, 288 (5th Cir. 2007). We note, however, that Rich’s
reliance on the Seventh Circuit’s Davenport test is flawed because Davenport
also contains an actual innocence requirement. See Reyes-Requena, 243 F.3d at
902-03 & n. 28.
Rich has not demonstrated that the district court erred in dismissing his
§ 2241 under the reasoning set forth in Jeffers, 253 F.3d at 830. Accordingly, the
judgment of the court is AFFIRMED.
2
|
767 F.2d 927
Walterv.American Nat. Bank
84-3140
United States Court of Appeals,Seventh Circuit.
6/28/85
1
N.D.Ill.
AFFIRMED
|
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
ELECTRONIC PRIVACY )
INFORMATION CENTER, )
)
Plaintiff, )
)
v. ) Civil Action No. 10-1992 (RCL)
)
UNITED STATES DEPARTMENT OF )
HOMELAND SECURITY, )
)
Defendant. )
)
MEMORANDUM OPINION
Before the Court is plaintiff Electronic Privacy Information Center’s (EPIC) motion for
attorneys’ fees and costs [ECF No. 24] against defendant U.S. Department of Homeland Security
(DHS). After considering the motion, the response and reply thereto [ECF Nos. 25–26], and the
record herein, the Court will award EPIC $3,321.95 in fees and costs. EPIC may also move the
Court for an additional $640.58, but only if DHS’s settlement offer was for less than $3,321.95.
I. BACKGROUND
There are three time periods to keep in mind for this case. The first period is from
November 19, 2010 to March 21, 2013. That is the time during which the parties litigated the
merits. The second is between March 21st and April 12th. That is when the parties litigated fees
and costs, but before DHS made an offer of settlement under Federal Rule of Civil Procedure 68.
The third period is after April 12th, 2013, or after DHS’s Rule 68 offer.
The underlying case began on November 19, 2010, when EPIC filed a Freedom of
Information Act (FOIA) lawsuit against DHS [ECF No. 1], seeking production of documents
relating to Whole Body Imaging technology used in U.S. airports. In response, DHS produced
nearly 1,900 pages but also withheld many pursuant to exemptions 3, 4, 5, and 6. In response to
EPIC’s summary judgment motion to compel production of documents withheld under
exemptions 3, 4, and 5 (EPIC conceded 6), this Court ordered production of documents withheld
under only exemption 4, resulting in the production of 18 pages. See Elec. Privacy Info. Ctr. v.
U.S. Dep’t of Homeland Sec., 928 F. Supp. 2d 139, 147–49 (D.D.C. 2013).
Because the Court granted it partial summary judgment, EPIC moved for attorneys’ fees
under FOIA’s fee-shifting statute. See 5 U.S.C. § 552(a)(4)(E). EPIC also logged the hours that
its attorneys worked on this fee litigation. Those hours began on March 21, 2013—both for this
case and for another, Elec. Privacy Info. Ctr. v. Transp. Sec. Admin., Civil No. 11-290. Except
for a few unique entries, the logs are substantially the same as of March 21st.
Fees continued to pile up even after DHS made a settlement offer under Rule 68 on April
12, 2013 (EPIC rejected it). DHS has not disclosed the amount offered so as not to bias the
Court, see Def.’s Opp’n 28–29, but even so, the Court will for the reasons below split the fees on
fee litigation into those incurred up to April 12th and those incurred after.
There are many issues contested in this fee litigation. So rather than repeat itself, the
Court will elaborate on the facts relevant to each one below.
II. LEGAL STANDARD
a. Eligibility for and entitlement to attorneys’ fees
In a FOIA suit, “[t]he court may assess against the United States reasonable attorney fees
and other litigation costs reasonably incurred in any case . . . in which the complainant has
substantially prevailed.” 5 U.S.C. § 552(a)(4)(E)(i). A plaintiff substantially prevails by
“obtain[ing] relief through either (I) a judicial order, or an enforceable written agreement or
2
consent decree; or (II) a voluntary or unilateral change in position by the agency, if the
complainant’s claim is not insubstantial.” § 552(a)(4)(E)(ii). In addition to being eligible for
attorneys’ fees, i.e. substantially prevailing, a plaintiff must be entitled to the fees in order to
receive any. Weisberg v. U.S. Dep’t of Justice, 745 F.2d 1476, 1495 (D.C. Cir. 1984).
Entitlement “entails a balancing of four factors: (1) the benefit of the release to the public; (2) the
commercial benefit of the release to the plaintiff; (3) the nature of the plaintiff's interest; and (4)
the reasonableness of the agency's withholding.” Id. at 1498. With respect to the balancing test,
“[t]he sifting of those criteria over the facts of a case is a matter of district court discretion.” Tax
Analysts v. U.S. Dep’t of Justice, 965 F.2d 1092, 1094 (D.C. Cir. 1992). Still, the D.C. Circuit
has offered some guidance, for instance by stating, “Essentially, the first three factors assist a
court in distinguishing between requesters who seek documents for public informational
purposes and those who seek documents for private advantage.” Davy v. CIA, 550 F.3d 1155,
1160 (D.C. Cir. 2008) (emphasis added).
b. Successful and unsuccessful claims
Even if a plaintiff is eligible for and entitled to attorneys’ fees, a court must still inquire
whether there are any unsuccessful claims that were unrelated to successful ones. See George
Hyman Constr. Co. v. Brooks, 963 F.2d 1532, 1535 (D.C. Cir. 1992). If there are, the plaintiff
may recover fees for work done on only the successful claims. Id. Further, a court “must then
consider whether the success obtained on the remaining claims is proportional to the efforts
expended by counsel.” Id. In other words, if the plaintiff achieves only limited success, it is
within the court’s discretion to reduce the award of fees. See id. The method of reduction this
Court will use here, one that the D.C. Circuit has used when a plaintiff does not allocate time
between claims, is to award a percentage of the fees sought equal to the percentage of pages
3
spent arguing the successful claims on the merits. See Judicial Watch, Inc. v. U.S. Dep’t of
Commerce, 2007 U.S. App. LEXIS 2337, at *2–*4 (D.C. Cir. 2007).
c. Fees for conferences
Whereas the touchstone for attorneys’ fees is reasonableness, see 5 U.S.C. §
552(a)(4)(E)(i) (“The court may assess . . . reasonable attorney fees . . . reasonably incurred . . .
.”), this Court expects fee applicants to exercise billing judgment. Where applicants fail to do
this, the Court will exclude “hours that are excessive, redundant, or otherwise unnecessary” after
considering the record. Hensley v. Eckerhart, 461 U.S 424, 434 (1983). Moreover, the Court
will pay particularly close attention when many lawyers bill for a single task. Cf. Copeland v.
Marshall, 641 F.2d 880, 891 (D.C. Cir. 1980) (en banc) (“[W]here three attorneys are present at
a hearing when one would suffice, compensation should be denied for the excess time.”).
d. Fees for junior attorneys and attorneys who are not barred in D.C.
The parties dispute the rates applicable to fees for the work of law school graduates who
have not been admitted to any bar, and attorneys who have not been admitted to the D.C. Bar.
Compare Def.’s Opp’n 19–21, ECF No. 25, with Pl.’s Reply 12–14, ECF No. 26. With respect
to junior attorneys not admitted to any bar, neither party cites any binding case that directly
answers the question, and this Court has not found any. But some cases in this district have
reduced non-barred attorneys’ fees to the paralegal/clerk Laffey rate. See, e.g., Elec. Privacy
Info. Ctr. v. U.S. Dep’t of Homeland Sec., 811 F. Supp. 2d 216, 238 (D.D.C. 2011); Blackman v.
District of Columbia, 677 F. Supp. 2d 169. 175 (D.D.C. 2010). Even though Laffey rates are
based on years after graduation, U.S. DEP’T OF JUST., Laffey Matrix – 2002-2012 n.2,
http://www.justice.gov/usao/dc/divisions/civil_Laffey_Matrix_2003-2012.pdf, this Court, too,
holds that that calculation does not kick in until the graduate is admitted to a bar, and work by
4
graduates who have not yet been admitted to any bar shall be compensated at the paralegal/clerk
rate.
With respect to attorneys barred somewhere other than D.C., they may file papers in D.C.
federal courts only if they “join[] of record a member in good standing of the [D.C. Bar].” D.C.
Fed. Ct. R., LCvR 83.2(c)(1). EPIC states, “This rule applies to all attorneys practicing out of
offices located within the District of Columbia.” Pl.’s Reply 14. Precisely the opposite is true:
Paragraph (1) above is not applicable to an attorney who engages in the
practice of law from an office located in the District of Columbia. An
attorney who engages in the practice of law from an office located in the
District of Columbia must be a member of the District of Columbia Bar
and the Bar of this Court to file papers in this Court.
D.C. Fed. Ct. R., LCvR 83.2(c)(2). But D.C. local rules provide that an attorney not barred in
D.C. may still practice law in D.C. by “[p]roviding legal advice only to one’s regular employer.”
D.C. Ct. of App. R. 49(c)(6). When an attorney’s work is not authorized in D.C., courts in this
district have nonetheless awarded fees at the paralegal rate for equitable reasons. See, e.g., Baker
v. D.C. Pub. Sch., 815 F. Supp. 2d 102, 116 (D.D.C. 2011); Dickens v. Friendship–Edison
P.C.S., 724 F. Supp. 2d 113, 119–20 (D.D.C. 2010). But those were Individuals with Disabilities
Education Act cases that followed a different statutory regime. For that reason, this Court
declines to monetarily penalize a FOIA plaintiff just because a licensed attorney who had not yet
acquired a D.C. license signed a brief, even if that is not in accordance with local rules. Instead,
the Court will apply the junior attorney rates that EPIC seeks.
e. Reduction of Fees on Fees
Fee applicants may be compensated for work done on fee litigation (fees on fees). E.g.,
Copeland, 641 F.2d at 896 & n.29. But “fees for fee litigation should be excluded to the extent
that the applicant ultimately fails to prevail in such litigation.” Comm’r, I.N.S. v. Jean, 496 U.S.
5
154, 163 n.10 (1990). This Court will therefore award EPIC the same percentage of fees for fee
litigation as it does for fees on the merits. Cf. Harris v. McCarthy, 790 F.2d 753, 758–59 (9th
Cir. 1986) (holding that applying the same percentage of fees awarded on the merits to fees on
fees was not an abuse of discretion); Judicial Watch, Inc. v. Dep’t of Justice, 878 F. Supp. 2d
225, 241 (D.D.C. 2012) (awarding fees on the merits at 5.3% of the amount sought and therefore
reducing the fees on fees sought to the same percentage).
f. Double Billing in a FOIA case
EPIC attempts to explain away inferences of double billing by suggesting,
The fees that EPIC seeks are those to which it is entitled to under statute
arising from FOIA requests in two distinct matters concerning two distinct
agencies. . . . Because both matters were discussed in these meetings and
communications, EPIC billed both cases for the time spent in these
conferences, hearings, and communications.
Pl.’s Reply 18. Once again, the opposite is true: “Hours that are not properly billed to one’s
client also are not properly billed to one’s adversary pursuant to statutory authority.” Copeland,
641 F.2d at 891 (quoted in Hensley, 461 U.S. at 434). After all, “[t]he fundamental purpose of
the fee award is to compensate the attorney for his efforts.” Id. (emphasis added). If a plaintiff
were to get fees from two different adversaries for the same hours, there would be a windfall of
100% beyond compensation for the attorneys’ efforts.
g. Costs before and after a Rule 68 offer
If an offeree rejects an offer made under Federal Rule of Civil of Procedure 68, then
under that Rule, “[i]f the judgment that the offeree finally obtains is not more favorable than the
unaccepted offer, the offeree must pay the costs incurred after the offer was made.” FED. R. CIV.
P. 68(d). In determining whether the judgment or offer is more favorable, “postoffer costs . . .
should not be included in the calculus.” Marek v. Chesny, 473 U.S. 1, 7 (1985). The judgment
6
includes attorneys’ fees in a FOIA case. See Id. at 9 (“[W]here the underlying statute defines
‘costs’ to include attorney’s fees, we are satisfied such fees are to be included as costs for
purposes of Rule 68.”); 5 U.S.C. § 552(a)(4)(E)(i) (authorizing an award for “attorney fees and
other litigation costs” (emphasis added)). Moreover, a prevailing plaintiff would not be
responsible for only his own post-offer costs, but also the defendant’s, Tunison v. Cont’l Airline
Corp., 162 F.3d 1187, 1193 (D.C. Cir. 1998)—but only those costs that are “properly
awardable,” Marek, 473 U.S. at 9. As such, because FOIA allows attorneys’ fees for only
plaintiffs and not the United States, 5 U.S.C. § 552(a)(4)(E)(i), EPIC would be responsible for
DHS’s post-offer costs exclusive of attorneys’ fees if the Court awards EPIC less than what DHS
offered under Rule 68 for work done prior to the offer.
III. ANALYSIS
a. EPIC is eligible for and entitled to attorneys’ fees based on its limited
summary judgment victory.
DHS does not contest that EPIC is eligible for and entitled to fees and costs associated
with DHS’s voluntary production of documents after EPIC filed the FOIA complaint. As a
result, EPIC gets $350 for the cost of filing right off the bat. 1 But all the hours spent on EPIC’s
only partially successful summary judgment motion is another story. It is true that EPIC is
eligible for fees based on the summary judgment motion because it prevailed on one of the
issues. But any consideration of entitlement to fees and reduction of fees for partial success
relates only to the summary judgment motion and not to the prior production of documents—the
work done on the summary judgment motion had no effect on the prior production. Cf. Cox v.
U.S. Dep’t of Justice, 601 F.2d 1, 6 (D.C. 1979) (per curiam) (“[T]he party seeking such fees in
the absence of a court order must show that prosecution of the action could reasonably be
1
EPIC would also have been entitled attorneys’ fees for the voluntary production of documents, but it did not log
any hours that were causally related to that production.
7
regarded as necessary to obtain the information, and that a causal nexus exists between that
action and the agency’s surrender of the information.” (emphasis added) (citations omitted)).
In addition to being eligible for fees in connection with its summary judgment motion,
EPIC is also entitled to fees. While the parties dispute the public benefit garnered from the 18
pages of production caused by the summary judgment motion, compare Pl.’s Reply 8–9, with
Def.’s Opp’n 14–17, this Court is satisfied that EPIC sought the documents for public purposes
and is therefore “the quintessential requestor of government information envisioned by FOIA.”
Davy, 550 F.3d at 1157; cf. id. at 1159 (“The first factor assesses . . . both the effect of the
litigation for which fees are requested and the potential public value of the information sought.”
(emphasis added)).
b. Due to EPIC’s limited success, its fees on the merits should be reduced by 6/7.
Even though EPIC is entitled to fees, the Court will reduce those fees by 6/7 because of
EPIC’s limited success. DHS withheld documents based on three exemptions, and EPIC won on
its motion to compel disclosure with respect to only one of those exemptions, leading to only 18
pages of new documents. Applying the test the D.C. Circuit used in Judicial Watch, 2007 U.S.
App. LEXIS 2337, see supra Part II.b, the Court finds that on the merits, EPIC dedicated 6 pages
out of 42 of argument, or 1/7, to the winning issue. See Pl.’s Mot. For Summ. J. 5–27, ECF No.
11; Pl.’s Reply 2–21, ECF No. 15. Therefore, EPIC will receive 1/7 of fees on the merits. 2
c. Only a fraction of EPIC’s logged hours for two conferences should count
towards its total.
EPIC held two March 2013 conferences for a total of less than one hour, but billed a total
2
Although EPIC sought to compel disclosure of 22 pages that DHS withheld under exemption 4 but won with
respect to only 18, the Court declines DHS’s offer to reduce EPIC’s fees further, Def.’s Opp’n 19, because a
common legal issue binds all of those pages. Cf. Goos v. Nat’l Ass’n of Realtors, 68 F.3d 1380, 1384 (D.C. Cir.
1995) (“[A] plaintiff’s failure to prevail on a related count is not in itself a sufficient ground for reducing her fees. It
is a plaintiff’s overall success, and not the number of counts she prevails on, that determines the amount of fees she
is entitled to.”).
8
of 6.7 hours because of all the attorneys involved. See ECF No. 24-3 at 2–3. Of the eight
attorneys who attended, four had no part in the litigation before the conferences (Ms. Barnes,
Ms. Stepanovich, Ms. Horwitz, and Mr. Scott). In fact, one of those four, Ms. Barnes, appears
on the hours log for only the two conferences and her affidavit; and another, Mr. Scott, appears
for only the conferences. The Court will not award fees for Ms. Barnes’, Ms. Stepanovich’s, Ms.
Horwitz’s, or Mr. Scott’s participation in the March 2013 conferences, and in Ms. Barnes’ case,
nor for her affidavit. As a result, $931.00 thus far must be subtracted from EPIC’s desired fees
($882 for the conferences and $49 for the affidavit). The Court will, however, award fees for
participation in the conferences by Mr. Rotenberg and Ms. McCall, the two primary attorneys on
the case; Mr. Jacobs, who had a prominent role in drafting the reply in the underlying case; and
Mr. Butler, who researched FOIA attorneys’ fees and drafted a memo the day before the first
conference.
d. EPIC should have billed some of its hours at the paralegal/clerk Laffey rate.
One attorney, Mr. Jacobs, was not a member of any bar in 2011, when he did a
substantial amount of work on the underlying case. See ECF No. 25-3 (showing that Mar.
Jacobs was admitted to the New York State Bar in 2012). For that reason, his billing rate during
that time should be $140 per hour rather than the claimed $240. As a result, an additional $3,140
must be deducted from EPIC’s fees. See ECF No. 24-3 at 1–2 (31.4 pre-bar hours at a $100
difference). And while Mr. Scott also was not a member of any bar when he worked on this
case, see ECF No. 25-4, this Court in its discretion has already eliminated all of his hours from
the fee calculation, see supra Part III.c.
Additionally, three attorneys (Mr. Jacobs, Ms. Horwitz, and Ms. Barnes) were not barred
in D.C. during their work on this case. In Ms. Horwitz’s case, she did in fact file a paper in the
9
Court. See Pl.’s Reply 21, ECF No. 26. The signature page itself acknowledges that Ms.
Horwitz’s admission to the D.C. Bar was pending at the time. Id. Under the plain language of
the D.C. Federal Court Rules, that is not enough. LCvR 83.2(c)(2) (“An attorney who engages
in the practice of law from an office located in the District of Columbia must be a member of the
District of Columbia Bar and the Bar of this Court to file papers in this Court.” (emphasis
added)). Nevertheless, this Court will not reduce EPIC’s fees on that account because the
attorneys’ efforts would not then be properly rewarded. Still, EPIC should take note that it did
not precisely comply with D.C. federal court rules.
e. EPIC’s fees for fee litigation should be reduced based on the partial award of
fees on the merits.
Although the Court will reduce the fees on the merits to 1/7 of the total, that is only
after taking into account other reductions based on lack of admission to a bar. So the percentage
of fees on the merits awarded compared to those sought will in fact be slightly less than 1/7.
Therefore, when calculating the percentage of fees on fees to award, the Court will use the
updated, slightly smaller percentage.
f. EPIC’s double billing in this FOIA case and a contemporaneous one merits a
50% reduction of those fees on fees.
EPIC’s fees-on-fees entries in this case are substantially similar to those in Elec. Privacy
Info. Ctr. v. Transp. Sec. Admin. (TSA), Civil No. 11-290. Compare ECF No. 24-3 at 2–7 (this
case), with TSA, ECF No. 28-3 at 3–7. Only six fees-on-fees entries are unique to this case
before the reply, and they total $983. After adding $2,090 for the reply, Pl.’s Reply 20, which
was also unique to this case, the unique fees total $3,073. The rest are identical to those in TSA.
But because the Court is satisfied that EPIC was not trying to pull one over the Court, but rather
10
just grossly misunderstood the law, 3 the Court will reduce the identical fees-on-fees entries by
50% to reflect the partition that EPIC should have made; the unique entries will be fully
rewarded.
g. EPIC is entitled to costs and fees only up to April 12, 2013, and is liable for
DHS’s costs (exclusive of attorneys’ fees) after that date.
DHS made a valid Rule 68 offer of settlement to EPIC on April 12, 2013. EPIC rejected
it. Under the plain language of Rule 68 and cases in this circuit interpreting it, EPIC cannot then
recover costs (including attorneys’ fees) for work done after April 12th unless the offer was for
less than what EPIC is awarded in costs up to and including that date. If the offer was not for
less, EPIC is liable for DHS’s post-April 12th costs (excluding attorneys’ fees), if any. As such,
the Court will divide the fees in this case into those awarded through April 12th, and those
awarded afterward.
h. Adding it all up.
The Court will now roll up its sleeves, go back to grade school, and sort through all the
math. First, EPIC moved for $22,242 for fees and costs incurred before March 21, 2013 (the day
fees-on-fees litigation began). After the reduction of $3,140 because attorney Mr. Jacobs was
not barred at the time, the total is $19,102. Of that number, $350 (the filing fee) will not be
reduced for partial success. But the Court will reduce the remaining $18,752 to 1/7 of that
number—that equals $2,678.86. After adding the $350 back on, the amount EPIC will receive
for work on the merits is $3,028.86.
3
EPIC is now aware of the law. This Court would not like to see EPIC bill a case in this way again. After all, given
EPIC’s “complete failure to segregate expenses for claims on which it did not succeed, failure to discount its
summary judgment fees in light of its minimal success, overstaffing this matter during later stages of the case,
improper claims of attorney rates for staff not admitted to the bar, and [definite] double-billing,” Def.’s Opp’n 32,
this Court could have in its discretion refused to award any fees, see Envtl. Def. Fund, Inc. v. Reilly, 1 F.3d 1254,
1258 (D.C. Cir. 1993) (“We may deny in its entirety a request for an ‘outrageously unreasonable’ amount, lest
claimants feel free to make ‘unreasonable demands, knowing that the only unfavorable consequence of such
misconduct would be reduction of their fee to what they should have asked for in the first place.’” (quoting Brown v.
Stackler, 612 F.2d 1057, 1059 (7th Cir. 1980))).
11
For fees on fees, the Court must divide the award into fees up to April 12, 2013, and fees
afterward. EPIC seeks fees up to April 12th totaling $4,840.50. Initially, the Court must
subtract $882 for overbilling the March 2013 conferences. That leaves $3,958.50. Most of that
total must be cut in half because of double billing, but some of it, $346 to be exact, remains
untouched for now. ($346 is the amount for fees on fees billed uniquely to this case up to April
12th, 2013.) So $3,612.50 must be halved, then $346 added back on. That brings the running
total to $2,152.25. Finally, this must be reduced to a percentage equal to the percentage of fees
on the merits awarded to fees on the merits sought (or a little less than 1/7). That equals $293.09.
Therefore, EPIC’s pre-offer judgment, including attorneys’ fees and the initial $350 filing fee, is
$3,321.95.
For work done after the Rule 68 offer (including work on the reply brief), EPIC seeks
$6,730 in attorneys’ fees. Subtracting $49 for Ms. Barnes’ affidavit, that leaves $6,681. $2,727
of that will be untouched because there was no double billing, but the rest is cut in half, resulting
in a subtotal of $4,704. Reducing that to the same percentage as on the merits, the post-offer
total is $640.58.
IV. CONCLUSION
For the foregoing reasons, EPIC is entitled to $3,321.95 in attorneys’ fees and costs.
EPIC may be entitled to $640.58 more, but only if DHS’s Rule 68 offer was for less than
$3,321.95. To that end, EPIC may move the Court for the additional $640.58 if the offer was for
less than $3,321.95. But if the offer was for that much or more, DHS may move for post-offer
costs, if any.
Signed by Royce C. Lamberth, U.S. District Judge, on October 15, 2013.
12
|
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.