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https://www.courtlistener.com/api/rest/v3/opinions/2357559/ | 244 P.3d 542 (2011)
Joseph JAMES, Appellant,
v.
STATE of Alaska, Appellee.
No. A-9785.
Court of Appeals of Alaska.
January 7, 2011.
*544 Paul Malin, Assistant Public Defender, and Quinlan Steiner, Public Defender, Anchorage, for the Appellant.
Marilyn J. Kamm, Assistant Attorney General, and Daniel S. Sullivan, Attorney General, Juneau, for the Appellee.
Before: COATS, Chief Judge, BOLGER, Judge, and STEWART, Senior Court of Appeals Judge.[*]
OPINION
BOLGER, Judge.
When the Alaska Parole Board released Joseph James on mandatory parole, the Board imposed several special conditions, including the requirement that he participate in sex offender treatment. In March 2005, James appealed to the superior court, contending that the special conditions were unconstitutional. In December 2005, the Board revoked James's parole because he did not satisfy the sex offender treatment condition. In January 2006, James appealed the parole revocation and moved to consolidate his first appeal with the appeal challenging his parole revocation. The superior court upheld James's conditions of parole and denied James's motion to consolidate. We conclude that the Parole Board was authorized to impose special conditions on James's mandatory parole release. We also conclude that the superior court did not abuse its discretion when it denied James's motion to consolidate his appeals.
Background
In 1979, Joseph James was convicted of committing lewd acts against a child under the age of sixteen and spent three years in prison.[1] While James was on furlough in 1984, he attempted to sexually assault a woman, forced fellatio on a ten-year-old boy, and had sexual contact with a nine-year-old girl.
James was then charged and convicted of attempted sexual assault in the second degree and three counts of sexual abuse of a minor. Superior Court Judge Jay Hodges sentenced James to thirty years to serve with an additional eighteen years suspended. Judge Hodges's sentence included several conditions of probation. Judge Hodges ordered James to refrain from excessive drinking, submit to urine or blood analysis, allow a probation officer to search him, not have contact with minor children outside the presence of another adult, and meet several other requirements. The probation conditions did not expressly include sex offender treatment.
Prior to James's release on mandatory parole in 2005, James's probation officer submitted a request to the Parole Board for supplemental conditions of mandatory parole. The Board notified James of the special conditions of his parole, but James submitted written objections to the conditions. The Board declined to modify the conditions, which included a condition that required James to participate in sex offender treatment and education classes. On March 26, 2005, James appealed the Board's decision to impose special conditions on his parole.
After his release, James missed a sex offender education class and refused to cooperate with his treatment. On December 8, 2005, the Board revoked James's parole and ordered him to serve ten years, the amount of his earned good time. On January 19, *545 2006, James filed a notice of appeal in superior court, contesting the parole revocation. At the same time, James moved to consolidate this new appeal with the appeal he filed in March 2005. Superior Court Judge Peter A. Michalski denied James's motion to consolidate the appeals.
Judge Michalski ultimately upheld the Board's special conditions on James's parole. James appeals Judge Michalski's decision, raising several constitutional challenges to the Parole Board's decision to impose the special conditions of mandatory parole.
In this case the superior court acted as an intermediate court of appeal; we independently review the Parole Board's decision.[2] We review the denial of a motion to consolidate for abuse of discretion.[3]
Discussion
The Parole Board was authorized to impose special conditions on James's mandatory parole.
The legislature originally enacted the relevant parole and good-time statutes in 1960. At that time, the good-time statute provided that a prisoner released on good-time deductions with more than 180 days remaining to serve "shall be deemed as if released on parole."[4] The Parole Administration Act provided that a parolee's release was subject to "such terms and conditions ... as the [Parole Board] may prescribe."[5] This relevant statutory language remained unchanged in 1979 and 1984 when James was sentenced for his crimes.[6]
In Braham v. Beirne, this court recognized that prisoners "who are released mandatorily under [the good-time statute] with greater than 180 days to serve under their sentences are released `as if released on parole.'"[7] Therefore, we held that the Board has the authority to set special conditions of parole for mandatory parolees, and that the Board may revoke the parole of mandatory parolees for violation of the special conditions.[8]
In 1985, the legislature repealed the 1960 Parole Administration Act[9] and enacted a new chapter on parole administration.[10] The 1985 statute expressly codifies a list of parole conditions that the Board can impose on discretionary or mandatory parolees.[11] The legislature also added a new statutory provision that clarified the distinction between discretionary and mandatory parole.[12] When the House Judiciary Committee addressed the 1985 statute, it indicated that it "intend[ed] the provisions of AS 33.16.010 relating to Parole to offer a system of discretionary and mandatory parole consistent with the holding in Braham v. Beirne, ... whereby both [the mandatory and discretionary parole] systems are the same except as to how the offender is placed on parole."[13]
The special conditions of parole in the 1985 statute did not violate the ex post facto clauses.
James argues that his special conditions of parole are based on the current parole statute, enacted in 1985. He argues that these conditions violate the prohibition on ex post facto laws because this statute was not effective when he was convicted in 1979 and 1984. The ex post facto clauses of the state and federal constitutions prevent the legislature from enacting a statute that *546 retroactively makes the punishment for a crime more burdensome.[14]
As noted above, beginning in 1960, the Parole Board was authorized to impose special conditions of parole. Such conditions could include "residential, employment, and reporting requirements as well as prohibition of activities which would otherwise be lawful (for example, drinking alcoholic beverages)."[15] Such conditions were valid as long as they were reasonably related to the parolee's rehabilitation and the underlying offense.[16]
James does not argue that his special parole conditions were unrelated to his offense, his prior record, or his rehabilitation. Instead, he argues that, before 1985, the Parole Board was not authorized to impose any special conditions of parole on those released on mandatory parole after deduction of good-time credits. But we have already decided this issue in Braham: the Parole Board was authorized to set special conditions of mandatory parole when James committed his offenses in 1979 and 1984, based on the statutes enacted in 1960.[17] Therefore, the enactment of a new parole statute in 1985 did not increase James's punishment in a way that violated the ex post facto clauses.
The special parole conditions imposed when James was released in 2005 did not constitute double jeopardy.
James argues that the special conditions on his 2005 parole constituted double jeopardy because they imposed a second punishment for his offenses in addition to the probation conditions originally imposed by the sentencing judges. The double jeopardy clauses of the state and federal constitutions forbid any increase in a sentence after it has been meaningfully imposed.[18] But generally, the revocation of parole does not constitute double jeopardy because the authority to impose and revoke parole is inherent in a criminal sentence.[19]
Again, James's success depends on his contention that the Parole Board lacked the authority to impose special conditions for those released on mandatory parole. But the authority for the Parole Board to impose special conditions on a mandatory parolee was based on statutes in effect since 1960. Therefore, the special conditions imposed on James's parole release were inherent in the criminal judgments imposed by the sentencing courts when James was convicted in 1979 and 1984. Since these conditions were authorized by James's original sentences, they did not increase his sentence when they were imposed in 2005.
The special conditions imposed by the Parole Board did not violate the doctrine of separation of powers.
James argues that the imposition of special conditions by the Parole Board (rather than the court) violates the doctrine of separation of powers. The separation of powers doctrine safeguards the independence of each of the three branches of government by limiting the authority of each branch to interfere with powers that have been delegated to the other branches.[20] This doctrine "requires that the blending of governmental powers will not be inferred in the absence of an express constitutional provision."[21]
The text of the constitution does not support James's arguments that parole conditions are part of a function constitutionally entrusted to the judiciary. There is an express constitutional provision regarding the parole system in the constitutional article defining the powers of the executive branch: "Subject to procedure prescribed by law, the *547 governor may grant pardons, commutations, and reprieves, and may suspend and remit fines and forfeitures. This power shall not extend to impeachment. A parole system shall be provided by law."[22] There is no similar provision discussing any aspect of parole administration in the article defining the judicial branch.
Moreover, we have previously recognized that the sentencing function is not assigned to the exclusive jurisdiction of either the judicial or the executive branch: "The administration of probation is the responsibility of the judicial branch, whereas the administration of parole is the responsibility of the executive branch."[23] While "the superior court has broad authority over the conditions of a defendant's probation, another governmental bodythe Board of Parolecontrols the conditions of a defendant's parole."[24] The imposition of special conditions of parole by the Parole Board is consistent with this constitutional grant of authority. Therefore, the imposition of conditions of parole by the Parole Board does not violate the doctrine of separation of powers.
James has not established a violation of his privilege against self-incrimination.
James argues that the special conditions requiring him to participate in sex offender treatment violate his privilege against self-incrimination. It is true that the state may not revoke probation or parole in response to a valid invocation of the privilege against self-incrimination.[25] But James did not raise this argument in his brief on appeal to the superior court. He has therefore abandoned this argument.[26]
Even if James had preserved this argument, he would not prevail. A parolee cannot validly invoke the privilege against self-incrimination when there is no realistic threat of incrimination.[27] In order to show a violation of the privilege, James must show that his parole conditions required him to make statements that would subject him to a realistic threat of incrimination. But the State granted James transactional immunity for any statements he was required to make during treatment.
Because he received immunity from prosecution, James did not face any realistic threat of incrimination. He therefore has not established that his parole conditions violated his privilege against self-incrimination.
James has not shown that Judge Michalski abused his discretion when he denied the motion to consolidate.
James originally appealed from the Parole Board decision imposing his special conditions of parole release. Several months later, after his parole was revoked, he filed a motion to consolidate, asking the superior court to allow him to raise issues related to the order revoking his parole. James now argues that the superior court abused its discretion by failing to recognize and grant his motion to consolidate as a motion to amend his points on appeal.[28]
We conclude that this argument is moot. The only issue that James sought to raise in his appeal from the parole revocation was the ex post facto issue we have just resolved: James claimed that his revocation was based on conditions of parole that were not authorized by the law in effect at the time of his crimes. In support of his request for consolidation, James noted that the decision in his appeal from the imposition of his parole conditions *548 would moot this point in his appeal from his revocation. He was correct on this point. James's appeal from the parole revocation is now moot because we have decided that the conditions imposed by the Parole Board were valid.
We also conclude that the superior court did not abuse its discretion when it denied James's motion to consolidate. James appears to argue that the court should have recognized his motion as a motion to amend his points on appeal. He relies on cases reviewing a motion to amend the points in a criminal appeal[29] and a motion to amend a civil complaint.[30]
But this case is distinguishable from the cases James relies upon. This is not a case where a litigant seeks merely to add an additional argument regarding the validity of an administrative decision. James was seeking to add a separate appeal from a separate administrative decision based on a separate record. The superior court could conclude that this procedure would unreasonably complicate the appeal.
Miscellaneous issues
James appears to be arguing that his revocation violated due process because the Parole Board had no authority to impose special conditions on his parole. James does not clarify why this is a due process violation. This argument is moot because, as noted above, the Parole Board did have authority to impose the special conditions on James's mandatory parole.
James also argues that the superior court erred by failing to rule on some of his arguments. He first argues that the State was bound by a contract theory based on a letter from DOC indicating that the Parole Board would apply 1984 law to his parole release. This argument is adequately addressed in the foregoing decision. James could not prevail even if the State was bound by this letter because the law in 1984 authorized the Parole Board to impose special conditions on his parole release.
James similarly argues that the superior court failed to address his argument that he had a liberty interest related to his mandatory release. But the superior court's ruling on this issue is implicit in its ruling on the due process issue James raised in that court. The superior court assumed that James had a liberty interest at stake when the Parole Board set his parole conditions and ruled that James received adequate due process when he was allowed to submit comments during that procedure.
Finally, James argues that the superior court failed to address his argument that the Parole Board lacked personal jurisdiction to impose conditions on his parole. The answer to this issue is also implied in the ex post facto ruling affirmed in the foregoing opinion. The Parole Board had statutory authority to exercise personal jurisdiction over James when he was released on mandatory parole, based on statutes in effect since 1960.
Conclusion
We consequently AFFIRM the superior court decision upholding the decision of the Alaska Board of Parole.
MANNHEIMER, Judge, not participating.
NOTES
[*] Sitting by assignment made pursuant to article IV, section 11, of the Alaska Constitution and Alaska Administrative Rule 23(a).
[1] For a complete history of the somewhat complicated procedural posture and facts of this case, see James v. State, 730 P.2d 811 (Alaska App.1987) (James I); James v. State, 739 P.2d 1314 (Alaska App.1987) (James II); James v. State, 754 P.2d 1336 (Alaska App.1988) (James III).
[2] Kuzmin v. State, Commercial Fisheries Entry Comm'n, 223 P.3d 86, 88 (Alaska 2009).
[3] C.L. v. P.C.S., 17 P.3d 769, 772 (Alaska 2001).
[4] Ch. 107, § 4, SLA 1960.
[5] Ch. 81, § 8, SLA 1960.
[6] See former AS 33.20.040(a) (1982 & Supp. 1983-1984); former AS 33.15.190 (1982 & Supp. 1983-1984).
[7] Braham v. Beirne, 675 P.2d 1297, 1300 (Alaska App.1984).
[8] Id.
[9] Former AS 33.15 (1982).
[10] Ch. 88, §§ 2, 7, SLA 1985 (enacting AS 33.16 and repealing AS 33.15).
[11] AS 33.16.150.
[12] AS 33.16.010.
[13] 1985 House Journal 821.
[14] Lapp v. State, 220 P.3d 534, 539 (Alaska App. 2009).
[15] Morton v. Hammond, 604 P.2d 1, 3 (Alaska 1979).
[16] Roman v. State, 570 P.2d 1235, 1240 (Alaska 1977).
[17] Braham, 675 P.2d at 1300.
[18] Lapp, 220 P.3d at 537.
[19] Hill v. State, 22 P.3d 24, 29 (Alaska App.2001) (citing Reyes v. State, 978 P.2d 635, 639 (Alaska App.1999)).
[20] Alaska Pub. Interest Research Grp. v. State, 167 P.3d 27, 35 (Alaska 2007).
[21] Bradner v. Hammond, 553 P.2d 1, 7 (Alaska 1976).
[22] Alaska Const., art. 3, § 21.
[23] See Smith v. State, Dep't of Corr., 872 P.2d 1218, 1228 (Alaska 1994) (quoting Paul M. Bater, The Constitution as Architecture: Legislative and Administrative Courts Under Article III, 65 Ind. L.J. 233, 274 (1990)).
[24] State, Dep't of Corr. v. Lundy, 188 P.3d 692, 696 (Alaska App.2008).
[25] Gyles v. State, 901 P.2d 1143, 1148 (Alaska App.1995).
[26] See Bickford v. State, Dep't of Educ. and Early Dev., 155 P.3d 302, 313 (Alaska 2007) (claims not raised in superior court appeal of administrative action are beyond scope of supreme court appeal).
[27] Gyles, 901 P.2d at 1148.
[28] See Amos v. State, 46 P.3d 1044, 1045 (Alaska 2002) (reviewing for abuse of discretion this court's decision not to allow defendant to supplement a merit appeal with briefing on a sentence appeal).
[29] Id. at 1045.
[30] Hallam v. Holland Am. Line, Inc., 27 P.3d 751, 755 (Alaska 2001). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2357971/ | 325 Pa. Super. 116 (1984)
472 A.2d 674
WILLS EQUIPMENT COMPANY
v.
GOLDMAN ENTERPRISES, INC. and Pennsylvania National Mutual Casualty Insurance Company, Appellants.
Supreme Court of Pennsylvania.
Submitted March 9, 1983.
Filed February 10, 1984.
*117 Thomas I. Puleo, Philadelphia, for appellants.
Donald L. Reihart, York, for appellee.
Before WICKERSHAM, BECK and MONTEMURO, JJ.
WICKERSHAM, Judge:
This is an appeal from the order of the Court of Common Pleas of York County granting appellee's motion for sanctions by entering a default judgment in favor of appellee and against appellants. We reverse and remand.
A close look at the procedural facts is necessary to the determination of this appeal. Appellee, Wills Equipment Company, is a Pennsylvania corporation. Appellant Goldman Enterprises, Inc. (hereinafter referred to as "Goldman") is a New Jersey corporation and appellant Pennsylvania National Mutual Casualty Insurance Company (hereinafter referred to as "Pennsylvania National") is a Pennsylvania Corporation.
This case arises from a contract between the appellee and appellant Goldman, in which appellee agreed to sell, deliver, and install a number of mechanical doors to be used in connection with a construction project at Lakehurst Naval Air Station, Lakehurst, New Jersey. Appellee claims that Goldman did not make full payment for the doors, and on May 8, 1980, appellee filed a complaint in assumpsit against Goldman and also against appellant Pennsylvania National, as surety on a performance and payment bond executed between Goldman and Pennsylvania National.
*118 Both appellants, who at all times relevant to this appeal have been represented by the same counsel, filed preliminary objections to the complaint on June 20, 1980. Specifically, appellants asserted a lack of subject matter jurisdiction over the action on the payment bond and of in personam jurisdiction over Goldman. The court below denied the preliminary objections in an opinion dated November 6, 1980. Thereafter, appellants filed an answer, new matter, and counterclaim. Appellee filed a reply and the pleadings were closed with the filing of appellants' counter-reply on January 12, 1981.
Appellants began discovery by a request for production of documents. On February 13, 1981, appellee served upon Goldman a set of interrogatories. By August 10, 1981, Goldman had not yet answered the interrogatories; therefore, appellee filed a motion for sanctions for failure to answer the interrogatories. Goldman filed an answer to appellee's motion for sanctions on August 24, 1981, in which it requested an additional thirty (30) days to answer the interrogatories. There was apparently no ruling upon that request, but in any case, the thirty days passed without any answers to the interrogatories being served. On December 17, 1981, appellee filed a brief in support of its motion for sanctions, which was served upon Goldman several days later. No responsive brief was filed by Goldman despite Local Rule 31[1] which required Goldman to file such a brief *119 within ten (10) days after service or suffer the relief requested by the appellee. On January 12, 1982, the lower court entered an order pursuant to Local Rule 31 and Pa.R.C.P. 4019[2] granting the relief requested in appellee's *120 motion for sanctions by entering a default judgment in favor of appellee and against both appellants. Appellants appeal from both this order and the order denying their preliminary objections.
Appellants raise three issues on appeal:
1. Whether the Court of Common Pleas of York County, Commonwealth of Pennsylvania, lacks subject matter jurisdiction in an action on a bond required pursuant to the provisions of the Miller Act, 40 U.S.C. § 270b(b)?
2. Whether the Court of Common Pleas of York County, Commonwealth of Pennsylvania, lacks in personam jurisdiction over Goldman Enterprises, Inc., a foreign corporation?
3. Whether the Court of Common Pleas erred in entering judgment by default against Defendants for failure to answer interrogatories?
Brief for Appellants at 3.
*121 We find the third issue to be dispositive of this case.[3]
The lower court entered a default judgment against both appellants for failure to answer interrogatories. Clearly this was an error as to appellant Pennsylvania National. The interrogatories were directed to appellant Goldman only; it is Goldman's failure to reply to these interrogatories that precipitated the events herein. Pennsylvania National was not involved in any way with these interrogatories. All parties, including the lower court, concede that the entry of a default judgment against Pennsylvania National was an error. Memorandum Opinion, 2-1-82 at 1; Brief for Appellants at 24; Brief for Appellee at 4. Therefore, we reverse the entry of the default judgment against appellant Pennsylvania National.
In its order dated January 12, 1982, the lower court entered the default judgment in favor of appellee "pursuant to Rule 31 of the York County Rules of Civil Procedure and Rule 4019 of the Pennsylvania Rules of Civil Procedure." In its memorandum opinion, the same court states that the default judgment was entered "for failure to file a brief, in violation of York County Rule 31(a)(5)," and goes on to discuss only that ground. Memorandum Opinion, 2-1-82 at 1. While we are somewhat confused by this inconsistency, we will assume that the order of January 12, 1982 states the correct ground and we will therefore examine both York County Rule 31 and Pa.R.C.P. 4019.
York County Rule 31(a)(2) and (a)(5) provide that where a party or counsel fails to file a brief in opposition to a motion within ten (10) days after the service of a brief in support of the motion, the party filing the motion may present to the District Court Administrator for entry by the court an order for disposition of that motion. This court recently decided a similar case concerning the failure to file a brief within the time constraints of a local rule:
*122 There can no longer be any doubt that a Court of Common Pleas has the right to promulgate local rules of procedure. See: 42 Pa.C.S.A. § 323. Local rules, however, must be consistent with and not in conflict with the Pennsylvania Rules of Civil Procedure. Gonzales v. Procaccio Brothers Trucking Co., 268 Pa.Super. 245, 407 A.2d 1338 (1979), allocatur denied October 29, 1979.
In Byard F. Brogan, Inc. v. Holmes Electric Protective Company of Philadelphia, 501 Pa. 234, [460 A.2d 1093] (1983), the Supreme Court considered Montgomery County R.C.P. 302(d), a local rule which provided for the automatic termination of an action for failure to file timely briefs in certain interlocutory matters. The Court held that "[a] rule which arbitrarily and automatically requires the termination of an action in favor of one party and against the other based upon a nonprejudicial procedural mis-step, without regard to the substantive merits and without regard to the reason for the slip, is inconsistent with the requirement of fairness demanded by the Pennsylvania Rules of Civil Procedure." Id., 501 Pa. at 240, 460 A.2d at 1096. See also: DeAngelis v. Newman, 501 Pa. 144, [460 A.2d 730] (1983).
Ricci v. Ricci, 318 Pa.Super. 445, 465 A.2d 38 (1983).
The local rule in question in Ricci was Montgomery County Rule 301(d), a rule that required the court to mark the matter granted or dismissed, depending upon which party did not comply with the 30 day brief filing requirement. In Byard F. Brogan, Inc. v. Holmes Electric Protective Company of Philadelphia, supra, and DeAngelis v. Newman, supra, the local rule in question was Montgomery County Rule 302(d), which provided for the automatic termination of an action for failure to file timely briefs. In Seidel v. Great Factory Store, 291 Pa.Super. 255, 435 A.2d 896 (1981), the lower court dismissed a complaint for failure to file a timely brief in response to preliminary objections on the basis of Montgomery County Rule 302(d). In each of these cases, the lower court's actions were reversed on appeal.
*123 In contrast to the mandatory enforcement required by Montgomery County Rules 301(d) and 302(d) discussed above, Lebanon County Local Rule 1028 as addressed in Harley Davidson Motor Co., Inc. v. Hartman, 296 Pa.Super. 37, 442 A.2d 284 (1982) called for a greater exercise of flexibility and discretion on the part of the lower court. This rule provided that any party desiring to oppose the sustaining of preliminary objections must file a brief within ten (10) days after service of the preliminary objections. Upon plaintiff's failure to do so, the defendants certified the record to the court for disposition, which eventually resulted in the dismissal of the complaint. Upon appeal, the superior court reversed on the basis that the lower court should have considered the sufficiency of the complaint before dismissing it. Dismissal without a consideration of the merits of the complaint was an inappropriate disposition.
York County Rule 31 falls somewhere between the mandatory requirements of the Montgomery County Rules and the discretionary requirements of Lebanon County Rule 1028. Upon failure of the responding party to timely file and serve a brief, the moving party may present to the District Court Administrator for entry by the court an order for disposition thereof. Presentation of an order to the Court Administrator is clearly optional, but it is unclear whether, after presentation of an order, the court exercises discretion in its disposition of such order. We suspect that such orders are disposed of more or less automatically, assuming the basis for the order is facially correct.
The Pennsylvania Rules of Civil Procedure "[do] not contemplate a local rule which requires mandatory and inflexible determinations of [motions] according to the dates of filing briefs and without regard for the merits or other considerations of equity and fairness." Ricci v. Ricci, supra, 318 Pa.Super. at 448, 465 A.2d at 39.
Inadvertence of counsel, if reasonably explained, has been held to be an adequate excuse for the failure to file a brief in accordance with local rules such as York County *124 Rule 31, and will justify relief. Seidel v. Great Factory Store, supra, 291 Pa.Superior Ct. at 258, 435 A.2d at 898.
Rule 4019(a) of the Pennsylvania Rules of Civil Procedure provides that a court may order appropriate sanctions if a party fails to answer interrogatories. Rule 4019(c) lists specific sanctions that the court may order. One of these is an order entering a judgment of non pros or by default. Rule 4019(c)(3). Unlike Local Rule 31, the wording of Pa.Rule 4019 is clear.
[Pa.R.C.P. 4019] establishes an unequivocal and mandatory procedure. Where answers to interrogatories have not been filed, a motion must be presented to the court to determine the default. Hanchey v. Elliott Truck Brokerage Company, 421 Pa. 131, 135, 218 A.2d 743, 745 (1966). Upon finding that a default has occurred, "the court may . . make an appropriate order." Subdivision (c) of Pa.R.C.P. No. 4019 amplifies the scheme of the rule by designating specific sanction orders which may be appropriate under particular circumstances. The imposition of specific sanctions, however, is largely within the discretion of the court. Pompa v. Hojnacki, 445 Pa. 42, 45, 281 A.2d 886, 888 (1971). See also: 10 Goodrich-Amram 2d § 4019(a):2.1, 3.1; 5A Anderson Pennsylvania Civil Practice § 4019.2. As a general rule, sanctions will not be imposed in the absence of some wilful disregard or disobedience of a court order or an obligation expressly stated in the Rules. In any event, it is the court which has been given responsibility for overseeing discovery conducted by the parties and which may enter appropriate sanctions to insure the adequate and prompt discovery of matters allowed by the Rules of Civil Procedure.
* * * * * *
Pa.R.C.P. No. 4019 envisions a procedure by which the court, when confronted with a failure or refusal to answer interrogatories, will exercise judicial discretion in formulating an appropriate sanction order. This requires *125 the court to select a punishment which "fits the crime." If a written interrogatory asks for information which, although relevant, is not determinative of the entire controversy, a default judgment, which in effect is an adjudication of the merits, would seldom, if ever, be appropriate. Under such circumstances, it would be more appropriate to treat the default as an admission or to disallow proof at trial of such undisclosed information. The need to "fit the punishment to the crime" compels the exercise of judicial discretion. The court is required to strike a balance between the procedural need to move the case to a prompt disposition and the substantive rights of the parties. (Emphasis added.)
Gonzales v. Procaccio Brothers Trucking Co., 268 Pa.Super. 245, 251-252, 407 A.2d 1338, 1341 (1979), allocatur denied October 29, 1979.
Since we are unclear whether York County Rule 31 permits the exercise of such discretion as demanded by the court in Gonzales, we must examine whether the "punishment" of default judgment fits the "crime" of failure to answer the interrogatories. Goldman essentially argues that there was no wilful disobedience or deliberate disregard of a court order for two reasons: (1) there was no court order ever issued compelling the answering of the interrogatories, and (2) failure to answer interrogatories was not disobedience, but merely an inability, due to sickness, to intelligently respond to the interrogatories. Brief for Appellants at 27.
It is true that no orders were entered by the lower court compelling Goldman to answer the interrogatories before the default judgment was entered. But as appellee correctly points out, a request for an order compelling answers to interrogatories is not required by Pa.R.C.P. 4019 or York County Rule 31. Brief for Appellee at 25. However, appellant argues that the entry of the severe sanction of default is punishment not befitting the crime and therefore *126 an abuse of the court's discretion, especially when other less severe sanctions were available under Pa.R.C.P. 4019.
Rule 4006 of the Pa.Rules of Civil Procedure requires a party served with interrogatories to answer within thirty (30) days after service of the interrogatories. Appellee served its interrogatories on Goldman on February 13, 1981. No answers were served on appellee, despite two written reminders by appellee to Goldman in March and April. In late May or June 1981, the president and principal officer of Goldman suffered a heart attack and was ill for several months. It was this person who alone, apparently, possessed the knowledge and information necessary to answer the interrogatories. On August 10, 1981, appellee's motion for sanctions for failure to answer the interrogatories was filed. At this time, according to the Deposition of Murray H. Goldman, the president of Goldman was still incapacitated and unable to answer the interrogatories. Goldman filed an answer to appellee's motion for sanctions shortly thereafter, which was in turn followed by appellee's answer to Goldman's answer. The record is then blank until December 17, 1981 when appellee filed its brief in support of its motion for sanctions.[4] Goldman was served with this brief on December 21, 1981 and thus, under York County Rule 31, had until approximately the beginning of January 1982 to file its brief. The lower court entered its order of a default judgment on January 12, 1982.
Bassion v. Janczak, 299 Pa.Super. 195, 198 n.[*], 445 A.2d 521, 522 n.[*] (1982) (dissenting opinion by Hoffman, J.) suggests the following procedures to be used after a sanction has been imposed and appealed:
. . . [T]his Court has held that the lower court may vacate an order imposing a sanction if the noncomplying party, by timely petition, offers a reasonable excuse for its failure to file a timely brief. Hesselgesser v. Glen-Craft *127 Contractors, Inc., 287 Pa.Superior Ct. 319, 325, 430 A.2d 305, 308 (1981). If the lower court abuses its discretion in deciding upon such a petition to vacate, this Court may reverse upon appeal, id., or it may remand if the record is inadequate to support meaningful appellate review, Seidel v. Great Factory Store, 291 Pa.Superior Ct. 255, 435 A.2d 896 (1981). Cf. Pa.R.Civ.P. 209. If the noncomplying party does not petition the lower court to vacate its order, but instead appeals directly to this Court, we may reverse if the "record before us clearly reveals a reasonable excuse for appellants' failure to file their brief," Shapiro v. Albright, 287 Pa.Superior Ct. 414, 421, 430 A.2d 672, 675 (1981), or may remand if the record is unclear, id., or may affirm if the record on appeal fails to set forth a reasonable excuse. Dunham v. Temple University, 288 Pa.Superior Ct. 522, 432 A.2d 993 (1981); Hesselgesser v. Glen-Craft Contractors, Inc., supra.
We do not condone unnecessary delay in proceedings such as these. However, we find that, due to the combination of the possible automatic application of York County Rule 31, the unduly harsh sanction of a default judgment when other sanctions were readily available, and the uncertainty of the record as to Goldman's reasons for not filing interrogatories, this case should be remanded to the lower court. The lower court should permit Goldman a reasonable time to file a reply brief in opposition to appellee's motion for sanctions, and then, assuming Goldman files such a brief, the court should conduct a hearing on the motion and enter whatever sanctions against Goldman it feels appropriate under Rule 4019(c). Shapiro v. Albright, 287 Pa.Super. 414, 430 A.2d 672 (1981).
We vacate the order of January 12, 1982 entering a default judgment against both appellants and remand the case for further proceedings consistent with this opinion.
Order vacated and case remanded. Jurisdiction is relinquished.
NOTES
[1] Local Rule 31 of the York County Rules of Civil Procedure provides, in pertinent part:
Rule 31. Procedure in One-Judge Cases
(a) Filing and service of briefs
(1) Within ten (10) days after the filing of any pleading, motion, petition, or other proceeding raising an issue for disposition by one judge, the party or counsel filing such proceeding shall file with the Prothonotary two (2) copies of a brief in support thereof, shall forthwith serve copies thereof on all other parties of record or their counsel, and shall file with the Prothonotary evidence showing such service.
(2) Within ten (10) days after the service of such brief, all other parties or their counsel desiring to oppose the issue raised by such proceeding shall file with the Prothonotary two (2) copies of a brief in opposition, shall forthwith serve copies thereof on all other parties or their counsel, and shall file with the Prothonotary evidence showing such service.
(3) Any moving party or counsel may within five (5) days after the service of an opposing brief file and serve a reply brief.
(4) Upon the failure of the party or counsel filing such proceeding to timely file and serve a brief in support thereof, the Prothonotary shall, upon praecipe of any other party or counsel, mark such proceeding dismissed. The party or counsel filing such praecipe shall forthwith give notice thereof to all other parties or their counsel and shall file with the Prothonotary evidence showing such notice.
(5) Upon the failure of any other party or counsel to timely file and serve a brief in opposition, the party or counsel filing such proceeding may present to the District Court Administrator for entry by the court an order for disposition thereof. The party or counsel obtaining such order shall forthwith serve a copy thereof on all other parties or their counsel, and shall file with the Prothonotary evidence showing such service.
[2] Rule 4019 of the Pennsylvania Rules of Civil Procedure provides in pertinent part:
Rule 4019. Sanctions
(a)(1) The court may, on motion, make an appropriate order if
(i) a party fails to serve answers, sufficient answers or objections to written interrogatories under Rule 4005;
(ii) a corporation or other entity fails to make a designation under Rule 4004(a)(2) or 4007.1(e);
(iii) a person, including a person designated under Rule 4004(a)(2) to be examined, fails to answers, answer sufficiently or object to written interrogatories under Rule 4004;
(iv) a party or an officer, or managing agent of a party or a person designated under Rule 4007.1(e) to be examined, after notice under Rule 4007.1, fails to appear before the person who is to take his deposition;
(v) a party or deponent, or an officer or managing agent of a party or deponent, induces a witness not to appear;
(vi) a party or an officer, or managing agent of a party refuses or induces a person to refuse to obey an order of court made under subdivision (b) of this rule requiring him to be sworn or to answer designated questions or an order of court made under Rule 4010;
(vii) a party, in response to a request for production or inspection made under Rule 4009, fails to respond that inspection will be permitted as requested or fails to permit inspection as requested;
(viii) a party or person otherwise fails to make discovery or to obey an order of court respecting discovery.
(2) A failure to act described in subdivision (a)(1) may not be excused on the ground that the discovery sought is objectionable unless the party failing to act has filed an appropriate objection or has applied for a protective order.
* * * * * *
(c) The court, when acting under subdivision (a) of this rule, may make
(1) an order that the matters regarding which the questions were asked, or the character or description of the thing or land, or the contents of the paper, or any other designated fact shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order;
(2) an order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting him from introducing in evidence designated documents, things or testimony, or from introducing evidence of physical or mental condition;
(3) an order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or entering a judgment of non pros or by default against the disobedient party or party advising the disobedience;
(4) an order imposing punishment for contempt, except that a party may not be punished for contempt for a refusal to submit to a physical or mental examination under Rule 4010;
(5) such order with regard to the failure to make discovery as is just.
[3] Because of the disposition we make concerning the default judgment, we do not decide appellant's arguments as to subject matter and in personam jurisdiction.
[4] We note that appellee did not file its brief in support of its motion until approximately four months after its motion was filed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2357989/ | 250 Pa. Super. 176 (1977)
378 A.2d 884
COMMONWEALTH of Pennsylvania, Appellant,
v.
Raymond PARRISH.
Superior Court of Pennsylvania.
Argued June 17, 1977.
Decided October 6, 1977.
*178 James J. Rosini, District Attorney, Milton, for Commonwealth, appellant.
A. Stephen Cohen, Sunbury, for appellee.
Before WATKINS, President Judge, and JACOBS, HOFFMAN, CERCONE, PRICE, VAN der VOORT and SPAETH, JJ.
HOFFMAN, Judge:
Appellant Commonwealth contends that: (1) the lower court improperly granted appellee's demurrer after the Commonwealth presented its case, and (2) the trial judge should have recused himself because he had represented appellee in an earlier stage of the criminal proceedings. We *179 vacate the order granting appellee's demurrer because the lower court improperly considered the prosecutrix's credibility in ruling on the request for a demurrer. If the Commonwealth retries appellee, a new judge should conduct the proceedings.
On March 27, 1974, the prosecutrix filed a private criminal complaint accusing appellee of neglect to support a bastard child.[1] On September 18, 1975, after a jury trial in the Northumberland County Court of Common Pleas, appellee was found guilty. However, on December 19, 1975, the presiding judge granted appellee's post-verdict motion for a new trial because appellee produced after-discovered evidence. On June 24, 1976, a second trial commenced before a jury and a different judge in the Northumberland County Court of Common Pleas. At the beginning of trial, the Commonwealth's attorney[2] asked the trial judge to recuse himself because the judge had represented appellee at an earlier stage of the criminal proceedings. The trial judge refused to disqualify himself. The Commonwealth then presented the testimony of the prosecutrix, her father, and a female friend of the prosecutrix. At the end of the Commonwealth's case, the trial court granted appellee's demurrer and dismissed the charge. The Commonwealth subsequently appealed.
The Commonwealth first contends that the lower court improperly sustained a demurrer to its evidence. In ruling on a request for a demurrer, the trial court must determine whether the Commonwealth's evidence, if believed by the factfinder, and all reasonable inferences stemming from this evidence establish the elements of the crime charged. Commonwealth v. Long, 467 Pa. 98, 354 A.2d 569 *180 (1976); Commonwealth v. Henderson, 451 Pa. 452, 304 A.2d 154 (1973); Act of June 5, 1937, P.L. 1703, No. 357, § 1; 19 P.S. § 481.
In the instant case, the prosecutrix's testimony, if believed, established all the elements of the charge of neglect to support a bastard child: (1) appellee's status as parent, (2) the illegitimacy of appellee's child, and (3) appellee's refusal to support his child. The prosecutrix presented the following testimony: she had intercourse with appellee, and with no one else during the period May-July, 1973. On March 19, 1974, she gave birth to an illegitimate son. Appellee refused to support this child. The trial court, however, refused to allow the jury to consider and evaluate the Commonwealth's prima facie case. Instead, the court sustained a demurrer because the weight of the evidence was insufficient to establish appellee's guilt beyond a reasonable doubt. In particular, the court canvassed various inconsistencies in the prosecutrix's testimony in reaching its decision. By so doing, the court usurped the jury's province. Because the trial court improperly considered the prosecutrix's credibility in granting the demurrer, we believe that the order granting the demurrer and dismissing the charge must be vacated.[3]
On remand, trial should be conducted before a new judge who has not represented appellee at any earlier stage of this criminal proceeding. As the concurring opinion *181 notes, the appearance of judicial integrity and neutrality mandates that a judge who has represented a party in a proceeding remove himself from further participation in that case.[4] Specifically, The Code of Judicial Conduct, Canon 3(C)(1)(b) provides: "A judge should disqualify himself in a proceeding in which his impartiality might reasonably be questioned, including but not limited to instances where:. . . he served as lawyer in the matter in controversy. . ." Accordingly, if the Commonwealth retries appellee, a new trial judge must conduct the proceedings.
Order granting demurrer and dismissing charges vacated.
WATKINS, President Judge, files a concurring opinion in which PRICE and VAN der VOORT, JJ., join.
WATKINS, President Judge, concurring:
The Code of Judicial Conduct, Canon 3, C(1)(b) recites: "(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 lawyer in the matter in controversy . . ." The Act of 1843 specifically applies to criminal proceedings. Act of 1843, April 4, P.L. 131, § 8, 17 P.S. 587.
The appellee was first tried September 17, 1975, before then President Judge Michael Kivko and found guilty of the charge of neglect to support a bastard child. He was granted a new trial which was scheduled before President Judge Peter Krehel. The Special Prosecutor made a written request to the trial judge to disqualify himself and call in an outside judge. The prosecutrix in this case was represented by private counsel as special prosecutor for the Commonwealth. The trial judge had served as counsel for appellee at an earlier stage of the criminal proceedings prior to his election, but refused to disqualify himself at trial. The *182 Commonwealth again, at trial, requested that the trial judge disqualify himself because of his prior involvement with the appellee and he again refused. After the introduction of the Commonwealth's case, he granted a demurrer.
The appellee argues that the only other judge in the judicial district was the former District Attorney and the same question may be raised as to his impartiality. The trial judge, however, was faced with the request by the appellee to disqualify himself. He could have assigned it to his associate judge in the judicial district and then the appellee would have had the option to seek his disqualification as the former District Attorney and an outside judge would be required to hear the case or the appellee could have waived and agreed to have the case tried by the associate judge. The trial judge should have disqualified himself to remove even a hint of prejudice or bias. The integrity of the court must be above question.
PRICE and VAN der VOORT, JJ., join in this concurring opinion.
NOTES
[1] The Crimes Code, Act of Dec. 6, 1972, P.L. 1482, No. 334, § 1, eff. June 6, 1973; 18 Pa.C.S. § 4323. 18 Pa.C.S. § 4323 provides, in pertinent part: "A person is guilty of a misdemeanor of the third degree if he, being a parent, willfully neglects or refuses to contribute reasonably to the support and maintenance of a child born out of lawful wedlock, whether within or without this Commonwealth."
[2] The lower court allowed a private attorney to act as a special prosecutor on behalf of the Commonwealth and the prosecutrix.
[3] The concurring opinion does not consider the merits of the lower court's decision to grant appellee's demurrer because it concludes that the trial judge should have disqualified himself. Analytically, this approach is erroneous. We must first consider the propriety of the lower court's decision to grant appellee's demurrer. The issue of possible trial court bias does not enter into the purely legal determination of whether the Commonwealth has produced sufficient evidence to withstand a demurrer. If we determine that the lower court properly granted the demurrer because the Commonwealth failed to adduce testimony which, if believed by the jury, would establish all elements of the crime of neglect to support a bastard child, then we could not order a new trial, regardless of whether the trial judge should have recused himself. In sum, whether or not to grant a demurrer is purely a legal question which must be reviewed apart from, and prior to, the issue of alleged trial court bias.
[4] Appellee asserts that the only other judge in the judicial district who could hear the case was the former District Attorney; his impartiality could also be questioned. If this contention is correct, and if appellee objects to trial before the former district attorney, then a judge from another judicial district must be appointed to try this case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2358250/ | 250 Pa. Super. 422 (1977)
378 A.2d 1008
COMMONWEALTH of Pennsylvania
v.
Walter B. CLAWSON, Appellant.
Superior Court of Pennsylvania.
Submitted September 22, 1976.
Decided October 6, 1977.
*423 Edward F. Browne, Jr., Assistant Public Defender, Lancaster, for appellant.
Louise G. Herr, Assistant District Attorney, and D. Richard Eckman, District Attorney, Lancaster, for Commonwealth, appellee.
Before WATKINS, President Judge, and JACOBS, HOFFMAN, CERCONE, PRICE, VAN der VOORT and SPAETH, JJ.
SPAETH, Judge:
A jury convicted appellant of delivery of marijuana in violation of The Controlled Substance, Drug, Device and Cosmetic Act.[1] He received a sentence of 6 to 23 months in a county prison, and a $50 fine. On this appeal he contends that the trial judge erred in refusing his request to instruct the jury on the defense of entrapment. We agree and therefore reverse the judgment of sentence and remand for a new trial.[2]
According to the Commonwealth's evidence the delivery of the marijuana occurred as follows. On January 27, 1975, at about 9:45 p.m., Pennsylvania State Police Officer Sonny *424 Bowser, acting in an undercover capacity, and an informant picked appellant up in their car at appellant's house in Mount Joy, and following appellant's instructions, drove to a corner in Manheim. Appellant left the car and entered a residence at 211 South Charlotte Street. When he returned, he was carrying a brown paper bag in which there was what appeared to be about a pound of marijuana. Appellant gave the bag to Officer Bowser and in return received $170. Appellant then went back into the house, returned to the car again, and was driven home. N.T. 6-9.
Appellant testified that the delivery occurred as follows. About three days before the delivery the informant came to appellant's house and asked whether appellant could get a pound of marijuana for Sonny, who, the informant said, was someone he knew from the Navy. N.T. 67, 69. The informant "was a friend of [appellant's] and he said that this Sonny guy really needed some pot because he was going out west or something like that. . . ." N.T. 71. Appellant responded: "I don't think so [that he could get the marijuana], but you know, I'll check on it, you know, to make sure, and then I'll let you know." N.T. 69. On the day of the delivery the informant came to appellant's house and asked "if [appellant] could get a friend of his a pound of pot. [Appellant] said, well, I don't know, I could check. . . . Well, I have to go to Manheim." N.T. 65. In Manheim, appellant got $170 from Sonny, went into the house, and returned with the paper bag. He gave all of the money to "the person that [he] copped the pound off of". N.T. 67. He made no profit but "got it . . . because [the informant] said that Sonny really needed it." N.T. 74. Appellant had never been a drug dealer. He admitted that "I smoke pot myself, and you know, I knew where I could get it." N.T. 73. (The sentencing hearing disclosed that he had no prior record. N.T. 3.) About a week after the delivery the informant again asked appellant to get some more marijuana, but appellant refused to. N.T. 71.
The Act of Dec. 6, 1972, P.L. 1482, No. 334, § 1, eff. June 6, 1973, 18 Pa.C.S. 313, provides in pertinent part:
*425 (a) General Rule. A public law enforcement official or a person acting in cooperation with such an official perpetrates an entrapment if for the purpose of obtaining evidence of the commission of an offense, he induces or encourages another person to engage in conduct constituting such offense by either:
.....
(2) employing methods of persuasion or inducement which create a substantial risk that such an offense will be committed by persons other than those who are ready to commit it.[3]
In Commonwealth v. Berrigan, 234 Pa.Super. 370, 375-382, 343 A.2d 355, 360 (1975) (Opinion in Support of Reversal) allocatur refused, Judge HOFFMAN quoted the following formulations of the entrapment rule. "This rule requires, before the defense becomes available, (1) a defendant not disposed to commit the crime, and also (2) police conduct likely to entrap the innocently disposed." Commonwealth v. Conway, 196 Pa.Super. 97, 104, 173 A.2d 776, 780 (1961). "The test is whether the criminal design was created by the officer or whether the officer merely afforded the opportunity for the commission of a crime by a person already disposed to commit that crime, in which case there is no entrapment." Commonwealth v. Klein, 222 Pa.Super. 409, 411, 294 A.2d 815, 816 (1972). In Sagansky v. United States, 358 F.2d 195, 202 (1st Cir. 1966), the court put it this way: "(1) Did the government put in motion this particular offense; and (2) did it initiate the defendant's criminal state of mind, or only activate it? The first issue is called inducement; the second is considered in terms of the defendant's predisposition."
Whether an entrapment has occurred is a question for the jury, unless the evidence points to only one conclusion, *426 in which case it may be decided as a matter of law. Commonwealth v. Mott, 234 Pa.Super. 52, 334 A.2d 771 (1975) (Opinion in Support of Affirmance).
The charge must be given, however unreasonable the judge would consider a verdict in favor of the defendant to be, when the accused shows (1) evidence that the Government initiated the crime, regardless of the amount of pressure applied to the defendant, and (2) any evidence negating the defendant's propensity to commit the crime. U.S. v. Watson, 489 F.2d 504, 509 (3d Cir. 1973).
If the jury had been permitted to consider appellant's testimony, it might have found an entrapment. Evidence of governmental initiative might have been found in appellant's testimony that he got and delivered the marijuana only because the informant was a friend of his and persuaded him that "Sonny really needed it." This testimony might also have been regarded as evidence that appellant was not disposed to commit the crime of delivery; additional evidence in this regard was that he had never been a drug dealer and had made no profit from the delivery but merely acted as a conduit, and that when a week later the informant again asked him to get some more marijuana, he refused. Appellant's admission that he himself smoked marijuana and knew where to get it did not as a matter of law establish a predisposition to deliver marijuana. To be sure, the jury might very well have rejected appellant's testimony. It should, however, have been given that choice. U.S. v. Watson, supra; Commonwealth v. Berrigan, supra; Commonwealth v. Klein, supra; Commonwealth v. Conway, supra.
The judgment of sentence is reversed, and the case is remanded for a new trial.
PRICE and VAN der VOORT, JJ., concur in the result.
WATKINS, President Judge, and JACOBS, J., dissent.
NOTES
[1] Act of April 14, 1972, P.L. 233, No. 64, § 13, imd. effective, as amended Oct. 26, 1972, P.L. 1048, No. 263, § 1, imd. effective, 35 P.S. § 780-113(a)(30).
[2] Because of this disposition we find it unnecessary to address appellant's additional contentions.
[3] See the Comment to the Model Penal Code, Tentative Draft No. 9 at 14-24, for a discussion of the evolution of this language and of the law of entrapment. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1970004/ | 821 A.2d 215 (2003)
Dr. Ira SOLOMON and Ronald Smack, Petitioners,
v.
WORKERS' COMPENSATION APPEAL BOARD (CITY OF PHILADELPHIA), Respondent.
Commonwealth Court of Pennsylvania.
Submitted on Briefs November 8, 2002.
Decided April 15, 2003.
*216 Marc S. Jacobs, Philadelphia, for petitioners.
Sandra R. Craig, Philadelphia, for respondent.
BEFORE: FRIEDMAN, Judge, SIMPSON, Judge, and JIULIANTE, Senior Judge.
*217 OPINION BY Judge SIMPSON.[1]
Ira Solomon, Ph.D., and Ronald Smack (Claimant) (collectively Petitioners) petition for review of the July 11, 2002, order of the Workers' Compensation Appeal Board (Board) that affirmed the decision of a workers' compensation judge (WCJ) to deny a utilization review (UR) determination. We affirm.
Claimant suffered a work-related injury in January 1999 while working as a corrections officer for the City of Philadelphia (Employer). Specifically, Claimant injured his lower back during an altercation with a prison inmate. After diagnosis and initial treatment in March 2000, Claimant was referred for treatment to Dr. Solomon at Montgomery Psychological Associates. WCJ Findings of Fact (F.F.) Nos. 1-4.
Employer questioned the reasonableness and necessity of Dr. Solomon's continued psychological treatment of Claimant and requested a UR under the Workers' Compensation Act (Act).[2] Alan Cooperstein, Ph.D. (Reviewer) prepared a UR report for Advanced Rehabilitation Management, a utilization review organization. After an examination of Dr. Solomon's medical records, Reviewer concluded Dr. Solomon's treatment was not reasonable or necessary for Claimant after early April 2000. F.F. Nos. 5-10.
After Claimant filed a petition for review of that UR determination, the WCJ held hearings. Employer presented the deposition testimony of Reviewer. Claimant testified on his own behalf, and presented the deposition testimony of Dr. Solomon.
Reviewer noted five deficiencies in Dr. Solomon's treatment of Claimant, as reflected in his treatment records. First, the initial assessment was brief and narrow, a one and one-half page narrative, with no clear treatment plan formulated; second, there was no substantial, in-depth information about Claimant's psychological treatment (e.g. noting involvement of biofeedback); third, pre-existing injuries and complicating medical conditions were not considered (e.g. no information concerning pre-injury physical and psychological status); fourth, no full, initial psychological consultation was performed with multi-axial diagnosis; and fifth, the essential features of a comprehensive evaluation and treatment plan were missing. F.F. Nos. 12-13.
In addition, though Claimant was referred to Dr. Solomon for an assessment of his mental state and chronic pain secondary to his work injury, Reviewer found Dr. Solomon's records contained no such assessment. F.F. No. 14. Reviewer testified that Dr. Solomon did not perform the appropriate initial psychological consultation, a mandatory first step in an assessment. F.F. No. 15.
Reviewer noted that Dr. Solomon's treatment gave varying results for Claimant, and also that Dr. Solomon's notes revealed Claimant denied suicidal tendencies. Reproduced Record (R.R.) at 293a, *218 296a. Reviewer concluded Dr. Solomon's materials, and his representations of Claimant's treatment contained in those materials, did not show that treatment was reasonable or necessary.[3]
Dr. Solomon's testimony, on the other hand, stated that his diagnosis was "the upshot of a mental status examination and is consistent with a number of symptoms. These included Claimant's "short fuse", his feelings of hopelessness, impaired short-term memory and concentration, and dysfunction in sleep pattern." F.F. No. 24. Dr. Solomon testified his initial assessment of Claimant was that Claimant suffered from an adjustment disorder, with depressed mood. F.F. No. 23. Dr. Solomon noted Claimant's constellation of symptoms was consistent with the presence of chronic pain, and concluded Claimant would benefit from a program that would provide both individual and behavioral treatments, including biofeedback therapy. F.F. Nos. 25, 26.
The WCJ found Reviewer's opinion more credible than Dr. Solomon's, and denied Claimant's petition. After the Board affirmed the WCJ's decision, Petitioners appealed to this Court.[4]
Petitioners raise two issues for our review. First, they contend the WCJ failed to make critical findings of fact as to whether Dr. Solomon's psychological treatment improved Claimant's medical condition. Next, Petitioners argue Reviewer's testimony does not constitute the substantial evidence necessary to support the WCJ's finding that Dr. Solomon's psychological treatment of Claimant was not reasonable or necessary after April 2000.
As for Petitioners' first allegation, whether Claimant's condition improved is not a necessary finding in the evaluation of the UR determination. The Board correctly noted treatment may be reasonable or necessary even if it is designed only to manage a claimant's symptoms, rather than to cure or permanently improve the underlying problem. Board Op. at 4, citing Central Highway Oil Co. v. Workers' Compensation Appeal Bd. (Mahmod), 729 A.2d 106 (Pa.Cmwlth.1999).
Petitioners also contend that Reviewer's testimony was incompetent because he did not obtain Claimant's entire medical file and because he did not speak with the treating health care provider, Dr. Solomon. Because Reviewer's testimony was incompetent, they argue, the WCJ's findings lack support of substantial evidence. We disagree.
A UR reviewer's assignment is to evaluate the reasonableness or necessity of a provider's treatment, not to devise or revise diagnoses, prognoses and treatment plans. Failure to obtain the entire medical file of a claimant does not automatically preclude a UR reviewer from assessing the reasonableness or necessity of a particular treatment. Seamon v. Workers' Comp. Appeal Bd. (Sarno & Son Formals), 761 A.2d 1258 (Pa.Cmwlth.2000).
In Seamon, the employer filed a UR request challenging the reasonableness or necessity of Seamon's chiropractic treatment. The UR reviewer, after reviewing *219 the medical file of Seamon's chiropractor, concluded that treatment was not reasonable or necessary. The UR reviewer summarized that those records did not provide a rationale for continued chiropractic care when the treatment was assessed, nor did it discuss Seamon's prior treatment plan or clinical outcome. The reviewer concluded the chiropractor did not provide an adequate reason to continue treatment. Seamon, 761 A.2d at 1260.
At that time, a reconsideration of the utilization review process was permitted, and a second UR reviewer reached the same conclusion. He relied, as well, on the lack of documentation showing the need for on-going chiropractic care. Id. at 1261. Neither reviewer contacted the health care provider.
After the UR reviewers' decisions were again reviewed by a WCJ and affirmed by the Board, Seamon appealed to this Court. Seamon argued the failure to obtain medical records from Seamon's earlier treating doctors rendered the UR determinations inadmissible or, at least, incompetent to support the finding that the treatment was not reasonable or necessary. He also claimed that failure precluded a "fair and impartial review" by the WCJ. Id.
This Court, sitting en banc in deciding this question of first impression, reviewed the extensive UR regulatory scheme.[5] We noted that the regulations contemplated the reviewing doctors assess the reasonableness or necessity of the particular treatment in the context of the entire course of care for the work-related injury. Id. at 1262. The Court determined the lack of a complete medical history does not preclude a UR reviewer from making a determination of reasonableness or necessity. Nor does the lack of that complete medical history preclude a WCJ from crediting and relying on the UR report.
If a reviewer cannot make a determination due to a lack of medical information, the regulatory scheme obligates the reviewer to resolve the issue in favor of the provider and to explain the reason for doing so. See 34 Pa.Code § 127.471(b). In Seamon, although both UR doctors noted the absence of information regarding the previous treatment, neither doctor indicated that they could not render an opinion due to the lack of medical records from other treating providers. Both doctors unequivocally opined that ongoing chiropractic care was not warranted for the type of injury noted. Seamon, 761 A.2d at 1262. The Court quoted the Act that a WCJ is obligated to consider the UR report as evidence, but is not bound by it. Section 306(f.1) of the Act, 77 P.S. § 531(6)(iv). The Court opined:
The weight and credibility of the UR report, as with any other evidence, is for the fact-finder. Any deficiency or irregularity in the UR process can be argued before and considered by the WCJ in determining the weight and credibility of the UR evidence.
Seamon, 761 A.2d at 1262.
We recently reaffirmed these principles. In Bolinsky v. Workers' Comp. Appeal Bd. (Norristown State Hospital), 814 A.2d 833 (Pa.Cmwlth.2003), a UR reviewer opined that a physical therapist's records did not support continued treatment. We again held that the failure to obtain the entire medical file does not automatically preclude a UR reviewer from assessing the reasonableness or necessity of a particular treatment. This is true even where there was no substantive contact between the reviewer and the treating health care provider. Id. at 836-37.
*220 The WCJ must make credibility and weight of the evidence determinations regarding any irregularity or deficiency of the contested evidence. Here, as in Seamon and Bolinsky, the breadth of information reviewed is a factor which the fact-finder may consider, but it is no more conclusive than any other single factor considered in evaluating the credibility of conflicting expert opinions. We decline the invitation to declare a UR reviewer's opinion automatically incompetent for failure to review the entire medical file or speak with the health care provider.
We disagree with Petitioners' argument that Reviewer's testimony did not provide the substantial evidence necessary to support the WCJ's decision. A WCJ may draw reasonable inferences from the evidence presented. On appeal, those conclusions must be reviewed in the light most favorable to the party that prevailed below. Oscar Mayer and Co. v. Workmen's Comp. Appeal Bd. (Manzi), 65 Pa.Cmwlth. 514, 442 A.2d 1238 (1982). It is within the WCJ's sole discretion to find facts, and, if those facts are grounded in competent evidence, neither the Board nor this Court may disturb them. Hess Bros. v. Workmen's Comp. Appeal Bd. (Gornick), 128 Pa.Cmwlth.240, 563 A.2d 236 (1989). Here, the WCJ reviewed the evidence of three depositions and exhibits and held two hearings. On the limited issue of the reasonableness of continued psychological treatment, he accepted the opinions of Reviewer over those of Dr. Solomon. Reviewer did not indicate that he could not render an opinion due to the lack of medical records. See Seamon. Reviewer's testimony supports the WCJ's determinations.
Accordingly, we affirm the decision of the Board.
ORDER
AND NOW, this 15th day of April, 2003, the decision of the Workers' Compensation Appeal Board in the above-captioned matter is affirmed.
Dissenting Opinion by Judge FRIEDMAN.
I respectfully dissent. The majority holds that the testimony of Alan Cooperstein, Ph.D., (the Reviewer) is competent and, therefore, constitutes substantial evidence to support a finding that the treatment provided to Ronald Smack (Claimant) by Ira Solomon, Ph.D., is not reasonable or necessary. For the reasons that follow, I cannot agree that the Reviewer's testimony is competent to support such a finding.
In a utilization review (UR) proceeding before a workers' compensation judge (WCJ), the employer bears the burden of proving by substantial competent evidence that the challenged medical treatment is not reasonable or necessary. Topps Chewing Gum v. Workers' Compensation Appeal Board (Wickizer), 710 A.2d 1256 (Pa. Cmwlth.1998). Medical testimony that is based upon possibilities is not legally competent evidence. Industrial Recision Services v. Workers' Compensation Appeal Board (Farbo), 808 A.2d 994 (Pa.Cmwlth. 2002).
In this case, the Reviewer admitted that, because of deficiencies in the materials provided, he could not "get a picture" of Claimant or determine whether Claimant's complaints were valid.[1] (R.R. at 281a, 295a.) It seems to me that, to determine *221 whether specific treatment is reasonable or necessary for a claimant, a UR reviewer must have knowledge of the claimant's condition. A UR reviewer's function is not to guess about the reasonableness and necessity of treatment based on the possible condition of a claimant. The UR reviewer's opinion must be an informed opinion. If the records provided are deficient, the reviewer has an obligation under the UR regulations to seek additional materials.[2] Otherwise, a claimant who truly needs a particular treatment may be denied medical benefits based solely on a provider's inadequate records. Because the Reviewer admitted that he could not determine Claimant's condition from the materials provided and because the Reviewer did not seek to supplement those materials, I conclude that the Reviewer's testimony was not competent to support a finding that Dr. Solomon's treatment of Claimant is not reasonable or necessary.
Accordingly, I would reverse.[3]
NOTES
[1] This opinion was reassigned to the author on February 4, 2003.
[2] Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-104 .4, 2501-2626. Section 306(f.1) of the Act, 77 P.S. § 531(6)(i), provides, in pertinent part:
(i) The reasonableness or necessity of all treatment provided by a health care provider under this act may be subject to prospective, concurrent or retroactive utilization review at the request of the employe, employer or insurer. The department shall authorize utilization review organizations to perform utilization review under this act. Utilization review of all treatment rendered by a health care provider shall be performed by a provider licensed in the same profession and having the same or similar specialty as that of the provider of the treatment under review....
[3] Before the WCJ, Reviewer testified that he spoke with Dr. Solomon before making his determination. Reviewer's seven page utilization review twice indicated Dr. Solomon refused contact. R.R. 326a-332a.
[4] This Court's review is limited to a determination of whether necessary findings of fact are supported by substantial evidence, whether Board procedures were violated, whether constitutional rights were violated, or an error of law was committed. Section 704 of the Administrative Agency Law, 2 Pa.C.S. § 704; Bey v. Workers' Comp. Appeal Bd. (Ford Elecs.), 801 A.2d 661 (Pa.Cmwlth.2002).
[5] 34 Pa.Code §§ 127.407(a); 127.459(a)(b); 127.460(a)(c); and 127.462.
[1] Moreover, the Reviewer conceded at his deposition that, because he did not examine Dr. Solomon's deposition testimony in depth, he could not determine whether Dr. Solomon properly evaluated the propriety of biofeedback treatment for Claimant. (R.R. at 297a.)
[2] The regulation at 34 Pa.Code § 127.469 (emphasis added) states:
The URO shall give the provider under review written notice of the opportunity to discuss treatment decisions with the reviewer. The reviewer shall initiate discussion with the provider under review when such a discussion will assist the reviewer in reaching a determination. If the provider under review declines to discuss treatment decisions with the reviewer, a determination shall be made in the absence of such a discussion.
Here, when asked whether he spoke to Dr. Solomon before making his decision, the Reviewer replied, "No. Typically, in a[UR], the materials that I receive will indicate whether the provider is requesting a contact. In his case, he refused contact.... [I]t was on a form that came from the [URO]." (R.R. at 288a.) However, although Dr. Solomon did not request an opportunity to discuss his treatment decisions with the Reviewer when the URO gave him written notice under 34 Pa. Code § 127.469, once the Reviewer concluded that the materials provided by Dr. Solomon lacked pertinent information, the Reviewer had an obligation under the regulation to initiate a discussion with Dr. Solomon in order to reach a proper determination. Although Dr. Solomon might have declined to speak with the Reviewer when he received notice, there is no reason to assume he would have continued to refuse had a request for information been made.
[3] Indeed, the regulation at 34 Pa.Code § 127.471(b) states, "If the reviewer is unable to determine whether the treatment under review is reasonable or necessary, the reviewer shall resolve the issue in favor of the provider under review." Here, the Reviewer was unable to "get a picture" of Claimant and was unable to determine "how valid the [C]laimant's complaints were." (R.R. at 281a, 295a.) Absent an understanding of Claimant's condition, the Reviewer could not possibly determine what type of treatment would be reasonable or necessary for Claimant. Under those circumstances, the Reviewer should have resolved the matter in favor of Dr. Solomon. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2358391/ | 249 P.3d 680 (2011)
STATE of Washington, Respondent,
v.
Corey (NMI) CHRISTMAN, Appellant.
No. 28609-6-III.
Court of Appeals of Washington, Division 3.
March 17, 2011.
*682 Susan Marie Gasch, Gasch Law Office, Spokane, WA, for Appellant.
Carole Louise Highland, Attorney at Law, D. Angus Lee, Grant County Prosecuting Attorney, Ephrata, WA, for Respondent.
SIDDOWAY, J.
¶ 1 Delivering a controlled substance that is used by the person to whom it was delivered, resulting in the death of the user, is punishable as controlled substances homicide. Corey Christman appeals his conviction for the crime, contending (1) that in order to prove the "results in death" element, the State was required to prove that the user's death was proximately caused by the drug he delivered and, given evidence that other substances contributed to the death in this case, the evidence was insufficient and (2) alternatively, that the statute establishing the crime is unconstitutionally vague in failing to clearly identify how a defendant's delivery of drugs must relate to the cause of death. We hold that proximate cause is a required element of controlled substances homicide, that the statute establishing the crime is not unconstitutionally vague in that respect, and that the evidence was sufficient to support the conviction.
FACTS AND PROCEDURAL BACKGROUND
¶ 2 On an evening in September 2008, a group of young people gathered at the sand dunes near Moses Lake, Washington, to party. They built a bonfire, ate, and drank beer and wine coolers. Some smoked marijuana and took ecstasy (methylenedioxymeth-amphetamine). Among those in attendance were Corey Christman and Ryan Mulder.
¶ 3 Mr. Christman brought nine and one-half methadone pills to the party, intending to sell them. Instead, he gave two of the pills to Mr. Mulder. Mr. Mulder later told Mr. Christman that he was not feeling any effect from the pills and asked for more, and Mr. Christman gave him another three. Still later, Mr. Mulder asked for more and was directed by Mr. Christman to the pocket of his shirt, which was by the fire. The next morning, Mr. Christman discovered that the remaining four and one-half pills that were in his shirt pocket were gone.
¶ 4 The partiers left the sand dunes after about an hour and one-half. Several, including Mr. Mulder, drove to the home of Justin Sibley. Those who moved on to the Sibley *683 home characterized Mr. Mulder as appearing extremely intoxicated. After lingering for a while at the Sibley home, several people walked Mr. Mulder to a nearby house where he planned to spend the night in the garage, something he had done before. Mr. Mulder said he was thirsty and would like something to eat, and before leaving Mr. Mulder to sleep, the residents of the home provided him with water and food.
¶ 5 The next morning, residents who went to wake Mr. Mulder found him barely breathing. After unsuccessfully trying to revive him, someone called 911. Mr. Mulder was taken to Samaritan Hospital and was then flown to Deaconess Medical Center in Spokane, where he died two days later. The only items of evidentiary value later located in the garage were items of clothing; no evidence of drugs or alcohol was discovered. By all accounts, Mr. Mulder did not consume any drugs or alcohol after leaving the sand dunes.
¶ 6 County medical examiners determined that Mr. Mulder had not died of natural causes and had toxic levels of methadone in his body. Mr. Christman was thereafter charged with controlled substances homicide.
¶ 7 At trial, Dr. John Howard, a forensic pathologist and one of the two medical examiners for Spokane County, testified that the cause of Mr. Mulder's death was hypoxic encephalopathy due to the use of methadone, methamphetamine, and alcohol and that aspiration pneumonitis contributed to his death. He relied on clinical evidence and laboratory test results from the hospital medical records, as well as a postmortem analysis of the earliest available hospital blood sample, which he requested be prepared by the state toxicology laboratory. Some of the screening tests performed at the hospitals over the several days of Mr. Mulder's care indicated the presence of methadone metabolites, alcohol, and methamphetamine but without quantifying the amounts present; one lab screen also indicated the presence of cannabinoids, or THC (tetrahydrocannabinol). The postmortem analysis prepared by the state toxicology lab measured the amount of methadone in Mr. Mulder's body as .23 milligrams per liter but did not reveal measureable evidence of alcohol or amphetamines, even though the toxicologist testified at the time of trial that he had run assays for those substances and the testing performed at the toxicology lab is more sensitive than a typical hospital assay.
¶ 8 On direct examination, Dr. Howard testified that ingesting nine and one-half pills of methadone was consistent with a blood methadone level of .23 milligrams per liter. He testified that the alcohol and methamphetamine present could have contributed to the toxic effects on the brain but that he could not say "percentagewise" what role, because their quantity was not measured. Report of Proceedings (RP) at 269.
¶ 9 When Dr. Howard was asked for his opinion as to methadone's contribution to the medical cause of death, defense counsel objected on foundation grounds, arguing that the doctor had no basis on which to form an opinion without knowing the amount of alcohol and methamphetamine in Mr. Mulder's system, which defense counsel suggested had metabolized prior to the postmortem testing. RP at 270. The objection was overruled, and Dr. Howard testified that .23 milligrams of methadone per liter had been shown to be lethal in other cases. RP at 284. When asked whether methadone caused the death of Mr. Mulder within reasonable medical certainty, Dr. Howard responded "Yes." RP at 273.
¶ 10 On cross-examination, Dr. Howard testified that both methamphetamine and alcohol were also causes of death. RP at 281-82. On redirect, the State questioned him further about methadone being an additional cause, and Dr. Howard testified:
My opinion is that all three combined to cause death, and that each one, each of the two drugs and the alcohol played a role. So each of thethe fact that each of them were detected describe it as each of them hastened his death. So the alcohol hastened his death, the methamphetamine hastened his death, and the Methadone hastened his death. So each of them is a cause of death.
RP at 284.
¶ 11 The medical testimony only partially bore out defense counsel's suggestion that *684 alcohol and methamphetamine could not be measured by the state toxicology lab because they had metabolized by the time of the postmortem analysis. Dr. Howard agreed that, while alive, Mr. Mulder would have more rapidly metabolized alcohol and methamphetamine than methadone, which could be one factor explaining why alcohol and methamphetamine were detected in some blood samples taken at the hospitals but did not exist in measureable amounts in the sample tested by the state toxicology lab.[1] But the state toxicologist testified that because the blood sample tested at the state toxicology lab was treated with an enzyme poison and anticoagulant at the time it was drawn, it would not have been compromised in the time elapsing before its postmortem analysis. RP at 302-03.
¶ 12 The instructions provided to the jury stated that among the elements the State was required to prove beyond a reasonable doubt in order to convict were:
(1) That on or about September 7, 2008, the defendant unlawfully delivered methadone, a controlled substance, to Ryan Mulder;
....
(3) That the defendant knew that the substance delivered was a controlled substance;
....
(5) That use of the controlled substance delivered by the defendant resulted in the death of Ryan Mulder.
Clerk's Papers at 32 (Instruction 12). The term "resulted in" was not defined for the jury, nor was a proximate cause definition instruction requested or given.
¶ 13 The jury found Mr. Christman guilty of controlled substances homicide and the superior court imposed a standard range sentence of 61 months. Mr. Christman appeals, contending first, that in light of the medical examiner's inability to isolate methadone as the cause of death, insufficient evidence supports his conviction; and second, that the controlled substances homicide statute is unconstitutionally vague as applied to him.
ANALYSIS
¶ 14 Mr. Christman's appeal proceeds from the premises (1) that the controlled substances homicide statute, RCW 69.50.415, requires that the State prove that a victim's death was proximately caused by a controlled substance delivered by the defendant and (2) that the State did not prove proximate cause in this case. If we do not reverse on the basis that the statute requires proof of proximate cause, he asks that we reverse by applying the rule of lenity or by finding the statute unconstitutional as applied.
¶ 15 RCW 69.50.415(1) provides:
A person who unlawfully delivers a controlled substance in violation of RCW 69.50.401(2)(a), (b), or (c) which controlled substance is subsequently used by the person to whom it was delivered, resulting in the death of the user, is guilty of controlled substances homicide.
Mr. Christman points out that no less an authority than the authors of the Washington Pattern Jury Instructions view the "results from" language in the statute as unclear as to the quality of causation required. Br. of Appellant at 6-7. The comment to pattern instruction 29.02 notes that "[i]t is not clear whether the Legislature intended that the death of the user must be proximately caused by the use of the controlled substance or that use of the controlled substance merely `result in the death of the user.'" 11 WASHINGTON PRACTICE: WASHINGTON PATTERN JURY INSTRUCTIONS: CRIMINAL 29.02, cmt. (3d ed. 2008). The comment further states that if the standard is determined to be proximate cause, the words "proximately caused" should be substituted for "resulted in" and the jury should be instructed as to the definition of proximate cause. Id.
*685 I
¶ 16 Mr. Christman's challenge hinges on a preliminary question of statutory interpretation: whether the element of controlled substances homicide that use of the delivered substance "results in" the user's death requires proximate cause. The appropriate standard of review is therefore de novo. State v. Armendariz, 160 Wash.2d 106, 110, 156 P.3d 201 (2007).
¶ 17 In construing a statute, the goal is to discern and implement the intent of the legislature. State v. Neher, 112 Wash.2d 347, 350, 771 P.2d 330 (1989). If the language is plain and unambiguous, the meaning is derived from the wording of the statute itself. Id. The "plain meaning" of a statute is to be discerned from the ordinary meaning of the language at issue, the context of the statute in which the provision is found, related provisions, and the statutory scheme as a whole. State v. Engel, 166 Wash.2d 572, 578, 210 P.3d 1007 (2009).
¶ 18 The term "resulting in" is not defined by statute or Washington case law. Common law definitions of the intransitive verb "result" include "to proceed, spring, or arise as a consequence, effect, or conclusion." WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 1937 (3d ed. 1993). Mr. Christman argues that the undefined term fails to make clear whether delivery of a controlled substance is punishable as controlled substances homicide if the delivered drug is not a cause of death but is present in the user's system, if the delivered drug is a contributing cause of death but not the sole cause, or only if the delivered drug is the sole cause of death. Br. of Appellant at 13.
¶ 19 The controlled substances homicide statute is included in chapter 69.50 RCW, which was originally adopted in 1971 as the Uniform Controlled Substances Act. LAWS OF 1971, 1st Ex. Sess., ch. 308. The uniform act is based on the federal Controlled Substances Act, Pub.L. No. 91-513, 21 U.S.C. §§ 801-904 (1970). See UNIF. CONTROLLED SUBSTANCES ACT prefatory note, 9 pt. V U.L.A. 853, 854 (2007) (Uniform Controlled Substances Act's purpose is to achieve uniformity between the laws of the several states and those of the federal government and was designed to complement the federal legislation). Among the provisions of the uniform act is one directing that it be applied and construed not only to effectuate its general purpose, but also to make uniform the law with respect to its subject matter among the states enacting it. RCW 69.50.603.
¶ 20 But RCW 69.50.415, added in 1987, is not a part of the uniform act or any proposed modification to the uniform act, and there is no legislative history that identifies its source or explains its intended scope. See LAWS OF 1987, ch. 458, § 2; FINAL B. REP. on H.B. 1228, 50th Leg., Reg. Sess. (Wash. 1987); H.B. REP. on H.B. 1228, 50th Leg., Reg. Sess. (Wash. 1987); S.B. REP. on H.B. 1228, 50th Leg., Reg. Sess. (Wash. 1987). Its language is strikingly similar to language included in federal legislation adopted a year earlier, however: the federal Narcotics Penalties and Enforcement Act of 1986, Pub.L. No. 99-570, § 1002, which amended Section 401(b)(1) of the Controlled Substances Act (21 U.S.C. § 841(b)(1)) to include sentencing enhancements for distribution of a controlled substance "if death or serious bodily injury results from the use of such substance." Federal courts construing the sentencing enhancement provisions have concluded that "results in" has a passive connotation, requiring that the government prove only cause in fact, not proximate cause, meaning (given the federal common law concept of proximate cause) that the risk of serious bodily harm or death need not be foreseeable. United States v. Hatfield, 591 F.3d 945, 949 (7th Cir.2010) (concluding that a jury instruction limited to the statutory language would have been clearer than the flawed instruction elaborating on what "results from" means); and see United States v. Houston, 406 F.3d 1121, 1124-25 (9th Cir.), cert. denied, 546 U.S. 914, 126 S. Ct. 282, 163 L. Ed. 2d 249 (2005); United States v. Soler, 275 F.3d 146, 152-53 (1st Cir.), cert. denied, 535 U.S. 1071, 122 S. Ct. 1948, 152 L. Ed. 2d 851 (2002). These cases are unhelpful to our analysis, however, because they involve the distinguishable context of sentencing enhancements. By contrast, where a required element of a federal crime is a certain result, it is a basic tenet of *686 federal criminal law that the government must prove that the defendant's conduct was the legal or proximate cause of the resulting injury. United States v. Pineda-Doval, 614 F.3d 1019, 1026-27 (quoting United States v. Spinney, 795 F.2d 1410, 1415 (9th Cir.1986); United States v. Main, 113 F.3d 1046, 1050 (9th Cir.1997)), 1028 (9th Cir. 2010) (observing that "[s]entencing factors applicable to drug crimes seem to be the exception to the rule that the Government prove probable cause when the charging statute calls for a certain result"). The federal cases are also distinguishable in their application of the federal common law concept of probable cause, which, unlike Washington's concept, generally focuses on foreseeability. See Pineda-Doval, 614 F.3d at 1028; cf. State v. Leech, 114 Wash.2d 700, 711, 790 P.2d 160 (1990) (foreseeability is not an element of proximate cause under Washington law).
¶ 21 We therefore look to basic tenets of our own criminal law, and to other provisions of the Washington criminal code. The legislature provided in 1975 that "[t]he provisions of the common law relating to the commission of crime and the punishment thereof, insofar as not inconsistent with the constitution and statutes of this state, shall supplement all penal statutes of this state." LAWS OF 1975, 1st Ex. Sess., ch. 260, § 9A.04.060, codified at RCW 9A.04.060. In so providing, the legislature both ratified the judicial practice of supplying common law definitions to statutes and affirmatively defined the elements of criminal statutes as containing common law definitions. State v. Chavez, 134 Wash.App. 657, 668, 142 P.3d 1110 (2006), aff'd, 163 Wash.2d 262, 180 P.3d 1250 (2008). Accord State v. David, 134 Wash.App. 470, 481, 141 P.3d 646 (2006) ("the judiciary would be acting contrary to the legislature's legitimate, express expectations, as well as failing to fulfill judicial duties, if the courts did not employ long-standing common law definitions to fill in legislative blanks in statutory crimes"), review denied, 160 Wash.2d 1012, 161 P.3d 1026 (2007).
¶ 22 The criminal law, both common law and statutory, has long imposed criminal liability for conduct that causes a particular result. When crimes are defined to require both conduct and a specified result of that conduct, the defendant's conduct generally must be the "legal" or "proximate" cause of the result. 1 WAYNE R. LaFAVE, SUBSTANTIVE CRIMINAL LAW § 6.4, at 464 (2d ed. 2003). As summarized by LaFave:
For one thing, it must be determined that the defendant's conduct was the cause in fact of the result, which usually (but not always) means that but for the conduct the result would not have occurred. In addition, even when cause in fact is established, it must be determined that any variation between the result intended (with intent crimes) or hazarded (with reckless or negligent crimes) and the result actually achieved is not so extraordinary that it would be unfair to hold the defendant responsible for the actual result.
Id. Accord State v. Perez-Cervantes, 141 Wash.2d 468, 484, 6 P.3d 1160 (2000) (Johnson, J., dissenting) ("In crimes, such as murder, which are defined to require specific conduct resulting in a specific effect, the State must prove the defendant's criminal act was both the `cause in fact' and the `legal' cause of the result. State v. Rivas, 126 Wash.2d 443, 453, 896 P.2d 57 (1995); State v. Dennison, 115 Wash.2d 609, 624, 801 P.2d 193 (1990).").
¶ 23 Consistent with this general tenet, murder punishable under the Washington criminal code requires that a defendant's or felony participant's conduct "cause the death" of a person, RCW 9A.32.030(1)(a),.050(1)(a), an element that requires proof of proximate cause. See, e.g., State v. Little, 57 Wash.2d 516, 521, 358 P.2d 120 (1961) (causal connection between death and criminal conduct of the accused is one element of the corpus delecti). Homicide by abuse requires proof that a defendant's conduct "cause[ ] the death" of a person in a class protected by the statute, RCW 9A.32.055(1), and likewise requires proof of proximate cause. State v. Berube, 150 Wash.2d 498, 510, 79 P.3d 1144 (2003). Manslaughter includes conduct recklessly or negligently "caus[ing] the death" of a person, RCW 9A.32.060(1)(a), .070(1). It, too, requires proof of proximate cause. State v. Ramser, 17 Wash.2d 581, 586, 136 P.2d 1013 (1943).
*687 ¶ 24 There appears to be no legislative intent to differentiate conduct "causing death" from conduct "resulting in death." Statute of limitations provisions, for instance, provide no limitations period for arson, vehicular assault, or hit-and-run injury-accident if "a death results." RCW 9A.04.080(1)(a)(iii), (v), (vi). And cf. RCW 9A.40.100(a)(ii)(C) (trafficking constitutes trafficking in the first degree when, inter alia, it "[r]esult[s] in a death"); RCW 9A.36.120(1)(b)(ii) (using "cause" and "result" terminology interchangeably in defining category of first degree assault of a child).
¶ 25 Contrary to Mr. Christman's argument, we find no textual or contextual support for construing "results in" to mean that use of the controlled substance delivered by the defendant must be the sole cause of death. Not only does that construction lack textual or contextual support, but construing a statute to impose criminal culpability only where a defendant's conduct is the sole cause of serious bodily injury or death has been rejected as leading to strained, unlikely, or absurd consequences. Neher, 112 Wash.2d at 351, 771 P.2d 330 (legislature "surely did not intend" that defendant would be relieved of criminal culpability any time conduct of the victim or a third party contributed to injury, regardless of the degree of that conduct).
¶ 26 Taking into consideration these related criminal statutes and long-standing common law concepts of "cause" and "result," we construe RCW 69.50.415 to have unambiguously required that the State prove that the methadone provided to Mr. Mulder by Mr. Christman was a proximate cause, but not the sole cause, of Mr. Mulder's death. The rule of lenity therefore does not apply.
II
¶ 27 We next consider whether the evidence was sufficient to establish that Mr. Christman's delivery of methadone resulted in Mr. Mulder's death, analyzing causation in terms of proximate cause. In reviewing the sufficiency of the evidence, the question is whether, after viewing the evidence in the light most favorable to the State, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. State v. Joy, 121 Wash.2d 333, 338, 851 P.2d 654 (1993).
¶ 28 As earlier discussed, proximate cause has two components: cause in fact and legal causation. With respect to cause in fact, tort and criminal situations are exactly alike. State v. McDonald, 90 Wash. App. 604, 612, 953 P.2d 470 (1998), aff'd, 138 Wash.2d 680, 981 P.2d 443 (1999). There are several tests for factual causation, the most common of which is the "but for" test, although the "substantial factor" test applies in some circumstances. Id. One instance in which the substantial factor test applies is where multiple causes could have produced the identical harm, thus making it impossible to prove the "but for" test. The "substantial factor" test is generally applied in multiple causation cases. Id. at 613, 953 P.2d 470 (quoting Allison v. Housing Auth., 118 Wash.2d 79, 94, 821 P.2d 34 (1991)). Under the substantial factor test, all parties whose actions contributed to the outcome are held liable. Id.
¶ 29 The second componentthe fairness of holding a defendant responsibleis the province of legal causation, described in Hartley v. State, 103 Wash.2d 768, 779, 698 P.2d 77 (1985), a tort case, as follows:
Legal causation ... rests on policy considerations as to how far the consequences of defendant's acts should extend. It involves a determination of whether liability should attach as a matter of law given the existence of cause in fact. If the factual elements of the tort are proved, determination of legal liability will be dependent on "mixed considerations of logic, common sense, justice, policy, and precedent."
(Quoting King v. City of Seattle, 84 Wash.2d 239, 250, 525 P.2d 228 (1974), overruled on other grounds by City of Seattle v. Blume, 134 Wash.2d 243, 947 P.2d 223 (1997).) Washington Pattern Jury Instructions refer to proximate cause, in its factual context, as "a cause which in a direct sequence [unbroken by any new independent cause,] produces the [injury] [event] complained of and without which such [injury] [event] would not have happened." 6 WASHINGTON PRACTICE: *688 WASHINGTON PATTERN JURY INSTRUCTIONS: CIVIL 15.01 (5th ed. 2005).[2]
¶ 30 Although a defendant's conduct is not a proximate cause if some other cause is a sole or superseding cause, it can be a proximate cause if another cause is merely a concurrent cause. The same harm can have more than one proximate cause. State v. Meekins, 125 Wash.App. 390, 398-99, 105 P.3d 420 (2005).
¶ 31 Dr. Howard's opinion was that all three substancesmethadone, alcohol, and methamphetaminecombined to cause death and that each one played a role. Only methadone was present in a quantifiable amount in the blood sample tested by the state toxicology lab, however, and the amount of methadone present was more than enough to cause toxicity and death. Dr. Howard testified that, with reasonable medical certainty, the methadone caused Mr. Mulder's death. A jury verdict will not fail on sufficiency of evidence grounds due to evidence suggesting a concurrent or intervening cause. See, e.g., Perez-Cervantes, 141 Wash.2d at 487, 6 P.3d 1160 (Johnson, J., dissenting); Leech, 114 Wash.2d at 705, 790 P.2d 160; State v. Karsunky, 197 Wash. 87, 99, 84 P.2d 390 (1938).
¶ 32 Viewing the evidence in the light most favorable to the State, a rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.
III
¶ 33 Finally, and alternatively, Mr. Christman argues that the legislature's failure to define "resulting in" renders the controlled substances homicide statute unconstitutionally vague, contrary to the Fourteenth Amendment. Other courts have rejected vagueness challenges to similar controlled substance crimes or sentencing enhancements. See United States v. Chevalier, 776 F. Supp. 853, 859 (D.Vt.1991) (rejecting vagueness challenge to 21 U.S.C. § 841(b)(1)(C) on facts of case); State v. Maldonado, 137 N.J. 536, 645 A.2d 1165, 1182 (1994) (rejecting vagueness challenge to drug death statute imposing liability if death results, subject to a statutory exception for remote or attenuated results). But we apply our own analysis to the statute before us and the facts of this case.
¶ 34 A defendant challenging a statute as unconstitutionally vague must show, beyond a reasonable doubt, that either (1) the statute does not define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is proscribed, or (2) does not provide ascertainable standards of guilt to protect against arbitrary enforcement. City of Spokane v. Douglass, 115 Wash.2d 171, 178, 795 P.2d 693 (1990). The void-for-vagueness doctrine protects against laws that trap the innocent by not providing fair warning or impermissibly delegate policy matters to police officers, judges, and juries for resolution on an ad hoc and subjective basis. Bullfrog Films, Inc. v. Wick, 847 F.2d 502, 512 (9th Cir.1988).
¶ 35 "The first step in any vagueness challenge `is to determine if the statute in question is to be examined as applied to the particular case or to be reviewed on its face.'" State v. Coria, 120 Wash.2d 156, 163, 839 P.2d 890 (1992) (quoting Douglass, 115 Wash.2d at 181-82, 795 P.2d 693). If the statute does not involve First Amendment rights, then the vagueness challenge is to be evaluated by examining the statute as applied under the particular facts of the case. Id. Since the controlled substances homicide statute does not implicate any First Amendment rights, we evaluate the application of the statute to the conduct of Mr. Christman proved to the satisfaction of the jury: that he had delivered nine and one-half methadone pills to Mr. Mulder, whose subsequent use of the pills resulted in death.
¶ 36 RCW 69.50.415 defines the crime of controlled substances homicide as requiring (1) "delivery," meaning "the actual or constructive *689 transfer from one person to another of a substance, whether or not there is an agency relationship," RCW 69.50.101(f); (2) of a "controlled substance," meaning "a drug, substance, or immediate precursor included in Schedules I through V as set forth in federal or state laws," RCW 69.50.101(d); (3) that the controlled substance be used by the person to whom it was delivered; and (4) that the use result in the death of the user.
¶ 37 Mr. Christman does not argue that there is anything vague about any element other than causation. Focusing on causation, he cannot tenably argue that RCW 69.50.415 is too indefinite for him to have avoided the proscribed conduct. There is no reasonable meaning of "result in death" under which Mr. Christmanwho made available a lethal dose, directly to the user, knowing that the user was seeking the drug for immediate consumptioncan claim to have been trapped without fair warning. Examining the statute with respect to the facts of this case, it is not unconstitutionally vague within the meaning of the first aspect of the vagueness doctrine.
¶ 38 So, too, with the second aspect of the doctrine. The evidence of the causal connection between Mr. Mulder's use of the methadone provided and his death was sufficient under the conceivably applicable standards of cause: cause-in-fact or proximate cause. The facts of this case do not present a risk of enforcement that was arbitrary, erratic, or discriminatory. See Douglass, 115 Wash.2d at 180, 795 P.2d 693. A statute "employ[ing] words with a well-settled common law meaning, generally will be sustained against a charge of vagueness." Anderson v. City of Issaquah, 70 Wash.App. 64, 75, 851 P.2d 744 (1993).
¶ 39 We affirm the judgment and sentence.
WE CONCUR: KULIK, C.J., and BROWN, J.
NOTES
[1] Dr. Howard testified that among the laboratory studies done were studies at both hospitals for treatment purposes, and later to confirm that Mr. Mulder could be an organ donor. RP at 264. Other than Dr. Howard's testimony that he requested that the earliest drawn sample available be analyzed, there was no evidence when the sample received by the state toxicology lab had been drawn. RP at 304.
[2] It is the aspect of legal causation by which the court weighs policy considerations in cases where a defendant's act is so removed and attenuated from the result that perhaps liability ought not attach. No such argument was made in this case. As a determination of what actually occurredthe only aspect of proximate cause at issue herecause in fact is generally left to the jury. Hartley, 103 Wash.2d at 778, 698 P.2d 77. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2358578/ | (2008)
Isaac ROSE, et al., Plaintiffs
v.
VOLVO CONSTRUCTION EQUIPMENT NORTH AMERICA, INC., Defendant.
Case No. 1:05 CV 168.
United States District Court, N.D. Ohio, Eastern Division.
March 17, 2008.
ORDER
SOLOMON OLIVER, JR., District Judge.
On February 1, 2005, Plaintiffs Isaac Rose, Peggy Knox, Joseph Henderson, Wilbert Whitt, Opal Whitt, Andrew Bergant, Jr., A.C. Wade, and Metro Burtyk, on behalf of themselves and all others similarly situated, along with International Union, and the United Automobile, Aerospace, and Agricultural Implement Workers of America ("UAW") (together, "Plaintiffs") filed the above-captioned action against Defendarit Volvo Construction Equipment North America, Inc. ("Defendant" or "VCENA"). After Plaintiffs amended their Complaint by withdrawing all individual claims for monetary damages (see Third Amended Compl. ("TAC"), ECF No. 138), the court certified the instant suit as a class action for declaratory and injunctive relief. (Order, ECF No. 175.) VCENA filed third-party claims against Euclid-Hitachi Heavy Equipment, Inc. ("EHHE"), Hitachi Construction Machinery ("HCM"), Hitachi Construction Manufacturing Ltd. ("HTM"), and Deere-Hitachi Construction Machinery Corp. ("Deere-Hitachi") for declaratory judgment and damages. Upon separate motions from each of the Defendants, the court stayed the third-party claims pending arbitration. (ECF No. 174.)
Plaintiffs comprise a class of hourly-paid retirees and spouses, surviving spouses, and dependents of retirees. Plaintiffs allege that VCENA violated Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, and Section 502 of the Employee Retirement Income, Security Act ("ERISA"), 29 U.S.C. § 1132. Specifically, Plaintiffs allege that VCENA breached the parties' Collective Bargaining Agreement ("CBA") to provide lifetime, fully-funded health care insurance benefits to the retirees, spouses, surviving spouses, and eligible dependents of retirees as well as lifetime, fully-funded life insurance benefits to retirees. Plaintiffs seek declaratory judgment and injunctive relief.
Now pending before the court are Plaintiffs' Motion for Summary Judgment (ECF No. 155), Defendant's Motion for Summary Judgment (ECF No. 156); Plaintiffs' Motion for Preliminary Injunction (ECF No. 182), and Defendant's Motion for Order Striking Plaintiffs' Affidavits or, in the Alternative, for Leave to Depose Affiants and Leave to File Surreply ("Motion to Strike") (ECF No. 195). For the reasons set forth below, Plaintiffs' Motion for Summary Judgment (ECF No. 155) is granted, Defendant's Motion for Summary Judgment (ECF No. 156) is denied, Plaintiffs' Motion for Preliminary Injunction (ECF No. 182) is denied as moot, and Defendant's Motion to Strike (ECF No. 195) is denied as moot.
I. FACTS AND PROCEDURAL HISTORY
The court has already set out the general factual background of the within case in a previous Order dated March 21, 2007, 2007 WL 893049. That Order states, in relevant part:
Plaintiffs maintain that VCENA and/or various other corporate entities operated facilities in Euclid, Ohio, involved with heavy truck manufacturing, engineering, and testing (the "Euclid Facility"). The individual Plaintiffs allege they are retirees, retiree spouses, surviving spouses or dependants of retirees from the Euclid Facility, who retired prior to January 1, 1987. While the Plaintiff retirees were employed at the Euclid Facility, the UAW and UAW Local 70, or its predecessor UAW Local 426 (collectively, the "Union"), served as their exclusive bargaining representative.
In 1984, Defendant VCENA, operating under the name of Clark Michigan Company ("Clark"), purchased the assets of the Euclid Facility, involved with heavy truck manufacturing, engineering, and testing. In 1994, Defendant VCENA, then operating under the name of "VME Americas Inc." ("VME"), entered into a joint venture agreement with Hitachi Construction Machinery ("HCM") to create Euclid-Hitachi Heavy Equipment, Inc. ("EHHE") and EHHE's wholly-owned Canadian subsidiary, Hitachi Construction Manufacturing Ltd. ("HTM"). EHHE was to operate the Euclid Facility. Between 1994 and 2000, VCENA transferred its interest in EHHE to HCM, until EHHE became a wholly-owned subsidiary of HCM in 2000. Sometime after 2001, the Euclid Facility was controlled by HTM, which operated the facility through one of its branches or divisions called the Euclid-Hitachi Technical Center ("EHTC").
While operating under the name of Clark, Plaintiffs allege that VCENA was bound by a collective bargaining agreement with the Union, effective [from] 1983 to 1986 (the "1983 CBA"). (See Third Amended Complaint ("TAC"), [] ECF No. 138.) The 1983 CBA allegedly contained a section entitled, "Pension Plan, Insurance Program and Supplemental Unemployment Benefit Plan," which stated that the terms of the healthcare and life insurance benefits were contained in a series of Supplemental Agreements. [See 1983 CBA at 144, ECF No. 144.] [According to Plaintiffs,] [t]he Supplemental Agreements provided for an insurance program that guaranteed retirees and their spouses, surviving spouses, and eligible dependents fully paid healthcare benefits for life. [See Supplemental Agreements, at 22-24-B, 96-B, and 97-98-B, ECF No. 145. Plaintiffs also contend that the insurance program set forth in the Supplemental Agreements also guaranteed retirees fully paid life insurance benefits for life. (See id. at Art II, 28-84-B.)] Plaintiffs maintain that all subsequent collective bargaining agreements with HTM and its predecessors, including VCENA operating as Clark and VME, guaranteed retirees, their spouses and dependents the same coverage that they received under the 1983 CBA.
In a letter dated January 12, 2005, all retirees and their spouses, surviving spouses, and dependents were informed that their benefits would be cancelled as of February 28, 2005. (See TAC, Ex. 9 (January 12, 2005 Form Letter).) The letter stated that EHHE was going out of business and the current retiree life and healthcare benefits would terminate on February 28, 2005. (Id.) Plaintiffs allege that VCENA was obligated to provide them with "vested lifetime retiree health care and life insurance benefits" and that VCENA has breached this obligation. (See TAC ¶¶ 64-66.)
(Order, ECF No. 175, at 2-4.)
On February 9, 2005, the UAW and EHHE and HCM executed a Retiree Benefit Agreement ("RBA"), under which EHHE, VCENA's successor, and HCM agreed to continue funding the same health care and life insurance benefits to hourly-paid retirees and their dependents through March 31,2005, and thereafter to contribute funds through an independent Voluntary Employees' Beneficiary Association ("VEBA"), which was established under Section 501(c)(9) of the Internal Revenue Code. (TAC ¶¶ 42-45.) According to Plaintiffs, the VEBA trust was intended to settle Plaintiffs' claims against the participating entities and to provide temporary benefits to Plaintiffs pending resolution of the instant lawsuit, which seeks lifetime benefits, with VCENA. According to Defendant, Plaintiffs released VCENA from liability through Plaintiffs' settlement agreement with EHHE. On August 24, 2006, both parties moved for summary judgment, arguing that the parties' intention to vest (in Plaintiffs' view) or not vest (in Defendant's view) lifetime, fully-funded benefits is clear from the unambiguous language of the CBA or, alternatively, through extrinsic evidence.
On August 3, 2007, Plaintiffs filed a Motion for Preliminary Injunction (ECF No. 182), seeking temporary relief against VCENA, on the ground that the trustees to the VEBA trust had reduced Plaintiffs' insurance benefits in order to extend the life of the trust due to VCENA's failure to pay lifetime benefits. Defendant then filed a Motion to Strike (ECF No. 195) the affidavits that Plaintiffs submitted with their Reply in Support of Motion for Preliminary Injunction.
II. SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56(c) governs summary judgment motions and provides:
The judgment sought shall be rendered forthwith 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 ....
In reviewing summary judgment motions, this court must view the evidence in a light most favorable to the non-moving party to determine whether a genuine issue of material fact exists. Adickes v. S.H. Kress & Co., 398 U.S. 144, 153, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970); White v. Turfway Park Racing Ass'n Inc., 909 F.2d 941, 943-44 (6th Cir.1990). A fact is "material" only if its resolution will affect the outcome of the lawsuit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). Determination of whether a factual issue is "genuine" requires consideration of the applicable evidentiary standards. Thus, in most civil cases the Court must decide "whether reasonable jurors could find by a preponderance of the evidence that the [nonmoving party] is entitled to a verdict." Id. at 252, 106 S. Ct. 2505. However, "[c]redibility judgments and weighing of the evidence are prohibited during the consideration of a motion for summary judgment." Ahlers v. Schebil, 188 F.3d 365, 369 (6th Cir.1999).
Summary judgment is appropriate whenever the non-moving party 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. Celotex Corp. v. Catrett, All U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Moreover, "the trial court no longer has a duty to search the entire record to establish that it is bereft of a genuine issue of material fact." Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479-80 (6th Cir.1989) (citing Frito-Lay, Inc. v. Willoughby, 863 F.2d 1029, 1034 (D.C.Cir.1988)). The nonmoving party is under an affirmative duty to point out specific facts in the record as it has been established that create a genuine issue of material fact. Fulson v. City of Columbus, 801 F. Supp. 1, 4 (S.D.Ohio 1992). The non-movant must show "more than a scintilla of evidence to overcome summary judgment"; it is not enough to show that there is slight doubt as to material facts. Id.
When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.
Fed.R.Civ.P. 56(e).
III. LAW AND ANALYSIS
Because a finding that Plaintiffs' have released VCENA from liability would preclude Plaintiffs from pursuing their claims against VCENA for insurance benefits, the court will address this issue first.
A. Whether Plaintiffs' Settlement with EHHE Discharged VCENA
Defendant argues that Plaintiffs' settlement with EHHE through the RBA effectively discharged VCENA because: (1) the settlement did not expressly preserve VCENA's recourse against EHHE; and (2) the settlement increased VCENA's risk of loss and decreased VCENA's ability to shift the cost of liability to EHHE. In response, Plaintiffs argue that: (1) ERISA and federal labor law preempt Defendant's state surety law arguments herein; and (2) the settlement agreement fulfills all requirements for Plaintiffs to retain their claims against VCENA. As discussed below, the court finds that the settlement did not discharge VCENA.
The court will accept several of Defendant's assertions without discussion, despite Plaintiffs' arguments to the contrary, because the court finds that they are not dispositive. Accordingly, the court will assume that state surety law is not preempted by ERISA and therefore applies to the instant case. The court will also assume that EHHE is the primary obligor of the disputed retiree benefits, and that VCENA constitutes EHHE's surety, or secondary obligor. Even so, the court finds Defendant's argument that Plaintiffs' settlement with EHHE released VCENA is not welltaken.
Defendant argues that under Gholson v. Savin, 137 Ohio St. 551, 560, 31 N.E.2d 858 (Ohio 1941), the terms of a settlement agreement must "reserve not only the creditor's right against the surety, but the surety's right against the principal as well." Defendant also quotes Section 39 of the Third Restatement of Suretyship & Guaranty ("Restatement") for this proposition. The Restatement provides, in pertinent part:
To the extent that the obligee releases the principal obligor from its duties pursuant to the underlying obligation:
....
(b) the secondary obligor is discharged from any unperformed duties pursuant to the secondary obligation unless:
(i) the terms of the release effect a preservation of the secondary obligor's recourse ...; or
(ii) the language or circumstances of the release otherwise show the obligee's intent to retain its claim against the secondary obligor ....
Id. Upon examining the instant RBA and the New Participation Agreement ("NPA"), in which the individual workers joined the settlement agreement, the court finds that these documents satisfy the requirements of both Gholson and the Restatement that the settlement agreement must indicate that the secondary obligor's recourse against the principal obligor is preserved.
The RBA settlement was signed on February 9, 2005. It reads, in relevant part:
11. Union's Covenant Not to Sue: The Union and UAW Local 70 agree that neither they nor their officers or employees will bring any grievance, arbitration, lawsuit, or other claim (or materially assist anyone else to do so, except as required by law) against EHHE or its parent HCM, either's affiliates, any of their officers, employees, agents or benefit plans, or any of their predecessors, with respect to the reduction or elimination of retiree health or welfare benefits other than to enforce this Agreement. They further agree to use their best efforts to discourage any of their affiliates from doing any of the foregoing. The preceding sentences shall not bar the Union, any of its locals, or any of their officers or employees from bringing any grievance, arbitration, lawsuit, or other claim against Volvo or any of its predecessors, or their officers or employees.
(RBA ¶ 11, ECF No. 156-7, at 3.) In addition, the Appendix to the RBA includes an example of an NPA, which the parties do not dispute that each Plaintiff signed. The NPA provides, in pertinent part:
In exchange for the benefits Euclid-Hitachi Heavy Equipment, Inc. (Euclid) has offered to provide me, as set forth in paragraph (b), I agree as follows:
(a) Background: .... Except to the extent Euclid is legally obligated to continue to [sic] such benefits, I acknowledge that no Released Party has to provide them. The Released Parties are Euclid, Hitachi Construction Machinery Co., Ltd. (HCM), Hitachi Construction Truck Manufacturing Ltd[.] (HTM), and their affiliates, and their predecessors (other than any Volvo company or affiliate, including [VCENA], and their predecessors and affiliates) and each such entity's current and former shareholders, directors, officers, employees, insurers, benefit programs, and all other related parties.....
....
(c) Waiver of Claim to Prior Coverages: In exchange for the substitute benefits described in paragraph (b), on behalf of myself and all members of my family and all of our successors, assignees, heirs, and legatees, I waive any known or unknown claims of any type I or they might have to any other life, health, or similar benefits, or anything in lieu of them, against every Released Party. I promise never to assert any such claim. I assign to HCM anything my family or I would otherwise receive as a result of anyone pursuing such a claim on my or their behalf. The preceding sentence shall not apply to amounts any Released Party must pay to or for any Volvo company pursuant to an indemnification or similar agreement. ....
(NPA, RBA Appendix, ECF No. 165-7, at 6) (emphasis added.)
While the language could have been written more clearly, the NPA refers to "amounts any Released Party must pay to or for any Volvo company pursuant to an indemnification or similar agreement." (NPA at (c).) This statement indicates that EHHE and all Plaintiffs acknowledged Volvo, or VCENA's, right to seek indemnification against "any Released Party."
Furthermore, the "circumstances of the release" also demonstrate that Plaintiffs intended to pursue claims against VCENA, thus satisfying Section 39(b)(2) of the Restatement. In a letter dated December 17, 2004 (nearly two months before the RBA was executed), VCENA informed EHHE and HCM that it was aware of their negotiations with Plaintiffs and that
if the Hitachi entities [EHHE and HCM] do not intend to satisfy [their obligations to VCENA] in full, please consider this to be notice under the indemnity provisions of the various agreements between Volvo entities and Hitachi entities that Volvo intends to pursue its rights to indemnity under these agreements to the fullest extent possible.
(ECF No. 160-6.) In addition, Plaintiffs filed the instant suit against VCENA eight days prior to the execution of the RBA. Therefore, at the time the RBA was signed, all parties knew that Plaintiffs were pursuing claims against VCENA and that VCENA had stated its intention to seek indemnification from EHHE and HCM.
The court similarly rejects Defendant's argument that the settlement "increased VCENA's risk of loss, as well as jeopardized VCENA's ability to effectively subrogate against EHHE and/or HCM and shift the loss to them." (Def.'s Mot. Summ. J. at 18); see Restatement § 37. Defendant contends that:
[P]laintiffs, EHHE, and HCM each intended the RBA to serve as a vehicle to shift all remaining retiree health expenses from EHHE and HCM to VCENA, and to facilitate the flight of EHHE and HCM from the reach of U.S. courts, thus making it far more difficult (if not impossible) for VCENA to invoke its contractual and common law indemnification and subrogation rights against EHHE and HCM, and forcing VCENA as surety to bear the entire loss.
(Def.'s Mot. Summ. J. at 18-19.) However, both EHHE and HCM remain third-party Defendants in the within case and, as Plaintiffs state, neither EHHE nor HCM have withdrawn their argument that this court lacks jurisdiction over them. (See ECF No. 108.) Consequently, the court finds that VCENA retains the ability to seek indemnification from EHHE and HCM. Therefore, the settlement did not release VCENA. As a result, Plaintiffs retain the right to pursue their claims against VCENA.
The court next examines whether the parties intended to vest lifetime, fully-funded life insurance and health care benefits for Plaintiffs.
B. Analytical Framework and "the Yard-Man Inference"
The Sixth Circuit laid out the general principles controlling retiree benefit plans in Yolton v. El Paso Tenn. Pipeline Co., 435 F.3d 571, 578 (6th Cir.2006).
A retiree health care insurance benefit plan is a welfare benefit plan under ERISA. Maurer v. Jay Techs., Inc., 212 F.3d 907, 914 (6th Cir.2000) (citing Boyer v. Douglas Components Corp., 986 F.2d 999, 1005 (6th Cir.1993)). Unlike pension plans, "there is no statutory right to lifetime health benefits." Golden, 73 F.3d at 653. If lifetime health care benefits exist for the plaintiffs, it is because the UAW and the defendants agreed to vest a welfare benefit plan. Id. at 654; see also Boyer, 986 F.2d at 1005. If a welfare benefit has not vested, "after a CBA expires, an employer generally is free to modify or terminate any retiree medical benefits that the employer provided pursuant to that CBA." Bittinger v. Tecumseh Prod. Co., 83 F. Supp. 2d 851, 857 (E.D.Mich.1998) (quoting Am. Fed'n of Grain Millers v. Int'l Multifoods, 116 F.3d 976, 979 (2d Cir.1997)). If a welfare benefit has vested, the employer's unilateral modification or reduction of those benefits constitutes a LMRA violation. Maurer, 212 F.3d at 914.
(footnote omitted).
In the seminal case of UAW v. Yard-Man, Inc., 716 F.2d 1476, 1479 (6th Cir. 1983), the Sixth Circuit established the analytical framework for determining whether parties intended benefits to "continue beyond the expiration of the collective bargaining agreement." First, the court noted that, "[a]ny such surviving benefit must necessarily find its genesis in the collective bargaining agreement.... [T]he court should first look to the explicit language of the collective bargaining agreement for clear manifestations of intent." Id. The court then noted the importance of context, stating:
The intended meaning of even the most explicit language can, of course, only be understood in light of the context which gave rise to its inclusion. The court should also interpret each provision in question as part of the integrated whole. If possible, each provision should be construed consistently with the entire document and the relative positions and purposes of the parties. As in all contracts, the collective bargaining agreement's terms must be construed so as to render none nugatory and avoid illusory promises.
Id. at 1479-80 (citations omitted). Where the CBA's language is ambiguous, Yard-Man held that "the court may look to other words and phrases in the collective bargaining agreement for guidance. Variations in language used in other durational provisions of the agreement may, for example, provide inferences of intent useful in clarifying a provision whose intended duration is ambiguous." Id. at 1480 (citations omitted). Finally, the court stated that its interpretation of a CBA should not "denigrate or contradict basic principles of federal labor law." Id. (citations omitted).
Following the framework set forth in Yard-Man, and consistent with general principles of contract interpretation, the court will first look to the language of the CBA itself. Only if the court finds that language to be ambiguous will the court then look to extrinsic evidence to determine the parties' intent.
The parties dispute the significance of certain language in the Yard-Man opinion that has become known as "the Yard-Man inference." The language, as well as its surrounding context, reads as follows:
[R]etiree benefits are in a sense "status" benefits which, as such, carry with them an inference that they continue so long as the prerequisite status is maintained. Thus, when the parties contract for benefits which accrue upon achievement of retiree status, there is an inference that the parties likely intended those benefits to continue as long as the beneficiary remains a retiree. This is not to say that retiree insurance benefits are necessarily interminable by their nature. Nor does any federal labor policy identified to this Court presumptively favor the finding of interminable rights to retiree insurance benefits when the collective bargaining agreement is silent. Rather, as part of the context from which the collective bargaining agreement arose, the nature of such benefits simply provides another inference of intent. Standing alone, this factor would be insufficient to find an intent to create interminable benefits. In the present case, however, this contextual factor buttresses the already sufficient evidence of such intent in the language of this agreement itself.
716 F.2d at 1482 (citations omitted and emphasis added). The Yolton court clarified the scope of the often-debated Yard-Man inference in the following statement:
Under Yard-Man we may infer an intent to vest from the context and already sufficient evidence of such intent. Absent such other evidence, we do not start our analysis presuming anything.... [U]nder Yard-Man, "there is no legal presumption that benefits vest and that the burden of proof rests on plaintiffs." Maurer, [212 F.3d 907, 917 (6th Cir.2000)]. This Court has never inferred an intent to vest benefits in the absence of either explicit contractual language or extrinsic evidence indicating such an intent. Rather, the inference functions more to provide a contextual understanding about the nature of labormanagement negotiations over retirement benefits. That is, because retirement health care benefits are not mandatory or required to be included in an agreement, and because they are "typically understood as a form of delayed compensation or reward for past services" it is unlikely that they would be "left to the contingencies of future negotiations." Yard-Man, 716 F.2d at 1481-82 (citations omitted). When other contextual factors so indicate, Yard-Man simply provides another inference of intent. All that Yard-Man and subsequent cases instruct is that the Court should apply ordinary principles of contract interpretation.
Id. at 579-580 (6th Cir.2006). Thus, the court will follow the analytical framework outlined in Yard-Man, as clarified by Yolton.
C. Language of the CBA
The CBA in the instant case stated that it became effective on March 15, 1983, and would "continue in full force and effect without change until ... March 14, 1986." (1983 CBA ¶ 180, at 143.) The CBA contained a section titled, "Pension Plan, Insurance Program and Supplemental Unemployment Benefit Plan," which stated as follows:
The parties have provided for a Pension Plan, an Insurance Program and Supplemental Unemployment Benefit Plan by Supplemental Agreements signed by the parties simultaneously with the execution of this Agreement, which Supplemental Agreements are attached hereto as Exhibit "A", Exhibit "B" and Exhibit "C" respectively and made parts of this Agreement as if set out in full herein, subject to all provisions of this Agreement.
(Id. ¶ 181, at 144.)
Plaintiffs argue that the CBA unambiguously provided for lifetime, fully-funded benefits because a provision stated that health care coverage "shall be continued thereafter"; some health care benefits were tied to pension eligibility; the CBA did not reserve the right to unilaterally terminate life insurance benefits; extrinsic evidence in the Summary Plan Description ("SPD") demonstrates an intent to vest lifetime benefits; and the duration clause that appears in the Supplemental Agreement is "general" and thus does not terminate benefits on the date the CBA terminated. In response, Defendant argues that the CBA unambiguously did not provide lifetime, fully-funded benefits because the continuation of health care benefits is subject to a satisfaction clause; not all health benefits are tied to pension eligibility; the CBA reserved the employer's right to unilaterally modify or discontinue life insurance benefits; the SPD is not valid; and the duration clause specifically terminates benefits when the CBA terminates. The court will analyze health care and life insurance benefits separately.
D. Health Care Benefits for Retirees, Spouses, Surviving Spouses, and Eligible Dependents
1. The Effect of the Phrase "Shall Be Continued Thereafter Provided That"
The Section of the Insurance Program Agreement titled, "Continuance of Health Care (Other than Vision) Coverages Upon Retirement or Termination of Employment at Age 65 or Older" reads, in relevant part:
Health Care Coverages[] an employee has under this Article at the time of retirement or termination of employment at age 65 or older for any reason other than a discharge for cause with insufficient credited service to entitle him to a benefit under Article II of The Euclid, Inc., Hourly Rate Employees Pension Plan shall be continued thereafter provided that suitable arrangements for such continuation can be made with the local plans, or insured plan. Contributions for coverages so continued shall be in accordance with Article I, Section 3(b)(7).[1]
(Art. Ill, Section 5(a), Insurance Program Agreement, at 96-B) (emphasis added.) Plaintiffs argue that the language states that coverage "shall be continued" after an employee retires or is terminated, which indicates that health care benefits were intended to continue after the CBA terminated.
Defendant argues that the phrase "provided that" constitutes a condition, or satisfaction clause, which limits the continuation of benefits because it allows the employer to cease paying the coverage if suitable arrangements' cannot be made,[2] thereby demonstrating that health care benefits were not meant to be vested for life. Plaintiffs contend that "provided that" is not a condition, but is instead an "impossibility of performance" clause that simply means that Defendant "would only be released from its obligation if companies stopped selling health insurance in Ohio [thus meaning that suitable arrangements could not be made with a local or insured plan], a fact not even alleged." (Pls.' Reply Br. at 7.)
Without ruling on whether "provides that" constitutes an impossibility clause, the court agrees with Plaintiffs that the "shall be continued thereafter" phrase indicates an intent to vest lifetime health care benefits. In Cole v. ArvinMeritor, No. 03-73872, 2006 WL 2385050, 2006 U.S. Dist. LEXIS 61003 (E.D.Mich. Aug. 17, 2006), the court examined a similar clause and found that the benefits were intended to vest for life. The court stated:
Section 5(a) addresses, among other things, "continuance" of health care coverages for pension-eligible retirees. It provides, in pertinent part:
The Health Care ... Coverages an employee has under this Article at the time of retirement ... shall be continued thereafter provided that suitable arrangements for continuation can be made with the Carrier(s). Contributions for coverages so continued shall be in accordance with Article I, Section 3(b)(6).
(Ex. 114, Exhibit "B-1" at 72)
This language, tying pension status to retiree health benefits and providing that the health benefits "at the time of retirement ... shall be continued thereafter" for retirees and "any eligible dependents" constitutes an enforceable contractual promise of lifetime retiree health benefits to accompany lifetime pension benefits.
Thus, the ArvinMeritor court implicitly discredited the "provided that" phrase and relied on the "shall be continued thereafter" phrase in its finding of vested lifetime benefits. Similarly, in Hinckley v. Kelsey-Hayes, 866 F. Supp. 1034, 1040 (E.D.Mich. 1994), the district court granted a preliminary injunction for plaintiffs, based in part on its finding that:
plaintiffs have cited specific provisions that indicate that retiree health benefits will be continued throughout their retirement years, beyond the expiration of any particular collective bargaining agreement. For example, section 5 of Article III of the 1991 agreement states that once an employee has retired or terminated employment at age sixty-five, his health benefits "shall be continued thereafter." Surviving spouses are assured that they will receive health benefits "as long as monthly survivor income benefits" are payable.
866 F.Supp. at 1042. The Hinckley court found vested lifetime benefits even where, as here, the language of the agreement stated that "[t]he health care coverages an employee has under this Article at the time of retirement or termination of employment at age 65 or older ... shall be continued thereafter provided that suitable arrangements for such continuation[] can be made with the carrier(s)." Id. at 1039 (emphasis added).
For these reasons, the court finds that the "provided for" phrase does not express an unambiguous intent not to vest benefits. Instead, consistent with ArvinMeritor and Hinckley, the court finds that the "shall be continued thereafter" language indicates an unambiguous intent for Plaintiffs' health care benefits to continue after the CBA terminated.
2. Whether Health Care Benefits Are Linked to Pension Eligibility
Plaintiffs argue that the CBA links retirees' health care benefits to pension eligibility and that, because pension benefits are for life, this link evidences an intent to vest health care benefits for life. This proposition was explained in Golden v. Kelsey-Hayes Co., 845 F. Supp. 410, 415 (E.D.Mich.1994), where the court granted a preliminary injunction for the plaintiffs, finding that "[t]here are no express provisions of the collective bargaining agreements that limit the duration of retiree health benefits. In fact, each of the collective bargaining agreements provides that eligibility for retiree health benefits is tied to eligibility for lifetime pension benefits or survivor spouse income." The Sixth Circuit affirmed, holding that "[s]ince retirees are eligible to receive pension benefits for life, the court found that the parties intended that the company provide lifetime health benefits as well." Golden v. Kelsey-Hayes Co., 73 F.3d 648, 656 (6th Cir.1996). The district court later relied on this evidence in granting summary judgment for the plaintiffs. Golden v. Kelsey-Hayes Co., 954 F. Supp. 1173, 1187 (E.D.Mich.1997). In addition, other district courts within the Sixth Circuit have held similarly, and the Sixth Circuit has upheld the granting of preliminary injunctions by district courts on this basis. E.g., Yolton, 435 F.3d at 580; McCoy v. Meridian Auto. Sys., 390 F.3d 417, 422 (6th Cir. 2004); ArvinMeritor, 516 F. Supp. 2d 850, 865-67 (E.D.Mieh.2005); Hinckley, 866 F.Supp. at 1042. Furthermore, just as in those cases, the CBA in the instant case does not include any express provisions "that limit the duration of retiree health benefits or that allow [the employer] to modify or terminate those benefits at will." Hinckley, 866 at 1042; accord Golden, 845 F.Supp. at 413-14, 415.
Defendant points out that other sections provide health care benefits to retirees who are not eligible for pension. Consequently, Defendant argues, no link with pension benefits exists to suggest an intent to vest lifetime health care benefits for retirees.
The relevant sections read, in pertinent part:
Article I Establishment, Financing and Administration of Insurance Program
....
Section 3. Company Contributions and Administration
....
(b) Company Contributions for Health Care Coverages
....
(7) For Retired and Certain Former Employees
The Company shall contribute the full premium or subscription charge for Health Care (including vision effective April 1, 1981) coverages continued in accordance with Article III, Section 5, for:
(i) a retired employee (including any eligible dependents), provided such retired employee is eligible for benefits under Article II of the Euclid, Inc., Hourly-Rate Employees Pension Plan and
(ii) an employee (including any eligible dependents) termination at age 65 or older for any reason other than a discharge for cause with insufficient credited service to entitle him to a benefit under Article II of The Euclid, Inc., Hourly-Rate Employees Pension Plan.[3]
As the quoted language indicates, Article I, Section 3(b)(7)(i) links health care benefits to pension benefits, while Article I, Section 3(b)(7)(ii) does not. However, despite Defendant's argument otherwise, this inconsistency is not fatal to Plaintiffs' argument Instead, it creates an ambiguity that allows the court to look at extrinsic evidence, in particular the SPD, to determine the parties* intent This approach was taken by the Sixth Circuit in Golden, which found that "[a] provision of one of the SPDs provides that those employees who retire without pension eligibility because they have not been with the company long enough to participate in the pension plan will, nonetheless, have lifetime health coverage at no cost." 73 F.3d at 656. The Golden court agreed with the plaintiffs' argument that "this specific language was necessary because these retirees do not have lifetime pension benefits to which to tie eligibility for health coverage, as do all the other retirees." Id.
The instant SPD states, in relevant part:
General Information About Employee Benefits
EUCLID PAYS THE FULL COST...
....
When you are retired, your life and extra accident insurance and all of your Health Care coverages are continued without cost to you.
....
If you terminate employment with Euclid at age 65 or older for any reason other than discharge for cause, all of your Health Care coverages will be continued for the rest of your life without cost to you.
Euclid also pays the full cost of Health Care coverages for surviving spouses and eligible children of deceased pensioners and of employees who die after they are eligible to retire voluntarily under the Euclid Pension Plan.
(Euclid, Inc. Hourly-Rate Employees Benefit Plans, April 1, 1983 ("SPD") 26, ECF No. 161-3.) The language in the instant SPD is virtually identical to the language of the SPD in Golden, in which the district court granted summary judgment for the plaintiffs. Golden, 954 F.Supp. at 1176-77.
Moreover, the Sixth Circuit has held that "the language of SPDs is binding, and where there is a conflict between the language of the SPD and the other official plan documents, it is the SPD which is controlling." Helwig v. Kelsey-Hayes Co., 93 F.3d 243, 250 (6th Cir.1996) (citing Edwards v. State Farm Mut. Auto., Ins. Co., 851 F.2d 134, 136 (6th Cir.1988)).
Finally, the court rejects Defendant's argument that the SPD document is not valid because it does not contain all the categories of information required under 29 U.S.C, § 1022(b) and 29 C.F.R. § 2520.102-3. The court finds that the SPD includes all required information, including a description of the claims and appeal procedure, a statement of how the plan is administered, and a statement of how the collective bargaining agreement is maintained and that it is available for participants to examine upon request. (See SPD at 17-18, 26-30.)
3. Duration Clause
The parties disagree about the effect of a duration clause contained in the Supplemental Agreement Exhibit B to the CBA ("Insurance Program Agreement"), which applies to both the health care and life insurance benefits. Defendant argues that the CBA was unambiguously intended not to vest lifetime health care and life insurance benefits because the duration clause in the Insurance Program Agreement explicitly limits the duration of the insurance benefits to the time period that the CBA is in effect (i.e., from 1983 to 1986). Plaintiffs argue that the provision is merely a "routine" or "general" duration clause, and is therefore not dispositive as to the duration of benefits. See Yolton, 435 F.3d at 580; Yard-Man, 716 F.2d at 1482-83.
The disputed duration clause in the Insurance Program Agreement reads as follows:
Section 10. Duration of Agreement
This Agreement and Program as modified and supplemented by this Agreement shall continue in effect until the termination of the Collective Bargaining Agreement of which this is a part.
(Supplemental Agreements at 14-B.) The Agreement defines "Program" as the "amended insurance program" attached to the Supplemental Agreement, which provides both health care and life insurance benefits. (See id. at 1-B.) The "Agreement" refers to the Insurance Program Agreement. (See id.) Defendant argues that a reading of the duration clause indicates that the Insurance Program Agreement is a part of the CBA and terminates on the date that the CBA terminates, and therefore the health care and life insurance benefits provided by the Insurance Program Agreement also terminate at that time.
a. Lack of Specific Reference to Benefits or Coverage
Defendant relies upon UAW v. Cleveland Gear Corp., No. C83-947, 1983 WL 2174, 1983 U.S. Dist. LEXIS 20400 (N.D.Ohio Oct. 20, 1983). However, the court finds that case to be distinguishable from the circumstances involved herein. In Cleveland Gear, the court found that the Master Contract and the Insurance Agreement expressly limited the duration of the insurance benefits to the duration of the CBA. The duration clause in the Master Contract is similar to the duration clause in the instant case. However, the duration clause in the Insurance Agreement expressly stated that "[t]his Group Insurance Plan, and all group insurance coverage provided hereunder, shall be effective... until discontinued or superceded either in whole or in part by the termination or suspension of such Collective Bargaining Agreement...." Id. at *3, 1983 U.S. Dist. LEXIS 20400 at *8. The duration clause in the instant case, on the other hand, does not reference either the insurance benefits or coverage. Consequently, it is not clear that the instant duration clause was intended to terminate insurance benefits upon the termination of the CBA.
On the other hand, the court finds that Plaintiffs' reliance on Hinckley is welltaken. The court in Hinckley held that a duration clause identical to the one in the instant case was merely a "routine" durational clause. Id. The Hinckley court stated that the duration clauses that the defendant cited were "provisions that merely incorporate supplemental agreements concerning pension plans, unemployment benefit plans, and health care insurance programs into the collective bargaining agreement itself." Id. at 1041. Significantly, the court continued,
[b]ecause such incorporated supplemental agreements would terminate on the date when the collective bargaining agreement terminated says nothing about the duration of particular benefits, especially benefits for retirees. Defendant does not cite to any provision that specifically limits the duration of any particular benefit This was also the key element that was missing from the durational clause addressed by the Sixth Circuit in Yard-Man. Yard-Man, 716 F.2d at 1482.
Id. (footnote omitted and emphasis added). Likewise, the duration clause in the instant case does not specifically limit the duration of any particular benefit. Therefore, consistent with Hinckley, the court finds that the duration clause in the Insurance Plan Agreement is merely routine and general.
b. The Effect of the Duration Clause in the Pension Plan Agreement
Furthermore, Plaintiffs point out that the Supplemental Agreement Exhibit A to the CBA ("Pension Plan Agreement") contains a duration clause nearly identical to the one in the Insurance Plan Agreement:
Section 9. Duration of Agreement
This agreement and Plan shall continue in effect until the termination of the collective bargaining agreement of which this is a part.
(Pension Plan Agreement at 15-A.) In this clause, "agreement" refers to the Pension Plan Agreement, and "Plan" refers to the "amended pension plan" that is attached to the Supplemental Agreement. (See id. at 1-A.) Thus, following Defendant's logic as to the Insurance Plan Agreement, the pension plan, too, would terminate on the date that the' CBA terminates, even though pension benefits "are understood to be life." Cole v. ArvinMeritor, Inc., 516 F. Supp. 2d 850, 868 (E.D.Mieh.2005). In response, Defendant acknowledges that the duration clause should not terminate the pension benefit. Defendant argues, however, that it should terminate the insurance benefit. In essence, Defendant contends that the same language should have one meaning as to one benefit and an opposite meaning as to another benefit. Courts have rejected this argument, and have instead held that the same language used with regard to pension and life insurance benefits should be given the same effect as to each benefit. When faced with this issue, the Sixth Circuit stated:
The plaintiffs assert ... that because pension plans are vested benefits and because the CBA uses the same durational language for pension plans that it uses for the health care benefits, the health care benefits also must be vested benefits. They argue that the agreements would not use the same language... if it had different meanings..... Reviewing "each provision in question as part of the integrated whole," the use of similar language in sections [regarding pension benefits and health care benefits] provides substantial support for the plaintiffs's [sic] position. Yard-Man, 716 F.2d at 1479.
Yolton, 435 F.3d at 581 (footnotes omitted). Similarly, relying on Yolton, the court in Cole v. ArvinMeritor, Inc., 515 F. Supp. 2d 791, 803 (E.D.Mich.2006), reasoned:
Despite the substantial similarity in these duration clauses, Defendants argue that, although vested pension benefits do not end when a CBA expires, health benefits do. This Court disagrees. Virtually identical language would not be used if it was intended to have one meaning as to health benefits and another as to pension benefits.
See Hinckley, 866 F.Supp. at 1041 n. 4 ("Given defendant's logic, because its pension plan was incorporated into the collective bargaining agreement, its obligation to provide pensions to past retirees would end with the expiration of the current agreement."). The court finds the reasoning in Yolton, ArvinMeritor, and Hinckley persuasive. Therefore, the court finds that the duration clause in the Insurance Plan Agreement does not terminate the health care and life insurance benefits at issue.
Therefore, for all the reasons discussed, the court finds that both the express language of the CBA as well as the SPD evidence an unambiguous intent to vest lifetime, fully-funded health care benefits for Plaintiffs.
E. Life Insurance Benefits for Retirees
1. Whether the CBA Reserved Employer's Right to Modify or Terminate Life Insurance Benefits
Defendant argues that two provisions of the Life Insurance Program enable the employer to modify or terminate retirees' life insurance benefits, therefore demonstrating an unambiguous intent that the life insurance coverage does not vest for life. The court disagrees.
Defendant points to Article II, Section 10(d)(3), which states, in relevant part:
Section 10. Provisions for Employees Not Actively at Work
....
(d) Cessation of Insurance and Conversion Privilege
....
(3) All insurance shall automatically cease upon the discontinuance of the Plan, or, if the provisions thereunder for any one of the forms of coverage in this Article are discontinued, that form of coverage shall be discontinued.
(Insurance Plan Agreement, Supplemental Agreements at 77-B.) The court agrees that this provision may arguably be read to reserve the employer's right to terminate life insurance coverage. The question, however, is to what coverage and to which employees the provision applies. As Plaintiffs point out, this provision appears in a section that "primarily addresses employees on layoff or disability leave." In addition to life insurance, the provision also addresses sickness and accident insurance and disability insurance. (Pls. Opp'n Br. 10 n.9, ECF No. 160.) Life insurance benefits for retirees, on the other hand, are set forth in Article II, Section 3. Consequently, the provision upon which Defendant relies does not apply to life insurance benefits for Plaintiff retirees.
Defendant also points to Article II, Section 3(b)(1)(i), which states, in relevant part:
(b) Continuing Life Insurance After Age 65
....
(i) .... Such remaining Life Insurance will be continued thereafter until the death of the employee, subject to the rights reserved to the Company to modify or discontinue this Plan.
(Insurance Plan Agreement, Supplemental Agreements at 44-B.) This provision appears in Section 3, entitled, "Life Insurance," which details life insurance benefits for employees both prior to, and after, age 65. Article IV, entitled "Definitions," defines "Plan" as "that portion of the Program referred to in Articles II and III, respectively." As stated previously, "Program" refers to the "amended insurance program" (in this case, the Life Insurance Program in Article II).
Defendant argues that this provision reserves the employer's right to unilaterally modify or discontinue Plaintiffs' life insurance benefits at any time. Plaintiffs argue that, at most, the employer "may have reserved the right to replace the specific life insurance plan with another, [but the employer] never reserved the right to discontinue the benefits provided by the plan." (Pls.' Opp'n Br. at 10 n.8.) Alternatively, Plaintiffs argue that the provision creates an ambiguity, which would therefore allow the court to examine extrinsic evidence to determine the parties' intent As discussed below, the court finds that this provision is not ambiguous and that it does not constitute a reservation of Defendant's right to unilaterally terminate Plaintiffs' life insurance benefits.
The language in the instant case is far less specific than language that courts have found to constitute a reservation of rights. In Maurer v. Joy Techs., Inc., 212 F.3d 907, 919 (6th Cir.2000), the Sixth Circuit held that an employer had adequately reserved its right to terminate retiree benefits where it had distributed handbooks to the retirees expressly stating that coverage could be amended or terminated. The reservation of rights language in the handbooks stated, in relevant part:
Amendments. [The employer] reserves the right to amend or terminate any of the plans. The right to amend includes the right to curtail or eliminate coverage for any treatment, procedure, or service regardless of whether you are receiving treatment for an injury, illness, or disease contracted prior to the effective date of the amendment.
....
Plan Changes. This insert summarizes your current retiree health care coverage. However, since no one can predict the future, Joy reserves the right to make changes or terminate these Plans.
Id. at 913 (emphasis omitted). The language in Maurer expressly mentions coverage and lists benefits in detail that could be terminated. As such, Maurer is distinguishable from the instant case.
The Sixth Circuit has recently reemphasized the general rule that "an existing contract cannot be unilaterally modified" and that "[t]his principle applies with equal force to collective-bargaining agreements, where employers are statutorily barred from effectuating unilateral modification[s] of ... existing collective bargaining agreement[s]." Prater v. Ohio Educ. Ass'n, 505 F.3d 437, 443 (6th Cir.2007) (citations and internal quotation marks omitted). In Prater, the court noted that it had previously limited Maurer's holding to "unqualified reservation-of-rights language... that claims a unilateral right by the employer to terminate coverage without regard to existing or future collective bargaining agreements...." Id. at 444 (quoting McCoy, 390 F.3d at 425) (internal quotation marks omitted). The disputed language in Prater stated, in relevant part:
While the employer expects retiree coverage to continue, the employer reserves the right to modify or discontinue retiree coverage at any time.... [The employer] may modify or amend the Plan from time to time in accordance with the provision of the collective bargaining agreement.... The Plan Administrator... may change or eliminate benefits under the plan and may terminate the entire plan or any portion of it.
Id. at 440 (quotation marks and citations to the record omitted). The Prater court reversed the district court's grant of summary judgment for the employer, holding that the employer had not reserved a right to unilaterally terminate contractual rights, in part, because the language was not as specific as that found in Maurer. Id. at 444 ("As in McCoy, neither summary explicitly represented to the retirees that existing medical treatment could be cut off, as the summary in Maurer did.").
Although the reservation of rights language in Prater, McCoy, and Maurer was all found in Summary Plan Descriptions and other extrinsic evidence, the court finds that the principles regarding reservation of rights set forth in these cases apply equally well to the language in the instant case. The purported reservation-of-rights language in the instant case is more similar to the language found in Prater than that in Maurer because of its lack of specific reference to the coverage or benefits themselves. Furthermore, the court finds it significant that the language that may be read to specifically reserve the employer's right to discontinue benefits for employees who are on layoff or disability leave does not appear in the section that outlines the life insurance benefit in general and for retirees. The absence of language from one section that appears in another section can provide evidence as to the parties' intent Cf. Yard-Man, 716 F.2d at 1481-82 (finding the fact that specific duration clauses appeared in some sections evidenced an intent to not limit the duration of benefits where no such clause appeared). Therefore, the court finds that Defendant has not reserved its right to unilaterally terminate retirees' life insurance benefits.
Without the purported reservation-of-rights language, Article II, Section 3(b)(1)(i) states that "[s]uch remaining Life Insurance will be continued thereafter until the death of the employee...." (Insurance Plan Agreement, Supplemental Agreements at 44-B.) In addition, Article II, Section 3(b)(3) provides that "[n]o employee contributions for Life Insurance are required after attainment of age 65." (Id. at 45-B.) Taken together, these two provisions demonstrate that the CBA intended to provide lifetime, fully funded life insurance benefits to retirees.
2. Duration Clause
As discussed previously, the duration clause in the CBA applies to both the health care benefits and the life insurance benefits. Consequently, the court's finding regarding the health care benefits, that the duration clause is merely routine and does not terminate benefits upon the termination of the CBA, is equally applicable to the life insurance benefits.
Therefore, for all the reasons discussed, the court finds that the CBA intended to vest lifetime, fully-funded life insurance benefits for Plaintiff retirees.
* * *
As discussed above, the court finds that the parties intended to create fully-vested, lifetime health care and life insurance benefits for Plaintiffs. Accordingly, the court hereby grants summary judgment to Plaintiffs, as well as declaratory and injunctive relief. The court orders VCENA, under ERISA and the LMRA, to maintain fully-funded health care insurance benefits to Plaintiff retirees, spouses, surviving spouses, and eligible dependents of retirees and fully-funded life insurance benefits to Plaintiff retirees.
F. Plaintiffs' Motion for Preliminary Injunction and Defendant's Motion to Strike
As the court has granted final relief for Plaintiffs, the Motion for Preliminary Injunction (ECF No. 182) is denied as moot. Similarly, Defendant's Motion to Strike (ECF No. 195), which seeks to strike affidavits that Plaintiffs submitted in support of their Motion for Preliminary Injunction, is also denied as moot.
IV. CONCLUSION
For the reasons stated above, Plaintiffs' Motion for Summary Judgment (ECF No. 155) is granted, Defendant's Motion for Summary Judgment (ECF No. 156) is denied, Plaintiffs' Motion for Preliminary Injunction (ECF No. 182) is denied as moot, and Defendant's Motion to Strike (ECF No. 195) is denied as moot. The court hereby grants declaratory and injunctive relief for Plaintiffs, ordering that VCENA is obligated under ERISA and the LMRA to maintain fully-funded health care insurance benefits to Plaintiff retirees, spouses, surviving spouses, and eligible dependents of retirees and fully-funded life insurance benefits to Plaintiff retirees during the lifetime of the class representatives and class members.
Plaintiffs shall file any documentation regarding their request for attorney's fees and costs within 14 days of the date of this Order. Defendant shall then have 10 days to file any response.
IT IS SO ORDERED.
NOTES
[1] Article I, Section 3(b)(7) in turn provides that "[t]he Company shall contribute ... [health care] coverages continued in accordance with Art. Ill, Section 5" for pension-eligible retirees as well as employees who were terminated at age 65 but were not eligible for the pension plan.
[2] In its Reply Brief, Defendant contends that "it is undisputed that, at present, `suitable arrangements' cannot in fact be made for the health care plan's continuation, because, the plan presently cannot obtain stop loss insurance coverage. (Trent Dep. 96.)" (Def.'s Reply Br. 8, ECF No. 164.) The evidence that Defendant cites is a deposition from Michelle Trent ("Trent"), who is a human resources employee for EHHE, HCM, and HTM. She states simply that no stop-loss insurance is provided. (Trent Dep. 96, ECF No. 168.) The court finds that Defendant did not raise the impossibility of performance as a defense. (VCENA Answer to TAC, ECF No. 151.) In any event, this evidence is insufficient to create a genuine issue of material fact regarding whether Defendant was unable to find suitable arrangements.
[3] Likewise, some of the provisions regarding health care benefits for surviving spouses are linked to the pension eligibility of the employee. (See Art I., § 3(8)(i); Art. Ill, § 6(b)(1)-(2), (4), at 23-B, 97-B-98-B.) Others are not (See Art. I, § 3(b)(ii); Art III, § 6(b)(3), at 23-B, 98-B.) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2358587/ | (2008)
FILEBARK, et al., Plaintiffs,
v.
U.S. DEPARTMENT OF TRANSPORTATION, et al., Defendants.
Civil No. 03-1685(RJL).
United States District Court, District of Columbia.
March 31, 2008.
MEMORANDUM OPINION
RICHARD J. LEON, District Judge.
Jerry Todd ("Todd") and Richard S. Boatman ("Boatman") ("plaintiffs"), Air Traffic Control Supervisors at the Albuquerque, New Mexico Air Traffic Control Center ("Albuquerque Center" or "Center"), brought this action against the Federal Aviation Administration ("FAA") and the United States Department of Transportation ("DOT") ("defendants") seeking, in essence, a reversal of the FAA's decision regarding the air traffic control classification of the Albuquerque Center. On February 23, 2006, the Court granted in part and denied in part defendants' motion to dismiss.[1] Both parties filed motions for reconsideration, which the Court denied via separate Minute Orders on December 19, 2006. Now before the Court are Defendants' Motion to Dismiss, or Alternatively, for Summary Judgment (Dkt.# 71) ("Defs. Mot."); Plaintiffs' Cross-Motion for Summary Judgment and Opposition to Defendants' Motion to Dismiss or for Summary Judgment (Dkt. # 74) ("Pls. Cross-Mot."); and Plaintiffs' Motion to Include Additional Materials (Dkt. # 75). Upon consideration of the briefs, the relevant law and the entire record herein, the Court GRANTS defendants' motion to dismiss and DENIES plaintiffs' cross-motion for summary judgment.[2]
BACKGROUND[3]
Pursuant to the Administrative Procedures Act ("APA"), plaintiffs seek judicial review of the FAA's decisions to deny the Albuquerque Center's requests to upgrade its classification from an air traffic control ("ATC") Level 10 to an ATC Level 11. Ultimately, plaintiffs want the FAA to pay them the higher salary associated with working at an air traffic control center classified as an ATC Level 11. For the following reasons, the Court will not reverse the FAA's classification decision.
A. General Background
The Department of Transportation Appropriations Act of 1996, Pub.L. No. 104-50, § 347, 109 Stat. 436 (1995), as amended by Pub.L. No. 104-122, § 1, 110 Stat. 876 (1996) ("DOT Act")[4] directed the FAA Administrator to develop and implement a new personnel management system, which would put into effect a new compensation and classification system that would classify FAA facilities and determine the pay of the FAA workers at those facilities. Filebark v. U.S. Dep't of Transp., 468 F. Supp. 2d 3, 4 n. 2 (D.D.C.2006) (Leon, J.) (citing 49 U.S.C. § 40122(g)). Congress directed that the "new system shall, at a minimum, provide for greater flexibility in the hiring, training, compensation, and location of personnel." 49 U.S.C. § 40122(g)(1). Pursuant to this authorization, the FAA implemented the FAA Personnel Management System ("PMS") in March 1996. (See generally A.R. 2-31.) The PMS anticipated that the FAA and the National Air Traffic Controller Association ("NATCA") would continue working together to devise a compensation plan "that values job complexity and compensates the employees based on level of work performance." (A.R. 14.)
In July 1998, the FAA and NATCA reached an agreement on the new compensation system.[5] (A.R. 133.) This system would transition the FAA from the GS system to the air traffic control ("ATC") system: the Position Classification Standard for Air Traffic Control Series ATC 2152 Terminal and En Route ("PCS").[6] (A.R. 136-204.) The PCS categorizes facilities based on traffic count, with classification levels ("ATC Level") ranging from ATC Level 3-12. (A.R. 313.) The FAA then compensates employees according to the ATC Level assigned to the facility at which they are employed. ATC Levels are assigned using a Classification Index ("CI"), which is calculated based on various factors, including traffic volume. See Todd v. United States, 56 Fed. Cl. 449, 450 (Fed.C1.2003), aff'd 386 F.3d 1091 (Fed.Cir. 2004); see also A.R. 313. The methodology for computing the CI is set forth in the PCS. (A.R. 180-81.) The FAA uses a software program, called Enroute Track Analysis Program or ETAP, to calculate traffic counts used to generate the CI. See Todd, 56 Fed.Cl. at 450-51. The CI required for a particular ATC Level is based on "break points" established by the FAA and NATCA.[7]
Recognizing that a facility's air traffic count might change over time, the PCS provides general guidelines for a facility to request an ATC Level upgrade. (See A.R. 193.) The FAA and NATCA refined the procedures for obtaining a facility upgrade in a November 15, 1999 Memorandum of Understanding with Respect to Reclassification and Associated Pay Rules Between the National Air Traffic Controllers Association and the Federal Aviation Administration ("November 1999 MOU"). (A.R. 205-08.) The November 1999 MOU delineates seven requirements a facility must meet to obtain an upgrade, including providing the facility's traffic count and CI calculation. (A.R. 206.) The final requirement is that "[t]he data will be validated at the Regional and/or National Level." (Id.)
If an employee or facility wishes to challenge a classification decision, the PCS delineates an Appeal Process to seek review of "[t]he way in which the classification standard is interpreted or applied at a specific facility." (A.R. 194). Pursuant to the Appeal Process, an individual employee may initiate an appeal, but only the Facility Manager and the NATCA Facility Representative are authorized to file the appeal. (Id.) Upon receipt of an appeal, a Classification Appeal Review Committee ("CARC"), consisting of a NATCA representative and an Air Traffic Management Representative, will be established; it will issue a written statement of findings within sixty days. (Id.) This decision is final and binding; no further appeal is permitted. (A.R. 195.) To the extent the CARC cannot reach a mutual decision, an appeal may be taken to the Classification Appeals Board ("CAB"). (Id.)
B. Albuquerque Center's Upgrade Requests
The FAA originally assigned the Albuquerque Center an ATC Level 10. The Albuquerque Center, however, has repeatedly requested an upgrade to an ATC Level 11. The Center's air traffic manager, Joan Mallen, initiated the Center's first upgrade request on June 7, 2000.[8] (A.R. 302-04.) Although the request acknowledged that the Center's current CI was below the Level 11 break point, it attributed that to the erroneous exclusion of some Special Use Airspace traffic, such as military operations. (A.R. 302.) On September 6, the air traffic manager sent a complete application for an upgrade, which also requested "assistance in validating this data" pursuant to the terms of the November 1999 MOU. (A.R. 306-08, 308.)
The FAA denied Albuquerque Center's request on October 17, 2000. (A.R. 209.) It noted that until it completed the validation of ETAP, it would not run a CI for classification purposes. (Id.) The FAA also pointed out that the current year of traffic data on file indicated that the Center had not met the requirements for an upgrade. (Id.) The Albuquerque Center was encouraged to submit a new upgrade request once the ETAP validation was complete and it met the upgrade requirements. (Id.)
Subsequently, Todd, in his capacity as an Air Traffic Control Supervisor, sought to initiate an appeal of the FAA's decision. The Albuquerque Center's Facility Manager, Joan Mallen, declined to file the appeal. (Pis. Opp'n to Mot. to Dismiss [Dkt. # 27], Ex. 13, ¶ 11.) Undeterred, Todd also tried to lodge a complaint with the Merit Systems Protection Board ("MSPB"), but they declined to accept the grievance. (Id. ¶ 13.)
In 2001, however, the Albuquerque Center requested another upgrade. As part of this request, the National Validation Team ("NVT") conducted an audit of the Center in July 2001.[9] (A.R. 265-300.) The NVT determined that "the facility has experienced adaptation problems between the HOST computer and ETAP that had an impact on the facilities (sic) classification index." (A.R. 265.) Once the adaptation problems were corrected during the validation process, the Center's CI was below the required breakpoint. (Id.) As a result, the Albuquerque Center's upgrade request was denied on September 26, 2001. (Id.)
In the interim, plaintiff Todd had filed a contract claim in the Court of Federal Claims in July 2001, seeking back pay on the grounds that the FAA's refusal to upgrade the Albuquerque Center's ATC Level violated the collective bargaining agreement between the FAA and the NATCA. See generally Todd v. United States, 56 Fed. Cl. 449 (Fed.C1.2003), aff'd, 386 F.3d 1091 (Fed.Cir.2004). The Federal Circuit upheld the dismissal of that case on October 5, 2004. See Todd v. United States, 386 F.3d 1091 (Fed.Cir.2004). Shortly thereafter, on December 22, 2004, plaintiffs sought leave to file an Amended Complaint adding Todd as a plaintiff to this action, but still seeking judicial review of the FAA's classification upgrade decisions.
DISCUSSION
I. Standard of Review
Federal Rule of Civil Procedure 12(b)(1) provides for dismissal of a complaint for lack of subject matter jurisdiction. Under Rule 12(b)(1), "the plaintiff bears the burden of establishing the factual predicates of jurisdiction by a preponderance of the evidence." Lindsey v. United States, 448 F. Supp. 2d 37, 42 (D.D.C.2006) (quoting Erby v. United States, 424 F. Supp. 2d 180, 182 (D.D.C.2006)). "The [C]ourt, in turn, has an affirmative obligation to ensure that it is acting within the scope of its jurisdictional authority." Id. at 42-43 (alteration in original) (quoting Abu Ali v. Gonzales, 387 F. Supp. 2d 16, 17 (D.D.C.2005)).
II. The Department of Transportation Appropriations Act of 1996 Precludes Judicial Review of the FAA's Facility Classification
The FAA challenges the Court's jurisdiction on the grounds that judicial review of plaintiffs' APA claims is precluded by the DOT Act.[10] Plaintiffs assert that their claims are properly brought pursuant to the APA since the upgrade decisions constitute a final agency action for which there is no other remedy in court.[11] (Pis. Opp'n to Mot. to Dismiss [Dkt. # 27] 12 (citing 5 U.S.C. § 704).) They contend that the case law regarding the preclusive effect of the Civil Service Reform Act ("CSRA") is irrelevant because the FAA is exempt from that statute, and the PMS does not provide comparable recourse. (Id. at 10-11.) The FAA, on the other hand, argues that the PMS provides the exclusive remedies for challenging FAA personnel actions. It supports its argument by comparing the PMS, which it implemented pursuant to § 347 of the DOT Act, to the CSRA, which courts have routinely held to preclude judicial review. (Defs.Mot.16-22.) For the following reasons, I agree with the defendants.
The APA "embodies the basic presumption of judicial review." Abbott Labs. v. Gardner, 387 U.S. 136, 140, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967). Specifically, "[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review." 5 U.S.C. § 704. The APA limits review, however, where "statutes preclude judicial review" or where "agency action is committed to agency discretion by law." Id. § 701(a)(1), (2). Absent an express statutory prohibition of judicial review, courts require a showing of "clear and convincing" legislative intent to preclude judicial review. See Abbott Labs., 387 U.S. at 141, 87 S. Ct. 1507. "Whether and to what extent a particular statute precludes judicial review is determined not only from its express language, but also from the structure of the statutory scheme, its objectives, its legislative history, and the nature of the administrative action involved." Block v. Comty. Nutrition Inst, 467 U.S. 340, 345, 104 S. Ct. 2450, 81 L. Ed. 2d 270 (1984); see also United States v. Fausto, 484 U.S. 439, 443-44, 108 S. Ct. 668, 98 L. Ed. 2d 830 (1988) ("examining the purpose of the [statute], the entirety of its text, and the structure of review that it establishes" to determine whether it precludes judicial review). An analysis of the DOT Act and the subsequent PMS and PCS illustrate Congress' clear intent to limit judicial review of FAA personnel decisions to what is explicitly provided.
Congress enacted-the DOT Act "to give the FAA the opportunity to replace standing regulations with its own specific personnel management system" that would address the "unique demands" of the FAA's workforce. See Fed. Air Marshals v. United States, 74 Fed. Cl. 484, 487 (Fed. C1.2006). To permit the FAA to create its own personnel management system that would "provide for greater flexibility in the hiring, training, compensation, and location of personnel," the DOT Act exempted the FAA from most federal personnel laws, including many provisions of the Civil Service Reform Act. See 49 U.S.C. § 40122(g)(1); see also H.R.Rep. No. 104-475(I) (1996), available at 1996 WL 108579, *31 (DOT Act "deal[s] with these problems by giving the agency the flexibility to develop its own procurement and personnel systems best suited to its unique mission.... by exempting the agency from current ... personnel laws that hinder its flexibility"). The Civil Service Reform Act, Pub.L. No. 95-454, 92 Stat. 111 (codified, as amended, in scattered sections of 5 U.S.C.) ("CSRA"), is "an integrated scheme of administrative and judicial review, designed to balance the legitimate interests of the various categories of federal employees with the needs of sound and efficient administration." Fausto, 484 U.S. at 445, 108 S. Ct. 668. Despite the FAA's general exemption from the CSRA and other federal personnel laws, Congress specifically maintained the applicability of certain "existing laws on whistle-blower protection, prohibiting strikes, prohibiting discrimination and those laws relating to suitability, security, conduct, workmen's compensation, unemployment compensation, retirement, labor-management relations, life insurance, and health insurance." H.R.Rep. No. 104-475(1), available at 1996 WL 108579 at *40. In fact, Congress amended the statute in 2000 to give FAA employees the right to petition the Merit Systems Protection Board in connection with major adverse personnel actions related to whistleblowing. See Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, Pub.L. No. 106-181, § 308, 114 Stat. 61 (2000).
Exercising the discretion afforded it by Congress, the FAA implemented the PMS, which, along with the DOT Act, governs FAA personnel. In doing so, it chose to make additional federal personnel laws applicable to the FAA, (A.R. 3 (exercising discretion to have certain sections of Title 5 applicable to FAA)), and it established its own grievance and appeal procedures,[12] (A.R. 22-26). Moreover, when the FAA implemented the PCS pursuant to the PMS, it instituted an Appeal Process for facility classification decisions. (A.R. 194-95.) Those procedures, however, do not provide judicial review for agency decisions regarding facility upgrade requests.
Indeed, allowing plaintiffs' claims to proceed here would undermine Congress' clear intent to the contrary. Congress exempted the FAA from the CSRA to give the FAA as much flexibility as possible in developing its own personnel management system. Permitting judicial review of personnel decisions that neither Congress, nor the FAA, elected to subject to judicial review would thwart that flexibility. Not surprisingly, the Fifth Circuit reached a similar conclusion in McAuliffe v. Rice, 966 F.2d 979 (5th Cir.1992).
In McAuliffe, the Fifth Circuit faced an APA claim by an employee of a nonappropriated funded instrumentality ("NAFI"), run by the Air Force, challenging her termination. Congress had exempted NAFIs from the CSRA to provide them with program flexibility. See id. at 979. In holding that the action was precluded, the Fifth Circuit explained that since Congress "deliberately exempted NAFI employee" from the CSRA to give them "the maximum possible personnel flexibility," requiring judicial review of those decisions "thwarts the goal of maintaining flexibility." See id. at 980-81.
Moreover, the comprehensive personnel system established by the DOT Act and the PMS supports the finding that judicial review is precluded here. Courts have recognized that the comprehensiveness of the CSRA demonstrates Congress' intent for the CSRA to provide the exclusive remedies for agency personnel actions. Accordingly, absent a provision for judicial review in the CSRA, challenges to agency personnel actions cannot be pursued via other statutes, like the APA. See Fausto, 484 U.S. at 455, 108 S. Ct. 668 (holding that Congress' establishment of a "comprehensive system for reviewing personnel action" judicial review if the statute excludes an employee from those provisions); see also Graham v. Dep't of Justice, No. 02-1231, 2002 WL 32511002, *2 (D.D.C. Nov.20, 2002) ("The law is well-settled that the CSRA displaces all other bases for judicial review of personnel actions taken against federal employees, including the APA."), aff'd Graham v. Ashcroft, 358 F.3d 931 (D.C.Cir.2004); Forrey v. Office of Pers. Mgmt, 70 F.3d 1271, 1995 WL 696901 *1 (6th Cir.1995) (unpublished table) (upholding determination that Congress did not intend that judicial review be available pursuant to the APA after enactment of the CSRA because "the [FAA's] classification decision [of an employee's position based on the density of air traffic handled in the Cleveland region] was discretionary and therefore not subject to judicial review").
It has also been observed by various courts that the principles regarding the CSRA's exclusivity in providing remedies "appl[y] even where the federal employee in question is not covered by the CSRA at all," as is the case with the plaintiffs here. See Graham, 2002 WL 32511002 at *3, n. 1 (citing McAuliffe v. Rice, 966 F.2d 979 (5th Cir.1992)); see also Croddy v. FBI, No. 00-0651, 2006 WL 2844261 (D.D.C. Sept.29, 2006) (holding that the CSRA precluded judicial review of FBI personnel actions within the ambit of the CSRA even though FBI is exempt from CSRA). The DOT Act was intended to supplant the CSRA and permit the creation of a personnel management system specifically designed for and by the FAA. Where Congress wanted to guarantee certain remedies, it explicitly did so. Thus, by providing the FAA with the discretion and flexibility to create its own personnel management system, Congress intended that resulting system to constitute the entire personnel system.
That the statutory scheme specifically provides for judicial review of certain other limited agency actions also suggests Congress' intent to preclude judicial review here. For example, Congress specified in the statute that employees have the ability to ultimately seek judicial review of an adverse ruling regarding a "major adverse personnel action." See 42 U.S.C. § 40122(h) (permitting review of "major adverse personnel action" through the FAA's Guaranteed Fair Treatment procedures); A.R. 24-26 (FAA Guaranteed Fair Treatment procedures ultimately permit an employee to seek judicial review). These "major adverse personnel actions" include "a suspension of more than 14 days, a reduction in pay or grade, a removal for conduct or performance, a nondisciplinary removal, a furlough of 30 days or less ... or a reduction in force action." 42 U.S.C. § 40122(j). Similarly, the DOT Act also provides for judicial review of certain challenges to "prohibited personnel practices" under "section 2302(b), relating to whistleblower protection." 49 U.S.C. § 40122(g)(2)(A). By contrast, neither the DOT Act nor the PMS provide the same review process to employees challenging "classification decisions." Indeed, the parties do not dispute this, and to the extent an upgrade classification decision could be considered in theory a "prohibited personnel practice" under the CSRA (ie., denying an employee equal pay for equal work), Congress did not provide for the possibility of judicial review for "prohibited personnel practices" in general, only prohibited personnel actions relating to whistleblowers. 49 U.S.C. § 40122(g)(2)(A). Thus, Congress left to the discretion of the FAA how to review erroneous classification decisions. And the FAA decided to limit the process to the Appeal Process set forth in the PCS, which does not contemplate judicial review. (A.R. 194-95.) Thus, for this Court to allow plaintiffs to proceed with judicial review here would "turn the review structure of the [DOT Act] on its head."[13]See Ryon v. O'Neill 894 F.2d 199, 203 (6th Cir.1990); see also McAuliffe v. Rice, 966 F.2d 979, 981 (5th Cir.1992).
Thus, in light of Congress' clear intent, the purpose and structure of the DOT Act limits judicial review for FAA employees to those explicitly provided for in the statute and accompanying procedures. Accordingly, since that is not the case here, the Court lacks jurisdiction to entertain plaintiffs' APA claims. Accordingly, in light of Congress' clear intent, the Court lacks jurisdiction to entertain plaintiffs' APA claims, and must GRANT defendants' motion to dismiss. An appropriate Order consistent with this ruling accompanies this Memorandum Opinion.
NOTES
[1] In its February 23, 2006 Memorandum Opinion, the Court dismissed plaintiffs Joseph J. Filebark II and John J. Havens II but permitted the suit by plaintiff Todd to go forward on the grounds that defendants had not demonstrated on the record then before the Court that Todd had failed to exhaust his administrative remedies. Filebark v. U.S. Dep't of Transp., 468 F. Supp. 2d 3, 7 (D.D.C. 2006). The remaining plaintiffs are Todd and Boatman. The Court granted Boatman's motion to intervene on December 19, 2006 via Minute Order.
[2] In light of the Court's determination that is lacks jurisdiction, it DENIES as moot Plaintiffs' Motion to Include Additional Materials.
[3] The parties agree that the material facts are undisputed, but that the legal significance of those facts remains disputed.
[4] For case of reference, the Court will use the term "DOT Act" to refer to not only the statute cited above, but also to any subsequent amendments, which have collectively been codified at 49 U.S.C. § 40122.
[5] Although the pay agreements between the FAA and NATCA do not encompass supervisors, such as plaintiffs here, the FAA notified its employees that it had decided to extend the agreements with the NATCA to supervisory employees. (A.R. 32-33.)
[6] The parties dispute whether the July 1998 PCS or the January 1999 PCS (A.R. 136-204) constitutes a final version of the compensation plan. The dispute is only relevant for determining whether the appropriate break point between a Level 10 facility and a Level 11 facility is 1200 or 1250. Since the Court does not have jurisdiction to reach the merits, resolution of this dispute is unnecessary.
[7] Despite reaching an agreement, the parties acknowledged that further work was required to implement the PCS. They memorialized their intent to continue working in a July 8, 1998 Memorandum of Understanding with Respect to Reclassification and Associated Pay Rules ("July 1998 MOU") and a July 9, 1998 Principal Memorandum of Agreement Between the National Air Traffic Controllers Association and the Federal Aviation Administration ("July 1998 MO A"). (See generally A.R. 311-27; see A.R. 316, 325 ("The parties have made a good faith effort to devise a new pay system consistent with the agreement on additional funds to be made available in each of the first three fiscal years of the life of the new collective bargaining agreement. The parties recognize, however, that certain variables are sufficiently complex that the fiscal year mark will likely not be met precisely.").) Although the FAA transitioned to the ATC pay system in October 1998, the FAA/NATCA Reclassification Team ("Reclassification Team") continued to work on the new classification system. Updates provided by the Reclassification Team noted that the classification process was ongoing, and due to additional data collection, the previously-distributed facility grades might change. (A.R. 133.) To mitigate any impact, they noted that the break points might need to be adjusted. (A.R. 134.)
[8] Plaintiffs' Amended Complaint and Cross-Motion assert that since the Albuquerque Center's initial classification, the FAA has erroneously classified the Center as an ATC Level 10. This assertion is based, in part, on their contention that the FAA applied an incorrect break point and that ETAP did not count certain special use airspace traffic, such as military traffic, (See, e.g., Pls. Cross-Mot. 8 & n. 5; Am. Compl. ¶ 22.) Although plaintiffs argue that the initial classification was incorrect, they do not challenge any agency decision relating to this determination.
[9] Plaintiffs assert that the version of ETAP in use during the summer of 2001 still did not count military traffic and also did not calculate the CI based on the appropriate number of hours, in violation of the PCS requirements for calculating a facility's CI.
[10] Plaintiffs claim that the law of the case doctrine bars the FAA from asserting its jurisdictional arguments because the Court's denial of the FAA's original motion to dismiss and motion to alter or amend judgment implicitly rejected those arguments. (See Pls. Cross-Mot. 23-26.) I disagree. The law of the case doctrine embodies "the general concept that a court involved in later phases of a lawsuit should not re-open questions decided (i.e., established as the law of the case) by that court or a higher one in earlier phases." Crocker v. Piedmont Aviation, 49 F.3d 735, 739 (D.C.Cir.1995). The doctrine is prudential, not jurisdictional. See id. at 739-40. This applies to issues decided explicitly or by necessary implication. See LaShawn A. v. Barry, 87 F.3d 1389, 1394 (D.C.Cir.1996) (en banc). Although our Circuit Court has rejected a subject matter jurisdiction exception to the doctrine, it also recognizes that it is a prudential doctrine. See id. at 1393-94. If the initial decision was "clearly erroneous and would work a manifest injustice," reconsideration is permissible. See id. at 1383 (citations and internal quotations omitted). In its prior Memorandum Opinion, the Court explicitly stated its understanding that defendants were moving to dismiss plaintiff Todd's claim "because he failed to exhaust his administrative remedies and because he already brought an action in the Court of Federal Claims regarding the same issue." Filebark v. U.S. Dep't of Transp., 468 F. Supp. 2d 3, 7 (D.D.C.2006). It did not believe that defendants' § 701(a) arguments were made as to plaintiff Todd. Additionally, the pleadings with regard to Defendants' Motion to Alter or Amend Judgment purported to argue that the court lacked jurisdiction over classification decisions because they were committed to agency discretion. Although both parties sprinkled variations of the word "preclude" into their briefing on the Motion to Alter or Amend Judgment, it was far from apparent to the Court that they were making arguments as to whether the Court lacked jurisdiction because a statute precluded judicial review pursuant to § 701(a)(1), as opposed to because the matter was committed to agency discretion pursuant to § 701(a)(2). Any confusion stemmed from the parties' lack of clarity regarding their arguments. Now that it is clear that defendants argue the Court lacks jurisdiction pursuant to § 701(a)(1), as well as § 701(a)(2), it is apparent that failing to consider this argument would, for the reasons infra, be erroneous and work a manifest injustice. Thus, addressing this argument is not inconsistent with the law of the case doctrine.
[11] In support of their contention that the challenged agency actions are subject to judicial review, plaintiffs rely exclusively on their papers filed in conjunction with the prior motion to dismiss and motion for reconsideration. (Pls.Cross-Mot. 25-26.)
[12] The PMS also provides additional procedural protections akin to protections provided for by the CSRA. For example, both the PMS and CSRA guarantee employees written notice of adverse personnel actions, such as removal, with an opportunity to respond. Compare A.R. 20-22 (FAA PMS Ch. III, ¶ (g)(q)), with 5 U.S.C. § 4303(b).
[13] Plaintiffs contend that the case law concerning the preclusive effect of the CSRA is inapplicable here because the employees in those cases had adequate procedural protections, which the plaintiffs lack here. (Pls. Opp'n to Mot. to Dismiss [Dkt. # 27] 11-12.) Although plaintiffs assert that access to the MSPB and Office of Special Counsel was the "linchpin" in Gray v. Office of Personnel Management, 771 F.2d 1504 (D.C.Cir.1985), and Carducci v. Regan, 714 F.2d 171 (D.C.Cir. 1983), the availability of other remedies was only one factor the Circuit Court considered. The Circuit Court also placed emphasis on not conferring greater rights to employees than provided for by Congress. See Gray, 771 F.2d at 1510-11; cf. Carducci, 714 F.2d at 175 (acknowledging that its ruling would render some limited number of minor personnel actions reviewable by neither the Office of Special Counsel nor the courts); Graham, 358 F.3d at 935 ("`[I]t is the comprehensiveness of the statutory scheme involved, not the "adequacy" of specific remedies thereunder, that counsels judicial abstention.'" (quoting Spagnola v. Mathis, 859 F.2d 223, 227 (D.C.Cir. 1988) (en banc)).). It bears noting, however, that plaintiffs do have some recourse through their facility manager, even if they deem that recourse unsatisfactory. Cf. Stella v. Mineta, 284 F.3d 135, 142-43 (D.C.Cir.2002) (observing that prior to 2000 amendment to DOT Act granting FAA employees access to enforcement and investigation provisions for whistleblower actions, FAA employees' recourse for whistleblowing reprisals was solely within the FAA's PMS procedures). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2358604/ | 542 F. Supp. 2d 949 (2007)
Mahir MOHAMMAD, Petitioner,
v.
Michael HESTON, District Director, Bureau of Citizenship and Immigration Services, and
The Honorable John Ashcroft, Attorney General of the United States of America, Respondents.
No. 4:04-CV-00460 SNL.
United States District Court, E.D. Missouri, Eastern Division.
September 24, 2007.
*950 Edgar E. Lim, Lim and Lim, St. Louis, MO, for Petitioner.
Raymond W. Gruender, III, United States Court of Appeals, Office of the Staff Attorney, Jane Rund, Office of U.S. Attorney, St. Louis, MO, for Respondents.
MEMORANDUM
STEPHEN N. LIMBAUGH, Senior District Judge.
This matter is before the Court upon Petitioner Mahir Mohammad's petition (Doc. # 1, filed April 19, 2004), requesting a writ of habeas corpus and a temporary restraining order. Responsive pleadings as to both have been submitted by both parties.
Petitioner, a resident alien of the United States, alleged that, shortly subsequent to a state court proceeding wherein he pled guilty in return for a suspended sentence on a drug-related charge, deportation proceedings were brought against him. Thereafter, Petitioner was ordered by the Immigration and Naturalization Service ("INS") to be removed from the United States. Following the order of deportation, Petitioner sought to have his guilty *951 plea withdrawn and requested a trial on the merits, on grounds that he received ineffective assistance of counsel This motion to withdraw, as well his subsequent request for a writ of mandamus, was denied by the state court.
Subsequently, Petitioner applied for relief from this Court, concurrently seeking injunctive relief as against the INS in moving forward on the deportation order, and habeas review of the INS's orders which stemmed from the allegedly unconstitutional state court proceedings.
This Court finds that Petitioner's application for a writ of habeas corpus pursuant to 28 U.S.C. § 2241, or alternatively § 2254, should be denied. As a result of this finding, the Court correspondingly lacks jurisdiction to further sustain its grant of injunctive relief.
I. WRIT OF HABEAS CORPUS
A. Jurisdiction
i. 28 U.S.C.A. § 2241
The petition filed by Petitioner asks this Court to review his order of deportation and resulting custody by the INS, basing the Court's jurisdiction over his habeas application upon 28 U.S.C. § 2241. Under Section 2241(a) and (c), district courts have the authority to grant writs of habeas corpus where a petitioner is in custody under, or by color of authority of, the United States; or is in custody in violation of the Constitution or laws or treaties of the United States. As respondents contend, the Immigration and Nationality Act ("INA"), codified at 8 U.S.C. § 1101, et seq., divests this Court of subject matter jurisdiction to review the same. Id. at § 1252. Therefore, insofar as Petitioner seeks review of his conviction or deportation order under Section 2241, this Court is without subject matter jurisdiction, per Section 1252.
Notwithstanding Section 1252, or the habeas relief expressly sought by Petitioner under Section 2241, the Court finds that the petition is within its purview. Although 8 U.S.C. § 1252 prohibits a district court's review of a conviction or deportation order under the INA, it does not operate to restrict courts from exercising jurisdiction over the underlying criminal conviction. The petition before the Court alleges that Petitioner's constitutional rights were violated during his plea agreement with the state circuit court, in that he received ineffective assistance of counsel, and said defect resulted in his order of deportation and custody by the INS. Therefore, the judicial review prompted from, and entered into by, this Court does not include the review of any finding, action, proceeding, or order of removal under the INA; and the Court thereby retains its habeas jurisdiction to consider constitutional questions, i.e. a claim of ineffective counsel, concerning the underlying conviction of an alien subject to removal. See 8 U.S.C. § 1252; Carranza v. I.N.S., 89 F. Supp. 2d 91, 94 (D.Mass.2000); Carranza v. I.N.S., 277 F.3d 65, 71 (1st Cir. 2002). See generally Mahadeo v. Reno, 226 F.3d 3 (1st Cir.2000), cert. denied, Ashcroft v. Mahadeo, 533 U.S. 949, 121 S. Ct. 2590, 150 L. Ed. 2d 749 (2001). Compare Ante v. Reno, 114 F. Supp. 2d 871, 872 (D.Mo.2000) (dismissing writ of habeas corpus under 28 U.S.C. § 2241 for want of jurisdiction, where petitioner raised constitutional and statutory challenges to the final order of removal).
Thereupon, although the Court does not have jurisdiction to grant habeas review under 28 U.S.C. § 2241, it may review the constitutional claims regarding the state court proceedings.
ii. 28 U.S.C.A. § 2254
Under 28 U.S.C. § 2254(a), district courts have jurisdiction to entertain habeas *952 applications on behalf of a person "in custody pursuant to the judgment of a state court only on the ground that he is in custody in violation of the Constitution or laws or treaties of the United States." In order to pursue such relief, a petitioner must be "in custody" and exhaust "the remedies available in the courts of the State." 28 U.S.C. § 2254(a)-(c); Banks v. Dretke, 540 U.S. 668, 690, 124 S. Ct. 1256, 157 L. Ed. 2d 1166 (2004).
In order to satisfy the exhaustion requirement, a petitioner must present his claim to each level of the state's courts for review and enable those respective courts to correct their own constitutional errors. Duckworth v. Serrano, 454 U.S. 1, 3, 102 S. Ct. 18, 70 L. Ed. 2d 1 (1981) (per curiam). Here, after his motions to withdraw and reconsider were denied by the circuit court, Petitioner exhausted his state court remedies by filing writs of mandamus with the circuit court, the Missouri court of appeals, the Missouri Supreme Court, and the United States Supreme Court, all of which were denied. (Doc. # 22:3, filed January 3, 2007.)
Next, the "in custody" requirement for purposes of habeas corpus is to be construed liberally, and does not require physical confinement where petitioner's release from confinement under the sentence in question is not unconditional. Maleng v. Cook, 490 U.S. 488, 491-92, 109 S. Ct. 1923, 104 L. Ed. 2d 540 (1989). However, it does require that petitioner be "in custody" for the conviction or sentence under attack at the time his petition is filed. Id. at 490-91, 109 S. Ct. 1923.
See, e.g., Sammons v. Rodgers, 785 F.2d 1343, 1345 (5th Cir.1986) (suspended sentence carrying a threat of future imprisonment is `in custody'); U.S. ex rel. Wojtycha v. Hopkins, 517 F.2d 420, 423-24 (3d Cir. 1975) (recognizing the difference between parole and probation, yet finding probation and suspended sentence to be `in custody'). Compare U.S. ex rel. Dessus v. Pennsylvania, 452 F.2d 557, 560 (3d Cir.1971), cert. denied, 409 U.S. 853, 93 S. Ct. 184, 34 L. Ed. 2d 96 (1972) (A suspended sentence that does not carry a possibility of future imprisonment is not `in custody' for purposes of habeas corpus.). See U.S. ex rel. B. v. Shelly, 430 F.2d 215, 217 (2d Cir. 1970) (citing Jones v. Cunningham, 371 U.S. 236, 83 S. Ct. 373, 9 L. Ed. 2d 285 (1963)) ("[W]e are directed to no reason or authority which would distinguish probation from parole in habeas corpus applications.") Petition of Engle, 218 F. Supp. 251, 252 (D.Ohio 1963) (probation is `in custody'), aff'd, Engle v. United States, 332 F.2d 88, 91 (6th Cir.1964), cert. denied, 379 U.S. 903, 85 S. Ct. 192, 13 L. Ed. 2d 176 (1964); Hahn v. Burke, 430 F.2d 100, 102 (7th Cir.1970), cert. denied, 402 U.S. 933, 91 S. Ct. 1522, 28 L. Ed. 2d 868 (1971) (probationary status seems to satisfy `in custody' requirement). C.f. Helm v. Jago, 588 F.2d 1180, 1181 (6th Cir.1979) (recognizing court's jurisdiction over defendant while on federal probation); accord Bruno v. Greenlee, 569 F.2d 775, 776-77 (3d Cir. 1978).
See c.f. Jones, 371 U.S. at 241-42, 83 S. Ct. 373 (prisoner on parole was still `in custody' under his unexpired sentence because release from his physical confinement was conditioned upon conducting and refraining from certain activities); Hensley v. Municipal Court, 411 U.S. 345, 351, 93 S. Ct. 1571, 36 L. Ed. 2d 294 (1973) (defendant released on his own recognizance pending sentencing is `in custody').
In the case before the Court, Petitioner is challenging his November 15, 2002 conviction from the state circuit court, wherein he received a suspended sentence and was placed on probation for five years. (Doc. # 5-8:1-2, filed June 18, 2004.) Thereafter, on or about April 19, 2004, Petitioner applied for a writ of habeas *953 as corpus with this Court. (Doc. # 1.) Relying on Circuits who have decided this issue, the Court finds that the statutory "in custody" requirement is satisfied by virtue of Petitioner's suspended sentence and probation, at the time he filed his petition.
B. Ineffective Assistance of Counsel
The Sixth Amendment, as applied through the Fourteenth, guarantees effective assistance of counsel to criminal defendants in state court. McMann v. Richardson, 397 U.S. 759, 771 n. 14, 90 S. Ct. 1441, 25 L. Ed. 2d 763 (1970); Powell v. State of Ala., 287 U.S. 45, 67-69, 53 S. Ct. 55, 77 L. Ed. 158 (1932).
The Court in Strickland v. Washington, 466 U.S. 668, 686, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984) propounded the "benchmark" for judging claims of ineffective counsel in federal habeas proceedings. The Court noted that ineffective counsel must rise to the level of "conduct so undermining [sic] the proper functioning of the adversarial process that the trial cannot be relied on as having produced a just result." Id. at 686, 104 S. Ct. 2052. Therefore, although in hindsight a particular act or omission may seem unreasonable, courts must give great deference to counsel's performance when considering the inherent nuances and difficulties attributed to trial strategy. Id. at 689-91, 104 S. Ct. 2052. Despite this strong presumption of effectiveness, in every case where a breakdown is alleged by the defendant, the court should assess the reliability of the outcome. Id. at 696, 104 S. Ct. 2052. In so doing, before a court may conclude that defense counsel fell below the standard mandated by the Sixth Amendment, a defendant must first prove both (i) deficient performance and (ii) prejudice. Id. at 687-88, 104 S. Ct. 2052; See also Forest v. Delo, 52 F.3d 716, 720 (8th Cir.1995).
A constitutionally deficient performance is one which falls "outside the wide range of professionally competent assistance." Strickland, 466 U.S. at 690, 104 S. Ct. 2052. A defendant is prejudiced by deficient performance if "there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different." Id. at 694, 104 S. Ct. 2052. In the context of a guilty plea, a defendant must show that, but for the errors, the defendant would not have pled guilty and would have insisted on going to trial. Forest, 52 F.3d at 721 (citing Hill v. Lockhart, 474 U.S. 52, 58-59, 106 S. Ct. 366, 88 L. Ed. 2d 203 (1985)); see also Strickland at 693, 104 S. Ct. 2052 ("It is not enough for the defendant to show that the errors had some conceivable effect on the outcome of the proceeding. Virtually every act or omission of counsel would meet that test.").
In reviewing the circuit court's conclusion that Counsel rendered effective assistance, this Court notes that both the performance and prejudice components of the ineffectiveness inquiry are mixed questions of law and fact, subject to the deference requirement of Section 2254. Strickland, 466 U.S. at 697-98, 104 S. Ct. 2052; 28 U.S.C. § 2254(d) (habeas application shall not be granted unless adjudication of the state claim (i) resulted in a decision contrary to, or involving an unreasonable application of, clearly established law, as determined by the Supreme Court; or (ii) resulted in a decision that was based on an unreasonable determination of the facts in light of the evidence presented in the state court proceeding) (quotations omitted); § 2254(e)(1) (factual determinations by the state court are presumed correct, unless proven otherwise by clear and convincing evidence).
The Court agrees with Petitioner's stance in that it is desirable for state and *954 federal counsel to advise clients of all the consequences of pleading guilty, and that deportation is an admittedly harsh consequence thereof. Afterall, "[f]or a resident alien assessing the effects of a conviction, deportation is second only to imprisonment in terms of importance." Immigration and Naturalization Service v. St. Cyr, 533 U.S. 289, 322, 121 S. Ct. 2271, 150 L. Ed. 2d 347 (2001). Therefore, if a defendant may face deportation as a result of a conviction, defense counsel "should fully advise the defendant of these consequences." Id. n. 48 (citing ABA STANDARDS FOR CRIMINAL JUSTICE, 14-3.2 cmt. at 75 (1982)). However, this Court differentiates between "should" and "must."
Notwithstanding the desirability of the most effective counsel, the purpose of the Sixth Amendment is not to prevent professional errors or misjudgments, or improve the quality of legal representation; rather, it is to prevent prejudice of those errors on the judgement or outcome of the proceeding, and to ensure a fair trial. Strickland, 466 U.S. at 689, 692, 104 S. Ct. 2052. In that way, the above-stated purpose limits the inquiry of this Court to whether Counsel's assistance was reasonable, considering all the circumstances. Although Petitioner asks this Court to require criminal defense attorneys representing aliens to advise of the immigration consequences of entering into a plea agreement, the prevailing norms cited by Petitioner are "only guides," and no court has entered into particularized mandates as to attorney representation. See id. at 688-89, 104 S. Ct. 2052 ("Any such set of rules would interfere with the constitutionally protected independence of counsel and restrict the wide latitude counsel must have in making tactical decisions.").
Petitioner argues that Counsel was ineffective in that he did not inform Petitioner that pleading guilty to a Class C felony would adversely affect his immigration status. (Doc. # 1-1:5.) Additionally, Petitioner claims he entered the guilty plea on the advice of Counsel, and only did so upon information and belief that the resulting suspended sentence would be expunged from his record after his period of probation. (Doc. # 1-1:6.) Petitioner further advances that effective counsel would have known about the consequences of a plea, and would not have allowed or advised Petitioner to take such action; and further that, given the fact that this was Petitioner's first felony, effective counsel should have been able to negotiate the charge down to a misdemeanor, and/or have had Petitioner pay a fine to avoid the plea and consequences thereof. (Doc. # 1-1:5-7.)
This Court is not as confident as Petitioner that, if he would have been informed of the immigration consequences, he would never have entered the plea, leading to "vastly" different results. Petitioner has not stated that any facts which, were unknown to him at the time of his decision to plead guilty and, would have made going to trial a more appealing alternative. See Hill, 474 U.S. at 59, 106 S. Ct. 366; Beans v. Black, 757 F.2d 933, 936 (8th Cir.1985), cert. denied, 474 U.S. 979, 106 S. Ct. 381, 88 L. Ed. 2d 334 (1985) (prejudice requirement not satisfied where petitioner failed to demonstrate what information counsel could have uncovered that would have changed outcome). Although the immigration consequences would not have been desirable to Petitioner, the available alternatives were not of greater appeal to a point which could reasonably lead this Court to conclude that, even if Petitioner knew all the consequences, the proceedings would have been different.
First, going to trial would not have ensured that Petitioner would not have been convicted and subject to deportation, which is presumably the reason he entered the plea in the first place. Also, the trial *955 record shows that when the circuit court explained Petitioner's right to a trial, he remarked that he did not have any witnesses, implying his disinterest in the alternative. (Doc. # 1-3:11.) Additionally, aside from Petitioner's assertion that Counsel should have been able to negotiate the charge down to a misdemeanor or should have had Petitioner pay a fine, there is no evidence in the record that Counsel would have been able to so negotiate. In fact, the trial record evidences that the prosecutor's recommendation for sentencing was not in the lowest applicable range, which she justified by reference to Petitioner's criminal history and the underlying circumstances; e.g., "we believe the Defendant has been convicted of assault in the third degree and was in a special neighborhood where drugs are not tolerated ..." (Doc. # 1-3:12-13.) Given the prosecutor's statements and recommendation, it is not apparent to this Court that Counsel, effective or not, could have negotiated the charge down to something that would have been more appealing than the plea. Furthermore, although Petitioner alleges that Counsel deliberately misled and misinformed Petitioner, there is no evidence before the Court that evidences such affirmative statements from Counsel. (Doc. # 1-1:5.)
Accordingly, Counsel's failure to inform Petitioner that pleading guilty would result in his deportation, and otherwise advising Petitioner to plead guilty, does not rise to the level of constitutionally ineffective assistance, as required by Strickland. See Hill, 474 U.S. at 60, 106 S. Ct. 366 (No finding of prejudice where habeas petition did not allege any special circumstances that might support the conclusion that he placed particular emphasis on the information not provided by counsel; or that, but for counsel's failure to inform him of the consequences of his plea, petitioner would not have pled guilty and would have insisted on going to trial).
Although the Eighth Circuit has not addressed the issue at bar, other Circuits have concluded that deportation is a collateral consequence of the criminal process, and that failure to advise a defendant of potential deportation does not amount to ineffective assistance of counsel. El-Nobani v. United States, 287 F.3d 417, 421 (6th Cir.2002); U.S. v. Jimenez, No. 05-C-1161, 2005 WL 1503123, at *4-5 (N.D.Ill. June 24, 2005); United States v. Fry, 322 F.3d 1198, 1200 (9th Cir.2003); United States v. Gonzalez, 202 F.3d 20, 25 (1st Cir.2000); United States v. Banda, 1 F.3d 354, 356 (5th Cir.1993); Varela v. Kaiser, 976 F.2d 1357, 1358 (10th Cir.1992), cert. denied, 507 U.S. 1039, 113 S. Ct. 1869, 123 L. Ed. 2d 489 (1993); United States v. Del Rosario, 902 F.2d 55, 59 (D.C.Cir.1990), cert. denied, 498 U.S. 942, 111 S. Ct. 352, 112 L. Ed. 2d 316 (1990); Santos v. Kolb, 880 F.2d 941, 945 (7th Cir.1989), cert. denied, 493 U.S. 1059, 110 S. Ct. 873, 107 L. Ed. 2d 956 (1990); United States v. Yearwood, 863 F.2d 6, 7-8 (4th Cir.1988); United States v. Campbell, 778 F.2d 764, 769 (11th Cir.1985); U.S. v. Gavilan, 761 F.2d 226, 229 (5th Cir.1985) (counsel not deemed ineffective where, despite counsel's failure to advise, petitioner knew bad conduct could lead to deportation, and facts did not demonstrate that counsel affirmatively misrepresented or that petitioner would have pled differently if he would have been informed of the collateral consequences).
But see United States v. Kwan, 407 F.3d 1005, 1017-18 (9th Cir.2005) (petitioner established claim of ineffective assistance of counsel where facts demonstrated that petitioner could have gone to trial or renegotiated plea agreement to avoid deportation, could have pled guilty to a lesser charge, or the parties could have stipulated to a sentence of less than one year); c.f. Strader v. Garrison, 611 F.2d 61, 63 (4th Cir. 1979).
*956 II. TEMPORARY RESTRAINING ORDER/ INJUNCTION
This Court granted Petitioner's motion for a temporary restraining order, and the resulting injunction, so as to afford Petitioner an opportunity to exhaust the Missouri state court review of his denied motions to withdraw his guilty plea and subsequent applications for a writ of mandamus, and to continue his requests with the immigration courts to review and/or reconsider the merits of his order of deportation. At present, Petitioner has exhausted his claims with the state courts, and this Court lacks jurisdiction to grant Petitioner equitable relief premised solely on his request for a review of the deportation order.
Accordingly, this Court hereby denies Petitioner's application for a writ of habeas corpus (Doc. # 1-1) and vacates the order (Doc. # 3:3, filed April 19, 2004) imposing a temporary restraining order. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2358541/ | 241 P.3d 540 (2010)
In re the MARRIAGE OF Angela HALL, Petitioner and
Bradley Hall, Respondent.
No. 10SA161.
Supreme Court of Colorado, En Banc.
October 25, 2010.
*541 Gradisar, Trechter, Ripperger & Roth, David A. Roth, Pueblo, Colorado, Attorneys for Petitioner.
Ted J. Malouff, Pueblo, Colorado, Attorney for Respondent.
Justice BENDER delivered the Opinion of the Court.
I. Introduction
In this original proceeding, the petitioner is the wife, and also the mother of a two-year-old son, in a dissolution proceeding pending in the trial court. The trial court denied her request for an allocation of parental responsibilities ("APR") evaluation by a licensed mental health professional under section 14-10-127, C.R.S. (2010). The court reasoned that it could decide the issue of petitioner's out of state relocation with her son without an APR evaluation based upon the appropriate statutory factors and case law. She argued to us that the trial court abused its discretion by refusing to order this evaluation, and we issued a rule to show cause, which we now make absolute.
Section 14-10-127(1)(a)(I) mandates that "in all proceedings concerning the allocation of parental responsibilities with respect to a child, the court shall upon motion of either party" order a licensed professional to perform an evaluation. By statute and our precedent, potential relocation of a parent requires a trial court to allocate parental decision-making and parenting time. See § 14-10-124(1.5)(a)(VIII), C.R.S. (2010); Spahmer v. Gullette, 113 P.3d 158, 162 (Colo.2005). Because relocation involves the determination of parental decision-making and parental time, a trial court must order an APR evaluation requested by either party when one party seeks to relocate out of state with the child. Hence, we hold that the trial court failed to comply with the mandatory requirement of section 14-10-127(1)(a)(I), and in so doing, abused its discretion. We now make the rule to show cause absolute and remand the case to the trial court for proceedings consistent with this opinion.
II.
In this action for dissolution, the petitioner sought the allocation of parental responsibilities for the parties' young son. The parties, through mediation, agreed to temporary orders and to permanently share parental decision-making responsibilities, but they did not agree on a permanent allocation of parenting time. In mediation, it became apparent that petitioner wanted to move out of state with their son. Petitioner then filed a motion for an evaluation by a licensed mental health professional under section 14-10-127(1)(a)(I). The trial court denied petitioner's motion, stating that it could decide the issue of her relocation with her son without an APR evaluation based upon the appropriate statutory factors and case law.
Petitioner then sought a writ of mandamus. She argued that the trial court abused its discretion because section 14-10-127(1)(a)(I) mandates that in all proceedings concerning the allocation of parental responsibilities, the trial court shall order an evaluation upon motion of either party. We issued an order and rule to show cause.
*542 III.
We first address whether an original proceeding is proper to review the trial court order challenged in this case. This court may exercise original jurisdiction under C.A.R. 21 where a trial court abused its discretion in exercising its functions and appeal is not an adequate remedy. Todd v. Bear Valley Vill. Apartments, 980 P.2d 973, 975 (Colo.1999) (citing Kourlis v. Dist. Court, 930 P.2d 1329, 1330 n. 1 (Colo.1997)). In this particular case, the allocation of parenting time and the determination of whether petitioner may move out of state with her very young son are important matters that will significantly impact the child's life. See Spahmer, 113 P.3d at 163 (noting that the creation and maintenance of a stable family situation for the child are two primary goals of the allocation of parental responsibilities). Under these circumstances, appeal is not an adequate remedy, and we find it appropriate to exercise our original jurisdiction.
IV.
We turn next to the question of whether the trial court abused its discretion when it denied petitioner's motion for an evaluation pursuant to section 14-10-127(1)(a)(I). Petitioner argues as follows: section 14-10-127(1)(a)(I) mandates that the trial court order an APR evaluation upon motion of a party in all determinations of parental responsibilities; and, because the issue of petitioner's proposed relocation is part of the allocation of parental responsibilities, the trial court was obligated to grant her motion. In denying the motion, the trial court ruled that it could decide the issue of petitioner's relocation without an evaluation based upon the case law and statutory factors for a determination of parenting time. Respondent agrees with the trial court's reasoning and argues two additional grounds: (1) section 14-10-127(1)(a)(I) applies only to determinations of decision-making and parenting time and does not apply to the issue of whether petitioner can relocate with their son; and (2) the trial court properly denied the motion because the parties lack sufficient funds to pay for an evaluation.[1] Upon review, we agree with petitioner that the trial court lacked discretion to deny her motion.
Section 14-10-127(1)(a)(I) provides for an evaluation by a qualified professional upon proper motion of either party in all determinations to allocate parental responsibilities. The statute states in relevant part:
In all proceedings concerning the allocation of parental responsibilities with respect to a child, the court shall, upon motion of either party or upon its own motion, order . . . a licensed mental health professional . . . to perform an evaluation and file a written report concerning the disputed issues relating to the allocation of parental responsibilities for the child, unless such motion by either party is made for the purpose of delaying the proceedings.
§ 14-10-127(1)(a)(I) (emphasis added).
We have held, based on the plain language of the statute, that section 14-10-127(1)(a)(I) obligates a trial court presiding over a dispute concerning the allocation of parental responsibilities to order an evaluation on a party's motion absent a finding that it was made for the purpose of delay. Hernandez v. Dist. Court, 814 P.2d 379, 381 (Colo.1991). Because the statute is mandatory, a trial court has no discretion to deny a proper motion for evaluation. Id.
*543 By its terms, section 14-10-127(1)(a)(I) applies to "all proceedings concerning the allocation of parental responsibilities." Both our statutes and our precedent dictate that, to allocate parenting time as part of the allocation of parental responsibilities, a court must consider a parent's potential relocation out of state. The General Assembly defines the allocation of parental responsibilities as including the determinations of both parenting time and decision-making responsibilities. § 14-10-124(1.5) ("The court shall determine the allocation of parental responsibilities, including parenting time and decision-making responsibilities, in accordance with the best interests of the child . . . ."); see Spahmer, 113 P.3d at 162 (interpreting the allocation of parental responsibilities to include the determination of parenting time).
Thus, section 14-10-127(1)(a)(I) applies to all disputed cases in which the trial court must allocate parenting time or decision-making responsibility. See In re Marriage of Kasten, 814 P.2d 11, 12 (Colo.App. 1991) (concluding that the statute applies to the allocation of parenting time). A court must take into account the "physical proximity of the parties to each other" to allocate parenting time, § 14-10-124(1.5)(a)(VIII), and we consider the potential relocation of a parent to be a fundamental part of a parenting time determination. See Spahmer, 113 P.3d at 164 ("[T]he plain language of subsection 14-10-124(1.5) indicates that a trial court must accept the location in which each party intends to live, and allocate parental responsibilities, including parenting time, accordingly. [Thus] we encourage parties . . . to submit to the court their proposed plans to move. . . ."). Hence, we conclude that section 14-10-127(1)(a)(I) applies to both the determination of parenting time and the allocation of parental decision-making when a trial court is asked to rule on the intended relocation of one of the parties.
Consequently, because relocation involves the determination of parental decision-making and parental time, a trial court must order an APR evaluation when requested by either party where one party seeks to relocate. The trial court may deny such a motion only if it finds that the motion was made for the purpose of delay.
Applying this holding here, the trial court made no finding of delay, and therefore it abused its discretion when it denied the petitioner's request for an APR evaluation.
V. Conclusion
For the reasons stated above, we make the rule to show cause absolute, and we remand the case to the trial court for proceedings consistent with this opinion.
NOTES
[1] We find it unnecessary to address the respondent's second argument. The statute provides that the moving party "shall . . . deposit a reasonable sum with the court to pay for the cost of the evaluation" and that the court "may order the reasonable charge for such evaluation and report to be assessed as costs between the parties." § 14-10-127(1)(a)(I). We note that, although raised by respondent, the trial court did not rule on this issue. See People v. Salazar, 964 P.2d 502, 507 (Colo.1998) ("It is axiomatic that issues not raised in or decided by a lower court will not be addressed for the first time on appeal."); Adams Reload Co. v. Int'l Profit Assocs., Inc., 143 P.3d 1056, 1060 (Colo.App.2005) ("Arguments not presented to or ruled on by the trial court cannot be raised for the first time on appeal."). In any event, petitioner stated in her motion that she would pay for the evaluation's initial cost. Therefore, we do not consider this argument. See Hernandez v. Dist. Court, 814 P.2d 379, 381 (Colo.1991) (holding that the court has discretion to determine the amount of the deposit and to assess the cost of the evaluation between the parties based on their ability to pay). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2358611/ | (2008)
Darrell HINSON, Plaintiff,
v.
CHELSEA INDUSTRIES, INC., Defendant.
Civil Action No. 2:05cv971-ID.
United States District Court, M.D. Alabama, Northern Division.
February 14, 2008.
MEMORANDUM OPINION AND ORDER
IRA DEMENT, Senior District Judge.
I. INTRODUCTION
In this lawsuit, Plaintiff Darrell Hinson ("Plaintiff), an African-American male, alleges that Defendant Chelsea Industries, Inc., ("Defendant") terminated his employment based upon his race. Plaintiff brings his claims pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e-2000e-17 ("Title VII"), and 42 U.S.C. § 1981 ("§ 1981"). Before the court are three motions: (1) Defendant's motion for summary judgment (Doc. No. 35); (2) Defendant's motion to strike seven paragraphs of Plaintiffs affidavit which was submitted in opposition to the summary judgment motion (Doc. No. 47); and (3) Plaintiffs motion for leave to file a surreply. (Doc. No. 49.) The parties have submitted briefs and evidence in support of and in opposition to the motion for summary judgment. (Doc. Nos. 36, 42, 48.) Plaintiff "concedes" that Defendant's motion to strike is due to be granted in part, but otherwise objects to the motion to strike. (Doc. No. 53.) Defendant objects to Plaintiffs motion for leave to a file surreply. (Doc. No. 52.) After careful consideration of the arguments of counsel, the relevant law, and the record as a whole, the court finds that Defendant's motion for summary judgment is due to be granted, that Defendant's motion to strike is due to be granted in part and denied as moot in part, and that Plaintiffs motion for leave to file a surreply is due to be denied.
II. JURISDICTION AND VENUE
The court properly exercises subject matter jurisdiction over this action, pursuant to 28 U.S.C. § 1331 (federal question jurisdiction) and 28 U.S.C. § 1343 (civil rights jurisdiction). Personal jurisdiction and venue are adequately pleaded and not contested.
III. STANDARD OF REVIEW
A court considering a motion for summary judgment must construe the evidence and make factual inferences in the light most favorable to the nonmoving party. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). At the summary judgment juncture, the court does not "weigh the evidence and determine the truth of the matter," but solely "determine[s] whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citations omitted).
Summary judgment is entered only if it is shown "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The movant can meet this burden by presenting evidence showing that there is no dispute of material fact or by showing that the nonmoving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Id. at 322-23, 325, 106 S.Ct. 2548. The burden then shifts to the nonmoving party, which "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Summary judgment will not be entered unless the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party. See id. at 587, 106 S.Ct. 1348.
IV. FACTS[1]
Plaintiff, an African-American male, began work for Defendant as a full-time local truck driver on March 18, 2002. He was fired on April 20, 2004. The alleged infractions which resulted in Plaintiffs termination occurred on April 11, 2004, and are as follows.
Plaintiff was working the night shift and was preparing to haul freight on a tractortrailer truck from one of Defendant's plant locations to the warehouse. (PI. Aff. ¶ 3 (Doc. No. 42-2).) Defendant's safety procedures required all drivers to "(1) go inside [the trailer] and pull the dock plate[] and (2) then place safety chains across the dock doors before departing the loading dock." (Barton Aff. ¶ 12)[2]; (Pl.Aff.¶ 4); (Def. Reply at 7-8 (Doc. No. 48).) At the plant location, the driver can push a button and a mechanical device will lift the dock plate. At the warehouse location, a forklift driver must lift the dock plate. (PI. Aff.¶¶ 13-5.)
Plaintiff pulled the dock plate connected to his trailer and placed the safety chains across the dock doors. Next, he went outside to pull the trailer. There were two tractor-trailer rigs sitting side by side, one of which was Plaintiffs, but Plaintiff "accidentally" entered the wrong truck cab. (Id. ¶¶ 6-7.) Plaintiff does not dispute that the dock plate had not been pulled and the safety chains had not been secured for the trailer connected to the tractor cab he mistakenly entered and drove. Plaintiff, however, says that he had no way of knowing that the safety chains had not been secured because Defendant's alternating red and green safety light was broken and not functioning. The safety light changes from red to green when the safety chain has been secured so as to notify the driver that it is safe to drive away from loading dock. (Id. ¶ 10.)
Plaintiff pulled the tractor-trailer slightly away from the dock in order to give him enough room to close the trailer door. When Plaintiff went to close the trailer door, he discovered that a forklift and its operator were in the trailer. Plaintiff backed up the trailer to the dock. The forklift operator was not injured, and the forklift was not damaged. (Id. ¶¶ 9, 11, 12.)
Defendant found that the explanation given by Plaintiff that he mistakenly drove the wrong truck, after having followed the safety procedures as to his truck, compounded, not alleviated, "the problem." (Ex. E to Doc. No. 36.) From Defendant's vantage point, Plaintiff violated company safety procedures, set out above, because he drove the tractor-trailer at issue away from the loading dock before pulling the dock plate and before placing the safety chains across the dock doors. As a result of Plaintiffs actions, Plaintiff drove a truck while a forklift and its operator were inside the trailer, thereby placing the operator at risk for serious injury or death. Plaintiff also could have caused significant damage to Defendant's forklift and facilities. Furthermore, Defendant concluded that Plaintiff violated safety procedures by operating the trailer once he learned that the forklift and its operator were inside the trailer. (Barton Aff. ¶¶ 11-15.)
As a result of Plaintiffs actions, Plaintiff was suspended on April 14 while the incident was investigated. (Id. ¶ 16.) The "Personnel Documentation for Employee Progressive Disciplinary Action," a written document which Plaintiff received, states:
On 4/11/2004, you drove your truck and pulled a trailer away from a loading dock while a forklift driver was inside your trailer. You violated several safety procedures that required you to check your trailer before driving away from the loading dock. This is a serious safety violation that could have severely injured the forklift driver and/or destroyed a Webster forklift. Therefore, you are being suspended while this incident is under investigation.
(Ex. C to Doc. No. 36.)
On April 20, 2004, Defendant terminated Plaintiff, concluding that he violated the safety procedures outlined above. (Barton Aff. ¶ 17.) The "Personnel Documentation for Employee Progressive Discipline Action" memorializes in writing Defendant's termination decision as follows:
On 4/11/2004, you pulled a trailer away from the loading dock without following the prescribed safety procedures. This action was compounded by the fact that a Webster employee in the process of loading the trailer was actually inside the trailer when you pulled it away. Further, when you discovered that an employee was inside the trailer, you returned it to the loading dock with the forklift driver still inside. The fact that it was not the trailer you were supposed to pull away in the first place just adds to the problem. You have committed several serious safety violations[,] the result of which could have been serious injury or death, not to mention a destroyed forklift. Therefore, you were suspended while this incident was under investigation.
After completing our investigation, we have concluded that based on the seriousness of these safety violations, your employment with Webster Industries has been terminated.
(Ex. E to Doc. No. 36.) After Plaintiff was terminated, Defendant internally posted Plaintiffs position and awarded the position to an African-American male. (Barton Aff. ¶¶ 18-19.)
Plaintiff contends that Paul Walden ("Walden"), also a local truck driver for Defendant, is a similarly-situated Caucasian employee who committed similar infractions, but who was not fired. Walden is a Caucasian male and began his employment with Defendant on March 19, 2003. (Id. ¶ 20.) A discussion of the admissible facts surrounding Walden's alleged infractions is helpful at this point. The alleged infractions can be placed into two categories.
The first category pertains to Walden's traffic accidents in 2003. Relying on paragraph 20 in his affidavit and two Alabama Uniform Traffic Accident Reports, Plaintiff says that on June 2, 2003, and August 5, 2003, Walden was operating a truck owned by Defendant and was involved in accidents on public roadways while transporting freight between Defendant's warehouse and plant locations. (Doc. No. 42 at 2-4.) Plaintiff also states that on both occasions, as reported in the Alabama Uniform Traffic Accident Reports, witnesses said that Walden was at fault. (Id.) Furthermore, relying on paragraph 21 of his affidavit, Plaintiff states that Walden received a two-month suspension as a result of his role in these two accidents. (Id. at 4.)
Defendant submits evidence, in the form of Barton's affidavit, that disciplinary procedures for traffic accidents are grounded in its "fleet safety policy and are entirely different [from] [its] procedures for handling safety violations in the loading and unloading process." (Barton Aff. ¶ 29.) Defendant also moves to strike paragraphs 20 and 21 of Plaintiffs affidavit, arguing that these paragraphs are lacking personal knowledge and are hearsay. (Doc. No. 47 at 4.) Plaintiff "concedes," and the court finds, that paragraph 21 is due to be stricken. (Doc. No. 53 at 2.) Consequently, there are no admissible facts in the record specifying the type of discipline, if any, imposed upon Walden. Construing the inferences in Plaintiffs favor, however, the court will assume that any discipline fell short of termination, given that Walden's traffic accidents occurred in 2003, and, as discussed below, Walden remained in Defendant's employ in 2004.
Turning to paragraph 20 of Plaintiffs affidavit which also is subject to the motion to strike, the court finds that this paragraph is hearsay. Plaintiff essentially agrees by his silence, arguing instead that paragraph 20 is cumulative because he also has submitted the accident reports and these reports fall within the public records exception to the hearsay rule. See Fed. R.Evid. 803(8); (Doc. No. 53 at 3.) The court, though, cannot agree in full with Plaintiffs argument. For instance, in the second sentence of paragraph 20, Plaintiff states that Walden was at fault in both of the accidents, but to reach that conclusion Plaintiff relies on the eyewitnesses' statements, as documented in the accident reports, not on any factual finding made by the police officer who did not charge Walden with committing any offense See Colony Ins. Co. v. Griffin, No. 3:06cv555-MEF, 2007 WL 4181738, at *4-5 (M.D.Ala. 2007) (Fuller, Chief J.) (assuming without deciding that police records were admissible, witness statements in those records would only be admissible if they too fell within a hearsay exception and rejecting plaintiffs argument (in circumstances similar to this case) that the witnesses' statements were not excepted from the hearsay rule under Rule 803(8)(C)). Nonetheless, in the context of this case, the court can assume, without deciding, that the accident reports otherwise are admissible, because as discussed in the next section, the court finds that Plaintiff has failed to demonstrate that his alleged misconduct and Walden's traffic accidents are comparable misconduct under the governing legal standards. The motion to strike, thus, is due to be granted as to the second sentence of paragraph 20, but as to the first sentence of paragraph 20, the motion is due to be denied as moot.
The second category of Walden's conduct upon which Plaintiff relies revolves around an incident in 2004 at the loading dock. In an affidavit, Plaintiff attests that on one unspecified occasion, Walden "pulled the truck away from the warehouse dock while the forklift was actively moving cargo into the trailer. This caused the forklift to fall over and the driver to go flying. The forklift was badly damaged. The details of this event were common knowledge" at the workplace. (Pl. Aff.¶ 18.) Defendant moves the court to strike paragraph 18 of Plaintiffs affidavit, arguing in part that it constitutes "impermissible hearsay." (Doc. No. 47 at 4.) Plaintiff does not challenge Defendant's hearsay argument, stating that Defendant "may properly assert that ¶ 18 is based on hearsay"; however, Plaintiff contends that his concession is inconsequential because Defendant has admitted "that a similar accident involving Paul Walden did in fact occur at Defendant's warehouse."[3] (Doc. No. 53 at 3.) The court finds, as Plaintiff essentially concedes, that paragraph 18 is due to be stricken. Plaintiffs affidavit does not set forth facts establishing that Plaintiff "was in a physical position to see, hear, or otherwise perceive the matters to which the testimony relates." Johnson v. Scotty's, Inc., 119 F.Supp.2d 1276, 1281 (M.D.Fla.2000). The statements also are hearsay because Plaintiff is attempting to offer the statements, which obviously were relayed to him by third parties, see Fed. R.Evid. 801(c), for the truth of the matter asserted, and Plaintiff has not demonstrated that the statements fall within an exception to the hearsay rule. See Macuba v. Deboer, 193 F.3d 1316, 1322-25 (11th Cir.1999) (holding that district court erred in considering "rank hearsay" in ruling on summary judgment motion); Fed.R.Civ.P. 56(e). The court, therefore, has not considered paragraph 18. The court turns to the admissible facts submitted by Defendant.
On an unspecified day in 2004, Walden pulled his trailer away from the loading dock while a forklift operator was inside. Barton and Joe Thomas ("Thomas"), a Kenco Logistics supervisor, conducted an investigation and concluded that Walden had pulled the dock plate and secured the chains prior to pulling his trailer away from the loading dock and that, thereafter, a Kenco Logistics employee (Sedrick Bowman) improperly had entered Walden's trailer without' permission from Defendant, without knowledge of Walden, and without the authority of Kenco Logistics.[4] (Barton Aff. ¶¶ 25-27); (Joe Thomas Aff. ¶¶ 3-8 (Doc. No. 48-2).)
It is undisputed that Walden was not disciplined as result of this incident. (See Doc. No. 48 at 16); (Barton Aff. ¶ 27.) Barton attests that, "to [his] knowledge and according to [his] review of [Walden's] personnel file, Walden has never failed to pull the dock plate and place the safety chains on the dock doors before pulling away from the loading dock." (Barton Aff. ¶ 21.) Walden also "has never knowingly driven his truck with an employee on a forklift inside his trailer." (Id.)
Seeking relief for an allegedly discriminatory termination, Plaintiff filed the instant lawsuit on October 11, 2005, against his former employer, alleging violations of Title VII and § 1981. Plaintiff filed an amended complaint which, other than correcting the name of Defendant, is substantially identical to the original complaint.[5] (Am.Compl.(Doc. No. 33).) Plaintiff requests a declaratory judgment, a permanent injunction, compensatory damages, costs and attorney's fees. (Id. at 6.)
V. DISCUSSION
A. Defendant's Motion to Strike
Plaintiff filed an affidavit in opposition to Defendant's motion for summary judgment. (See Doc. No. 42-2.) As indicated, Defendant filed a motion to strike paragraphs 14, 15, 17, 18, 20, 21 and 22 of Plaintiffs Affidavit. (Doc. No. 47.) Plaintiff "concedes" (Doc. No. 53 at 1-2), and the court finds, that the motion to strike is due to be granted as to paragraphs 14, 17 and 21. Additionally, Defendant's motion to strike paragraph 22 is due to be denied as moot because Plaintiff states that he does not rely on this paragraph of his affidavit in opposing summary judgment. (Id. at 2.) Paragraph 15 of Plaintiffs affidavit in which Plaintiff argues that "[u]nder similar circumstances, Defendant did not fire Paul Walden ... a white track driver" is conclusory and states an impermissible legal conclusion which invades the province of the court. See, e.g., HomeBingo Network, Inc. v. Chayevsky, 428 F.Supp.2d 1232, 1239 (S.D.Ala.2006) ("Another black-letter requirement of affidavits is that they must be rooted in facts, rather than conclusory remarks."). Moreover, in the preceding section, the court discussed and found that Defendant's motion to strike paragraph 18 was well taken and that Defendant's motion to strike paragraph 20 was due to be granted in part and denied as moot in part. Accordingly, overall, the court finds that Defendant's motion to strike is due to be granted in part and denied in part as moot.
B. Defendant's Motion for Summary Judgment
Because this is not a direct evidence case, Plaintiffs Title VII/ § 1981 racial discrimination claims are governed by the familiar McDonnell Douglas burden-shifting framework.[6]McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). In the first McDonnell Douglas phase, the employee must produce evidence sufficient to make out a prima facie case, thus giving rise to a presumption that the employer unlawfully discriminated or retaliated against him in taking the alleged adverse employment action. See St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 506, 113 S.Ct. 2742, 125 L.Ed.2d 407 (1993). To establish a prima facie case of discriminatory discharge, involving an employer's alleged racial animus in disciplining employees for violations of work rules, an employee must show the following: (1) that he is a member of a protected class; (2) that he was qualified for the job; (3) that he suffered an adverse employment action; (4) that he "has engaged either (a) disputedly or (b) admittedly in misconduct similar to persons outside the protected class"; and (5) "that similarly situated nonminority employees (that is, persons outside the protected class) received more favorable treatment."[7]Jones v. Bessemer Carraway Med. Ctr., 137 F.3d 1306, 1311 n. 6 (11th Cir.), modified on other grounds on denial of reh'rg, 151 F.3d 1321 (11th Cir. 1998); Lathem v. Department of Children & Youth Servs., 172 F.3d 786, 792 (11th Cir.1999); Holifield v. Reno, 115 F.3d 1555, 1562 (11th Cir.1997).
Next, the employer must rebut this presumption by producing evidence that the negative employment action was motivated instead by a legitimate, nondiscriminatory reason. St. Mary's Honor Ctr., 509 U.S. at 509, 113 S.Ct. 2742. Finally, to avoid summary judgment, the employee must respond with evidence, which may include previously produced evidence establishing a prima facie case, which would allow a reasonable jury to conclude that the reason given by the employer was not the real reason for the adverse employment decision. See Combs v. Plantation Patterns, Meadowcraft, Inc., 106 F.3d 1519, 1528 (11th Cir.1997); see also Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 143, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).
Attacking Plaintiffs prima facie case, Defendant asserts that Plaintiff has not demonstrated that a similarly-situated employee outside of his protected class engaged in nearly identical conduct.[8] Plaintiff disagrees, asserting that Walden is a proper comparator. For the reasons to follow, the court agrees with Defendant.
Under the similarly-situated requirement of the prima facie case, Plaintiff bears the burden of demonstrating that Walden was "similarly situated in all relevant respects." Holifield, 115 F.3d at 1562. "In determining whether employees are similarly situated ..., it is necessary to consider whether the employees are involved in or accused of the same or similar conduct and are disciplined in different ways." Id. A "similarly-situated" employee is one who "engaged in the same conduct without such differentiating or mitigating circumstances that would distinguish [his] conduct or the employer's treatment of [him] for it." Anderson v. Twitchell-A-Tyco, 76 F.Supp.2d 1279, 1286 (M.D.Ala.1999) (citation omitted). Although Walden need not be identically situated to Plaintiff, the "quantity and quality of [Walden's] misconduct [must] be nearly identical to prevent courts from second-guessing employers' reasonable decisions and confusing apples with oranges."[9]Maniccia v. Brown, 171 F.3d 1364, 1368 (11th Cir.1999); see also Silvera v. Orange County Sch. Bd., 244 F.3d 1253, 1259 (11th Cir.2001). For purposes of the prima facie showing, "[t]he most important factors in the disciplinary context are the nature of the offenses committed and the nature of the punishments imposed." Maniccia, 171 F.3d at 1368.
There is no dispute that Plaintiff and Walden had the same job title and had similar job responsibilities. Walden, like Plaintiff, was employed as a local truck driver for Defendant and was responsible for transporting freight between Defendant's plant and warehouse locations. Plaintiff cites the incident at the loading dock in 2004 and Walden's traffic accidents in 2003 as providing the bases of his argument that Walden engaged in conduct similar to Plaintiff. The court, thus, turns to a discussion of the proposed comparable conduct engaged in by Walden.
Plaintiff argues that in 2004 Walden committed an infraction similar to Plaintiffs because Walden drove a truck and trailer away from a loading dock while a forklift operator was inside the trailer. (Doc. No. 42 at 7.) Plaintiff accurately describes the similarities which exist between Walden's and Plaintiffs conduct, as Plaintiff also drove a truck and trailer away from a loading dock while a forklift operator was inside the trailer. The court finds that Plaintiffs level of comparison, though, is too imprecise under the precedential authorities cited above. The court also finds that the Sixth Circuit's decision in Clayton v. Meijer, Inc., 281 F.3d 605 (6th Cir.2002), is instructive as to the degree of similarity required between Plaintiffs conduct and the proposed comparative conduct.
In Clayton, the plaintiff brought suit under Title VII, arguing that he was terminated from his job as a truck driver on the basis of race. Id. at 607. The district court granted summary judgment in the employer's favor, and the plaintiff appealed. The Sixth Circuit held that the plaintiff failed to identify a non-minority employee who was similar "in all relevant respects" and, thus, failed to establish a prima facie case of discrimination. Id. at 611. The Sixth Circuit recognized that, like the plaintiff, "[a]ll three white coworkers were truck drivers for the defendant[,]" and "[a]ll three admittedly pulled a rig away from a loading dock without insuring that the back doors were closed and that the dock plate had been removed." Id. The court concluded, though, that these similarities were "superficial[]." Id. The court held that there was a crucial distinction between the plaintiffs and his comparator's conduct, namely, that only the plaintiff "seriously injured a coworker[.]" Id. The Sixth Circuit reasoned:
In this case, the employer discharged an African-American employee who had engaged in a serious act of misconduct which resulted in injury to a coworker who was rendered totally disabled. While other white employees may have engaged in the same acts of negligence, the employer is not precluded from considering the harm resulting from the conduct of its employees. In this case, only [the plaintiffs] negligence caused serious injury to a coworker. This is precisely "such differentiating or mitigating circumstance" that distinguishes [the plaintiffs] conduct from those of the three white coworkers. The fact that an employer discharged an African-American employee who seriously injured a coworker, but did not discharge white employees who engaged in the same conduct without injury to fellow employees, does not give rise to an inference of discrimination.
Id. at 612 (internal citation and footnote omitted).
Here, as in Clayton, in making his comparison, Plaintiff omits several critical distinctions. The additional facts, omitted by Plaintiff, are that Defendant cited Plaintiff for failing to pull the dock plate connected to the trailer at issue and to place safety chains across the dock doors prior to pulling the occupied trailer. (Barton Aff. ¶ 11.) The admitted failure of Plaintiff to complete these two safety tasks as to the trailer he actually pulled resulted in Plaintiff driving the trailer away from the dock while a forklift operator was inside the trailer. There, however is no evidence that Walden was accused of committing these same safety violations. The evidence establishes that Walden pulled the dock plate and secured the safety chains as to the trailer which Walden then pulled away from the dock. (Id. ¶¶ 25-27.) There is no evidence that Walden transported the forklift operator in the trailer as a consequence of his failure to adhere to safety procedures, but, rather, the evidence establishes that the forklift operator entered the trailer after Walden had pulled the dock plate and secured the safety chains.[10]
Plaintiff, though, argues that his punishment was too severe because he provided a reasonable justification for his alleged misconduct: he merely made a mistake by getting into the wrong truck and once in the wrong truck there was no way for him to know that the dock plate had not been pulled and the chains had not been secured on that trailer because Defendant's safety lights had malfunctioned. (See Doc. No. 42 at 7-8.) Plaintiffs argument misses the mark. To hurdle the similarly-situated prong of the prima facie case, Plaintiff must do more than offer an excuse. Cf. Jones, 137 F.3d at 1311 n. 6 ("[N]o plaintiff can make out a prima facie case by showing just that she belongs to a protected class and that she did not violate her employer's work rule."). Plaintiff "must also point to someone similarly situated (but outside the protected class) who disputed a violation of the rule and who was, in fact, treated better." Id. Plaintiff, though, has not identified a similarly-situated Caucasian local truck driver who, after pulling the dock plate and securing the chains of his assigned trailer, claimed that he mistakenly entered the wrong tractor-trailer for which these safety procedures had not been performed and unknowingly pulled the trailer away from a dock with a forklift and its operator inside, but who was not fired.
The end result may have been the same in that forklift operators were inside the trailers when Walden and Plaintiff pulled the trailers away from the loading dock. Unlike Walden, however, Plaintiff failed to pull the dock plate and secure the chains on the trailer at issue, and the court finds that this conduct mistaken or not presents a "`differentiating ... circumstance'" which Defendant properly could consider and which materially distinguishes Plaintiffs conduct from Walden's. Clayton, 281 F.3d at 612. Plaintiff also has not presented any evidence that, like Plaintiff, Walden drove the trailer after learning that the forklift operator was inside, additional conduct which Defendant found warranted termination and yet another factor which distinguishes Walden's conduct from Plaintiffs.
Plaintiff also argues that Walden's 2003 traffic accidents on public roads, as documented in the Uniform Traffic Accident Reports, are "similar to" Plaintiffs "accident at the loading dock." (Doc. No. 42 at 6.) Plaintiff says that Defendant's local truck drivers are required not only to "pull trucks away from the docks," but also to "haul freight on public roads between the plant and warehouse," and that compliance with "procedures and regulations" on public roads is just as "important," if not more important, than compliance with procedures and regulations at the loading docks. (Id. at 6-7.) Plaintiff essentially contends that all driving infractions committed by Defendant's local drivers should be treated the same and punished alike, but again the court finds that Plaintiff makes the comparison in terms much too general for purposes of demonstrating nearly identical misconduct. Cf. Richardson v. Newburgh Enlarged City Sch, Dist, 984 F.Supp. 735, 746 (S.D.N.Y.1997) ("The level of generality at which [plaintiff] attempts to compare the various instances of misconduct i.e., `poor judgment' is contrary to case law and would render disparate treatment analysis meaningless."). Above, the court set out what it takes for Plaintiff to show nearly identical conduct. Plaintiffs comparisons to Walden's traffic accidents lack the necessary similarities, even more so than Walden's 2004 incident at the loading dock, and, thus, do not satisfy Plaintiffs burden.[11]
Moreover, Defendant argues that it does not treat all driving improprieties the same (Def. Mem. of Law at 17 (Doc. No. 48)), and the record supports its argument. Defendant has submitted undisputed evidence, in the form of Barton's affidavit, that it has a separate policy called the "fleet safety policy" which applies to traffic accidents and that the disciplinary procedures outlined in that policy are "entirely different" from its procedures for handling safety violations in the loading and unloading process. (Barton Aff. ¶ 29.) Walden's involvement in the two traffic accidents at issue breached a policy different from the policy violated by Plaintiff at the loading dock, and this distinction further illustrates why the misconduct for which Plaintiff was discharged is not nearly identical to Walden's. See Smith v. Wal-Mart Stores (No. 471), 891 F.2d 1177, 1180 (5th Cir.1990) (finding that employees who engage in different violations of company policy are not similarly situated).
In sum, Plaintiff fails to make out a prima facie case of racial discrimination because he has not met his burden of showing that the "quantity and quality" of Walden's conduct was "nearly identical" to his conduct. Maniccia, 171 F.3d at 1368. The fact, therefore, that Defendant fired Plaintiff, but not Walden, does not give rise to an inference of racial discrimination. Unfair discipline, absent any evidence from which racial animosity can be inferred, is not an unlawful employment practice which violates Title VII or § 1981. As the Eleventh Circuit has stated on more than one occasion, an "employer may fire an employee for a good reason, a bad reason, a reason based on erroneous facts, or for no reason at all, as long as its action is not for a discriminatory reason." Abel v. Dubberly, 210 F.3d 1334, 1339 n. 5 (11th Cir.2000) (per curiam) (quoting Nix v. WLCY Radio/Rahall Communications, 738 F.2d 1181, 1187 (11th Cir.1984)). Accordingly, the court finds that Defendant's motion for summary judgment on Plaintiffs wrongful termination claim, brought pursuant to Title VII and § 1981, is due to be granted.[12]
C. Plaintiffs Motion for Leave to File a Surreply
In response to Defendant's motion for summary judgment, Plaintiff submitted an affidavit, stating that Walden was involved in an accident at the loading dock similar to Plaintiffs. (Pl.Aff.¶ 18.) As set out above, Defendant moved to strike paragraph 18 as constituting inadmissible hearsay, and the court granted Defendant's motion to strike this paragraph. In addition to moving to strike paragraph 18, Defendant filed a reply brief and introduced Thomas' affidavit and a second affidavit from Barton to rebut Plaintiffs (hearsay) arguments concerning the incident at the loading dock involving Walden. (Barton Aff. ¶¶ 25-29 (Doc. No. 48-2).) Because the court's briefing order on the summary judgment motion did not permit a surreply (see Order (Doc. No. 38)), Plaintiff filed a motion for leave to submit one. In his proposed surreply, Plaintiff argues that Barton's and Thomas' affidavits are not proper rebuttal evidence. Therein, Plaintiff does not move to strike Barton's and Thomas' affidavits, but rather submits a supplemental affidavit which he says offers an interpretation of Defendant's rebuttal evidence which raises an issue of material fact on his termination claim. The court finds that Plaintiffs motion for leave to file a surreply is due to be denied for at least three reasons.
First, the court finds that the evidence to which Plaintiff objects i.e., Barton's supplemental affidavit and Thomas' affidavit is not new evidence. See Rayon Terrell v. Contra Costa County, 232 Fed. Appx. 626, 629 n. 2 (9th Cir.2007) (reply evidence is not new when employer's reply brief "addressed the same set of facts supplied in [employee's] opposition to the motion but provides the full context to [employee's] selected recitation of the facts"). Second, Defendant submitted Barton's second affidavit and Thomas' affidavit in rebuttal to Plaintiffs statement in paragraph 18 of his affidavit, but, as discussed earlier in this opinion, the court has stricken paragraph 18 as hearsay. Defendant's evidence, therefore, is no longer needed for the purpose for which Defendant offered the affidavits. Because Plaintiff has not submitted any admissible evidence that at the loading dock Walden engaged in conduct nearly identical to Plaintiffs, the court would resolve the summary judgment motion in Defendant's favor even if it had not considered Defendant's supplemental affidavits. See E.E.O.C. v. Go Daddy Software, No. CV-04-02062 PHX (DGC), 2006 WL 1791295, at *10 (D.Ariz. June 27, 2006) (denying motion to strike evidence in reply as moot where court "did not rely on these exhibits in resolving the issues addressed in this order"). Third, assuming that Plaintiff was correct that Barton's supplemental affidavit and Thomas' affidavit constituted new evidence, the court would deny as moot Plaintiffs motion for leave to file a surreply because, even if considered by the court, Plaintiffs supplemental affidavit would not alter the court's conclusion that no triable issues of fact remain as to whether Walden is a proper comparator. See, e.g., supra, footnote 10; Infantino v. Waste Mgmt, Inc., 980 F.Supp. 262, 266 n. 1 (N.D.Ill.1997) (noting that "even if the court were to have ... fully considered the facts argued in plaintiffs surreply, the outcome of the court's ruling on defendants' motion for summary judgment would have been the same").
VI. ORDER
Accordingly, it is CONSIDERED and ORDERED that Defendant Chelsea Industries, Inc.'s motion for summary judgment (Doc. No. 35) be and the same is hereby GRANTED, that Defendant's motion to strike (Doc. No. 47) be and the same is hereby GRANTED in part and DENIED as moot in part, and that Plaintiff Darrell Hinson's motion for leave to file a surreply (Doc. No. 49) be and the same is hereby DENIED.
A final judgment shall be entered separately.
NOTES
[1] The facts are presented in the light most favorable to Plaintiff. When pertinent for purposes of establishing which facts are the summary judgment facts, the court discusses the motion to strike.
[2] Barton was Plaintiff's supervisor. (Barton Aff. ¶ 20 (Doc. No. 36-2).) Barton submitted two affidavits in support of Defendant's summary judgment motion. (See Doc. Nos. 36-2, 48-2.) Barton's second affidavit includes five new paragraphs submitted in rebuttal to Plaintiff's response to the summary judgment motion. (See Barton Aff. ¶¶ 25-29.) Otherwise, the affidavits are the same.
[3] The fact that the court quotes Plaintiff's argument does not mean that the court agrees that the summary judgment facts support the argument. Whether the "accident" was similar under the governing legal standards, a conclusion which Defendant disputes, is discussed later in this opinion
[4] In 2004, Thomas was Bowman's supervisor. (Thomas Aff. ¶¶ 2, 5.) Kenco Logistics contracted with Defendant to assist in the loading and unloading process, and Kenco Logistics, not Defendant, imposed discipline on Bowman. (Barton Aff. ¶¶ 24, 28); (Thomas Aff. ¶¶ 3, 8.)
[5] Plaintiff sued Webster Industries, but Defendant maintained in its answer that Chelsea Industries, Inc., was its proper name. Apparently, Webster Industries is a division of Chelsea Industries.
[6] The McDonnell Douglas analysis applies not only to Title VII claims, but also to § 1981 claims, alleging discriminatory treatment in employment. Turnes v. AmSouth Bank, NA, 36 F.3d 1057, 1060 (11th Cir.1994). Consequently, Plaintiff's Title VII and § 1981 claims rise or fall together.
[7] An employee can circumvent the "similarly situated" prong by demonstrating instead that he was replaced by someone outside of his protected class. See Maynard v. Bd. of Regents, 342 F.3d 1281, 1289 (11th Cir.2003). It is undisputed, however, that Plaintiff's position was filled by another African-American employee; thus, an inference of racial discrimination cannot arise from this act.
[8] All other prima facie elements are not in dispute.
[9] In Burke-Fowler v. Orange County, Florida, the Eleventh Circuit observed that a prior panel "called into question" the "nearly identical" requirement. 447 F.3d 1319, 1323 n. 2 (11th Cir.2006) (citing Alexander v. Fulton County, 207 F.3d 1303, 1334 (11th Cir.2000)). The Eleventh Circuit in Burke-Fowler, however, noted that it was "bound to follow Maniccia's `nearly identical' standard rather than the standard articulated in Alexander because when a later panel decision contradicts an earlier one, the earlier panel decision controls." Id. (citing Walker v. Mortham, 158 F.3d 1177, 1188-89 (11th Cir. 1998)); see also Eggleston v. Bieluch, 203 Fed.Appx. 257, 264 n. 5 (11th Cir.2006) (holding that Burke-Fowler clarified the "confusion in the law of this circuit about the degree of similarity necessary for a valid comparator"). Herein, the court has applied the "nearly identical" standard, but notes that its findings would be the same even under the less stringent standard set forth in Alexander, supra.
[10] In this regard, the court notes that it has reviewed the affidavit submitted by Plaintiff in his proposed surreply, but finds that the affidavit does not create a factual issue as to whether Defendant honestly believed that Walden pulled the dock plate and secured the chains prior to Bowman's entry. There is more discussion on Plaintiff's proposed surreply later in this opinion.
[11] The court also notes that, as discussed in the preceding section, Plaintiff's arguments premised on an assertion that Walden's conduct was more egregious than his because Walden's alleged negligence caused two traffic accidents are based upon inadmissible hearsay.
[12] Even if Plaintiff had established a prima facie case, the court would find, as argued by Defendant, that Defendant's articulated nondiscriminatory reasons for Plaintiff's termination rebut any inference of discrimination presented by a prima facie case and that Plaintiff fails to show a genuine issue of material fact regarding pretext. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2358629/ | 244 P.3d 880 (2010)
239 Or. App. 522
Than EXAMILOTIS and Nicole Examilotis, Petitioners,
v.
DEPARTMENT OF STATE LANDS, Respondent.
700204; A139450.
Court of Appeals of Oregon.
Argued and Submitted January 19, 2010.
Decided December 15, 2010.
*882 Daniel J. Stotter argued the cause for petitioners. With him on the briefs was Irving & Stotter LLP.
Karla H. Ferrall, Assistant Attorney General, argued the cause for respondent. With her on the brief were John R. Kroger, Attorney General, and Jerome Lidz, Solicitor General.
Before WOLLHEIM, Presiding Judge, and SERCOMBE, Judge, and CARSON, Senior Judge.
SERCOMBE, J.
Petitioners seek review of a final order of the director of the Oregon Department of State Lands (DSL) that affirmed the issuance of a fill/removal permit to the Coos County Salmon Trout Enhancement Program Commission (Coos STEP). Coos STEP applied for the permit in conjunction with its proposed plan to move and reconstruct a fish hatchery on Morgan Creek. The issues in this case concern inconsistencies between the statutory standards for issuing a fill/removal permit, ORS 196.825 (2005), amended by Or. Laws 2007, ch. 849, §§ 4, 5; Or. Laws 2009, ch. 342, § 2; Or. Laws 2009, ch. 343, § 20, and the standards set out in a DSL rule, OAR 141-085-0029 (Mar. 27, 2006). Broadly speaking, the statutory standards require an evaluation of the effects of the fill or removal activity, whereas some of the regulatory standards speak to the effects of the "project" as a whole. DSL concluded that the broader scope of the rule exceeded its rulemaking authority and applied the narrower statutory approval criteria to the permit. Petitioners claim that DSL erred in concluding that it lacked authority to broaden the permit standards in the rule and that the agency was bound to apply its own rule to the permit. Petitioners particularly contend that DSL erred in failing to apply two of the rule standards to the "project" as opposed to the fill and removal activities. Petitioners finally assert that one of the findings in the order lacks substantial evidence in the record. For the reasons that follow, we affirm.
I. FACTS
The relevant facts, as found by the director, are as follows. In 1982, Coos STEP, through the Oregon Department of Fish and Wildlife (ODFW), began operating a fish hatchery on Priorly Creek in Coos County. In 1986, the hatchery was expanded to the confluence of Priorly Creek and Morgan Creek. In or about 1998, petitioner Nicole Examilotis purchased property on Morgan Creek just west of the hatchery; she later learned that the hatchery was actually on her property and not on the adjacent tax lot owned by the person who had given permission to Coos STEP and ODFW to expand the hatchery. After being notified of the situation, Coos STEP and ODFW proposed to move the hatchery to a site further up Morgan Creek.
In December 2005, DSL received a joint fill and removal permit application from Coos STEP and ODFW to fill in rock along Morgan Creek for the new hatchery and to remove silt from behind a temporary dam. The application proposed to remove 71 square yards of structures related to the existing hatchery from the waterway and reconstruct the hatchery by adding 25 square yards of concrete and rock to the creek. The work proposed in the application that related directly to the waters of the state was to install a removable, flashboard diversion dam, a fishway, a main raceway with diversions at each end, a water intake channel, a fish bypass structure, and a manually operated fish sorting ladder. Coos STEP proposed to build a spawning pool and building further from the creek. DSL provided a comment period for interested parties and received objections from local landowners to the operation and maintenance of the proposed hatchery.
*883 In response to concerns that arose during DSL's investigation into the impact of the proposed fill/removal on wetlands, Coos STEP submitted a revised permit application in April 2007. DSL then provided a second comment period and again received feedback from interested parties. DSL considered the comments and concluded that most were complaints regarding the operation of the proposed hatchery. In particular, DSL concluded that the neighbors' issues regarding the odor from the hatchery and traffic safety were outside its jurisdiction. In addition, the director found:
"DSL considered all alternatives, including different sites for the hatchery. Coos STEP reviewed a number of alternative sites, including those suggested by [petitioners], and concluded that the alternative sites were not as good due to environmental concerns, the lack of access, or were not food fish areas designated by ODFW. ODFW considered and rejected alternatives to Coos STEP's proposal, including moving to Daniels Creek, which had inadequate water and no facilities, plus ownership issues. An alternative suggested by [petitioners] was on someone else's property and not feasible. DSL considered these alternatives and agreed with Coos STEP and ODFW that they were not feasible."
(Citations omitted.) Ultimately, on July 13, 2007, DSL granted the application from Coos STEP and issued a fill/removal permit, subject to various conditions.
In August 2007, petitioners requested a contested case hearing on the permit. DSL referred the request to the Office of Administrative Hearings, and an administrative law judge (ALJ) was assigned to conduct the hearing. Among the issues to be considered by the ALJ was "[w]hether the scope of DSL's review is limited to only the fill/removal parts of Coos STEP's application or whether it must review all parts of the application, including any concerns regarding the operation of the hatchery. ORS 196.825 and OAR 141-085-0029." In May 2008, the ALJ issued a proposed order resolving that issue, along with others raised by the petitioners. Following consideration of that proposed order, the director issued the final order now before us on review that, as far we can tell, is identical to the order proposed by the ALJ.
II. THE FINAL ORDER
A. Statutory and Regulatory Framework
Before discussing the conclusions reached by the director in the final order, and because doing so will provide helpful context, we describe the statutory and regulatory framework governing DSL's authority to issue fill/removal permits as it existed in April 2007, when DSL received Coos STEP's revised permit application.[1] At that time, ORS 196.810(1)(a) generally prohibited the removal of material from beds and banks of state waters and the filling of state waters without a permit. In determining whether to issue the permit, DSL was required to consider certain criteria pursuant to ORS 196.825. That statute provided, in part:
"(1) The Director of the Department of State Lands shall issue a permit to remove material from the beds or banks of any waters of this state applied for under ORS 196.815 if the director determines that the removal described in the application will not be inconsistent with the protection, conservation and best use of the water resources of this state as specified in ORS 196.805.[[2]]
*884 "(2) The director shall issue a permit applied for under ORS 196.815 for filling waters of this state if the director determines that the proposed fill would not unreasonably interfere with the paramount policy of this state to preserve the use of its waters for navigation, fishing and public recreation.
"(3) In determining whether or not a permit shall be issued, the director shall consider all of the following:
"(a) The public need for the proposed fill and the social, economic or other public benefits likely to result from the proposed fill. When the applicant for a fill permit is a public body, the director may accept and rely upon the public body's findings as to local public need and local public benefit.
"(b) The economic cost to the public if the proposed fill is not accomplished.
"(c) The availability of alternatives to the project for which the fill is proposed.
"(d) The availability of alternative sites for the proposed fill.
"(e) Whether the proposed fill conforms to sound policies of conservation and would not interfere with public health and safety.
"(f) Whether the proposed fill is in conformance with existing public uses of the waters and with uses designated for adjacent land in an acknowledged comprehensive plan and zoning ordinances.
"(g) Whether the proposed fill is compatible with the acknowledged comprehensive plan and land use regulations for the area where the proposed fill is to take place or can be conditioned on a future local approval to meet this criterion.
"(h) Whether the proposed fill is for streambank protection.
"(i) Whether the applicant has provided all practicable mitigation to reduce the adverse effects of the proposed fill in the manner set forth in ORS 196.800(10). If off-site compensatory wetland mitigation is proposed, the applicant shall document the impracticability of on-site compensatory wetland mitigation."
(Emphases added.)
In 2006, DSL, pursuant to its general rulemaking authority in ORS 196.692,[3] promulgated a rule under ORS 196.825 that established regulatory standards for its review of permit applications; those standards were substantially similarbut not identicalto the statutory criteria announced in ORS 196.825. Specifically, OAR 141-085-0029(3) (Mar. 27, 2006) provided:
"To issue an individual removal-fill permit the Department must determine that the proposed removal-fill activity will not be inconsistent with the protection, conservation and best use of the water resources of this state and would not unreasonably interfere with the paramount public policy of this state to preserve the use of its waters for navigation, fishing and public recreation, by:
"(a) Considering the public need for the project including the social, economic or other public benefits likely to result from the project. If the applicant is a public body, the Department may rely on the *885 public body's findings as to local public need and benefit;
"(b) Considering the economic cost to the public if the project is not accomplished;
"(c) Considering whether the project would interfere with public health and safety;
"(d) Considering whether the project is compatible with the local comprehensive land use plan. The Department will not issue an individual removal-fill permit for a project that is not consistent or compatible with the local comprehensive land use plan and/or zoning ordinance. The Department may issue an individual removal-fill permit requiring the applicant to obtain local land use approval prior to beginning the authorized activity;
"(e) Determining the degree to which, if at all, the project, will unreasonably interfere with navigation, fishing and public recreation uses of the waters of the state;
"(f) Considering the degree to which, if at all, the project will increase erosion or flooding upstream and downstream of the project or redirect water from the project site onto adjacent nearby lands[;]
"(g) Considering the practicable alternatives for the project in accordance with (4) as presented in the application;[[4]] and
"(h) Considering practicable mitigation (including compensatory mitigation) for all reasonably expected adverse impacts of project development, as required by subsection (5).[[5]]"
(Emphases added.)
For purposes of OAR chapter 141, division 85, OAR 141-085-0010(169) (Mar. 26, 2006) defined "project" to mean "the primary development or use intended to be accomplished (e.g. retail shopping complex, residential development)." In addition, OAR 141-085-0010(170) (Mar. 27, 2006) defined "project area" to mean "the physical space in which the removal-fill takes place including any on site or off-site mitigation site," which encompassed "the entire area of ground disturbance, even though not within waters of the state, including all staging areas and access ways, both temporary and permanent."[6]
B. Conclusions Reached in the Final Order
In issuing the final order in this case, the director was thus tasked with reconciling OAR 141-085-0029 (the standards rule) and OAR 141-085-0010 (the definition rule) with ORS 196.825.[7] In the final order, the director, in a, stated, "As explained below, DSL's review is limited by statute only to the fill/removal parts of the plan and therefore [petitioners'] issues are reviewed only under the statutory standard." The director later explained:
"Any attempt by DSL to expand its scope of review by rule is beyond the scope of review set out in ORS 196.825 and related *886 sections and is not permitted. DSL exceeded its authority when defining `project' in OAR 141-085-0010(169) beyond the fill/removal parts of an application. DSL has established that its review of the `project' is limited to the fill/removal parts of Coos STEP's application."
Consequently, the director reviewed the remaining issues raised by petitioners under only the statutory criteria; the director did not review those issues under any of the regulatory standards of OAR 141-085-0029. As to the criteria in ORS 196.825, the director concluded:
"DSL has shown that the fill and removal plan proposed by Coos STEP is consistent with the protection, conservation and best use of the water resources of this state, as specified in ORS 196.600 to 196.905, and would not unreasonably interfere with the paramount policy of this state to preserve the use of its waters for navigation, fishing and public recreation. DSL established that it considered the availability of alternatives to the proposed fill and removal plan and the availability of alternative sites. It further showed that the proposed fill or removal conforms to sound policies of conservation and would not interfere with public health and safety."
Regarding practical and feasible alternatives, the director stated further:
"DSL's review is not whether there were more practical and feasible alternatives to the proposed hatchery, but only whether there are more practical and feasible alternatives to the fill and removal plan proposed by Coos STEP. [Petitioners] argued that the barrier between the raceway and Morgan Creek was deteriorating and was not a good place for fill and removal, but as explained above, the barrier is reinforced by riprap and DSL accounted for possibility of deterioration by imposing a condition that the barrier be reinforced with the planting of vegetation. If this planting has not been done or if efforts to stop deterioration do not work, DSL has reserved authority in the permit to require more measures to prevent erosion."
The director thus determined that "DSL properly issued a permit to Coos STEP."
III. ASSIGNMENTS OF ERROR
On review, petitioners raise several interrelated challenges to the final order. We address those challenges to the final order for errors of law and substantial evidence. See ORS 196.835 (2009) (providing, in part, that "[a]ppeals from the director's final order may be taken to the Court of Appeals in the manner provided by ORS 183.482"); ORS 183.482(8)(a), (c) (orders in a contested case reviewed to determine if "the agency has erroneously interpreted a provision of law and that a correct interpretation compels a particular action" and if supported by "substantial evidence in the record").
In their first three assignments of error, petitioners contend that (1) two particularly relevant parts of OAR 141-085-0029(3) require DSL to assess the effects of "the project," i.e., the entire fish hatchery facility: OAR 141-085-0029(3)(c) ("whether the project would interfere with public health and safety") and OAR 141-085-0029(3)(f) ("the degree to which, if at all, the project will increase erosion or flooding upstream and downstream of the project or redirect water from the project site onto adjacent nearby lands"); (2) DSL lacks authority to not apply those rules by construing them to be outside of its statutory authority to adopt; and, therefore, (3) DSL erroneously interpreted its rules and a remand is necessary for their application to the project.
DSL counters that (1) "the project," as used in the administrative rules, means the fill and removal activities, and DSL did not err in confining its review to those activities; (2) alternatively, the agency did not err in failing to apply those parts of OAR 141-085-0029 that exceeded the permit criteria set out in ORS 196.825. We conclude that (1) the term, "the project," is used in the administrative rules to cover activities and uses beyond any fill and removal; (2) DSL had authority to not apply rules that exceeded its rulemaking authority; and (3) DSL did not err in confining its review of the permit to the criteria announced in ORS 196.825.
Again, OAR 141-085-0029(3)(c) and OAR 141-085-0029(3)(f) apply standards to *887 "the project." In determining the meaning of an administrative rule, our role is the same as in determining the meaning of a statute, i.e., "to determine the meaning of the words used, giving effect to the intent of the enacting body." Abu-Adas v. Employment Dept., 325 Or. 480, 485, 940 P.2d 1219 (1997). Our inquiry begins with an examination of the text and context of the rule itself. Id. To recall, OAR 141-085-0010(169) defined "project" to mean "the primary development or use intended to be accomplished (e.g. retail shopping complex, residential development)." In addition, as context, OAR 141-085-0010(170) defined "project area" to mean "the physical space in which the removal-fill takes place including any on site or off-site mitigation site," including "the entire area of ground disturbance, even though not within waters of the state, including all staging areas and access ways, both temporary and permanent." Thus, "project," as defined by OAR 141-085-0010(169), and as used in OAR 141-085-0029, possessed an expansive scope, reaching beyond the proposed fill or removal.
DSL, however, did not err in not applying those parts of OAR 141-085-0029 that required consideration of issues outside DSL's authority to issue permits under ORS 196.825. It is axiomatic that "an agency has only those powers that the legislature grants and cannot exercise authority that it does not have." SAIF v. Shipley, 326 Or. 557, 561, 955 P.2d 244 (1998). "In the absence of a statute which grants a presumption of validity to administrative regulations, an administrative agency must, when its rule-making power is challenged, show that its regulation falls within a clearly defined statutory grant of authority." Ore. Newspaper Pub. v. Peterson, 244 Or. 116, 123, 415 P.2d 21 (1966) (footnote omitted).
Under ORS 196.692(1), the rulemaking authority of DSL is limited to those rules that "carry out the provisions" of various statutes, including ORS 196.825. Put another way, the agency's rulemaking authority is confined to policies that implement its statutory authority and does not include the authority to issue rules that expand or neglect those responsibilities. OAR 141-085-0029 "carr[ies] out the provisions of" ORS 196.825, a statute that requires the director to issue a fill or removal permit if certain criteria are met. ORS 196.825(1) (the director "shall issue a permit to remove material * * * if the director determines that * * * [the proposed removal meets particular standards]"); ORS 196.825(2) (the director "shall issue a permit * * * for filling waters of this state if the director determines that [the proposed fill meets specified criteria]"). DSL did not err, then, in confining the scope of its rule to the statutory directives in ORS 196.825. The question becomes whether ORS 196.825 allows consideration of the effects of "the project," as defined by OAR 141-085-0010(169), in issuing a fill or removal permit. We conclude that only one part of the statute applies to "the project," as distinguished from evaluation of fill and removal activities.
In construing ORS 196.825, we employ the familiar methodology of State v. Gaines, 346 Or. 160, 171-73, 206 P.3d 1042 (2009), and PGE v. Bureau of Labor and Industries, 317 Or. 606, 610-12, 859 P.2d 1143 (1993). Under ORS 196.825(3)(c), the director was required to consider "[t]he availability of alternatives to the project for which the fill is proposed." (Emphases added.) There are no other statutory references to "project" in the approval criteria set out in ORS 196.825 and ORS 196.805.[8] Conversely, ORS 196.825(3)(d) required consideration of "alternative *888 sites for the proposed fill." (Emphasis added.)
Given the separate requirements to consider alternatives to both "the project for which the fill is proposed" and alternative sites "for the proposed fill," it is plain that "project" means something different from "the proposed fill." The word "project" was not defined by any provision in ORS chapter 196. Therefore, as a word of common usage, we give "project" its "plain, natural, and ordinary meaning." See PGE, 317 Or. at 611, 859 P.2d 1143. Among its various meanings, "project" is defined as "a specific plan or design." Webster's Third New Int'l Dictionary 1813 (unabridged ed. 2002). As used in ORS 196.825(3)(c) ("the project for which the fill is proposed"), then, the word "project" connotes a scope that reaches beyond the proposed fill, that is, the development facilitated by the proposed fill.
That meaning of "project" is corroborated by two other related statutes. ORS 196.825(11)(b) defined a "completed application" as
"a signed permit application form that contains all necessary information for the director to determine whether to issue a permit, including:
"(A) A map showing the project site with sufficient accuracy to easily locate the removal or fill site;
"(B) A project plan showing the project site and proposed alterations;
"* * * * *
"(E) If the project may cause substantial adverse effects on aquatic life or aquatic habitat within this state, documentation of existing conditions and resources and identification of the potential impact if the project is completed; [and]
"* * * * *
"(G) If the project is to fill and remove material from wetlands, a wetlands mitigation plan[.]"
(Emphases added.) "Project" is used in ORS 196.825(11) to mean an activity beyond the specific fill or removal; that meaning of "project" likely is the same as the term is used in ORS 196.825(3)(c). See also ORS 196.830(4) (use of "project" in statutory provision on criteria for waiving estuarine resource replacement as requiring consideration of the "economic and public need for the project," "public benefits resulting from the project," whether the "project is for a public use," and whether the "project is water dependent or * * * publicly owned and water related").
Thus, ORS 196.825(3)(c) required consideration of "alternatives to the project for which the fill is proposed," with "project" meaning the development facilitated by the proposed fill. In other respects, however, ORS 196.825 confined the approval criteria for a fill or removal permit to the characteristics or effects of the proposed fill or removal. DSL was obligated to apply OAR 141-085-0029 consistently with those statutory parameters. This brings us to petitioners' specific contentions about the director's failure to apply OAR 141-085-0029(3)(c) and OAR 141-085-0029(3)(f).
Petitioners argue that DSL improperly failed to consider various public health and safety issues associated with the proposal to move the fish hatchery, including fecal matter, odor, and upland traffic impacts. Petitioners cite OAR 141-085-0029(3)(c) (regarding the public health and safety impacts of "the project") in support of their position. Under that regulatory standard, petitioners contend that, given the broad scope of the definition of "project" in OAR 141-085-0010(169), DSL was required to consider public health and safety issues beyond the areas of actual fill and removal.
The problem with petitioners' argument is that it assumes the validity of OAR 141-085-0029(3)(c). In the final order, however, the director stated that "DSL's review is limited by statute only to the fill/removal parts of the plan and therefore [petitioners'] issues are reviewed only under the statutory standard." Further, the director explained that "[a]ny attempt by DSL to expand its scope of review by rule is beyond the scope of review set out in ORS 196.825 and related sections and is not permitted." We infer, consistent with those statements and the director's decision not to apply any of the regulatory standards, that the director also implicitly determined *889 that OAR 141-085-0029(3)(c) exceeded DSL's rulemaking authority. On that score, we agree with the director.
In reviewing a permit application, OAR 141-085-0029(3)(c) required DSL to consider "whether the project would interfere with public health and safety." (Emphasis added.) Given the regulatory definition of "project" discussed above, that standard required DSL to consider public health and safety impacts beyond those associated with the application's fill and removal components. By contrast, ORS 196.825(3)(e) required the director to consider only "[w]hether the proposed fill * * * would not interfere with public health and safety." (Emphasis added.) "Fill" was defined by ORS 196.800(5) as "the total of deposits by artificial means equal to or exceeding 50 cubic yards or more of material at one location in any waters of this state." Thus, ORS 196.825(3)(e) required the director to review the application through a narrow lens, focused only on whether a proposed deposit in state waters of 50 cubic yards or more of material would interfere with public health and safety.
We conclude that the regulatory standard exceeded the agency's authority because it required DSL to review an application more broadly than would otherwise be required by statute. Therefore, because the public health and safety issues identified by petitionersthe fecal matter, odor, and traffic impacts associated with the proposal to move the fish hatcheryfall outside the confines of the director's review under ORS 196.825(3)(e), the director did not err in failing to consider those issues.
Petitioners next argue that DSL improperly failed to consider various erosion and flood issues associated with the proposal to move the fish hatchery, including erosion and flood impacts on adjacent uplands of neighboring properties as a result of the proposed diversion dam. Petitioners cite OAR 141-085-0029(3)(f) (regarding the erosion and flood impacts of "the project") in support of their position. Under that regulatory standard, petitioners contend that, given the broad scope of the definition of "project" in OAR 141-085-0010(169), DSL was required to consider erosion and flood issues beyond those associated with the areas of actual fill and removal.
Again, the problem with petitioners' argument here is that it assumes the validity of OAR 141-085-0029(3)(f). We again infer, consistent with the director's statements in the final order and the director's decision not to apply any of the regulatory standards in reviewing Coos STEP's application, that the director implicitly determined that OAR 141-085-0029(3)(f) exceeded DSL's rulemaking authority. As above, we agree with the director as to that determination.
In reviewing a permit application, OAR 141-085-0029(3)(f) required DSL to consider "the degree to which, if at all, the project will increase erosion or flooding upstream and downstream of the project or redirect water from the project site onto adjacent nearby lands." (Emphases added.) Unlike the regulatory standard regarding public health and safety impacts, which had a comparable statutory analogue, the regulatory standard regarding erosion and flood impacts on nearby lands did not have such a comparable statutory analogue; on that ground alone, the regulation could exceed the statutory rulemaking authority of DSL. On the other hand, consideration of erosion and flood impacts on nearby lands may fall within the penumbra of several of the statutory criteria, including the portion of ORS 196.825(3)(e) that required consideration of "[w]hether the proposed fill conforms to sound policies of conservation" and ORS 196.825(3)(h) that required consideration of "[w]hether the proposed fill is for streambank protection." (Emphases added.)
Assuming, without deciding, that consideration of erosion and flood impacts of "the proposed fill" on nearby lands falls within the statutory authority, we nonetheless conclude that consideration of those impacts, as they relate to the broader "project," unquestionably exceeds the agency's statutory authority. Because the erosion and flood issues identified by petitionersthose associated with the diversion damfall outside consideration of impacts associated with the proposed fill, the director did not err in failing to consider them.
*890 Petitioners finally contend that DSL's analysis of practicable alternatives is not supported by substantial evidence in the record. Petitioners note that, pursuant to OAR 141-085-0029(3)(g), (4), and (5), DSL was required to consider practicable alternatives to the project in issuing the permit. According to petitioners, "[t]he evidence presented by * * * DSL in the proceedings below clearly demonstrates that [Coos STEP] failed to provide substantial evidence in the administrative record to meet its burden as to the applicable approval criteria." More particularly, petitioners note that Coos STEP's application materials contained only general statements regarding the analysis of alternatives. Petitioners assert that "DSL's decision to approve this permit, based solely upon the limited record submitted by Coos STEP constitutes a decision that is not adequately supported by substantial evidence in the administrative record."[9]
DSL responds that petitioners understate the extent of evidence in the record as it pertains to analysis of alternatives under ORS 196.825(3)(c) and OAR 141-085-0029(4). DSL notes that the final order relies on the testimony of three witnesses, as well as information in Coos STEP's application. Further, DSL contends that other evidence also exists in the record to support the final order.
In reply, petitioners observe that only the testimony of one witness, Lobdell, was cited to support the director's finding that "DSL considered all alternatives, including different sites for the hatchery." Petitioners, citing Hodgin v. PSRB, 127 Or.App. 587, 591, 873 P.2d 466, rev. den., 320 Or. 272, 882 P.2d 1114 (1994), contend that all the other evidence referred to by DSL was not the basis for the director's determination on the issue of alternatives and, therefore, should not be considered as the basis for upholding the agency's decision on judicial review. In addition, petitioners contend that DSL cannot rely on evidence that other parties considered alternatives to support its finding that DSL considered alternatives.
When we review a finding of fact for substantial evidence, we determine whether "the record, viewed as a whole, would permit a reasonable person to make that finding." ORS 183.482(8)(c). An initial problem with petitioners' substantial evidence contention is that petitioners, in their opening brief, fail to specifically identify the finding(s) of fact in the order that they contend lack substantial evidence. Indeed, in their reply brief, petitioners point to only one finding of fact as lacking substantial evidencethe finding that "DSL considered alternatives, including different sites for the hatchery." We review that finding under the applicable standard of ORS 183.482(8)(c).
Petitioners' reliance on Hodgin to restrict the scope of our review to only that evidence referenced by the director in making the challenged finding is misplaced. Hodgin belongs to a line of cases that require an agency to articulate the "substantial reason" for its action. In Hodgin we explained, "In reviewing a PSRB order, it is not enough that the record contain substantial evidence to support the PSRB's findings. `The question is whether the evidence on which PSRB expressly relied supports what the agency did.'" 127 Or.App. at 591, 873 P.2d 466 (quoting Martin v. PSRB, 312 Or. 157, 167, 818 P.2d 1264 (1991)). That explanation in Hodgin has been echoed in other cases that discuss our review for substantial reason. See, e.g., Goin v. Employment Dept., 203 Or.App. 758, 763, 126 P.3d 734 (2006) ("Our substantial reason review requires a determination of whether [the agency's] findings of fact logically lead to its conclusions of law."). As such, Hodgin concerns the extent or adequacy of factual findings as a whole. It does not stand for the principle that petitioners suggestthat our review of a finding for substantial evidence is limited to reviewing *891 only that evidence cited by the director in support of the challenged finding of fact.[10]
Accordingly, our review of the record reveals the following evidence in support of the director's finding. Coos STEP, in its revised application, stated that it had researched alternative locations for the facility for over two decades; that the new facility, as compared to the old facility, would significantly reduce impacts to the Morgan Creek; and that any other areas surveyed in the basin would have significantly more impacts to the watershed than the selected site on Morgan Creek. At the contested case hearing below, Lobdell, a natural resource coordinator with DSL, testified that, although no specific alternative locations were described in Coos STEP's application, during the period for public comment, Coos STEP responded to concerns raised by petitioners and others about alternatives to the project site. Lobdell further testified that Coos STEP had looked at several sites on Daniels Creek, including sites suggested by petitioners, and had rejected those alternatives for various reasons, including that there was already an existing facility there and the Daniels Creek area had a greater amount of wetlands in the immediate project vicinity. The record also contains evidence of the specific written response provided by Coos STEP, which stated, in part:
"Alternative locations, including those proposed by [petitioners], were considered. Daniels Creek already had a STEP fish facility with its own fish production level, operated by another STEP group. Another piece of property suggested by [petitioners] has significant wetland characteristics for much of the year, not just during high water/flooding events. This property would be suitable for a wetland/wildlife habitat restoration project, but not a site suitable for an out-of-stream fish rearing facility as proposed."
In light of the above-stated evidence, we conclude that the director's finding that "DSL considered all alternatives, including different sites for the hatchery" is supported by substantial evidence.
IV. CONCLUSIONS
In sum, DSL did not err in confining the scope of its rules to the requirements for issuing a fill or removal permit under ORS 196.825. Given that limitation, the director did not err in failing to apply OAR 141-085-0029(3)(c) and OAR 141-085-0029(3)(f) to the fish hatchery operations, as opposed to the particular fill or removal activities. Further, petitioners' substantial evidence challenge is not well taken.
Affirmed.
NOTES
[1] ORS chapter 196 was amended by the legislature in 2007, and those amendments became effective on July 1, 2007. See Or. Laws 2007, ch. 849, §§ 19, 21. Because DSL received Coos STEP's revised application before the effective date of the 2007 amendments, they did not apply to DSL's determination of whether to issue the permit to Coos STEP. See ORS 196.825(10) ("In determining whether to issue a permit, the director [of DSL] may consider only standards and criteria in effect on the date the director receives the completed application."). We therefore refer throughout this opinion to the 2005 version of ORS chapter 196, unless otherwise indicated.
[2] ORS 196.805(1) announced the general policy underlying the authority of DSL to issue fill/removal permits:
"The protection, conservation and best use of the water resources of this state are matters of the utmost public concern. Streams, lakes, bays, estuaries and other bodies of water in this state, including not only water and materials for domestic, agricultural and industrial use but also habitats and spawning areas for fish, avenues for transportation and sites for commerce and public recreation, are vital to the economy and well-being of this state and its people. Unregulated removal of material from the beds and banks of the waters of this state may create hazards to the health, safety and welfare of the people of this state. Unregulated filling in the waters of this state for any purpose, may result in interfering with or injuring public navigation, fishery and recreational uses of the waters. In order to provide for the best possible use of the water resources of this state, it is desirable to centralize authority in the Director of the Department of State Lands, and implement control of the removal of material from the beds and banks or filling of the waters of this state."
[3] ORS 196.692 provided:
"(1) [DSL] shall adopt rules to carry out the provisions of ORS 196.668 to 196.692, 196.800, 196.810, 196.825, 196.830, 196.850 to 196.860, 196.885, 196.905, 197.015, 197.279, 215.213, 215.283, 215.284, 215.418 and 227.350.
"(2) Rules adopted pursuant to subsection (1) of this section shall include rules governing the application for and issuance of permits to remove material from the beds or banks of any waters of this state or to fill any waters of this state including, but not limited to, clear and objective standards and criteria for determining whether to grant or deny a permit."
[4] OAR 141-085-0029(4) (Mar. 27, 2006) provided, "The Department will issue a permit only upon the Department's determination that a fill or removal project represents the practicable alternative that would have the least adverse effects on the water resources and navigation, fishing and public recreation uses." (Emphasis added.)
[5] OAR 141-085-0029(5) (Mar. 27, 2006) provided:
"In determining whether or not an alternative might be the practicable alternative with the least adverse effects, the Department will consider the type, size and relative cost of the project, the condition of the water resources, and navigation, fishing and public recreation uses as depicted in the application. The financial capabilities of the applicant are not the primary consideration. The basic project purpose, logistics, use of available technology and what constitutes a reasonable project expense are the most relevant factors in determining the most practicable alternative. The applicant bears the burden of providing the Department with all information necessary to make this determination."
(Emphases added.)
[6] All references throughout the remainder of this opinion to OAR 141-085-0010 and OAR 141-085-0029 are to those versions that became effective March 27, 2006, and were in effect at the time DSL received petitioners' revised application.
[7] In completing that task, the director used the 2007 version of ORS 196.825, rather than the 2005 version of the statute that was in effect at the time DSL received Coos STEP's revised permit application. Petitioners have not assigned error to that aspect of the final order, and we therefore do not address it further.
[8] ORS 196.825(5) used the term "project" to mean the activities being evaluated under the approval criteria. ORS 196.825(5) provided, in part:
"If the director issues a permit, the director may impose such conditions as the director considers necessary to carry out the purposes of ORS 196.805, 196.830 and subsections (1) and (2) of this section and to provide mitigation for the reasonably expected adverse impacts from project development."
The director's authority to impose conditions is that necessary to mitigate adverse impacts where that mitigation allows compliance with the approval criteria in ORS 196.805, ORS 196.830, and ORS 196.825(1) and (2). We do not read ORS 196.825(5) as expanding the approval criteria beyond the standards set out earlier in the statutes.
[9] To be clear, petitioners, in their opening brief, did not argue, much as they did in their other assignments of error, that DSL erred as a matter of law in improperly failing to consider the applicable regulatory standards under OAR 141-085-0029(3)(g), (4), and (5). Further, to whatever extent petitioners attempt to recast their fourth assignment of error in their reply brief as including such an argument, that argument is raised too late. See Johnson v. Best Overhead Door, LLC, 238 Or.App. 559, 563 n. 2, 242 P.3d 740 (2010) ("A party may not raise an issue for the first time in a reply brief.").
[10] To the extent that petitioners' substantial evidence argument may be couched as a substantial reason argument, it is unpersuasive. Here, petitioners have clearly identified and challenged only one finding of fact by the director. The director, however, made several other findings that bear on the conclusion later in the order that "[t]he proposed plan for fill/removal of material in Coos STEP's application met and adequately addressed the applicable review criteria that there are no practical and feasible alternatives." Petitioners do not explain why the totality of the director's findings fails to logically lead to the director's ultimate conclusion, and that failure is fatal to a review under substantial reason. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2360350/ | 218 F. Supp. 2d 876 (2002)
FRANKEN INVESTMENTS, INC., a Michigan corporation, FranKen Sub-1, Inc., a Michigan corporation, and FranKen Sub-2, a Michigan corporation, Plaintiffs,
v.
THE CITY OF FLINT, a municipal corporation, and the City of Lansing, a municipal corporation, Defendants.
No. 00-CV-74682-DT.
United States District Court, E.D. Michigan, Southern Division.
August 30, 2002.
*877 *878 *879 *880 Elias Mauwad, Mauwad & Mauwad, Southfield, MI, for plaintiffs.
Michael J. Gildner, Simen, Figura, Flint, MI, for City of Flint, defendant.
Jack C. Jordan, James D. Smiertka, City Attorney, Lansing City Attorney's Office, Lansing, MI, Brian W. Bevez, City Attorney's Office, Lansing, MI, for City of Lansing.
MEMORANDUM OPINION AND ORDER
HOOD, District Judge.
This matter is before the Court on the parties' cross-motions for summary judgment, filed October 1, 2002. Response Briefs have been filed by both parties, and a hearing was held on November 20, 2001. For the following reasons, Defendants' Motion is GRANTED and that of Plaintiffs DENIED.
I. FACTS
The Plaintiffs, FranKen Investments, Inc., and its two wholly owned subsidiaries FranKen Sub-1, Inc. and FranKen Sub-2, Inc., are involved in the business of investing in real estate tax liens. Their principal members are Kenneth Frantz and Frank Simon, two attorneys. In 1998 and 1999, the Plaintiffs purchased real estate tax liens for properties located in various counties throughout the state. This lawsuit involves the purchase of lands located in the Cities of Flint and Lansing ("Defendant Cities"), which are in Genesee and Ingham counties, respectively. Plaintiffs did not inspect any of the lands they purchased.
Under the relevant version of the General Property Tax Act of Michigan, MICH. COMP. LAWS. ANN. 211.60 et seq., governmental entities such as Defendant Cities could recover delinquent taxes by selling tax liens at an annual tax lien sale usually held the first Tuesday in May. Cities would transfer all delinquent tax liens to the county in which they sit, and the county would then conduct the tax lien sale. Individual investors would "bid" on the tax liens on the properties, and in exchange for payment of the delinquent taxes they would receive a tax lien entitling them to repayment of their individual amount, plus interest at a rate of 15% or *881 50% per annum, depending upon circumstances.
According to Plaintiffs, Defendant Cities "have engaged in a custom and policy of intentionally and consistently deceiving the investors purchasing tax liens at the annual sale by knowingly reporting to the Counties `delinquent taxes' which inappropriately include some of the Cities' municipal non-tax `special assessments' and `special bills' as real estate taxes." Complaint ¶ 15. Specifically, Plaintiffs argue that Defendant Cities have included demolition charges in their calculation of the amount of delinquent taxes owed in violation of the statute. According to Defendant Cities, the tax liens transferred to the counties would be itemized such that the county could ascertain which delinquent amounts were for property taxes, and which amount were for other charges to the land. Defendant Cities claim that the county would publish a catalog listing all properties for sale, but aggregate all amounts into one sum.
Plaintiffs have produced a letter from the Assistant City Attorney of the City of Lansing dated March 1, 2000, to the Ingham County Treasurer. The letter states in pertinent part:
Please be advised that the City of Lansing has discovered an error in the reported assessments for the properties listed on the attached sheet. The amounts listed for the years designated are not the type of special assessment normally considered as capital improvements and should not have been added to the delinquent tax roll. Therefore, please remove them and reissue the tax certificates so that they reflect the correct redemption amounts.
Ps.' Ex. 1 (emphasis added). According to Plaintiffs, this letter was written as a result of a complaint by Plaintiffs' Principal, Kenneth Frantz, regarding demolition costs.
Plaintiffs have asserted various theories of recovery from the Cities of Flint and Lansing in the amounts of $110,576.16 and $37,080.05, respectively, plus costs, loss of interest at the relevant percentage rate and attorneys fees. Count I alleges violations of 42 U.S.C. § 1983 and the Headlee Amendment. Count II requests declaratory relief under 28 U.S.C. § 2201. Count III, which has been voluntarily dismissed, alleges breach of contract, and Count IV alleges unjust enrichment. All parties have moved for summary judgment.
II. STANDARD OF REVIEW
Rule 56(c) states that summary judgment should be entered only where "the pleadings, depositions, answers to the interrogatories, and admissions on file, together with 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." The presence of factual disputes will preclude granting of summary judgment only if the disputes are genuine and concern material facts. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). A dispute about a material fact is "genuine" only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.
Although the Court must view the motion in the light most favorable to the nonmoving party, where "the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Moreover, the court need not accept as true legal conclusions *882 or unwarranted factual inferences. Hoeberling, 49 F.Supp.2d at 577.
Summary judgment must be entered 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. See Celotex Corp., 477 U.S. at 322-23, 106 S. Ct. 2548. 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. Id. A court must look to the substantive law to identify which facts are material. Anderson, 477 U.S. at 248, 106 S. Ct. 2505.
III. ANALYSIS
A. Mich. Comp. Laws Ann. § 211.60 et seq.
The crux of Plaintiffs' argument is that the cities of Flint and Lansing unlawfully included demolition costs in their calculations of delinquent taxes. Attempting to predict Defendants' arguments, Plaintiff disputes the categorization of demolition costs as "special assessments." Special assessments are improvements to the land, the costs of which are recoverable by the cities not as taxes, but as remuneration for the cost incurred to increase the property value. Claiming that demolitions do not "increase" the value of the land, Plaintiffs contend that they should not be included in the delinquent-tax calculation.
A review of Defendants joint motion for summary judgment, however, reveals that the cities do not contest the fact that demolition costs do not raise property value and therefore are not special assessments recoverable in the yearly tax sale. Instead, Defendants argue that they do not include demolition costs in their calculation of delinquent taxes, but that the counties do. The cities admit that the liens on the property do, in fact, include "costs incurred by the City for demolition of structures on the parcels, costs incurred by the City for mowing grass, or other costs related to the removal of blighting conditions on the parcels." Defendants contend, however, that they "list these expenses separately in its records and reported these items to the County separately as well." Defendants claim that it is the counties, not the cities, that combined these amounts and reported the aggregate in the catalog published in mid-March. "If that practice is unlawful," Defendants argue, "the County alone is responsible for it." Plaintiffs do not counter this argument.
MICH. COMP. LAWS ANN. § 211.61 sets forth procedures relative to notice and lists of lands to be sold. Section 211.61 states that the county clerk in each county in which lands are to be sold are to prepare and file a petition "addressed to the circuit court for the county stating by appropriate reference to lists or schedules annexed to the petition a description of those lands in the county upon which [delinquent taxes exist]." Section 211.61 further requires that the petition "be in a substantial record book, with the lists of lands and taxes annexed following the petition in the book," and that the record, to be known as the "tax record," "be ruled with appropriate columns, including 1 containing a description of the lands and other columns as the state treasurer considers necessary." Of particular relevance is the requirement that the description found within the tax record detail all "charges adjudged against the lands." Demolition costs are "charged against the land" if the requirements of MICH. COMP. LAWS. ANN. § 124.541 are met. It appears, therefore, that § 211.61 not only allows cities to submit the amount of delinquent taxes owed, but also contemplates the submission of demolition costs. *883 Under this theory, the City Defendants had authority to submit demolition costs to their respective counties when submitting their list of properties with delinquent taxes.
Section 124.541(5) states that "the cost of the demolition ... shall be reimbursed to the city ... by the owner or party in interest in whose name the property appears." Section 124.541(6) provides for notice of the amount of the costs to "[t]he owner or party in interest in whose name the property appears upon the last local tax assessment records..." Section 124.541(6) further states that failure to pay the demolition costs results in a lien against the property, and that a properly recorded "lien for the cost shall be collected and treated in the same manner as provided for property tax liens under [§§ 211.1 to 211.157]." Id. (emphasis added). Because § 211.60 et seq allows for tax liens to be recovered via the tax sale outlined in that section, arguably, demolition costs can also be recovered thereunder. The Court grants Defendants' motion for summary judgment on this issue.
B. The Title-Object Clause of the Michigan Constitution
Plaintiffs also argue that MICH. COMP. LAWS ANN. § 125.541 is an inappropriate vehicle to recover demolition costs because the section violates the Title-Object Clause of the Michigan Constitution. Although Defendants have not responded to this argument, the Court addresses it.
The Title-Object Clause, which provides in relevant part that "[n]o law shall embrace more than one object, which shall be expressed in its title," MICH. CONST.1963, art. 4, §§ 24, is not violated. In determining the validity of a challenge to a statute on the basis of an alleged violation of the Title-Object Clause, the test is whether the title of the act gives the Legislature and the public fair notice of the challenged statutory provision. Knauff v. Oscoda County Drain Com'r, 240 Mich.App. 485, 496, 618 N.W.2d 1 (2000) (citing Ray Twp. v. B & BS Gun Club, 226 Mich.App. 724, 728-729, 575 N.W.2d 63 (1997)). The title of the housing law of Michigan states:
AN ACT to promote the health, safety and welfare of people by regulating the maintenance, alteration, health, safety, and improvement of dwellings; to define the classes of dwellings affected by the act, and to establish administrative requirements; to prescribe procedures for the maintenance, improvement, or demolition of certain commercial buildings; to establish remedies; to provide for enforcement; to provide for the demolition of certain dwellings; and to fix penalties for the violation of this act.
MICH. COMP. LAWS ANN. § 125.541(6) states that
The owner or party in interest in whose name the property appears upon the last local tax assessment records shall be notified by the assessor of the amount of the cost of the demolition, of making the building safe, or of maintaining the exterior of the building or structure or grounds adjoining the building or structure by first class mail at the address shown on the records. If the owner or party in interest fails to pay the cost within 30 days after mailing by the assessor of the notice of the amount of the cost, the city, village, or township shall have a lien for the cost incurred by the city, village, or township to bring the property into conformance with this act. The lien shall not take effect until notice of the lien has been filed or recorded as provided by law. A lien provided for in this subsection does not have priority over previously filed or recorded liens and encumbrances. The lien for the *884 cost shall be collected and treated in the same manner as provided for property tax liens under the general property tax act, Act No. 206 of the Public Acts of 1893, being sections 211.1 to 211.157 of the Michigan Compiled Laws.
According to Plaintiffs, this portion of the act violates the Title-Object Clause "because the subjects of demolition costs and property tax laws are diverse and have no bearing to each other."
The title of the housing law of Michigan clearly indicates in intent to establish remedies and enforcement mechanisms for violations of regulations concerning "the maintenance, alteration, health, safety, and improvement of dwellings." Assessment of the expenses incurred for demolition is a remedy; utilizing the recovery procedures outlined property tax laws is an enforcement mechanism. As in Knauff, "[a] review of the text of the statute reveals that the body of the statute parallels the scope of the title. Plaintiffs have failed to explain how the trial court `searched the statute for the meaning of the preamble' of the [housing law of Michigan]." Accordingly, this court finds no Title-Object Clause violation. Defendants motion for summary judgment is granted as to this claim.
C. Headlee Amendment
Plaintiffs claim that "Defendant Cities were prohibited from levying the demolition costs as special assessment tax (sic) which is not authorized by law pursuant to the Headlee Amendment." The Headlee Amendment states in pertinent part:
Sec. 31 Units of local government are hereby prohibited from levying any tax not authorized by law or charter when this section is ratified or from increasing the rate of an existing tax above that rate authorized by law or charter when this section is ratified, without the approval of a majority of the qualified electors of that unit of local government voting thereon.
MICH. CONST. (1963) art. 9, § 31.
Defendants argues that the Cities have been authorized by law to impose these taxes pursuant to M.C.L. §§ 125.541. This Court agrees. Additionally, there is an argument that demolition costs do not constitute a "tax," but is instead a "fee" charged for the demolition service. "There is no bright-line test for distinguishing between a valid user fee and a tax that violates the Headlee Amendment." Bolt v. City of Lansing, 459 Mich. 152, 161, 587 N.W.2d 264 (1998). However, there are three factors a court considers to determine whether a charge constitutes a "tax" or a "fee." First, a user fee must serve a regulatory purpose rather than a revenue-raising purpose. Id. at 161, 587 N.W.2d 264. Second, user fees must be proportionate to the necessary costs of the service. Id. at 161-62, 587 N.W.2d 264. The third criterion is voluntariness. Id.
Taxes have a primary purpose of raising revenue. Id. at 161, 587 N.W.2d 264. Section 125.541's stated purpose is to protect the health and welfare of citizens. Plaintiffs admit as much. Ps.'s Br. at 13. The recovery portion of the statute has a primary purpose of providing for the reimbursement to the city for expenses it has incurred in enforcing the housing act. In this way, it is a "fee." Id. ("Generally, a `fee' is `exchanged for a service rendered or a benefit conferred, and some reasonable relationship exists between the amount of the fee and the value of the service or benefit.'"). Therefore, the analysis set out in Section A, supra, applies equally to Plaintiffs' Headlee Amendment argument. That is, demolition cost liens can be collected and treated in the same manner as provided for property tax liens *885 under § 211.60. The mere fact that demolition costs may be collected in the same way as a tax does not thereby convert the demolition cost to a tax. See Ripperger v. City of Grand Rapids, 338 Mich. 682, 686, 62 N.W.2d 585 (1954) ("No one can be compelled to take water unless he chooses, and the lien, although enforced in the same way as a lien for taxes, is really a lien for an indebtedness, like that enforced on mechanics' contracts, or against ships and vessels." (Emphasis added)).
D. 42 U.S.C. § 1983
Plaintiffs claim that Defendant Cities have violated their Fourteenth Amendment rights to procedural and substantive due process. Plaintiffs also argue that Defendants' actions violated their equal protection rights under the Fourteenth Amendment. Finally, Plaintiffs claim that Defendant Cities actions' have effectuated a taking of their property in violation of the Fifth Amendment, as made applicable to the states by the Fourteenth Amendment.
1. Taking
The Fifth Amendment to the United States Constitution states that "[n]o person shall be deprived of life, liberty or property, without due process of law, nor shall private property be taken for public use, without just compensation." To establish that governmental action constitutes a taking in violation of the Fifth and Fourteenth Amendments to the United States Constitution, Plaintiffs must demonstrate that the Cities' actions placed an impermissible burden on their property. Amen v. City of Dearborn, 718 F.2d 789, 794 (6th Cir.1983). Defendants contend that Plaintiffs cannot prevail on this claim because the Cities did not place any impermissible burdens on the properties that they purchased.
Here, Plaintiffs argue that "[t]he Defendant Cities do not have valid authority to transfer these demolition costs to the Counties." In Plaintiffs' estimation, "[b]ecause of the invalid transfer of the demolition costs to the Counties for tax sales for recoupment, the Defendant Cities have caused a taking in the Plaintiff's (sic) personal property (money) that the Cities are not entitled to." This Court disagrees with Plaintiffs' contention. "A taking does not occur merely because the governmental action burdens or restricts some particular right or interest in a parcel of land; rather, before a taking occurs, the government must deny the owner all or an essential use of his property." Amen, 718 F.2d at 796. That has not occurred here. Plaintiffs' takings claim fails for this reason.
2. Procedural Due Process
Procedural due process principles protect persons from deficient procedures that lead to the deprivation of cognizable liberty interests. Bartell v. Lohiser, 215 F.3d 550, 557 (6th Cir.2000) (citing Mathews v. Eldridge, 424 U.S. 319, 333-34, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976)). To establish a procedural due process claim under § 1983, a plaintiff must demonstrate that she was deprived of a constitutionally protected life, liberty or property interest without due process of law. Hahn v. Star Bank, 190 F.3d 708, 716 (6th Cir.1999). In this circuit, a party may maintain a procedural due process § 1983 case in federal court if "he alleges and proves that there was a constitutional violation under color of law and: 1. The state did not have a remedy; or 2. The state had a remedy but it was deemed inadequate; or 3. The state had an adequate remedy in form, both procedurally and in damages, but the state did not apply it or misapplied its remedy." Id. (citing Haag v. Cuyahoga County, 619 F. Supp. 262, 278-79 (N.D.Ohio 1985), aff'd. *886 798 F.2d 1414, 1986 WL 17279 (6th Cir. 1986)).
i. Constitutionally Protected Property Interest
Defendants claim that "Plaintiff in this case was a potential purchaser of property. Nowhere does the Constitution or state law require that the City provide Plaintiff with the information he now demands or in the manner he prefers it." Defendants argue, "the Plaintiff lacks a property interest in this information and cannot maintain the procedural due process claim against that interest." Plaintiffs claim that they have been deprived of their money via an unlawful "taxing" scheme operated by the Defendant Cities. As the Supreme Court has impliedly recognized that money is a protected property interest. See Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 571-72, 92 S. Ct. 2701, 33 L. Ed. 2d 548 (1972) ("The property interests protected by procedural due process extend well beyond actual ownership of real estate, chattels, or money."). Plaintiffs, therefore, have properly identified a protected property interest.
ii. Notice & Opportunity to be Heard
Plaintiffs further claim that "there was no notice afforded to the Plaintiffs that demolition costs were being added or transferred to the Counties for recoupment." Defendants counter by noting that "[t]he City's records distinguish between delinquent taxes and other expenses related to the parcels," and that "[t]hat information is available by telephone, facsimile or in person to those who request it." Because Plaintiffs never requested the information, suggest Defendant Cities, they cannot be heard to claim that they lacked notice. There is no indication whether Defendant Cities publish or otherwise announce that they maintain these records and that they are available to entities such as Plaintiffs.
In determining which procedural protections are appropriate for a particular situation, the court considers the governmental and private interests that are affected. Kallstrom v. City of Columbus, 136 F.3d 1055, 1069 n. 5 (6th Cir.1998) (citing Mathews v. Eldridge, 424 U.S. 319, 334, 96 S. Ct. 893, 47 L. Ed. 2d 18, (1976)). The courts must consider three distinct factors: (1) the private interests that will be affected by the official action; (2) the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and (3) the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. Id. at 335, 96 S. Ct. 893. An analysis of these three factors reveals the following: (1) that Plaintiffs claim a private interest in their money; (2) that Defendant Cities have articulated no interest in depriving Plaintiffs thereof; and (3) that the current procedure involves a high risk of erroneous deprivation. Evidence of this last conclusion is Plaintiffs' Exhibit 1, which details the City of Lansing's mistaken inclusion of non-special assessments (e.g., demolition costs) in its delinquent tax report to the county.
It should be noted, however, that the discussion in Section A, supra, regarding the cities' statutory authority to recover demolition costs in the same manner as they recover property taxes, as well as the discussion of the description found in the tax record, supports the proposition that Plaintiffs had sufficient notice that demolition costs could/would be recouped in the tax lien sale. Businesses are deemed knowledgeable of the laws affecting their enterprise. Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384, 68 S. Ct. 1, 92 L. Ed. 10 (1947). "Without question, the *887 imputation of knowledge by virtue of publication in the Statutes at Large `is something of a fiction ...[;]' however, it is a fiction `required in any system of law[.]'" Neuser v. Hocker, 140 F. Supp. 2d 787, 801 (W.D.Mich.1999) (citing United States v. R.L.C., 503 U.S. 291, 308, 112 S. Ct. 1329, 117 L. Ed. 2d 559 (1992) (concurring opinion of J. Scalia)). Applying that fiction here, Plaintiffs had constructive notice of MICH. COMP. LAWS ANN. § 125.541.
iii. State Remedies
The Supreme Court has limited the use of § 1983 by holding that in cases involving deprivation of property without due process, a cause of action under § 1983 is unavailable if there exists a "state remedy that comports with procedural due process." Parratt v. Taylor, 451 U.S. 527, 101 S. Ct. 1908, 68 L. Ed. 2d 420, (1981); Braley v. City of Pontiac, 906 F.2d 220, 225 (6th Cir.1990). Under Parratt, where pre-deprivation process is impractical and adequate post-deprivation remedies are available, plaintiff is relegated to the available state remedies. Although Defendants have not demonstrated that pre-deprivation process is impractical in this instance, they cite to Swales v. Ravenna Township, 989 F. Supp. 925 (N.D.Ohio 1997), for the latter proposition. Specifically, Defendants asserts that Plaintiffs' § 1983 claim for procedural due process should be dismissed because they have not demonstrated that they lack state remedies.
Plaintiffs respond to this argument by voluntarily dismissing their implied contract claim and stating that their unjust enrichment claim is not a tort remedy but an equitable remedy. In Plaintiffs' view, therefore, Swales is inapplicable. Plaintiff is incorrect. The Supreme Court in Parratt spoke of available state remedies, not just state torts. Although Swales and Parratt involved a situation in which the plaintiff had alternative tort theories available to him, Parratt does not require this limitation. Plaintiffs' continued assertion of their unjust enrichment claim acknowledges their recognition that they have an adequate state remedy available to them. See, e.g., Reich v. Beharry, 686 F. Supp. 533, 535 (W.D.Pa.1988) ("In addition to the due process claim against the County, plaintiff asserts pendent state claims for breach of contract and unjust enrichment. These are clearly adequate post-deprivation remedies which are available to plaintiff."). Moreover, the court is unable to ascertain whether any administrative remedies exist to remedy Plaintiffs' situation. See, e.g., Mansfield Apartment Owners Ass'n v. City of Mansfield, 988 F.2d 1469, 1475-76 (6th Cir.1993) (stating that "the Mansfield Water Division Regulations provided plaintiffs with the right to a hearing regarding their objections to their water bills."). While Plaintiffs correctly note that Jones v. Powell, 462 Mich. 329, 612 N.W.2d 423 (2000), precludes an action for damages against municipalities under the Michigan Constitution, they have not demonstrated the nonexistence of other state remedies exist to redress Plaintiffs' claim. For these reasons, Plaintiffs' procedural due process claim is dismissed.
3. Substantive Due Process
Substantive due process provides that, irrespective of the constitutional sufficiency of the processes afforded, government may not deprive individuals of fundamental rights unless the action is necessary and animated by a compelling purpose. Bartell, 215 F.3d at 557-58 (citing Washington v. Glucksberg, 521 U.S. 702, 721, 117 S. Ct. 2258, 138 L. Ed. 2d 772 (1997)). Plaintiffs claim that "the Cities know that demolition costs cannot be transferred to the County under Michigan law, but have been disguising the demolition costs by attaching it to the outstanding taxes which are unconscious, shocking *888 and oppressive to the public." As stated previously, the Defendant Cities were authorized to assess the demolition costs in this case. Accordingly, the Court finds no conduct that a reasonable person would consider "shocking to the conscience." Plaintiffs' arguments to the contrary unpersuasive. Defendants' motion for summary judgment as to this claim is granted.
4. Equal Protection
The equal protection clause of the Fourteenth Amendment protects property interests by requiring legislative classifications adversely affecting the property interests of a class to be rationally related to a legitimate legislative goal. Ohio Inns, Inc. v. Nye, 542 F.2d 673, 680 (6th Cir. 1976). Plaintiffs' Amended Complaint states that the Defendants "have carried out a denial of Plaintiffs' equal protection by stating an amount of delinquent taxes which is grossly disproportionate to the actual lien on the land on tax sales and created a class of de facto taxes which are unconstitutional and invalid under the law." Defendants argue that, even assuming their truth, Plaintiffs' statements "do not support an equal protection claim because they do not show that the cities treated Plaintiff differently than others similarly situated." Defendants position is correct, and Plaintiffs' own arguments defeat its equal protection claim.
Plaintiffs have not established the existence of two groups similarly situated treated differently by the Defendant Cities. To the contrary, Plaintiffs argue that the Defendant Cities "have engaged in a custom and policy of intentionally and consistently deceiving the investors purchasing tax liens at the annual sale by knowingly reporting to the Counties `delinquent taxes' which inappropriately include some of the Cities' municipal non-tax `special assessments' and `special bills' as real estate taxes." Complaint ¶ 15 (emphasis added). Plaintiffs have not argued that the Defendant Cities include the demolition costs in some liens but not in others, thereby creating two classes of investors. Instead, Plaintiffs appears to argue that the Defendant Cities include demolition costs associated with properties in Lansing and Flint in all tax lien sales. In this way, there are not two classes. There is but one-that of the investors purchasing tax liens.
Plaintiffs Motion of Summary Judgment offers no assistance to their equal protection claim. Plaintiffs argue that "[t]he Cities, by transferring demolition costs to the County has created a class of persons who bid on properties which have the defacto demolition costs attached to them, and a class of bidders who bid on property which do not have demolition costs attached to the tax sale." Plaintiffs further assert that "[t]he taxes with demolition costs do not relate to the value of the property compared to taxes without the demolition costs," and argue that "the Cities are denying these bidders equal protection of the law to other bidders who purchase properties without demolition costs associated with the tax sale in violation of their equal protection rights."
Again, Plaintiffs have failed to produce evidence of the existence of a class of "other bidders who purchase properties without demolition costs associated with the tax sale." Plaintiffs argue that if demolition costs are associated with Flint and Lansing-area properties sold at the annual tax lien sale, it is the custom of the cities to include these costs in the amount of the tax lien. If this is so, the only "class of bidders who bid on property which do not have demolition costs attached to the tax sale" is the class of individuals who buy properties in the Flint and Lansing areas that have no associated demolition costs to include. This class could not be "similarly situated" for purposes of the equal protection *889 clause. For this reason, Plaintiffs equal protection claim is dismissed.
E. Unjust Enrichment
Plaintiffs claim that "[t]he Defendant Cities have been unjustly enriched by taking monies which they were not entitled to." Complaint ¶ 41. Defendants respond by stating that, because unjust enrichment is an equitable remedy, Plaintiffs must demonstrate that they acted equitably. Defendants also contend that "[t]he Plaintiff did not do equity because it did nothing to protect its own interests before offering to purchase the tax liens." Defendants further contend that:
The Plaintiff's representative-an attorney-spoke of doing "due diligence," but it consisted of nothing more than reading the County's catalog to choose those properties with tax liens totaling between $1,000 and $1,5000. Had Plaintiff asked, the City of Flint could have advised it of all tax liens, including those which the Plaintiff described as "non-tax special assessments and special bills." The City's Treasurer kept that information and provided it by telephone, facsimile or in person to those who requested it. The Plaintiff never asked for that information and now complains that the City "deceived" him.
Citing to Atlantic Municipal v. Auditor General, 304 Mich. 616, 8 N.W.2d 659 (1943), Defendants claim that Plaintiffs failure to investigate militates in favor of summary judgment for Defendants.
In Atlantic Municipal, the plaintiff was, like the Plaintiff is this case, in the tax-title business. Plaintiff in that case bought property at a tax lien sale from the City of Flint. Unbeknownst to him, the State of Michigan had previously purchased tax liens for prior tax periods, making the State's lien superior to plaintiffs. Plaintiff sued to invalidate the tax lien sale, but the Michigan Supreme Court rejected his claim, observing that plaintiff was "no novice in the business of purchasing at State tax sales." Id. at 620-21, 8 N.W.2d 659. The Michigan Supreme Court further recognized that:
The tax records were open to plaintiff's inspection, and it is presumed to have known of the existing State laws relating to tax sales. It is apparent that plaintiff purchased at the 1939 tax sale with open eyes, and we are satisfied that it received all that it purchased and paid for, i.e., the lien of the State for the 1936 unpaid taxes, which lien was cut off when the State's title became absolute November 3, 1939.
Id. at 621, 8 N.W.2d 659.
Plaintiffs respond to this argument by stating that it does not apply because it does "not pertain to the same factual situation that we have in this case and the Plaintiffs in these cases did not do anything wrong." It should be noted that plaintiff in Atlantic Municipal also did nothing wrong. Plaintiffs do not explain the factual differences they claim. Plaintiffs' distinction on this issue is nonexistent. However, Defendants analogy to Atlantic Municipal fails because Defendants cite to no law of which the Plaintiffs should know that requires the cities to keep the records they say that have.
Plaintiffs do, however, point to Helin v. Grosse Pointe Township, 329 Mich. 396, 45 N.W.2d 338 (1951), for the proposition that "intentional over-assessment is fraud." Id. at 407, 45 N.W.2d 338. In Helin, the Michigan Supreme Court found that the municipal taxing authority had engaged in fraud where a tax lien investor had been induced into paying more for a tax lien than the value of the underlying property. According to Plaintiffs, "[t]his is the exact same situation as the case at bar. In our case, the Cities are carrying out and engaging in fraud," leading to Plaintiffs being *890 induced into paying more for a tax lien than the value of the underlying property.
Helin does not change the premise of Atlantic Municipal. Helin involved individual plaintiffs not learned in the business of property tax valuation. They could not be presumed to know the laws of that area. By contrast, the Plaintiffs here are experienced in the business of purchasing tax liens and, by law, are presumed to know the relevant laws.[1]Adams Outdoor Adver. v. City of East Lansing, 463 Mich. 17, 27 n. 7, 614 N.W.2d 634 (2000) ("People are presumed to know the law"); American Way Service Corp. v. Commissioner of Ins., Michigan Dept. of Commerce, Ins. Bureau, 113 Mich.App. 423, 433, 317 N.W.2d 870 ("One engaged in business in this state is presumed to know the law as it relates to the operation of that business.").
Defendants cite to Mercantile Trust Co. v. Tennessee Cent. R. Co., 294 F. 483, 487 (6th Cir.1923), for the proposition that the doctrine of caveat emptor applies at judicial sales. The Michigan Court of Appeals has also stated that, "[u]nder Michigan law, a purchaser at a judicial sale takes the property subject to all prior defects, liens and encumbrances of which he has notice or of which he could obtain knowledge under his duty to inform himself." Byerlein v. Shipp, 182 Mich.App. 39, 43, 451 N.W.2d 565 (1990). Plaintiffs rely on Helin to refute this claim, as well, arguing that fraud negates this rule.
The above mentioned arguments notwithstanding, Plaintiffs claim fails because their premise is faulty. Contrary to Plaintiffs' assertion, the Defendant Cities have not been unjustly enriched by taking monies which they were not entitled to because, as explained earlier, the Defendant Cities were entitled to these monies. Plaintiffs' Motion for Summary Judgment is DENIED and Defendants' Motion is GRANTED in its entirety.
IV. CONCLUSION
This Court GRANTS Defendants motion for summary judgment on Plaintiffs' § 1983 procedural due process claim because alternative state court remedies exist for Plaintiffs to redress their alleged harm. This Court also GRANTS summary judgment in favor or Defendants on Plaintiffs' substantive due process claim because Defendants have not committed conduct "shocking to the conscience." Additionally, Plaintiff's equal protection claim is DISMISSED because Plaintiffs have not demonstrated the existence of two similarly situated classes which have been irrationally treated differently by Defendant Cities. Defendants' motion is also GRANTED with regard to Plaintiff's takings and unjust enrichment claims. Finally, Plaintiffs' state law claims are meritless, and summary judgment is GRANTED in favor of Defendants.
Accordingly,
IT IS HEREBY ORDERED THAT Defendants' Joint Motion for Dismissal and/or Summary Judgment (Docket # 20, filed October 1, 2001) is GRANTED.
IT IS FURTHER ORDERED THAT Plaintiff's Motion for Summary Judgment (Docket # 21, filed October 21, 2001) is DENIED.
IT IS FURTHER ORDERED THAT Defendants' Motion and Brief for Extension to File Response to Plaintiff's Motion for Summary Judgment (Docket # 25, filed November 15, 2001) is GRANTED.
*891 JUDGMENT
This action having come before the Court and pursuant to the Memorandum and Order entered this date,
Accordingly,
Judgment in favor of Defendants and against Plaintiff is hereby entered.
NOTES
[1] Franken Investments has been incorporated "at least since 1997." Dep. of Kenneth Frantz at 4. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2360373/ | 218 F. Supp. 2d 788 (2002)
Earl SAND, Plaintiff,
v.
Corrections Officer S. STEELE, Corrections Officer L. Hicks, Corrections Officer Darling, and Inmate Hearings Officer B. Mohead, Defendants.
No. Civ.A. 2:01CV11.
United States District Court, E.D. Virginia, Norfolk Division.
August 15, 2002.
*789 Earl Sand, Wallens Ridge State Prison, Big Stone Gap, VA, pro se.
Pamela Anne Sargent, Office of the Attorney General of Virginia, Richmond, VA, for defendants.
ORDER
MORGAN, District Judge.
This matter comes before the Court on a joint motion of the Defendants' for summary judgment in the above titled 42 U.S.C. § 1983 ("Section 1983") claims filed by Plaintiff Earl Sand, a Virginia prison inmate. The joint motion is filed pursuant to Federal Rule of Civil Procedure (Rule) 56. Sand opposes the motion of the Defendants, and further asks this Court to grant him Rule 56 summary judgment on the pleadings he has previously filed with the Court. For the reasons stated herein, the joint motion of the Defendants is GRANTED, and the Plaintiff's motion is DENIED. Accordingly, the Court ENTERS JUDGMENT in favor of the Defendants, and this cause of action is DISMISSED with prejudice.
STANDARD OF REVIEW
District courts may enter summary judgment only when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. See Miller v. Leathers, 913 F.2d 1085, 1087 (4th Cir.1990) (en banc) cert. denied, 498 U.S. 1109, 111 S. Ct. 1018, 112 L. Ed. 2d 1100 (1991). The facts and inferences to be drawn from the pleadings must be viewed in the light most favorable to the nonmoving party. See Nguyen v. CNA Corp., 44 F.3d 234, 237 (4th Cir.1995). Summary judgment is appropriate when the record, taken as a whole, could not lead a rational trier of fact to find for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-49, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
In order to defeat a motion for summary judgment, a plaintiff cannot rely on "mere belief or conjecture, or the allegations and denials contained in his pleadings." Doyle v. Sentry Insur., 877 F. Supp. 1002, 1005 (E.D.Va.1995) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)). Rather, the nonmoving party must set forth specific facts through affidavits, depositions, interrogatories, or other evidence to show genuine issues for trial. See Celotex, 477 U.S. at 324, 106 S. Ct. 2548. When a plaintiff fails to make a sufficient showing establishing an essential element of his case and the plaintiff bears the burden of proof on that issue, "there is `no genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other fact immaterial." Celotex, 477 U.S. at 322, 106 S. Ct. 2548; see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
While "it is the province of the jury to resolve conflicting inferences from circumstantial evidence, ... it is the duty of the court to withdraw the case from the jury when the necessary inference is so tenuous that it rests upon speculation and conjecture." Ford Motor Co. v. McDavid, 259 F.2d 261 (4th Cir.1958). Such an approach protects against the danger that a jury will make a decision based on sheer speculation, tainted by impermissible factors such as jury sympathy. Lovelace v. Sherwin-Williams Co., 681 F.2d 230, 242 (4th Cir. 1982).
CORRECTIONS OFFICERS S. STEELE AND L. HICKS
Sand is an inmate with the Virginia Department of Corrections' Sussex I State *790 Prison, serving a 50 year sentence for rape and forcible sodomy. On May 31, 1999, the Plaintiff was allegedly observed exposing his genitals in a public area of the prison so that other individuals present, guards and inmates, would take notice of his behavior. After prison officials witnessed such behavior, a major offense violation was filed against Sand,[1] in which Officers Steele and Hicks were primarily involved as reporting officers. On June 2, 1999, a hearing was held in front of Inmate Hearings Officer Mohead, as finder of fact and guilt or innocence, where Sand was ultimately convicted of the offense.
Sand exercised his right of appeal to the prison's warden and the Regional Director. The Regional Director attempted to listen to the audiotape of the proceedings to determine the disposition of Sand's appeal, and discovered the tape was damaged beyond his ability to distinguish the sequence of events that took place during the hearing. Unable to review the tape, the Regional Director had no other choice but to rule in Sand's favor on the appeal, and expunge the charge and incident from his prison record. Sand now files suit against Officer's Steele and Hicks for defamation, slander and libel, conspiracy, cruel and unusual punishment, and lying and giving false information, seeking damages pursuant to Section 1983. Steele and Hicks ask the Court to dismiss this action on the grounds that they enjoy qualified immunity from such lawsuits, among other grounds.
As has been ruled consistently in the past:
The doctrine of good faith qualified immunity shields government employees performing discretionary functions from civil liability unless their conduct violates clearly established statutory or constitutional rights of which a reasonable person would have known. For an individual official to be held liable, the contours of the law must be sufficiently clear that a reasonable official would understand that what he is doing violates that right. Judging whether qualified immunity attaches turns on a standard of objective reasonableness. This immunity defense provides ample protection to all but the plainly incompetent or those who knowingly violate the law. Delph v. Trent, 86 F. Supp. 2d 572, 575 (E.D.Va.2000) (internal punctuation and citations omitted).
This Court must therefore determine if Steele and Hicks subjected Sand to a violation of federal rights as defined in the United States Constitution and law in reporting on this incident to the proper authorities for disciplinary actions.
As the United States Supreme Court has consistently ruled, courts should accord "wide ranging deference" to prison security officials who are reacting with what they believe to be good faith efforts to handle a situation in which they are confronted with unruly prisoners. Whitley v. Albers, 475 U.S. 312, 320, 106 S. Ct. 1078, 89 L. Ed. 2d 251 (1986) (citing Bell v. Wolfish, 441 U.S. 520, 547, 99 S. Ct. 1861, 60 L. Ed. 2d 447 (1979)). In this situation, Sand argues that Officers Steele and Hicks did little more than react and testify to the best of their recollection about an incident they saw, which could have caused a disturbance among those prisoners in the general area. The conviction was overturned on technical grounds, and there is not even a hint of proof anywhere in the record that the Officers testified falsely or out of a motive to maliciously harm the integrity of the Plaintiff. See generally Id. Furthermore, Sand's Complaint does not allege any sufficient injury of the type that *791 would trigger the invocation of Section 1983. See Lewis v. Casey, 518 U.S. 343, 116 S. Ct. 2174, 135 L. Ed. 2d 606 (1996); see also Strickler v. Waters, 989 F.2d 1375 (4th Cir.1993).
Defendants Steele and Hicks were merely living up to their duty as correctional officers to report a violation of prison policy by an inmate. "The doctrine of good faith qualified immunity shields government employees performing discretionary functions from civil liability unless their conduct violates `clearly established statutory or constitutional rights of which a reasonable person would have known.'" Delph, 86 F.Supp.2d at 575 (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982)). "For an individual official to be held liable, the contours of the law must be sufficiently clear that a reasonable official would understand that what he is doing violates that right." Id.
The Court FINDS that a correctional officer testifying in good faith at an administrative prison proceeding as to his or her belief about what took place involving an inmate is not something a reasonable officer would understand to violate a federal right. Further, the Court FINDS that Officers Steele and Hicks are entitled to qualified immunity from the Section 1983 action filed against them by Sand in the Court. Accordingly, the above titled cause of action against Officers Steele and Hicks is DISMISSED with Prejudice.
CORRECTIONS OFFICER DARLING
On July 23, 1999, Correctional Officer Darling allegedly observed the Plaintiff standing in the window of his cell suggestively manipulating his unclothed genital area, in such a manner that the officer believed was reasonably designed to attract the attention of those standing in the general public vicinity. Darling immediately rushed to Sand's cell and issued a verbal warning, which by all accounts was heeded by the Plaintiff. Defendant Darling then filed a Major Offense # 210 charge against Sand with the proper prison authorities.
A July 30, 1999 hearing was promptly held in front of Mohead, in which Darling testified. Based on the record and testimony at the hearing, Inmate Hearings Officer Mohead found Sand guilty of the offense. Sand's case was appealed to the Regional Director, who ordered a rehearing of the charge. There is no evidence that the rehearing was conducted by prison officials. Without evidence that Mohead conducted the ordered rehearing, the Regional Director dismissed the charge against Sand and ordered it expunged from his prison records.
On August 10, 1999, Officer Darling again claims to have observed Sand participating in indecent activities with his exposed private areas in a public section of the prison. Darling filed a Major Offense # 210 infraction charge with the prison. Mohead found Sand guilty on August 19, 1999, following a hearing and review of the record. The Regional Director was unable to locate the audiotape recording of the proceeding to review the hearing upon an appeal by Sand. Without such a tape, the Regional Director dismissed the charge against Sand, and ordered it expunged from his prison record.
As with the identical claims Sand filed against Officers Steele and Hicks, Officer Darling was merely satisfying his duty as a correctional officer to report a violation of prison policy. See Id. Sand has not alleged sufficient facts to demonstrate Darling was maliciously reporting on these activities in an attempt to damage the Plaintiff's integrity or knowingly violate a federal right of Sand's. Furthermore, the Plaintiff has not alleged a sufficient harm. See Id.
*792 The Court FINDS that a Darling testified in good faith at an administrative prison proceeding as to his belief about the incident he believed took place involving the Plaintiff, and would not have reasonably understood his actions to violate a federal right. Further, the Court FINDS that Officer Darling is entitled to qualified immunity from the Section 1983 action filed against him by Sand in the Court. Accordingly, the above titled cause of action against Officer Darling is DISMISSED with Prejudice.
INMATE HEARINGS OFFICER MOHEAD
During the July 30, 1999 hearing, Inmate Hearings Officer Mohead directed Officer Darling not to answer several questions of Sand's he deemed to be profane and inappropriate. Sand claims this was a violation of his constitutional rights, and therefore the hearing was tainted. The Court notes, arguendo, that even if Mohead violated Sand's constitutional rights by not allowing Darling to answer certain questions, that claim was likely remedied by the fact the Regional Director dismissed and expunged the indecent exposure charge of which Sand was found guilty at the July 30, 1999 hearing.
The Court does not have to decide that question, however, because Mohead, too, is entitled to protection under the doctrine of good faith qualified immunity. The inmate hearings officer is under a duty to maintain an environment during a hearing where the examination of witnesses is conducted in a professional manner and relates only to germane subjects. See Id. If any person examining a witnesses strays into inappropriate questioning, it is his duty to return the proceeding to proper order and decorum.
The Court FINDS that an Inmate Hearings Officer who, in good faith, directs a witness at an administrative prison proceeding not to answer a question deemed inappropriate is not acting in such a manner that a reasonable officer would understand to violate a federal right. Further, the Court FINDS that Mohead is entitled to qualified immunity from the Section 1983 action filed against him by Sand in the Court. Accordingly, the above titled cause of action against Inmate Hearings Officer Mohead is DISMISSED with Prejudice.
The Plaintiff is advised that he may appeal from this final Order granting summary judgment by forwarding a written notice of appeal to the Clerk of the United States District Court, United States Courthouse, 600 Granby Street, Norfolk, Virginia 23510. Said written notice must be received by the Clerk within sixty (60) days from the date of this Order.
The Clerk is REQUESTED to send a copy of this order to all counsel of record.
It is so ORDERED.
NOTES
[1] Sand was officially charged with Major Offense # 210 for indecent exposure. He has 35 such convictions for indecent exposure in his prison record. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2361988/ | 770 A.2d 82 (2001)
DISTRICT OF COLUMBIA, Appellant,
v.
Van HARRIS, as Personal Representative of the Estate of Tezia Allen, and as parent of Vann Allen, a minor, Appellee.
Nos. 95-CV-1382, 95-CV-1775.
District of Columbia Court of Appeals.
Argued October 21, 1997.
Decided April 12, 2001.
*84 Donna M. Murasky, Assistant Corporation Counsel, with whom Jo Anne Robinson, Interim Corporation Counsel at the time the brief was filed, and Charles L. *85 Reischel, Deputy Corporation Counsel, and Charlotte Bradley, Assistant Corporation Counsel, were on the brief, for appellant.
Carolyn J. Israel, with whom Patrick J. Christmas was on the brief, Washington, DC, for appellee.
Before WAGNER, Chief Judge, and TERRY and FARRELL, Associate Judges.
Wagner, Chief Judge:
On June 9, 1992, Tezia Allen, who was not quite two years old, was beaten to death by her mother's live-in male companion, Eustus Smith. Smith was convicted of criminal charges arising out of the murder. At about the same time, Tezia's brother, Vann Allen, was the victim of physical abuse in the home. The children's father, Van Harris, on behalf of Vann and as personal representative of Tezia's estate, filed a complaint for damages against the District of Columbia and Eustus Smith related to Tezia's death and Vann's injuries. A jury returned a verdict for the estate in the amount of $250,000 and for Vann in the amount of $150,000. The District argues for reversal on the principal ground that it was entitled to judgment as a matter of law because the evidence failed to establish negligence on its part which would render it liable for the intervening criminal acts of Smith. Alternatively, the District contends that Harris failed to present expert testimony which was required to establish the standard of care. It also argues that the damages awarded to the estate and for the minor child, Vann, were excessive and that as to Vann, the evidence was insufficient to support a finding that his injuries were proximately caused by the District. We affirm the judgment in favor of the estate against the District, but reverse the judgment against the District as to Vann's claims.
I.
A. Factual Background
The evidence at trial showed that Harris went to the home of the children's mother to pick up the children for a visit on or about May 19, 1992. According to Harris, the home was filthy, and he noticed "three silver [dollar] size bruises on [Tezia's] head... [o]n her forehead and on the right cheek.... She had like three silver dollar size blotches." He questioned the children's mother about the bruises, and she responded that Tezia had fallen out of the bed. Later, when he undressed and bathed the children, Harris noticed a "hand size blotch in the middle of [Tezia's] chest," small scratches over her chest, stomach and back, and two additional silver dollar shaped bruises on her lower back. Harris found similar scratches on Vann's chest and back. When he asked Vann about these injuries, he responded "my daddy at home, belts us a lot."
Harris returned the children to their mother a few days later and went "down-town" immediately afterwards to report the children's condition. He said that he did not keep the children with him because the mother had custody, he thought she would complain to the police if he did, and he feared being charged with kidnaping. Harris testified that he went into two to three different buildings before being directed to one where he could report child abuse. Harris spoke to Phyllis Ferguson, a supervisor at "Child Welfare and Paternity," to whom he reported that the children were neglected and abused. He testified that he told her about the blotches on their bodies, his son's statement about the abuse, and the condition of their home, which he described in testimony as filthy. Harris said that he spoke with Ms. Ferguson fifteen to twenty times over a one *86 month period seeking assistance. Mr. Harris also contacted the Metropolitan Police Department regarding his concerns.
The deposition testimony of Detective Cervantiz Burke of the Metropolitan Police Department, who subsequently became involved in the investigation, was read into evidence at trial. According to her testimony, she went to the children's home on May 28th to investigate. There, she interviewed the children's mother, who denied Harris' allegations and said that she had not seen him since January. Although she had no specific recollection of removing the children's clothing to examine them, Detective Burke stated that "I would have had to look to find out if they had marks or bruises," and the report stated that "the examination of the Respondent and sibling didn't reveal any marks or bruises." When shown a photograph of Vann's hand taken after Tezia was found dead, showing a burn, Detective Burke stated that had the hand appeared like that during her visit to the home, she would have taken the children. The detective concluded that the allegations were unfounded, and the investigation was closed.
Smith was in the home when Detective Burke investigated, and he testified about the conditions there at the time and the manner in which the detective performed her investigation. Smith testified that the mother returned home from work early and started to clean in anticipation of the detective's arrival, but Detective Burke arrived within a few minutes. According to Smith, Detective Burke remained in the apartment for about fifteen to twenty minutes. She did not go into the bedroom or the kitchen, although one could see the kitchen from where the detective was standing. Smith testified that she did go into the bathroom, which "was filthy." He said, "[s]he came back checked the kids then she asked two questions and that was it." Smith stated that the questions were whether he lived in the apartment and whether the mother was on welfare. Smith testified that the detective did not speak to the children privately or ask them any questions, even though Vann was old enough to respond and could speak well. Smith described the detective's inspection of the children in this way:
She looked like she was rushing to check them and go ahead and go, do whatever she had to do. When she did they were standing side by side,.... What she did she just lift the shirt up, see what was there and that was it. Checked Tezia the same way and that was it and she went on about her business.
Smith testified that she never looked at Vann's hand, which had a burn on it which had been there for a couple of days.[1] He said that Detective Burke examined Tezia's back, but never asked about a bruise that was on her back, which Smith said resulted from the mother striking the child with a paint brush. Eleven days later, on June 9, Tezia Allen was beaten to death by Smith.
The parties stipulated to certain facts which were presented to the jury. First, they stipulated that "it is undisputed that Tezia Allen was beaten [to] death by an assailant." Second, they stipulated that
pursuant to the prevention of child abuse and neglect act when report of child abuse or neglect is made[,] the Child Protective Services Division of the District [Department] of Human Services[,] the District of Columbia through [its] agent, servants and/or employees is required to make certain determinations and take certain immediate actions to safeguard the right and protect the welfare *87 of children who[se] parents aren't able to do so.
Finally, the parties stipulated that
the Metropolitan Police Department Youth Services Division is the agency responsible for investigating reports made of children who are being abused. And the Department of Human Services is the agency responsible for investigating reports made of children who are being neglected in the District of Columbia.
B. Trial Court Rulings
The District moved for judgment as a matter of law at the conclusion of Harris' presentation of the evidence, which the trial court denied. The jury returned a verdict for Harris, and the District filed a post-trial motion for a judgment notwithstanding the verdict or in the alternative, for a new trial or remittitur, which the trial court also denied. In denying the motions, the court determined that the fact pattern presented fell within the exception to the public duty doctrine outlined in Turner v. District of Columbia, 532 A.2d 662 (D.C.1987), because of the special relationship established through the complaint and the mandatory functions of the prevention of child abuse statutes. See Prevention of Child Abuse and Neglect Act of 1977, D.C. Law No. 2-22, D.C.Reg. 3341 (1977), as amended, D.C.Code §§ 6-2101 through 2127 (1995). The trial court concluded that there was evidence from which a reasonable juror could find that the District had a continuing duty, that it breached that duty, and that there was a foreseeable link between the negligent performance of that duty and the resulting harm to the children. The trial court also ruled that the award of damages was not excessive and denied the District's request for a new trial or remittitur.
II.
Harris's claims against the District are based upon a negligence theory. Therefore, we start with the familiar proposition that to establish negligence a plaintiff must prove "`a duty of care owed by the defendant to the plaintiff, a breach of that duty by the defendant, and damage to the interests of the plaintiff, proximately caused by the breach.'" Turner, supra, 532 A.2d at 666 (quoting District of Columbia v. Cooper, 483 A.2d 317, 321 (D.C. 1984) (citations omitted)). Focusing first on the duty of care, as a general rule, there is no individual right of action for damages against the government for failure to protect a particular citizen from harm caused by the criminal conduct of another. Morgan v. District of Columbia, 468 A.2d 1306, 1310-11 (D.C.1983) (en banc) (citations omitted). A narrow exception to this no-liability rule has been recognized where, for example, "the police by their actions affirmatively undertake to protect an individual under circumstances creating a special relationship or there is a statute or regulation which mandates protection of a particular class and where the individual justifiably relies upon such undertaking of the police, or the statute or regulations...." Id. at 1315. Pertinent to this case, in Turner, supra, we held that the Child Abuse Prevention Act imposes "upon certain public officials specific duties and responsibilities which are intended to protect a narrowly defined and otherwise helpless class of persons: abused and neglected children." Turner, supra, 532 A.2d at 668. Thus, when abused and neglected children have been individually identified to the government agency charged with their protection, then a duty, although narrow and specific, is created by statute to benefit the individually identified persons. Id. at 673. In Turner, we held that evidence sufficient to permit a reasonable *88 juror to find that the District was negligent in fulfilling a special duty under the Act would support a claim for damages proximately resulting from such breach. Id. at 674-75.
The District does not seem to challenge on appeal that a special duty arose under the circumstances presented.[2] Rather, it contends that the evidence showed that it satisfied any potential duty imposed by the Act. Specifically, it argues that: (1) the District's employees investigated the complaints of abuse with reasonable promptness; (2) the detective's investigation and disposition of the complaint was adequate; and (3) it had no legal duty to refer the case to the Child and Family Services Division (CFSD) of the Department of Human Services (DHS) because the investigating detective's supervisor said that he would have concluded that Harris' report of abuse was "unfounded," and the law requires the police department to contact DHS only for supported reports of abuse.
The District's first two arguments are essentially a challenge to the factual determinations apparently made by the jury in rendering verdicts for Harris. In support of these arguments, the District points out that "none of the three detectives... who investigated ... Mr. Harris' report to the MPD can be faulted for not physically locating Vann and Tezia," and that "Detective Burke, who interviewed the children's mother and Smith, and who inspected Tezia and Vann, cannot be faulted for concluding ... that Mr. Harris' report of child abuse was unfounded." In support of this argument, the District points to evidence that the officers had difficulty locating the children within the first twenty-four hours of the report because Harris provided an incorrect address, and therefore, they were not negligent in failing to intervene to protect them during this period. However, there was evidence from which the jury could have determined that the District's negligence occurred after the initial period. The children remained in the home for almost a month between the time of this initial report of neglect and abuse and the time that Tezia was murdered and Vann was observed with a burn on his hand. Detective Burke ultimately found the children in their home and had an opportunity to inspect the children and their living conditions.
Focusing on the investigation, the District argues that the detective cannot be faulted for determining upon investigation that the complaint was unfounded. It cites again the bad address that Harris gave, the absence of bruises and red spots all over their bodies as he had reported, the mother's negative responses about Harris, and the detective's account of the children's condition as best as she could recall it, aided by her report. However, the jury was at liberty to reject the detective's account and rely instead upon other evidence supporting Harris' claims. Harris reported to the authorities that he observed marks indicative of physical abuse on the children, and according to Smith, Vann had a burn on his hand and Tezia had a mark on her back inflicted by a paint brush at the time when the detective observed them under deplorable living conditions. Indeed, the District concedes in its brief that "[a]t worst, from the District's stand point, Vann had `like a little burn' on one hand, ... and Tezia had a bruise on her back, which could have been accidental." Smith also testified that the detective who investigated appeared to be in a hurry and failed to ask Vann any questions, *89 and the detective described her own examination as cursory. Thus, the jury could have inferred reasonably that the detective, in her haste, failed to see that which was there to be observed and failed to investigate adequately the allegations that the children were the victims of abuse and neglect. There was also evidence that Vann explained to Harris the marks that Harris observed during his visit by saying that Smith belted them a lot, which Harris testified that he reported.
The District's third argument similarly rests on the resolution of factual issues. In contending that there was no legal duty to refer the case to DHS because unfounded reports need not be reported, it relies on (or assumes) the jury's acceptance of the District's version of the facts, when there was a differing version.
It is the jury's province, and not the court's, to weigh the evidence and to determine the credibility of witnesses. Etheredge v. District of Columbia, 635 A.2d 908, 917 (D.C.1993) (citing Rich v. District of Columbia, 410 A.2d 528, 534 (D.C.1979)). "When there is some evidence from which jurors could find the requisite elements of negligence, or when the case turns on disputed facts and the credibility of witnesses, the case must be submitted to the jury for determination." Lyons v. Barrazotto, 667 A.2d 314, 320 (D.C.1995) (citing Washington Welfare Ass'n. v. Poindexter, 479 A.2d 313, 315 (D.C.1984) (other citation omitted)). A case may not be taken away from the jury and decided as a matter of law if an impartial juror could find reasonably that the evidence was sufficient to support the verdict. Etheredge, 635 A.2d at 916 (citing Finkelstein v. District of Columbia, 593 A.2d 591, 594 (D.C.1991) (en banc)). In determining whether a case should be taken from the jury and judgment entered as a matter of law, the evidence must be viewed in the light most favorable to plaintiff, giving plaintiff the benefit of all reasonable inferences. Etheredge, 635 A.2d at 915. Under that standard, cases are rare where issues of negligence and proximate cause can be taken from the jury and decided by the court as a matter of law. Lyons, 667 A.2d at 320 (citing Oxendine v. Merrell Dow Pharms., 506 A.2d 1100, 1103 (D.C. 1986) (quoting Rich, 410 A.2d at 532)). This is not one of those unusual cases. The issues here involve factual matters within the jury's province. "As an appellate court we have no power to retry factual issues; our authority is restricted to a review for errors of law." Sachs v. Eller, 89 A.2d 644, 645 (D.C.1952); see D.C.Code § 17-305(a) (1997).
The District also argues that as a matter of law Detective Burke was not negligent, a conclusion it contends is compelled by this Court's decision in In re T.G., 684 A.2d 786 (D.C.1996). In T.G., the parents challenged the finding of the trial court that their children were neglected within the meaning of D.C.Code § 16-2301(9)(B) and (F).[3] We reversed the finding of neglect because the government had failed to meet its burden of establishing that the neglect was not due to the lack of financial *90 means, as required by the statute. T.G., 684 A.2d at 791. Comparing the adverse conditions of the children's home as described in T.G. with the physical conditions of the apartment in this case,[4] the District argues that it had no duty to remove the children from the home since their physical living conditions were not as severe as those described in T.G., where the court suggested caution to the government in intervening, absent danger to the physical or emotional health of a child. Id. at 789. T.G., however, provides no support for the District's argument that it is entitled to judgment as a matter of law. Unlike the present case, T.G. did not involve allegations of physical abuse nor evidence that signs of physical abuse could be observed on the children when the DHS workers investigated.[5] The decision in T.G. turned on a failure of proof of an element of neglect, i.e., that the children's deprivation was not due to the parents' lack of financial means.
III.
The District argues that expert testimony was required to establish the applicable standard of care for police officers investigating reports of child abuse and neglect. Harris did not present expert testimony on the standard of care; therefore, the District argues, Harris failed in his proof of negligence.[6]
In a negligence case, the plaintiff has the burden of establishing a standard of care and that defendant's deviation from that standard proximately caused plaintiff's injuries. Toy v. District of Columbia, 549 A.2d 1, 6 (D.C.1988) (citing Meek v. Shepard, 484 A.2d 579, 581 (D.C. 1984) (other citation omitted)). Expert testimony will be required where "the subject in question is so distinctly related to some science, profession, or occupation as to be beyond the ken of the average layperson." District of Columbia v. Peters, 527 A.2d 1269, 1273 (D.C.1987) (citing District of Columbia v. White, 442 A.2d 159, 164-65 (D.C.1982) (other citation omitted)).
Harris argues that the applicable standard of care was established, in part, through the Metropolitan Police Department Youth Division Handbook. He contends that the Handbook sets forth the responsibilities of the District's detectives in responding to situations of the type involved here. He also contends that *91 there was evidence from the District's agents concerning the required procedures and the detectives' failure to abide by the procedures. Rules of this type may provide evidence of a standard of reasonable care. Washington Metro. Area Transit Auth. v. O'Neill, 633 A.2d 834, 841 (D.C. 1993). The provisions of the Handbook upon which Harris relies are set forth in part in the footnote of this opinion.[7] The District does not argue that the Handbook provides no evidence of negligence. Rather, it contends that there is no evidence that the District's workers violated the provisions of the Handbook. Yet, there was evidence, as previously indicated, from which a jury could determine that, inconsistent with the manual, the detective conducted an examination of the children and their conditions insufficient to reveal obvious injuries and neglect. Absent a reasonable assessment of their condition, the District's employees could not conform their conduct to the requirements of the cited manual and take any steps for the children's protection. Similarly, there is a factual basis for the conclusion that the detective's belief that the allegations of abuse were not supported was contrary to the evidence credited by the jury. In addition, the parties stipulated that the Prevention of Child Abuse and Neglect Act requires immediate actions on the part of the District when abuse or neglect is reported to Child Protective Services (CPS), which was not done. There was evidence that when an allegation of abuse or neglect is supported, the police must make a report to CPS. Moreover, we are not persuaded that the circumstances of this case do not fall within the "common knowledge" exception to the expert testimony requirement. See District of Columbia v. Hampton, 666 A.2d 30, 35 (D.C.1995) (citing O'Neil v. Bergan, 452 A.2d 337, 342 (D.C. 1982)). A jury could determine whether the District was negligent in failing to exercise reasonable care to protect two children, who the evidence showed, particularly when viewed most favorably to plaintiff, were obviously injured and at risk *92 for further injury. Therefore, we conclude that the District's argument that expert testimony was required to prove negligence in this case must fail.
IV.
The District argues that Harris failed to establish that Tezia's death was a foreseeable consequence of its agent's actions, and therefore, the proximate cause of her injury and death. Proximate cause is "that cause, which in natural and continued sequence, unbroken by any efficient intervening cause, produces the injury and without which the result would not have occurred." Lacy v. District of Columbia, 424 A.2d 317, 320 (D.C. 1980) (internal quotation omitted). The "defendant need not have foreseen the precise injury, nor should [he] have had notice of the particular method in which a harm would occur, if the possibility of harm was clear to the ordinary prudent eye." Spar v. Obwoya, 369 A.2d 173, 177 (D.C.1977) (citing Kendall v. Gore, 98 U.S.App. D.C. 378, 387, 236 F.2d 673, 682 (1956)). When the intervening criminal act of a third party causes the injury, the District is liable for negligence only if it should have reasonably anticipated and protected against the danger of that act. Boykin v. District of Columbia, 484 A.2d 560, 565 (D.C.1984).[8] Foreseeability of the risk must be more precisely demonstrated because of the extraordinary nature of criminal conduct. District of Columbia v. Doe, 524 A.2d 30, 33 (D.C.1987) (citing Lacy, 424 A.2d at 323). "[T]his heightened showing does not require previous occurrences of the particular type of harm, but can be met instead by a combination of factors which give defendants an increased awareness of the danger of a particular criminal act." Doe, 524 A.2d at 33. Various factors may be considered by the factfinders as "enhancing the foreseeability of danger...." Id. at 34. In Doe, probative evidence of a criminally active environment was held to raise a factual question as to the foreseeability of the rape of a fourth grader by an intruder at an elementary school. Id.
Similarly, in this case, the likelihood of a further assault upon the children was foreseeable. The factors supporting the foreseeability that harm would come to the two children if left unprotected included: a report from the children's father that they were being abused in their mother's home; a report from the father that both children had bruises on their bodies; a report that both children had scratches on their bodies; a burn on the son's hand; a report of the child that Smith belted them a lot; a bruise on Tezia's back, and other deplorable conditions in the home.[9] These factors could be viewed by reasonable factfinders as enhancing the foreseeability of danger from the children's living situation, thereby creating a duty on the *93 part of District officials to protect them from this type of criminal activity. In short, the likelihood of abuse was not remote in this case. See Doe, supra, 524 A.2d at 34. Mr. Harris' complaint was that his children were being abused, and that Tezia was murdered by the alleged abuser. As in Spar, supra, "the possibility of harm was clear...." Id. at 177. Therefore, we reject the District's argument that proximate cause was not established by the evidence, at least as to Tezia's death.
V.
The District challenges the damages awarded. It contends that the case should be reversed on that ground or the verdicts reduced substantially. "An appellate court should order a new trial [for damages] only when the award is contrary to all reason." Romer v. District of Columbia, 449 A.2d 1097, 1099 (D.C.1982). It is the jury's province to assess the evidence and determine the amount to award. See id. Unless the verdict "evidences prejudice, passion or partiality on the part of the jury or . . . appears to be the result of oversight, mistake, or consideration of an improper element," the appellate court has no basis for overturning it. Id.
As for Tezia, contrary to the District's claims, there was evidence that she suffered conscious pain and suffering as a result of the beating before she was rendered unconscious and died. The doctor so testified. We find no basis to overturn the verdict for Tezia's estate.[10]
The District argues that reversal of the judgment in favor of Vann is required because the evidence did not establish that his injuries were proximately caused by the District's negligence and that, in any event, the verdict was excessive. A plaintiff is entitled to an award of damages for injuries that were proximately caused by a defendant. Shomaker v. George Washington Univ., 669 A.2d 1291, 1296 (D.C.1995); Bernard v. Calkins, 624 A.2d 1217, 1220 (D.C.1993). An important component of the claim for damages suffered by Vann was the burn to his left hand alleged (and arguably shown) to have resulted in permanent scarring. However, the record provides no evidence that would have allowed the jury reasonably to decide that this burn was inflicted or occurred after, rather than before, the District negligently failed to intervene in the children's lives. Indeed, as the foregoing discussion indicates, appellees' theory was that the pre-existing burn on Vann's hand was one of the indicia of abuse that Detective Burke should have observed but failed to notice on visiting the apartment. This failure to investigate adequately and take action on the children's behalf formed the basis of the District's alleged negligence. Thus, the evidence that Vann's physical injuries were proximately caused by the District's negligence is absent, or at best, highly speculative. Vann contends that he can be compensated for the bruise on his head and emotional injuries suffered as a result of being physically abused and watching his sister's murder.[11] Again, *94 there was no evidence of when Vann sustained a head injury or that he witnessed the murder of his sister. Under the circumstances, the claim for damages for Vann was not established.
For the foregoing reasons, the judgment appealed from hereby is affirmed as to the claim on behalf of Tezia's estate and reversed as to the claim of Vann against the District.[12]
So ordered.
NOTES
[1] Smith denied that either he or the mother caused the injury to the child's hand.
[2] In a footnote, the District states that "[a]lthough the District relies on Turner in this case, the District's position continues to be that Turner was wrongly decided."
[3] D.C.Code § 16-2301(9)(B) (1997) defines a neglected child as one "who is without proper parental care ... subsistence ... or other care ... necessary for his or her physical, mental, or emotional health, and the deprivation is not due to the lack of financial means of his or her parent, guardian, or other custodian." D.C.Code § 16-2301(9)(F) (1997) includes as a neglected child one "who has received negligent treatment or maltreatment from his or her parent, guardian or other custodian." The terms negligent treatment or maltreatment involve "a failure to provide adequate food, clothing, shelter or medical care ... and the deprivation is not due to the lack of financial means of his or her parent, guardian, or other custodian." D.C.Code § 16-2301(24)(1997).
[4] In T.G. the DHS workers found two of the children at the home of their grandmother, who had just died, dirty, apparently hungry and without food. T.G., supra, 684 A.2d at 789. A social worker drove the two children to their parents' home and found it to be in deplorable condition, and observed two younger children in the home dirty. Id. The next day, DHS filed a petition for neglect. Id.
[5] The conditions in T.G. were described as follows:
An officer, responding to the report of death, found the two children, T.G. and D.G., in their grandmother's house. The officer later described the house as being in a deplorable state and the children dirty and in need of clean clothes and baths. Shortly thereafter, the children's mother arrived with the two younger children. The officer drove the mother and the four children to the residence of the mother and father; he found the house likewise to be in a deplorable state. The two younger children were also dirty and in need of baths. The officer took all four children into protective custody and carried them to DHS.
In re T.G., supra, 684 A.2d at 787 (footnote omitted).
[6] Harris contends that the District failed to raise this argument in the trial court, and therefore, it is waived. Although the District did not raise the issue in its post-trial motion for judgment as a matter of law, it raised the issue briefly in its motion for judgment during the course of the trial. Therefore, we will consider the issue properly before us for review.
[7] Among the provisions of the Handbook pertinent to Harris' argument are the following:
When the safety or welfare of a child is in question and the lack of ... livable environmental conditions, or medical attention suggests that the child may have to be removed from the situation, a Youth Division Investigator shall respond to the location of the child to assess the situation and insure the safety and welfare of the child.
3* * * * * *
The Youth Division Investigator shall handle the complaint as an "Immediate Danger Child Neglect" when an assessment on the scene reveals that the health, safety, or welfare of the child requires the immediate removal of that child from the present surroundings, and appropriate assistance from Child and Family Services cannot be provided to correct or alleviate the situation.
3* * * * * *
The Youth Division Investigator shall handle a complaint as an "Otherwise Endangered Child Neglect Case" when, after consultation with a representative from Child and Family Services on the scene, it is decided that the removal of the child from the present situation by the Youth Division is necessary for the health, safety, [or] welfare of the child, or any other valid reason articulated by the Department of Human Services Social Work, and appropriate assistance from Child and Family Services cannot be provided to correct or alleviate the situation.
According to the Handbook, "Immediate Danger of Neglect" means that the child's immediate safety is in jeopardy, and the child must be removed because of lack of livable conditions or medical attention. "Otherwise Endangered Neglect" means the safety or welfare of the child who must be removed for any valid reason as determined in consultation with the DHS Worker and the Youth Division Investigator. In all such investigations of abuse or neglect, the handbook points out that it may be necessary to remove the child's clothing to determine the extent of the injuries.
[8] Section 448 of the RESTATEMENT (2ND) OF TORTS (1965) states:
The act of a third person in committing an intentional tort or crime is a superseding cause of harm to another resulting therefrom, although the actor's negligent conduct created a situation which afforded an opportunity to the third person to commit such a tort or crime, unless the actor at the time of his negligent conduct realized or should have realized the likelihood that such a situation might be created, and that a third person might avail himself of the opportunity to commit such a tort or crime.
[9] Although the detective testified that she did not see either of these marks, Mr. Smith, who was present at the time of the inspection, testified that the marks were present when the detective conducted her interview. The claim that she did not see anything and therefore had no reason to be on notice must fail in light of evidence from which the jury could find that the injuries were present and that the detective should have seen them.
[10] We reject the District's challenge to the damage award based upon the testimony of Harris' expert economist as to lost future earnings of Tezia. The District presented its own expert on damages and had an opportunity to challenge the claimed error in Harris' economist's testimony. The resolution of the issue was for the jury, and we see no basis for a new trial on this ground.
[11] We have held that "if the plaintiff was in the zone of physical danger and was caused by defendant's negligence to fear for his or her own safety, the plaintiff may recover for negligent infliction of serious emotional distress and any resultant physical injury, regardless of whether plaintiff experienced a physical impact as a direct result of defendant's negligence." Williams v.. Baker, 572 A.2d 1062, 1067 (D.C.1990) (en banc). Absent physical injury, to recover for emotional distress, the emotional distress must be "serious and verifiable." District of Columbia v. McNeill, 613 A.2d 940, 943 (D.C.1992) (quoting Jones v. Howard Univ., 589 A.2d 419, 424 (D.C.1991)). Vann has not argued this theory on appeal, and apparently did not proceed on that basis in the trial court. Rather, this claim was to compensate him for a burn and bruise on his head and the emotional distress of watching his sister's death.
[12] Harris does not object to the entry of judgment for the District on its cross-claim against Smith. That is a matter to be resolved by the trial court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2361994/ | 770 A.2d 762 (2001)
COMMONWEALTH of Pennsylvania, Appellee,
v.
Stephen FETTER, Appellant.
Superior Court of Pennsylvania.
Argued November 1, 2000.
Filed February 16, 2001.
Reargument Denied April 19, 2001.
*764 Vincent P. DiFabio, Paoli, for appellant.
Thomas Ost-Prisco, Assistant District Attorney, West Chester, for Commonwealth, appellee.
Before JOYCE, OLSZEWSKI, JJ., and CIRILLO, P.J.E.[*]
*763 OLSZEWSKI, J.:
¶ 1 Stephen Fetter appeals from the judgment of sentence entered on December 16, 1999, for statutory sexual assault, involuntary deviate sexual intercourse, six counts of corruption of minors, and false reports to law enforcement officials. We affirm.
¶ 2 The above crimes stem from a variety of incidents that occurred between November 1997 and January 1998. In November 1997, appellant had T.W., a minor, perform a striptease at a party given in his *765 home. Both minors and adults attended the party. On December 21, 1997, T.W. went to appellant's home, spent the night there, and engaged in sexual intercourse with him. Appellant also performed copulation per os on the minor. At the time of this incident, appellant was twenty-one years old, and T.W. was fifteen.
¶ 3 During the investigation of appellant, A.P., a juvenile friend of appellant, agreed that he would wear a wire to speak with appellant at his home. Subsequently, A.P. spoke with appellant and obtained incriminating statements from him. On March 12, 1998, however, A.P. went to appellant's home and tried to speak with appellant again, but appellant would not let him into the house. Instead, appellant telephoned the police and reported that someone was trying to break into his residence. As a result, appellant was charged with making false reports to law enforcement agents.
¶ 4 On May 19, 1998, two state police troopers went to appellant's home to execute a search warrant, in order to obtain tools used in a burglary. Appellant wanted to speak with the state police troopers about some discrepancies he felt were in the warrant. He spoke with the police despite the fact that he was advised that he did not have to speak with them, that he was free to leave, and was not under arrest. During the conversation, appellant freely moved around his residence, provided drinks for the troopers, used the bathroom, and answered the phone. While speaking with the troopers, appellant made incriminating statements concerning his sexual relations with T.W.
¶ 5 Consequently, the police arrested appellant on October 29, 1998. A jury trial was held on October 6, 1999. At the close of trial, the jury found appellant guilty of statutory sexual assault, involuntary deviate sexual intercourse, six counts of corruption of minors, and false reports to law enforcement officials. The jury, however, found him not guilty on the following counts: criminal solicitation for burglary, criminal solicitation of criminal mischief, criminal conspiracy to commit burglary, and criminal mischief and corruption of minors related to those charges. On December 16, 1999, the court sentenced appellant to the following: on the charge of statutory sexual assault, to a term of incarceration of not less than six months nor more than twelve months; on the charge of involuntary deviate sexual intercourse, to a term of incarceration of not less than five years, nor more than ten years, concurrent to the statutory sexual assault; on the multiple charges of corruption of minors, to individual terms of incarceration of not less than three months, nor more than six months, with each sentence to run concurrent to the other sentences; on the charge of false reports, to one year of probation, consecutive to the terms of incarceration. See N.T. Trial, 12/16/99, at 694-95. This timely appeal followed.
¶ 6 Appellant raises the following issues for our review:
(1) Did the trial court err in failing to grant [a]ppellant's Motion to Suppress for violations of the Wiretapping and Electronic Surveillance Act?
(2) Did the Pennsylvania State Police obtain statements from [a]ppellant during electronic oral interceptions in violation of his rights under the Sixth Amendment of the United States Constitution and Article I, Section 9 of the Pennsylvania Constitution?
(3) Did the trial court err in failing to grant [a]ppellant's Motion to Suppress his statements to the Pennsylvania State Police, who conducted the interview with prior knowledge that appellant was represented by counsel?
(4) Did the trial court err in failing to allow defense counsel to cross-examine *766 the victim on the issue of her appearance in order to establish the defense of mistake of age pursuant to 18 Pa.C.S.A. § 3102?
(5) Did the trial court err in failing to grant a mistrial based upon the testimony of a witness that [a]ppellant was a "compulsive liar" and "everything out of his mouth is not true?"
(6) Was the [a]ppellant denied his right to effective assistance of counsel?
Brief of Appellant at viii.
¶ 7 When reviewing an order denying a motion to suppress evidence, we must determine whether the factual findings of the suppression court are supported by the evidence of record. See Commonwealth v. Jackson, 451 Pa.Super. 129, 678 A.2d 798, 800 (1996). In examining the suppression court's factual findings, this Court may only consider the evidence of the appellee's witnesses, together with so much of the evidence for the appellant, as, fairly read in the context of the record as a whole, remains uncontradicted. See Commonwealth v. Nester, 551 Pa. 157, 709 A.2d 879, 881 (1998). "The suppression court's conclusions of law, however, are not binding on an appellate court, whose duty it is to determine if the suppression court properly applied the law to the facts." Id. It is exclusively within the province of the suppression court to determine the credibility of the witnesses and the weight to be accorded their testimony. See Commonwealth v. Fitzpatrick, 446 Pa.Super. 87, 666 A.2d 323, 325 (1996). If the evidence supports the factual findings of the suppression court, we are bound by such findings and may reverse only if the legal conclusions drawn therefrom are erroneous. See id.
¶ 8 Appellant contends that the trial court should have suppressed the evidence obtained from the wire worn by A.P. Appellant believes that normal investigative procedures should have been used instead of the wire, as required under 18 Pa.C.S. §§ 5709(3)(vii) and 5710(A)(3), because this was an in-home interception and the wire would otherwise violate Article I, Section 8 of the Pennsylvania Constitution. In addition, appellant argues that the Commonwealth failed to comply with the requirements of custody and control of the tapes under 18 Pa.C.S. § 5704(2)(ii), because the named custodian never had actual possession, and the police officer made working copies.
¶ 9 Appellant's constitutional argument is based mainly on Commonwealth v. Brion, 539 Pa. 256, 652 A.2d 287 (1994) (in a situation involving a one-party consensual, in-home wiretap, the Commonwealth must obtain a prior determination of probable cause by a neutral, judicial authority). In response to Brion the Legislature amended the Wiretap Act to include § 5704(2)(iv), which requires the president judge of the court of common pleas, or his designee, to independently review the affidavit and establish that probable cause exists. This is in addition to meeting the other requirements of § 5704(2)(ii), involving review and approval by a designated authority, rules for recording and record keeping, and custodial care by the designated authority. However, 18 Pa.C.S. § 5704 is not subject to other sections of the Wiretap Act, unless specifically enumerated; instead, it lists exceptions to the generally stringent requirements for wiretaps when the interception occurs at the direction of a law enforcement officer and one party voluntarily consents to the interception. Therefore, it was unnecessary for the Commonwealth to establish that "normal investigative procedures with respect to the offense have been tried and failed, or reasonably appear to be unlikely to succeed if tried or are too dangerous to employ." 18 Pa.C.S. §§ 5709(3)(vii) and *767 5710(A)(3). The Commonwealth did not violate the Pennsylvania Constitution for using a wiretap, even in the appellant's home, as long as they established one-party consent and probable cause to the designated authorities.
¶ 10 Appellant also argues that the evidence should have been suppressed because the designated authority, Deputy District Attorney Cynthia Vickers Wilson, failed to maintain proper custody of the tapes in violation of 18 Pa.C.S. § 5704(2)(ii) and because working copies were made of the tapes. The tapes were delivered to the Chester County Detective's Office, in accordance with normal policy, and stored in the detectives' secured evidence facility. Although the tapes were never in the physical custody of the deputy district attorney, they were placed in the designated, secure location and Ms. Wilson retained total control of access to them. In addition, appellant has failed to cite any evidence of tampering or discrepancy that resulted from the minor mishandling; therefore, it was not fatal error warranting suppression of the evidence. In response to appellant's contention that the police officer should not have made copies, we note that the Wiretap Act generally allows investigators to make working copies of tapes for the proper performance of their duties, see 18 Pa.C.S. §§ 5714(b) and 5717; therefore, a prohibition in the case of the exceptions listed in § 5704 is unwarranted.
¶ 11 Appellant argues that his statements should be suppressed because they were obtained in violation of his right to counsel. Appellant believes that the Commonwealth's use of A.P. to intercept communications was in violation of his right to counsel under the Sixth Amendment to the United States Constitution and Article I, Section 9 of the Pennsylvania Constitution, because the police had knowledge that counsel represented him in this matter. In addition, appellant argues that the voluntary statements he made to the police, while they were in his home, violated his rights under Miranda and the Fifth Amendment to the United States Constitution. Appellant's arguments lack merit.
¶ 12 First, we examine the Sixth Amendment and Article I, Section 9 claim. The right to counsel under Article I, Section 9 is coterminous with appellant's Sixth Amendment rights. See Commonwealth v. Arroyo, 555 Pa. 125, 723 A.2d 162, 170 (1999). Under both provisions, appellant's right to counsel attaches at all critical stages of a criminal proceeding. See Commonwealth v. West, 370 Pa.Super. 365, 536 A.2d 447, 449 (1988). Under the Sixth Amendment, a "defendant who asserts a desire to have counsel may not be questioned concerning a matter on which he has been arrested, unless counsel is present or the right is properly waived." Commonwealth v. Laney, 729 A.2d 598, 601 (Pa.Super.1999). "One cannot invoke the Sixth Amendment before arrest, as it does not apply until then." Id. Appellant's right to counsel had not attached, because he was not under arrest or charged when the statements were made. Thus, his claim lacks merit.
¶ 13 In addition, "the Fifth Amendment privilege against self-incrimination prohibits admitting statements given by a suspect during `custodial interrogation' without a prior warning." Id. at 602.
Custodial interrogation means questioning initiated by law enforcement officers after a person has been taken into custody. The warning mandated by Miranda was meant to preserve the privilege during incommunicado interrogation of individuals in a police-dominated atmosphere. That atmosphere is *768 said to generate inherently compelling pressures which work to undermine the individual's will to resist and to compel him to speak where he would not otherwise do so freely.
Id. In this case, no custodial interrogation took place. The police advised appellant that he did not have to speak to them, yet he did so freely. During the conversation, appellant was not restricted in any way. He even provided drinks for the troopers, used the bathroom, and talked on the telephone. Appellant was not in custody when the incriminating statements were made; therefore, the right to counsel had not yet attached. Appellant's claimed violations of his right to counsel fail.
¶ 14 Appellant also claims that the trial court erred by not allowing him to cross-examine T.W. about whether she believed she looked older than her actual age. Our law is well settled in the area of lack of ability to cross-examine. It states that "it is within the discretion of the trial court to determine the scope and limits of cross-examination and that [an appellate court] cannot reverse those findings absent a clear abuse of discretion or an error of law." Commonwealth v. Nolen, 535 Pa. 77, 634 A.2d 192, 195 (1993); see also Commonwealth v. Whiting, 447 Pa.Super. 35, 668 A.2d 151 (1995).
¶ 15 Appellant claims that he attempted to establish a defense under 18 Pa.C.S. § 3102, which states that when criminal conduct depends on a child being below a critical age but older than 14 years, it is a defense to prove the defendant believed the child was above the critical age. Appellant believes that he was unable to establish this defense because the trial court would not allow him to question T.W. As the victim's beliefs as to how old she looked is irrelevant to appellant's beliefs and knowledge of her actual age, the trial court did not err in sustaining the objection to the question.
¶ 16 Appellant's next claim is based on his belief that the trial court erred in not granting a mistrial when a witness testified that the appellant was a "compulsive liar" and that "everything that comes out of his mouth isn't true." N.T. Trial, 10/7/99, at 305-07. The statement was elicited by the Commonwealth on redirect, but was beyond the proper scope of questioning. Our standard of review for determining whether the trial court erred in not granting a mistrial is as follows. A motion for mistrial is a matter addressed to the discretion of the court. See Commonwealth v. Jones, 542 Pa. 464, 668 A.2d 491, 502-03 (1995). A trial court need only grant a mistrial where the alleged prejudicial event may reasonably be said to deprive the defendant of a fair and impartial trial. See id.
¶ 17 Here, the trial court issued a curative instruction to the jury.[1] A mistrial is not necessary where cautionary instructions are adequate to overcome any possible prejudice. See Commonwealth v. Lawson, 519 Pa. 175, 546 A.2d 589, 594 (1988). Although the statements made by the witness were inflammatory, the trial court issued curative instructions, which it felt were adequate to cure the defect and overcome prejudice. We agree.
*769 ¶ 18 Appellant raises twelve sub-issues under his ineffectiveness of counsel claim. The sub-issues are as follows:
(1) Defense counsel failed to raise and litigate the issue that the statements obtained by the State Police from Fetter during oral interceptions were in violation of his rights under the Sixth Amendment of the U.S. Constitution and Article I, Section 9 of the Pennsylvania Constitution.[2]
(2) Defense counsel failed to introduce at trial the custody/visitation order to establish that all visitation exchanges between the defendant and his wife were accomplished with a witness, and he failed to call George Homes, Jr. as a witness to testify that he was present during the visitation exchange on November 6, 1997, in order to establish the time of said exchange.
(3) Defense counsel failed to call Gloria Fetter as a witness to testify as to the events of November 6, 1997 and the time that the defendant arrived at her home with her son after the visitation exchange.
(4) Defense counsel failed to investigate and produce witnesses and other evidence as to the time he was at his doctor's appointment on November 18, 1997, in order to refute the testimony that he was present at his home when certain statements were made about the victim's age and that he went to Philadelphia with these witnesses.
(5) Defense counsel failed to call Marie Waltz as a witness to refute false allegations that the defendant had improper contact with her.
(6) Defense counsel failed to introduce a court order concerning the return of the defendant's bed in order to refute the testimony of Mr. Vacca that he saw the defendant and the victim on his bed hugging and kissing.
(7) Defense counsel failed to call the defendant's mother, Gloria Fetter, as a witness to refute the testimony of Mr. Vacca that the defendant had a bed at his house on the date Mr. Vacca testified he saw the defendant and the victim on his bed hugging and kissing.
(8) Defense counsel failed to call the following witnesses to testify concerning the difficulty he had in waking from sleep: Gloria Fetter, Richard Fetter, Jen Gragilia, Maria Waltz, Marisa Silage, John Petry, and Custodian of Records, Consestoga High School.
(9) Defense counsel failed to question Anthony Vacca concerning his requests for money from Fetter after the investigation had commenced.
(10) Defense counsel failed to question T.W. or present evidence on the following: (i.) The police threatened to file charges against T.W. for entertaining without a license and falsifying her age; (ii.) T.W. and A.P. were in a romantic relationship in 1998; and (iii.) T.W. was not permitted to baby-sit for Fetter.
(11) Defense counsel failed to call Fetter to testify.
(12) Defense counsel allowed the court to instruct the jury on two inconsistent defenses.
Brief of Appellant at 32-34.
¶ 19 The standard of review when evaluating a claim of ineffective assistance of counsel is that the law presumes that counsel is effective; thus, the defendant has the burden of proving otherwise. See Commonwealth v. Baker, 531 *770 Pa. 541, 614 A.2d 663, 673 (1992). Therefore, in order to prove ineffective assistance of counsel, the defendant must prove: "(1) the underlying claim is of arguable merit; (2) the particular course chosen by counsel did not have some reasonable basis designed to effectuate his interests; and (3) counsel's ineffectiveness [worked to his prejudice]." Commonwealth v. Blount, 538 Pa. 156, 647 A.2d 199, 203 (1994). Moreover, we recognize under the law that "trial counsel can never be found ineffective for failing to raise a meritless claim." Commonwealth v. Smith, 539 Pa. 128, 650 A.2d 863, 866 (1994).
¶ 20 Ineffectiveness sub-issues two, three, four, five, six, seven, eight, and eleven all refer to appellant's claim that his trial counsel was ineffective for failing to call these potential witnesses. In order to succeed on a claim of ineffectiveness for failing to call witnesses, appellant must demonstrate that his trial counsel knew or should have known about the witnesses. See Commonwealth v. Phillips, 411 Pa.Super. 329, 601 A.2d 816, 824 (1992) (appellant must demonstrate the witnesses would have provided material evidence at the time of trial and he must establish the manner in which the witnesses would have been helpful to his case). Further, appellant must demonstrate that the proposed witnesses were available for trial and that the proposed testimony was truly necessary. See Commonwealth v. Wayne, 553 Pa. 614, 720 A.2d 456, 470 (1998).
¶ 21 From the record, it is clear that all of these issues are meritless. Specifically, appellant first alleges that two witnesses, George Holmes, Jr. and Gloria Fetter, were present during a custody exchange. However, the record and appellant's brief are devoid of any mention as to when this custody exchange took place or how it would have helped appellant's case. Next, appellant alleges that trial counsel was ineffective for failing to produce witnesses to prove that he had a doctor's appointment on November 18, 1997, when he was allegedly with various witnesses in Philadelphia. Appellant fails to state the time of the alleged appointment and fails to provide the name of the physician. He also fails to assert whether he actually kept the appointment. Therefore, this claim is meritless, and trial counsel cannot be ineffective for failing to raise a meritless claim. See Smith, 650 A.2d at 866. As to the testimony of Ms. Maria Waltz, appellant has failed to establish that she was available to testify or that her testimony would have exculpated him. Therefore, this claim is also meritless. See Wayne, 720 A.2d at 470. Appellant further alleges that a number of witnesses should have been called to testify that he has difficulty waking from sleep. Appellant has failed to establish that these witnesses were available to his defense counsel or that they were willing to testify for the defense. See id. Moreover, appellant has not shown that the absence of these witnesses was so prejudicial that he was denied a fair trial. See id. Therefore, this claim is without merit.
¶ 22 Lastly, in regards to the testimony of proposed witnesses, appellant alleges that trial counsel failed to call him as a witness. "In order to sustain a claim that counsel was ineffective for failing to call the appellant to the stand, the appellant must demonstrate either: (1) that counsel interfered with his right to testify, or (2) that counsel gave specific advice so unreasonable as to vitiate a knowing and intelligent decision to testify on his own behalf." Commonwealth v. Breisch, 719 A.2d 352, 354 (Pa.Super.1998). The record is devoid of any evidence to support appellant's claim, and appellant fails to assert any *771 evidence in his brief. Therefore, this claim is meritless.
¶ 23 Issues nine, ten and twelve have not been developed by appellant. Appellant only lists the issues and cites no case law in support of his claims. Therefore, we find these claims waived. In Commonwealth v. Delligatti, 371 Pa.Super. 315, 538 A.2d 34 (1988) we stated: "It is not the function of this court to consider, and respond to, vacuous claims. When issues are not properly raised and developed in briefs, when the briefs are wholly inadequate to present specific issues for review, a court will not consider the merits thereof." Id. at 41 (citing Commonwealth v. Sanford, 299 Pa.Super. 64, 445 A.2d 149, 150 (1982)). Accordingly, we will not address these issues.
¶ 24 Judgment of sentenced affirmed.
NOTES
[*] P.J.E. Cirillo did not participate in the consideration or decision of this case.
[1] "Ladies and gentlemen of the jury, I am instructing you that the testimony of the witness, most recent witness, given in response to Mr. Foster's question on redirect, in other words, his last question and the witness' last answer, I'm instructing that that be stricken from the record and I am directing that you will disregard that question and response to it that were given. You may consider anything the witness said prior to that point, but you are to disregard and not include in your consideration at all the question of and the response that were-those last given by that witness." N.T. Trial, 10/7/99, at 307.
[2] This issue has already been addressed and found to lack merit. Therefore, counsel cannot be found ineffective for failing to raise it. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1975923/ | 11 F. Supp. 277 (1935)
T. J. MOSS TIE CO.
v.
WABASH RY. CO. et al.
District Court, S. D. New York.
June 21, 1935.
*278 Frank C. Nicodemus, Jr., of New York City, receiver.
Humes, Buck, Smith & Stowell, of New York City (Gordon M. Buck, of New York City, of counsel), for New York Trust Co.
Barnett, Plaut & Schweitzer, of New York City (Roy Plaut, of New York City, of counsel), for Northwestern Mut. Life Ins. Co.
Milbank, Tweed, Hope & Webb, of New York City (Arthur A. Gammell and William D. Gaillard, Jr., both of New York City, of counsel), for Chase Nat. Bank of City of New York.
Root, Clark, Buckner & Ballantine, of New York City (William P. Palmer and A. Goodwin Cooke, both of New York City, of counsel), for committee of refunding and general mortgage bondholders.
Mitchell, Taylor, Capron & Marsh, of New York City, for City Bank Farmers Trust Co.
Cabell, Ignatius, Lown & Blinken, of New York City, for Massachusetts Mut. Life Ins. Co.
Henry W. Clark, of New York City, for Union Pac. R. Co.
WOOLSEY, District Judge.
The receivers of the Wabash Railway Company may have a decree ordering the trustees to execute the releases as prayed.
I. The Wabash Railway Company, a corporation of Indiana, having been sued on December 1, 1931, by the T. J. Moss Tie Company, a corporation of Missouri, in the Eastern Division for the Eastern District of Missouri, in a creditors' action for a consent receivership in equity, *279 filed its consent and joined in the prayer of the bill, and as a result thereof, Judge Charles B. Davis appointed as receivers of the said railway company Mr. Walter S. Franklin, of St. Louis, Mo., and Mr. Frank C. Nicodemus, Jr., of New York City.
On the 3d day of December, 1931, a so-called ancillary bill of complaint was filed in this court by the T. J. Moss Tie Company against the Wabash Railway Company for similar relief, and the Wabash Railway Company, having filed its consent thereto, joined in the prayer of the bill, and on the 3d day of December, 1931, out of comity, I appointed the same receivers for the said railway company here.
Under date of October 19, 1933, Mr. Walter S. Franklin, one of the receivers aforesaid, having been elected to be vice president in charge of traffic of the Pennsylvania Railroad Company, wrote a letter to Judge Davis resigning the receivership; his resignation was accepted at once, and on the same date Judge Davis appointed Mr. Norman B. Pitcairn, of St. Louis, Mo., in place of Mr. Franklin, as co-receiver with Mr. Frank C. Nicodemus.
On October 20, 1933, after due application made under a supplemental bill of complaint, by an order of Judge Paterson, Mr. Norman B. Pitcairn was appointed receiver in this court in place of Mr. Walter S. Franklin.
II. The said receivers of the Wabash Railway Company, appointed by this court, filed on April 2, 1935, an ancillary dependent suit against the following classes of defendants:
(1) The New York Trust Company, as trustee under an indenture of the first mortgage, dated January 1, 1899, of the Des Moines Division of the Wabash Railroad Company, the predecessor of the railway now in receivership here, and the Northwestern Mutual Life Insurance Company, as the holder of $873,000 of the bonds issued under said indenture out of a total issue of $1,600,000.
(2) The Chase National Bank of the City of New York, as present trustee under an indenture, dated January 1, 1925, of the refunding and general mortgage of the Wabash Railway Company, and the Metropolitan Life Insurance Company, as the holder of $3,000,000 of the bonds issued thereunder out of a total issue of $60,870,000.
The prayer of this suit was that the trustees be instructed to execute releases of a part of the mortgaged property for the reasons hereinafter set forth, and that this court hold that the defendant bondholders sued constitute an adequate representation of the cestuis que trustent for such a proceeding.
III. Between the towns of Albia and Tracy, in Iowa, a distance of about 19.55 miles, the line of the Chicago, Burlington & Quincy Railroad Company, hereinafter called the Burlington Railroad, parallels closely the line of the Wabash Railway Company, hereinafter called the Wabash Railway. The intermediate stations between the two towns above named are served by both railroads. For several years the passenger and freight traffic on both roads had been so light that in August, 1933, it became abundantly clear to those operating the two roads that a single line between Albia and Tracy jointly operated by the Wabash Railway and the Burlington Railroad would result in a very substantial saving in maintenance and taxes to each road, without in any way impinging on the service required of them by the public.
The competition of bus, truck, and other motorized transportation used on the public highway has eaten into the revenues earned by both railroads on this part of their lines with results that look yearly more ominous.
As economy of operation was the only course for the railroads under the circumstances, with the hope of reducing expenses a contract was entered into on August 31, 1933, between the receivers of the Wabash Railway and the Burlington Railroad, subject to the approval of the United States District Court, Eastern Division, for the Eastern District of Missouri, and by the Interstate Commerce Commission, in which the Wabash Railway agreed to abandon part of its railroad extending from a point near Albia, Iowa, to a point near Hamilton, Iowa, in a northwesterly direction, for approximately 11.207 miles, with the exception of certain sidings, and by which the Wabash Railway was to be given the right to operate under trackage rights over the line of the Burlington Railroad between the said points, and whereby the Burlington Railroad was to operate under trackage *280 rights over the line of the Wabash Railway from a point near Hamilton to Tracy, a distance of 8.343 miles, and certain sidings to be used as passage tracks, with the result that each railroad would abandon the operation of part of its track between Albia and Tracy and operate instead under perpetual trackage rights over the unabandoned portion of the other railroad.
This agreement was approved by Judge Davis in the Eastern Division for the Eastern District of Missouri on January 26, 1934.
IV. On March 12, 1934, the Wabash Railway and its above-named receivers and the Burlington Railroad, acting in pursuance of the contract aforesaid, jointly applied to the Interstate Commerce Commission asking for approval of the said contract for the abandonment of part of the track of each railway between Albia and Tracy.
On May 23, 1934, the Interstate Commerce Commission, after hearings, granted the request of the railroads and found that the joint operation of the line as proposed by the contract aforesaid would result in an estimated saving of $15,000 a year to each railroad in maintenance, operation and taxes, and at the same time made the following findings as to the losses which had resulted from the separate operation of the two lines between Albia and Tracy and the expectable earnings of the joint line:
"The average annual freight tonnage during the years 1931-33 over the present line of the Burlington between Hamilton and Tracy, sought to be abandoned, is represented as 218,403 tons. Using that figure as a basis, the Burlington estimates that the annual results of its proposed joint operation between those points would be as follows: Operating revenues $28,805.81, operating expenses $21,799.77, net revenue from railway operation $7,006.04, and net railway operating income $6,686.27. It is represented by the Burlington that, allocated largely on various mileage bases, its operation between the same points resulted in deficits in net railway operating income for the years 1929-33, in order, of $13,761.54, $14,325.25, $13,580.94, $9,829.64, and $9,768.43.
"The average annual freight tonnage during the years 1931-33 over the present line of the Wabash between Albia and Hamilton, sought to be abandoned, is stated as 323,017 tons. It is represented by the Wabash that, allocated largely on various mileage bases, the operation of that line resulted in deficits in net railway operating income for the years 1929-33, in order, of $20,666.35, $18,961.06, $23,699.14, $19,799.80, and $20,425.84. The Wabash estimates that if the proposed joint operation had been in effect during the same years the deficits in net railway operating income would have been $78.87, $2,316.86, $8,291.79, $5,563.33, and $6,984.52 respectively.
"The applicants estimate that the cost incidental to the construction of the proposed connecting tracks, turnouts, platform, and installation of signals would be $11,462 to the Wabash and $7,673 to the Burlington, which costs would be defrayed from the general funds of the respective applicants."
On May 23, 1934, the Commission made a certificate of public convenience and necessity formally approving the aforesaid contract between the railroads and thus allowed (1) the abandonment by each railroad of the part of its line therein referred to between Albia and Tracy, Iowa, as provided, after the building of the connecting tracks necessary to effectuate a joining of the two lines, and (2) the operation of the line thus jointly constituted under perpetual mutually arranged trackage agreements running, respectively, in favor of the present contracting parties and their successors.
The original certificate of convenience and necessity issued by the Interstate Commerce Commission provided that the construction of the connecting tracks to enable the joint operation of the line should be commenced on or by August 24, 1934, and should be completed on or before December 31, 1934. This time, however, has been extended. The latest order of the Commission, issued on April 9, 1935, provides that the contemplated construction of the connecting tracks should be begun not later than September 15, 1935 and should be finished by February 1, 1936.
V. The situation, therefore, has been fully covered so far as the public relations of the parties are concerned and now comes before me in a way that involves the private economy of the Wabash Railway, namely, whether the mortgage indentures of the Wabash Railroad Company, Des Moines Division, first mortgage of January 1, 1899, or the Wabash Railway *281 Company refunding and general mortgage, dated January 1, 1925, will respectively permit the present trustees under each mortgage to execute the releases necessary to put the Wabash Railway in a position to carry out its part of the agreement of August 31, 1933, which it has been advised the Burlington Railroad on its part is now ready, able, and willing to perform.
VI. In an endeavor to make performance by the Wabash Railway of the contract of August 31, 1933, with the Burlington Railroad possible, the receivers of the Wabash Railway on April 21, 1935, filed their complaint in the ancillary dependent suit above referred to against the defendants above named, alleging in substance the facts hereinbefore summarized, and asking this court:
(1) That it hold that the Northwestern Mutual Life Insurance Company and the Metropolitan Life Insurance Company be adjudged to be proper and adequate representation of the holders of bonds issued, respectively, under the Des Moines Division first mortgage of January 1, 1899, and the refunding and general mortgage of January 1, 1925.
(2) That the New York Trust Company, as trustee under the Des Moines Division first mortgage of January 1, 1899, and the Chase National Bank of the City of New York, as trustee under the refunding and general mortgage of January 1, 1925, be ordered and directed to execute and deliver to the receivers instruments of release in the form annexed to the complaint, and thus enable the Wabash Railway Company and its receivers to be in position to perform their contract with the Burlington Railroad.
The defendant New York Trust Company, as trustee of the Des Moines Division first mortgage of January 1, 1899, has filed an answer and stipulation of facts admitting the principal allegations of the bill of complaint, but alleges it is not authorized by the terms of the mortgage indenture under which it is trustee to execute the release required by the receivers, and further alleges that this court has no power to authorize any departure from the said trust instrument, unless the bondholders are all before the court, or at least the court holds they are adequately represented.
The defendant Northwestern Mutual Life Insurance Company, as owner of bonds of the first mortgage, filed an answer also admitting the principal allegations of the bill of complaint, but denying any express authority or qualification to represent the other bondholders or outstanding bonds of that mortgage, but admits that the operation of the joint line proposed by the two railroad companies would be of financial benefit to each and to the holders of bonds secured by mortgages on the railroads, and interposes no objection to the granting of the relief prayed for, except that it requests that the receivers of the Wabash Railway be required to execute certain supplemental indentures extending the lien of the mortgages to the easement or trackage rights to be secured from the Burlington Railroad under the contract.
The defendant Chase National Bank of the City of New York, as trustee under the indenture of the refunding and general mortgage of January 1, 1925, filed an answer also admitting the principal allegations of the bill of complaint, but denying its right to execute the proposed release requested from it and submitting to the court for determination whether, as the ancillary suit was originally constituted in respect of parties, there was an adequate representation of the bondholders either under the Des Moines Division first mortgage of January 1, 1899, or the refunding and general mortgage of January 1, 1925; and also whether there was sufficient facts alleged in the complaint to justify the court in ordering a departure from the strict letter of the trust indentures.
The Metropolitan Life Insurance Company, owner of $3,000,000 of bonds under the refunding and general mortgage of January 1, 1925, though duly served as a party, did not enter any appearance or file any answer.
VII. A motion was made by the plaintiffs on the bill of complaint which, as noted above, sets forth fully the facts above detailed as to the loss of revenue, the contract and its approval by the court of original jurisdiction, and by the Interstate Commerce Commission and on the answers above described, for a decree as against the New York Trust Company, as trustee, and the Northwestern Mutual Life Insurance Company, as bondholder, under the Des Moines Division first mortgage, and the Chase National Bank, as trustee under the refunding and general mortgage, and as against the Metropolitan *282 Life Insurance Company as bondholder thereunder for a decree pro confesso because it had not filed any answer.
A full hearing was had before me on the motion thus made by the receivers, and it seemed to me, in the first place, that the receivers had not secured so many bondholders as they feasibly could secure to be parties to the suit, and, in the second place, that it was necessary to have more definite proof than was afforded by the admitted allegations of the complaint as to a reason for any deviation from the letter of the trust agreement.
Accordingly, on my own motion, I had an order entered directing, inter alia: (1) That the complainants forthwith file an amendment to their bill of complaint by adding as parties defendant thereto a committee representing holders of the defaulted refunding and general mortgage bonds, consisting of Messrs. John W. Stedman, James H. Brewster, Jr., George Bovenizer, and R. G. Page, which committee represents the holders of more than 25 per cent. of the bonds outstanding under the refunding and general mortgage, and also by adding thereto as additional defendants, certain additional parties known to own and hold bonds of the two issues referred to in the bill of complaint; (2) that the supplemental subpnas be issued to such proposed additional defendants as were within this district, and (3) that the complainants submit to the court at a formal hearing on notice (a) proof of any allegation of the bill of complaint herein as amended not admitted by the answers herein, or otherwise, to be true; (b) proof of the physical condition of the sections of line of railroad proposed to be abandoned and the physical conditions of the proposed joint line, particularly with reference to improved grades, maintenance costs, and operating conditions; (c) proof of competition of other modes of transportation new since the execution of the above-mentioned mortgages; and (d) proof of any other facts deemed material as supporting the necessity and propriety of the relief prayed by the complainants herein; and (4) that the complainants mail a copy of the order to each of the holders of first mortgage Des Moines Division bonds and of refunding and general mortgage bonds whose names were known to the complainants, to the end that they may, if so advised, intervene as parties defendant in the cause.
The additional parties named, including the bondholders' committee of the refunding and general mortgage bonds issued under the indenture of January 1, 1925, were duly served with subpnas, and notices of the pendency of this ancillary cause, and its purposes were given to all known holders of the bonds under the two mortgages.
The new defendants holding the Des Moines Division first mortgage bonds and the amounts of their respective holdings are:
Mary Colgate .................................... $50,000
Utilities Mutual Insurance Company .............. 25,000
Postal Life Insurance Company ................... 10,000
City Bank Farmers Trust Company, as Trustee
under the Will of Simon Stern, deceased ....... 10,000
The new defendants holding refunding and general mortgage bonds and the amounts of their respective holdings are:
The Prudential Insurance Company of
America .................................... $2,852,000
Union Pacific Railroad Company ............... 1,105,000
Massachusetts Mutual Life Insurance Company .. 250,000
The bondholders' committee filed an answer similar to that filed by the Chase National Bank of the City of New York, submitting the legal questions to the determination of the court but not taking a position for or against the granting of the relief asked by the complainants.
The Union Pacific Railroad Company filed an answer consenting to the granting of the relief prayed for, and alleging: "That since the execution of the aforesaid trust indenture there have been radical changes in the art of transportation and that many of the provisions of trust indenture executed as recently as ten years ago must, in order to protect the trusts from waste, loss and depreciation, be moulded to meet existing conditions. The transaction referred to in the bill of complaint having been approved and authorized by the Interstate Commerce Commission in the exercise of its jurisdiction under the Interstate Commerce Act and being supported by the findings of said Commission that substantial economies will be achieved without impairing the capacity or ability of the complainants to serve the public, commends itself to this defendant as meriting the approval and sanction of this Court."
The Massachusetts Mutual Life Insurance Company has appeared and filed *283 an answer admitting the principal allegations made in the ancillary bill of complaint and joining in the prayer thereof.
The City Bank Farmers Trust Company, as trustee under the Will of Simon Stern, deceased, has appeared and filed an answer admitting ownership of the bonds, but denying special authority to represent other bondholders and submitting the case for the determination of the court.
All the other defendants within the district were duly served with process, but none other has filed an answer, although the time for filing answers has now elapsed.
Furthermore, as to bondholders outside this jurisdiction, as above observed notice was given to all the known bondholders of the respective mortgages of the pendency of the cause giving them an opportunity to intervene with advice that there would be a final hearing in the matter on June 7, 1935.
VIII. On June 7, 1935, I held a hearing at which counsel for all parties had an opportunity to be present and at which the receivers called and examined witnesses to supplement some of the allegations of the complaint and to comply with my order of May 23, 1935.
As a result of said hearing I find:
That the section of railroad to which the suit relates involves approximately twenty miles between Albia and Tracy, in the state of Iowa.
That it is proposed to abandon about 11 miles of the existing line of the Wabash Railway between those points and about 9 miles of the existing line of the Burlington Railroad, the Wabash Railway thereafter to use the Burlington track and the Burlington to use the Wabash track, thus creating a single line approximately 20 miles in length.
That the present Wabash Railway maximum grade is 1.75 per cent., whereas on the new line the maximum grade will be 1.25 per cent.
That the tracks of the proposed joint line are in a level country, laid in the river bottoms, of which the Wabash Railway will be required to maintain 9 miles and the Burlington Railroad 11 miles.
That the Burlington Railroad track which the Wabash Railway will use is laid with rail weighing eighty pounds to the yard and pretty generally throughout with creosoted ties. The Wabash Railway track to be retired and eliminated is laid with various weights and ages of rail, averaging about 70 pounds to the yard. On this section there are no creosoted ties and it is estimated that the complainants will save approximately $11,000 a year in maintenance.
That the agreement was designed to utilize a single track to the greatest advantage, for two tracks are now unnecessary and probably never will be necessary.
That as a result of the arrangement the complainants will save the cost of maintaining 11 miles of track and the Burlington Railroad the cost of maintaining 9 miles of track.
That the exchange is a fair one between the two companies and will avoid otherwise useless duplication.
That at the present time the complainants operate daily one passenger train in each direction and two freight trains. Years ago there were three passenger trains in each direction daily and two freight trains. The train service of the Burlington Railroad is substantially the same.
That the arrangement is made practicable by reason of the fact that between Albia and Tracy the lines of the two companies are closely parallel and by consolidating operations the two companies will jointly maintain one track, ample for the traffic, thereby greatly reducing maintenance expenses.
That there is ample room on the right of way to construct an additional track should traffic revive to such a point as to make such additional track necessary, but that in recent years the construction of double track has been superseded by the use of centralized control, whereby the switches and signals are controlled from a central point and trains are run by signals directed by a train dispatcher located at a central point.
That double tracking is, therefore, no longer considered necessary unless at least 30 trains daily travel in each direction, so that on this particular joint line it would be many years before traffic would rise to a point where even central control would be considered an operating necessity.
*284 That during the past few years highway construction has been active; that there are state highways paralleling the joint track all the way from Albia to Tracy, and thence into Des Moines, and as a result traffic between these points has practically dried up.
That the railroad line in question is sandwiched in between two improved highways built within the last five or six years, and since the execution of the Des Moines Division first mortgage and the refunding and general mortgage.
That as a result of highway competition gross passenger earnings, which in 1925 amounted to $27,381.06, fell in 1934 to $1,956.86, and that gross freight revenues, which reached $279,032.99 in 1925, fell in 1934 to $101,022.60.
That it is necessary for the Wabash Railway to do everything possible to reduce expenses in order to justify continuing operation of this branch of the railroad.
That the present revenue is not adequate to support the line, that there has been a deficit in its operation for the last five years and increasing deficits are expectable, and that the contract of August 31, 1933, is a measure designed to prevent abandonment.
That if the Wabash Railway and the Burlington Railroad lines were today carrying the maximum amount of freight between Albia and Tracy and were also operating the maximum number of trains which they have ever operated over that line, a single track would be more than sufficient to carry all traffic in each direction.
That even if the former traffic were restored it could be handled by the single line and could be increased up to a total of 25 trains a day in each direction before it would be necessary to resort to central control or double tracking.
IX. As trusts are creatures of courts of equity and depend on them for the maintenance of their purposes, it necessarily follows that an equity court of an appropriate venue may administer any trust in order to maintain the purpose thereof. This power of the equity court is only part of its general administrative power in connection with its trust creations, and for many years has been constantly exercised by equity courts, both in England and in this country. Usually when the necessary parties are before the court, the exercise of this jurisdiction is in Chambers, and, as a result, the principle which is under discussion here has not often become articulate in the reports.
However, there is a very valuable English case, In re New, [1901] 2 Ch. 534, in which a deviation by trustees from the authority given by the instrument of trust was ordered by the English Court of Appeal. The principle to be followed in a proceeding for such an order was well summarized by Lord Justice Romer in the course of the argument when he said, [1901] 2 Ch. at page 543): "The principle seems to be this that the Court may, on an emergency, do something not authorized by the trust. It has no general power to interfere with or disregard the trust; but there are cases where the Court has gone beyond the express provisions of the trust instrument cases of emergency, cases not foreseen or provided for by the author of the trust, where the circumstances require that something should be done."
Judgment was reserved and in giving the judgment of the unanimous court, Lord Romer further dealt with the basis on which a court of equity acts in such cases in [1901] 2 Ch. 534, at page 544, as follows: "But in the management of a trust estate, * * * it not infrequently happens that some particular state of circumstances arises for which provision is not expressly made by the trust instrument, and which renders it most desirable, and it may be even essential, for the benefit of the estate and in the interest of all the cestuis que trust, that certain acts should be done by the trustees which in ordinary circumstances they would have no power to do. In a case of this kind, which may reasonably be supposed to be one not foreseen or anticipated by the author of the trust, where the trustees are embarrassed by the emergency that has arisen and the duty cast upon them to do what is best for the estate, and the consent of all the beneficiaries cannot be obtained by reason of some of them not being sui juris or in existence, then it may be right for the Court, and the Court in a proper case would have jurisdiction, to sanction on behalf of all concerned such acts on behalf of the trustees as we have above referred to."
*285 And later, [1901] 2 Ch. 534, at page 545, the Lord Justice says: "Of course, the jurisdiction is one to be exercised with great caution, and the Court will take care not to strain its powers. It is impossible, and no attempt ought to be made, to state or define all the circumstances under which, or the extent to which, the Court will exercise the jurisdiction; but it need scarcely be said that the Court will not be justified in sanctioning every act desired by trustees and beneficiaries merely because it may appear beneficial to the estate; and certainly the Court will not be disposed to sanction transactions of a speculative or risky character. But each case brought before the Court must be considered and dealt with according to its special circumstances."
It seems to me that this is a very good statement of the principle to be applied and the proper attitude for an equity court to take in applying it, when, as here, the court is asked to instruct trustees to do an act for the obvious benefit of the estate, and the trustees claim that it would constitute a deviation from the trust instruments.
I think that on any reasonable interpretation of the trust instruments before me, the release which the plaintiffs ask me to order to be given by the New York Trust Company, as trustee under the indenture of the Des Moines Division first mortgage of January 1, 1899, is within the authority of the trust indenture of that mortgage; but I think that the release which I am asked to order from the Chase National Bank of the City of New York, as trustee of the refunding and general mortgage of January 1, 1925, is clearly outside the authority given by the trust indenture of that mortgage. Consequently, I have before me in one proceeding the two aspects of the questions which are presented to a court of equity on requests for instructions to trustees to do acts affecting trust estates.
X. Before dealing with the merits of the plaintiff's requests, however, I must turn aside and deal with a very important question which always arises in cases of this kind, and that is whether the cestuis que trustent are adequately represented, for the jurisdiction invoked necessitates the exercise of an informed judicial discretion by the equity judge and he should be certain that he has a sufficient representation of all the interested parties before him to insure his hearing all sides of the question involved, whether it be of interpretation of the powers conferred on the trustee by the trust instrument or of the advisability of instructing the trustee to deviate therefrom. Only with full light thrown on either of these questions from all sides can the equity judge exercise his discretion with any feeling that no consideration of importance has probably been overlooked.
The extent to which a trustee has a right to act in connection with trust property shades like a spectrum from the instances wherein he is expressly given by the trust instrument itself the power which he is asked to exercise, through cases in which such a right may be implicit in varying degrees by a proper interpretation of the trust instrument, down to cases in which it is perfectly obvious that, for the benefit of the trust estate, the trustee must have instructions to act entirely outside of any authority conferred on him by the trust instrument and thus to deviate from it.
In every respect wherein the equity court is asked to exercise such powers as are here invoked, the situation should be treated as one in which it is possible that, on an examination of the pleadings and documents involved and after hearing evidence if necessary, the court will order a departure from the trust instrument.
Therefore, I do not think there is any proper basis as some of the cases seem to suggest for a differentiation between the representation of cestuis que trustent necessary in proceedings where it is sought merely to interpret the powers given to a trustee by the trust instrument and cases in which the trustee is obviously being asked to deviate from it. There should be as full a representation of the cestuis que trustent on the record in respect of one kind of suit as in respect of the other.
The case of Colorado & Southern Railway Co. v. Blair, 214 N.Y. 497, 108 N.E. 840, Ann. Cas. 1916D, 1177, is the leading case in this country dealing with the necessary parties in proceedings of this kind. It holds that it is not sufficient for the plaintiffs who ask the court to instruct a trustee to deviate from the authority given by a trust instrument to make only the trustee a defendant to the suit.
*286 Furthermore, it seems to me that it is not sufficient for the plaintiffs asking such relief, as is here sought in respect of a trust to secure an issue of bonds, to join in the role of defendants only a single bondholder with the trustee, as was done here in the first instance, in respect of each trust. Cf. New Jersey National Bank & Trust Co. v. Lincoln Mortgage & Title Guaranty Co., 105 N. J. Eq. 557, 148 A. 713, 716.
As I indicated above, the reason why I made the order of May 23, 1935, providing that the plaintiffs should join as defendants additional bondholders under each mortgage and also the protective committee of the holders of bonds issued under the refunding and general mortgage of January 1, 1925, was that it seemed to me the plaintiffs in this case had not done the best they could under the circumstances a minimum of effort always required to get as full a representation of all interested parties as possible.
As a result of the order of May 23, 1935, and the steps taken by the plaintiffs pursuant thereto, I now have before me a representation of bondholders of the Des Moines Division first mortgage of January 1, 1899, amounting to 90.38 per cent. of the total bonds outstanding thereunder, and notice has been given to all the 108 known holders of bonds issued under that mortgage. Because that mortgage is not in default and ownership certificates are filed with the coupons that have been coming through semiannually to the Wabash Railway Company, it was not difficult to trace the ownership of these bonds.
In respect of the refunding and general mortgage of January 1, 1925, however, the situation is different. I now have before me 25.51 per cent. of the bondholders under that mortgage. I am persuaded that this is as high a representation as is practicably feasible under the circumstances, because, as that mortgage is in default, coupons have not been arriving periodically with ownership certificates attached, and it is not possible to find out who are the present owners and holders of a large percentage of the bonds, for they were widely distributed throughout the United States.
The ganglion of contact, therefore, with the bondholders under that mortgage necessarily has to be principally through their protective committee, for the members of that committee represent the bondholders who have deposited their bonds and are fiduciaries for such bondholders, and if not authorized to act in such a situation as this it would be their duty to notify their depositors and to secure from the court time within which to get instructions from them.
I do not, however, desire to be understood as laying down any general rule as to any fixed percentage of bondholders who must be served in a proceeding of this kind, because no such rule can be safely made. The situation must be left plastic so that each particular case can be dealt with according to its particular situation.
My purpose in writing this opinion and going so fully into the situation, largely noncontroversial, which is presented to me, is to show what seems to me to be a wise procedure to follow in attempting to get personal jurisdiction of the parties necessary to secure for the court as broad a background as possible of argument and advice for the exercise of its discretion.
The fact, therefore, that I was fortunate in getting jurisdiction over such a large percentage of the two bond issues involved here must be looked as an instance of good luck, and not in any respect as a quantitative measure of the percentage of cestuis que trustent necessary to a proceeding of this kind.
Each case which arises will present its own individualized problem. The main point which I wish to emphasize is that if a mortgage be in default and there be a bondholders' protective committee, it should certainly always be brought in as a party defendant in cases of this kind because of its fiduciary duty to guard the bondholders' interest, and because by making it a party more holders of defaulted bonds can probably be reached for service of process or notice than by any other procedure.
I find that the parties now before the court constitute an adequate class representation of the bondholders as cestuis que trustent under the circumstances here involved, and, therefore, having had a full hearing, I am free to deal with the merits of the plaintiffs' prayers.
XI. I turn now from the question of the presence of the necessary parties before *287 me to the question of the merits of the granting of the relief requested.
I recognize, of course, that as indicated by the quotation above made in In re New, 1901, 2 Ch. 534, 544, 545, the power here invoked is one that should be exercised with great circumspection, and that such an application as the receivers are here making should be met by the court with a very cautious hospitality.
Whilst I am comforted, in considering whether I should grant the plaintiffs' prayer, by the findings and the order of public convenience and necessity made by the Interstate Commerce Commission, I am not thereby controlled, nor, unless by stipulation of the parties, do I have a right to rely thereon, in dealing with the questions before me, as a basis for my judicial acts. Therefore, I have pursued an independent inquiry which convinces me, by evidence which I have heard, that there has been a radical change in the situation since the trust indentures were executed and that it is for the interest of the two trust estates to have the relief sought by this suit granted.
I think it is perfectly clear from the facts which have been shown to me, as I have indicated in my findings, that since the mortgages were made there has been a change in the art of transportation, undreamed of at the time of the mortgage indenture of January 1, 1899, and not really predictable when the mortgage indenture of January 1, 1925, was made.
The competition of motorized transportation using the public highways has impinged heavily on railroad earnings, especially on branch lines for short hauls. This competition has created in respect of the earnings for this section of the Wabash Railway in particular an emergency which was not foreseeable when the trust indentures were executed and, hence, was not provided for therein, and in which circumstances have arisen requiring that something should be done to prevent serious and continual erosion of the trust estate. Cf. New York State Railways v. Security Trust Company of Rochester, 135 Misc. 456, 238 N. Y. S. 354, 360, affirmed without opinion 228 A.D. 750, 238 N. Y. S. 887; New Jersey National Bank & Trust Co. v. Lincoln Mortgage & Title Guaranty Co. et al., 105 N. J. Eq. 557, 148 A. 713, and also the excellent discussion of the circumstances under which an equity court will instruct a trustee to deviate from the terms of the trust instrument contained in an article "Deviation from the Terms of a Trust" by Professor Austin Scott of the Law School of Harvard University, one of the great law teachers of this generation, which appeared, May, 1931, in volume XLIV, Harvard Law Review, at page 1025.
By reason of the fortunate circumstance that between Albia and Tracy the tracks of the Wabash Railway run closely parallel with those of the Burlington Railroad, the opportunity has been afforded certainly to reduce and possibly to eliminate the deficit from this section of the Wabash Railway by joining the tracks and operating on the basis above set forth over the short distance where the two lines are so close together.
The wisdom of this plan is, apparently, not seriously challenged, and I think that it is a properly justified exercise of my discretion as an equity judge in charge of this situation to grant the relief prayed for by the receivers, and, consequently, I do so.
XII. As I mentioned above, in the answer of the Northwestern Mutual Life Insurance Company the suggestion was made that through the execution of supplemental indentures by the Wabash Railway Company the liens of the mortgages on its properties should be extended so as to cover and include the easement or trackage rights which would be given to it by the Burlington Railroad on performance of the contract of August 31, 1933, between it and the Burlington Railroad.
Until the purpose of the contract of August 31, 1933, has been accomplished, however, the easements or trackage rights of the Wabash Railway Company over the part of the proposed joint line owned by the Burlington Railroad will not have been created, and, consequently, the suggestion in the answer of the Northwestern Mutual Life Insurance Company is premature at the present time, although the question raised may well be considered as the basis of the quid pro quo which should be secured by the trustees under the mortgage indentures in exchange for the releases which they will be ordered by my decree herein to give.
My present decree, however, need not deal with this matter in any way for all the parties are subject to my jurisdiction. *288 But my decree should provide that the trustees may at any time apply to this court, at the foot of the decree, for further relief in respect of the matter presently under discussion, and in order to keep time open the decree will also provide that the present term of this court is extended until after the complete execution of this decree and final disposition of all matters thus reserved for future determination or action by this court; and in any event, for a period of three years from the date hereof with leave to any party to this cause at any time prior to the three years to apply to this court for further extension of said term of court.
This will leave the matter sufficiently plastic to enable this court to deal with any further exigency which may arise in connection with the situation in case the joint operation for some reason turns out not to be a success, or in the event that the trustees should desire to make such an application as is above indicated. The matter of a supplemental indenture was mentioned so incidentally as to make it quite impracticable at the present time to make any further provision with regard to it.
XIII. This opinion may constitute the findings of fact and conclusions of law in this cause and an order must be embodied in the decree made herein so providing.
Settle order and decree on notice. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1975814/ | 1 B.R. 150 (1979)
In the Matter of Mark MILBANK, d/b/a the Furniture Craftsman, Bankrupt.
Bankruptcy No. 78 B 1849.
United States Bankruptcy Court, S.D. New York.
November 2, 1979.
*151 Schulman & Abarbanel, New York City, for Ann C. Milbank.
Ruben, Schwartz, Lasker & Schnall, New York City, for Mark Milbank.
DECISION ON COMPLAINTS OF ANN C. MILBANK and HOWARD SCHULMAN TO HAVE DEBTS DUE THEM DECLARED NONDISCHARGEABLE
HOWARD SCHWARTZBERG, Bankruptcy Judge.
Plaintiffs are father and daughter who seek a nondischargeable determination with respect to their claims against the bankrupt, who is the ex-son-in-law of plaintiff, Howard Schulman, and ex-husband of plaintiff, Ann C. Milbank. The essence of their complaints is that the bankrupt obtained money from the plaintiffs at a time when he was having an adulterous affair with his next door neighbor and that he thereafter ran off with her. Since both complaints are based upon the same allegations of fraud the following determination will cover both cases.
The parties appeared at the trial and submitted evidence resulting in the following Findings of Fact and Conclusions of Law:
FINDINGS OF FACT
1. The bankrupt, Mark A. Milbank, filed his voluntary petition in bankruptcy with this court on October 13, 1978, and was thereupon adjudicated. He had been engaged in the business of designing and fabricating custom furniture in Port Chester, New York.
2. Plaintiff, Ann Milbank, was married to the bankrupt on August 20, 1966 and resides in Nassau County, New York. She has three children from this marriage.
3. Plaintiff, Howard Schulman, is the father of plaintiff Ann Milbank and is an attorney at law with offices in New York City. He is a member of the firm of Schulman & Abarbanel, attorneys for both plaintiffs with respect to these proceedings against the bankrupt.
*152 4. During the Spring of 1977, plaintiff, Howard Schulman, learned from his daughter and his former son-in-law, the bankrupt, that their marital relationship was in trouble and that they were trying to put it together again. The bankrupt had moved out of his house and left his wife for a period of five months, commencing January, 1977.
5. In September, 1977, after the bankrupt returned to the marital home, he requested that the plaintiff, Howard Schulman, lend him the sum of $10,000 as a partial payment for the purchase of a building in Port Chester, New York where the bankrupt could conduct his custom-made furniture business. The plaintiff, Howard Schulman, then believed that the bankrupt's marital relationship with the plaintiff's daughter had stabilized; the bankrupt had talked about building another house for his family. Plaintiff, Howard Schulman, was given to understand that the acquisition of the Port Chester location would enable the bankrupt to obtain greater production and alleviate some of his business problems so that the bankrupt could spend more time with his wife and children.
6. Plaintiff, Howard Schulman, advised the bankrupt that the purchase of the Port Chester building was a bad business investment because of the unique nature of the building which impaired its resaleability. However, plaintiff, Howard Schulman, advised the bankrupt that he would make the loan in the interest of the family and his grandchildren. He advanced the money in the belief that the new business location would afford the bankrupt more time to spend with his family.
7. On September 27, 1977, plaintiff, Howard Schulman, paid to the seller's attorney as a down payment for the purchase of the building on behalf of the bankrupt the sum of $5,750. Thereafter, on November 15, 1977, plaintiff, Howard Schulman, advanced to the bankrupt an additional $4,250 which was used by the bankrupt to enable him to acquire the building in the name of the bankrupt's wholly owned corporation.
8. In August, 1977, the bankrupt requested his then wife, the plaintiff, Ann Milbank to advance to him $5000 for the purchase of a new Honda automobile to be used in connection with his business. Repayment was to be made from the funds received by the bankrupt in connection with a business project then pending. Plaintiff, Ann Milbank, said that the bankrupt requested this money as a showing of her faith in their marriage and in him.
9. The bank account from which the $5000 was taken was in the name of the plaintiff, Ann Milbank. She had formerly been a school teacher. Her salary went into this account. They lived on the bankrupt's earnings, although the bank account had been placed in their joint names until December, 1977 when the plaintiff, Ann Milbank, caused it to be put back into her name alone.
10. On or about November 11, 1977, the plaintiff, Ann Milbank, withdrew $7500 from her bank account which she advanced to the bankrupt at his request in connection with his acquisition of the building in Port Chester, New York.
11. During the period when the plaintiff, Howard Schulman, advanced $5750 to the bankrupt in September, 1977, and $4250 on November 15, 1977, and when the plaintiff, Ann Milbank, advanced $5000 to the bankrupt in August, 1977, and $7500 in November, 1977, the bankrupt admittedly maintained an adulterous relationship with the wife of his next door neighbor.
12. During this time the bankrupt and his neighbor's wife registered at various motels and admittedly engaged in sexual activities. In October, 1977, the bankrupt rented an apartment in Long Beach, New York where the consorting neighbor visited him and had sex.
13. In December, 1977, plaintiff, Ann Milbank, first learned of the bankrupt's extra-marital affair when the husband of the next door neighbor telephoned to inform her that the bankrupt was having an affair with the neighbor's wife.
*153 14. In January, 1978, the bankrupt left home, abandoning the plaintiff, Ann Milbank.
15. On October 4, 1979, the New York State Supreme Court, Nassau County, entered a decision granting the plaintiff, Ann Milbank, a divorce based on adultery committed by the bankrupt and the neighbor's wife, with whom he is now living.
16. The bankrupt did not repay any portion of the funds borrowed from the plaintiffs, with the result that they seek to have their claims determined to be nondischargeable.
17. There was no proof that when the bankrupt borrowed the funds from the plaintiffs he did not intend to make repayment. Hence, the central issue is even if the bankrupt intended to repay the loans, did he obtain the money under false pretenses?
18. The bankrupt made the stability of his marriage an issue in August, 1977, when he advised his former wife, plaintiff Ann Milbank, that her response to his request for the $5000 loan for his purchase of a Honda automobile would be a reflection of her faith in their marriage.
19. Similarly the bankrupt's request for loans from his then father-in-law, plaintiff Howard Schulman, and the bankrupt's former wife, plaintiff Ann Milbank, were predicated on a joint effort by the bankrupt and his former wife to attempt to make their previously troubled marriage work. The bankrupt caused plaintiff, Howard Schulman, to believe that the acquisition of the Port Chester building would enable him to spend more time with his family. The plaintiff, Ann Milbank, advanced the sum of $7500 from her bank account at the bankrupt's request as an expression of faith in their marriage. Thus, the stability of the bankrupt's marriage was a material fact in inducing the loans.
20. Although the bankrupt accepted the funds which the plaintiffs advanced in reliance upon a faithful attempt by the bankrupt and his then wife to repair their marital difficulties, the bankrupt was then unfaithful.
21. During the period when the bankrupt accepted the loans from his then wife and father-in-law he was having an affair with the wife of his next door neighbor. Indeed, the bankrupt even went so far as to rent an apartment in Long Beach, New York where he continued his extra-marital affair until he finally abandoned his wife in January, 1978. Obviously, if the plaintiffs had been aware of the bankrupt's conduct they would not have made the loans. Surely, the bankrupt was aware of the fact that he could only obtain these advances under the pretense that he was making an effort to strengthen his marriage.
22. The bankrupt therefore pretended to his then wife and father-in-law that he was making a good faith effort to stabilize his marriage, when in fact, he was rendering it asunder. This false pretense was instrumental in obtaining the loans because the plaintiffs made the advances in reliance upon the bankrupt's express request for a display of faith, at a time when he was faithless.
DISCUSSION
It does not follow that every family loan made concurrently with the commission of adulterous acts can be characterized as having been obtained as a result of fraud in the bankruptcy sense. In this case the bankrupt and his then wife had experienced previous marital difficulties. The bankrupt became restless; he felt he was cut out for better things, notwithstanding his marriage of over ten years which resulted in three children, one of whom was adopted. In January of 1977, he abandoned his wife and family for approximately five months. The bankrupt thereafter returned to his marital home in the Spring of 1977, with the hope of stabilizing his marriage; both husband and wife consulted marriage counselors in this effort. They intended to make a good faith effort to strengthen their marriage.
The plaintiffs, who are the bankrupt's then wife and father-in-law, made loans to the bankrupt to enable him to purchase an automobile for his custom-made furniture *154 business and a building in which the business was to be conducted. These loans were made in reliance upon the bankrupt's representations that he and his wife would make a good faith effort to strengthen their marriage. After the bankrupt returned to his marital home, and unbenounced to the plaintiffs, from whom the bankrupt requested loans for his business, the bankrupt was then engaged in an extramarital affair with the wife of his next door neighbor. This conduct was thereafter admitted by the bankrupt in the plaintiff, Ann Milbank's suit for a divorce on the ground of adultery. Hence, the loans were made in reliance upon the bankrupt's expressed representation that he and his then wife would make a good faith effort to strengthen their marriage, when in fact, the bankrupt's conduct was a sham; his extra-marital affair evidenced the bankrupt's false pretenses with respect to a display of marital stability.
Section 17a(2) of the Bankruptcy Act excepts from a discharge provable debts which "are liabilities for obtaining money or property by false pretenses or false representations . . ." 11 U.S.C. § 35a(2). The type of fraud to which § 17a(2) is addressed is that which involves moral turpitude or intentional wrong. 1A Collier on Bankruptcy ¶ 17.16.
In the instant cases the claimants allege that in reliance on false representations made to them by the bankrupt they made a number of loans to him. The representations to Mr. Schulman, the bankrupt's ex-father-in-law, were statements that the loans would help to strengthen his marriage and family life by allowing him to purchase a new building for his business which in turn would permit him to hire additional employees thus freeing him from working seven days a week. The representations to Mrs. Milbank, the debtor's ex-wife, were, in effect, that by loaning him money for his needs she would show her faith in him and in their marriage thus strengthening the bond between them. The allegation of false pretenses arises in light of the fact that although the bankrupt stated that the claimants' loans would strengthen the marriage and indicate to him his wife's faith, he in turn was carrying on an extra-marital affair the entire period in question. In other words, the loans were made in reliance on the bankrupt's representations that since he was working hard to keep the marriage and family together his wife should act similarly and make the loans. However, since the representation was false in that the debtor was not working to keep the marriage together but was having an extra-marital affair, the claimants allege that the loans were made in reliance on false representations and that they should be excepted from discharge pursuant to Section 17a(2).
The burden of proof is on the claimants to show that the debtor intentionally and purposefully attempted to deceive them in obtaining the loans, In re Taylor, 514 F.2d 1370 (9th Cir. 1975) and that the loans would not have been made but for the false representations, 1A Collier on Bankruptcy Sec. 17.16.
It is not essential that the bankrupt's pretenses be expressed in words. A deliberately created falsehood is the same as a spoken falsehood. In re Nieinhuis, 1 Bankr.Ct.Dec. 404, 406 [S.D.Mich.1974]. It is hornbook law that the concealment of a material fact may be the equivalent of a false representation and be sufficient upon which to predicate a charge of fraud. 37 C.J.S. Fraud § 15. Similarly, the concealment of a fact, which if known, would have influenced a party to refrain from acting, or causing injury, has been held sufficient to constitute fraud. 37 C.J.S. Fraud, § 18.
Manifestly, the plaintiffs would not have made the loans in question had they known that the bankrupt was not only not working at keeping his marriage together, but that he was at that time engaged in an extra-marital relationship with his neighbor's wife, for whom he later abandoned his wife and children. The stability of the bankrupt's marriage to the plaintiff, Ann Milbank, and her faith in him were factors expressed by the bankrupt in order to induce *155 the original loan. Accordingly, the stability of the marriage was a condition upon which the plaintiffs relied to their detriment as a result of the bankrupt's false pretenses.
CONCLUSIONS OF LAW
1. The plaintiff, Ann Milbank, was induced by the bankrupt's false pretenses in August, 1977, to loan him $5000 for his purchase of a Honda automobile.
2. The bankrupt's indebtedness to the plaintiff, Ann Milbank, for the $5000 loan to purchase a Honda automobile was obtained by false pretenses within the meaning of § 17a(2) of the Bankruptcy Act and, therefore, is nondischargeable.
3. The plaintiff, Ann Milbank, was induced by the bankrupt's false pretenses in November, 1977, to loan him $7500 for the purchase of a building in Port Chester, New York.
4. The bankrupt's indebtedness to the plaintiff, Ann Milbank, for the $7500 loan to purchase the Port Chester building was obtained by false pretenses within the meaning of § 17a(2) of the Bankruptcy Act and, therefore, is nondischargeable.
5. The plaintiff, Howard Schulman, was induced by the bankrupt's false pretenses in September and November, 1977, to loan him $10,000 for his purchase of a building in Port Chester, New York.
6. The bankrupt's indebtedness to the plaintiff, Howard Schulman, for the $10,000 loan to purchase the Port Chester building was obtained by false pretenses within the meaning of § 17a(2) of the Bankruptcy Act and, therefore, is nondischargeable. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1898333/ | 394 Pa. Super. 302 (1990)
575 A.2d 914
Virginia LEIDICH, Appellant,
v.
David FRANKLIN and Irene Franklin, His Wife, Appellees.
Supreme Court of Pennsylvania.
Argued March 6, 1990.
Filed May 16, 1990.
Reargument Denied July 3, 1990.
*303 Leslie D. Jacobson, Harrisburg, for appellant.
James G. Nealon, III, Harrisburg, for appellee.
Before WIEAND, TAMILIA and POPOVICH, JJ.
POPOVICH, Judge.
This case involves an appeal from the order of the Court of Common Pleas of Dauphin County granting the motion for judgment on the pleadings filed on behalf of the appellees/defendants, David and Irene Franklin, and dismissing with prejudice the complaint of the appellant/plaintiff, Virginia Leidich. We reverse.
"Like all summary judgments entered without a trial judgment on the pleadings may be entered only in clear *304 cases free from doubt where there are no issues of fact, and only where the cause is so clear that a trial would clearly be a fruitless exercise. . . . The party moving for the judgment on the pleadings admits for the purpose of his motion the truth of all the allegations of his adversary and the untruth of any of his allegations which may have been denied by his adversary." Goodrich-Amram 2d, § 1034(b)(1).
Beck v. Minestrella, 264 Pa.Super. 609, 611, 401 A.2d 762, 763 (1979).
The defendants were the moving parties. They pleaded the bar of the statute of limitations in new matter to which the plaintiff in answer denied its applicability and set forth the factual basis for her contention. Hence, we read the pleadings as follows:
As a result of a collision between the plaintiff's and defendants' automobiles in Dauphin County on April 4, 1986, the plaintiff suffered personal injuries. On January 4, 1988, the plaintiff filed a praecipe for the issuance of a writ of summons with the prothonotary of Dauphin County. Payment for the issuance of the writ was made, but on the back of the writ was written: "writ to atty. 1/4/87[[1]] RB". Next in the record is a certificate of service, prepared by an employee for the plaintiff's attorney, indicating that a copy of the writ was served upon the defendants by first class mail dated January 5, 1988.[2] This was not disputed by the defendants. See Defendant's Answer With New Matter, Paragraph 23; Defendants' Motion For Judgment On The Pleadings, Paragraph 2; Defendants' Brief In Support Of Motion For Judgment On The Pleadings, page 1.
Also, on January 5, 1988, the defendants were served with a notice to appear for deposition on February 2, 1988. Counsel for the defendants, on or about March 3, 1988, *305 objected to the deposition "referencing the Writ of Summons, at which point it was agreed to postpone said deposition indefinitely." Plaintiff's Answer To New Matter With Additional New Matter, Paragraph 34.
Nonetheless, from March 15 through April 4, 1988, documentation (which included the plaintiff's medical bills) was submitted to the defendants' insurer "with regard to possible settlement of the claim on a `policy limits' basis." Id. at Paragraphs 36-38.
It was not until after April 4, 1988, that the plaintiff learned that settlement would not occur. Rather, the case was being contested "on technical grounds involving alleged deficiencies in the service of the Writ of Summons." Id. at Paragraph 39.
After the passage of the two-year period of limitations, the plaintiff filed a praecipe on May 17, 1988, seeking the reissuance of the writ. This occurred and the sheriff served the writ on the defendants the same date. The plaintiff, with the issuance of a rule to do so, filed a complaint. This was followed by the defendants filing an answer with new matter alleging, in Paragraphs 28 and 29, that the plaintiff's claim was barred by the statute of limitations and the principles enunciated in Lamp v. Heyman, 469 Pa. 465, 366 A.2d 882 (1976).
In the pleadings that followed, the plaintiff denied that her claim was foreclosed by Lamp, supra, that she acted in "good faith" in pursuing the lawsuit and she "ha[d] done nothing to stall or delay th[e] action." In the end, the court below granted the defendants' motion for judgment on the pleadings. It found that the plaintiff's action (of seeking the issuance of the initial writ and serving it by mail to the defendants) was contrary to the Rules of Civil Procedure (e.g., Rule 400), local practice[3] and established case law, i.e., *306 Lamp, supra. Thereafter, the plaintiff filed an appeal to this Court.
The plaintiff raises for our consideration but a single issue of whether the court below erred in granting the defendants' motion for judgment on the pleadings. This one issue, however, is subdivided into seven subsections in the argument section of her appellate brief, six of which distill to the query: Did the plaintiff comply with the "good faith" effort required by Lamp, supra, in effectuating service of the writ of summons upon the defendants by mail, so as to toll the statute of limitations and render her lawsuit viable? Our response to this inquiry will resolve the matter posed for our review, and, as such, dispenses with the need to address the last of the plaintiff's contentions concerning the claim that defendants' counsel violated American Bar Association Canons of Professional Ethics by "wait[ing] to file a motion on the grounds of improper service until the statute [of limitations had expired.]"
All parties concerned, including the court below, look to the Lamp decision to buttress their respective positions. As such, we will examine Lamp and determine whose version is an accurate interpretation of its objective and purpose.
In Lamp, four days before the expiration of the two-year statute of limitations, the plaintiff's attorney filed a praecipe for a writ of summons against the defendants for injuries sustained in an automobile accident. However, instead of delivering the writ to the sheriff for service, the plaintiff instructed the prothonotary to "issue & hold". A praecipe for the reissuance of the writ was filed together with a complaint thirty-one months after the date of the accident. Again no service was made, and this time no reason appeared of record. Within two months of the reissuance of the writ, another praecipe for reissuance was filed, and service was effectuated on June 19, 1970.
*307 The defendants filed preliminary objections asserting that the original summons was a "nullity" because of the plaintiff's "issue & hold" instructions to the prothonotary, and, therefore, the action was not brought within the two-year period provided by the statute of limitations.
The trial court sustained the preliminary objections and entered judgment for the defendants. On appeal, the Supreme Court observed that, under Pa.R.Civ.P. 1007, the mere filing of a praecipe to commence an action was sufficient to toll the running of the statue of limitations, and that, pursuant to then Rule 1010(a) (now found at Rule 401(b)(5)), the writ could be reissued at any time after the original issuance during a period equivalent to that permitted by the applicable statute of limitations for the commencement of the action. Further, each valid reissuance gave rise to a new equivalent period during which the writ might again be reissued.
The Court observed that the plaintiff validly commenced her action so as to toll the statute of limitations. Thus, when the writ was reissued, the plaintiff's action was not barred by the statute of limitations. The case did not come to an end at this point. The Court went on to decide whether the "issue & hold" instructions of the plaintiff's attorney rendered ineffectual the original filing. The Court began by reading Rule 1007 allowing no exceptions in providing that an action is "commenced" with the filing of a praecipe, irrespective of whether the prothonotary issues the writ or the sheriff serves it. Stated otherwise, the mere filing of a praecipe, even if a plaintiff deliberately delayed service, was held sufficient to toll the statute of limitations, as stated by the Court in prior rulings. Therefore, the Court held the plaintiff was entitled to rely on these past rulings, and, consequently, the order of the court below holding to the contrary was reversed.
Cognizant of the possible deleterious repercussions flowing from a continuation of such a practice, the Lamp Court altered, for prospective purposes only, such a practice. It did so in the following fashion; to-wit:
*308 . . . there is too much potential for abuse in a rule which permits a plaintiff to keep an action alive without proper notice to a defendant merely by filing a praecipe for a writ of summons and then having the writ reissued in a timely fashion without attempting to effectuate service.
* * * * * *
Our purpose is to avoid the situation in which a plaintiff can bring an action, but, by not making a good-faith effort to notify a defendant, retain exclusive control over it for a period in excess of that permitted by the statute of limitations.
Accordingly, . . . we rule henceforth, [that] . . . a writ of summons shall remain effective to commence an action only if the plaintiff refrains from a course of conduct which serves to stall in its tracks the legal machinery he has just set in motion. Since the manner in which writs of summons are to be prepared and delivered to the sheriff for service is not covered by our rules . . . a plaintiff should comply with local practice as to delivery of the writ to the sheriff for service. If under local practice it is the prothonotary who both prepares the writ and delivers it to the sheriff, the plaintiff shall have done all that is required of him when he files the praecipe for the writ; the commencement of the action shall not be affected by the failure of the writ to reach the sheriff's office where the plaintiff is not responsible for that failure. Otherwise, the plaintiff shall be responsible for prompt delivery of the writ to the sheriff for service.
469 Pa. at 477-79, 366 A.2d at 888-889 (Footnote omitted; Citation omitted).
In applying Lamp, the Commonwealth Court has ruled that filing a petition to review an arbitrator's award and sending a copy to the opposition by regular mail, albeit not in compliance with Rule 1009's[4]service by the sheriff, did not justify the lower court's dismissal of the plaintiff's petition for review. See Big Beaver Falls Area School *309 District v. Big Beaver Falls Area Educational Association, 89 Pa.Cmwlth. 176, 492 A.2d 87 (1985). In reversing, the Commonwealth Court held that:
. . . it is our position that the [plaintiff] should be permitted to have its petition for review reissued in order for it to effectuate proper service in accordance with Rule 1009 of the Pennsylvania Rules of Civil Procedure. The [defendant] suggests, however, that, under Lamp, for a reissuance to extend the applicable statute of limitations, the [plaintiff] should have initially arranged for service [by the sheriff] and further that the [plaintiff's] conduct prevented service upon the [defendant] thereby nullifying the commencement of the action. We disagree. The [plaintiff] merely mistakenly used the improper mode of service and thus this case is not typical of the circumstance contemplated by Lamp. We, furthermore, detect no conduct wherein the [plaintiff] sought to stall the legal machinery it set in motion by filing its petition for review.
89 Pa.Cmwlth. at 181-82, 492 A.2d at 90.
In a similar vein, this Court upheld a motion for summary judgment where the appellants had not made any effort, be it "good faith" or otherwise, to notify the defendant a suit had been instituted against him. See Feher by Feher v. Altman, 357 Pa.Super. 50, 515 A.2d 317 (1986). In making our decision, we made some remarks that are instructive; viz.:
When a praecipe is filed but the writ is not served, the burden is on the plaintiff to show that he made a good faith attempt to have the writ served. In this case plaintiffs'-appellants' counsel had the burden of proving that he took some affirmative action calculated to provide notice of the suit to the defendant, yet he did not present the court with any evidence that he had made the requisite good faith effort. The record reflects . . . the [various pleadings and briefs supportive of the respective positions of the parties]. . . . None of these documents contain [sic] any indication that counsel made an effort to effect service of the original writ. . . .
*310 Thus, although appellants' counsel did not actively attempt to thwart service of the writ, he also did not take any affirmative action to see that the writ was served and to put the defendant on notice that an action had been filed against him.
* * * * * *
In fact, appellants' counsel conceded at oral argument that the reason for not taking steps to have the original writ served was to avoid the additional expense incurred by having the writ served and then at a later time having the complaint served. His argument is without merit. . . .
357 Pa.Super. at 55-56, 515 A.2d at 320 (Emphasis in original).
Lastly, we garner some guidance as to the course we should pursue from the Supreme Court's ruling in Farinacci v. Beaver County Industrial Development Auth., 510 Pa. 589, 511 A.2d 757 (1986), wherein the Court was reviewing the application of Lamp, supra, to a matter where the plaintiff's counsel's inadvertence prevented the service of a writ within thirty days of its issuance.
It appears that the plaintiff's attorney filed a praecipe for the issuance of a writ with the prothonotary of Beaver County on the last day to commence an action for personal injuries. The plaintiff's counsel paid for the issuance of the writ and it was issued the next day. The plaintiff's attorney had intended to instruct and pay the sheriff for service immediately. However, he misplaced the file. The file was found within eight or nine days but the plaintiff's attorney forgot to take the necessary steps to effectuate service of the writ. It was reissued and the sheriff paid some four weeks after the file was found, and service was made within the next two weeks.
Although the Supreme Court affirmed the lower court's grant of the defendants' preliminary objections and dismissal of the plaintiff's cause of action, it observed, in dictum, that the: "eight or nine days of delay . . . was attributable to counsel's simply misplacing the file . . . is not necessarily *311 inconsistent with a finding of good faith." 510 Pa. at 594-95, 511 A.2d at 759-760. However, the four-week delay being assignable to the plaintiff's faulty memory was held not to be an "explanation for counsel's inadvertence which could substantiate a finding that plaintiff[] made a good faith effort to effectuate service of the writ." Id.
It is interesting to note that Justice ZAPPALA, writing for the dissent consisting of LARSEN and McDERMOTT, JJ., would have reversed because there was no finding by the lower court that the plaintiff:
. . . intended to stall the legal proceedings, and resulted in prejudice to the Appellees. On the contrary, the record reviewed by the trial court does indicate that the Appellees were made aware of the Appellant's claim within one year prior to the commencement of these legal proceedings. Therefore, this is not a case in which a potential party has no notice of a pending claim until the filing of a writ for the purpose of tolling the statute of limitations. The trial court opinion is also noticeably void of any finding of prejudice suffered by any of the Appellees.
510 Pa. at 596, 511 A.2d at 760.
What is to be gleaned from Lamp and its progeny is that: (1) one's "good faith" effort to notify a defendant of the institution of a lawsuit is to be assessed on a case-by-case basis; and (2) the thrust of all inquiry is one of whether a plaintiff engaged in a "course of conduct" forestalling the legal machinery put in motion by his/her filings. See Lamp, supra; Jacob v. New Kensington Y.M. C.A., 312 Pa.Super. 533, 459 A.2d 350 (1983). Further, we do not read Lamp, and the cases interpreting and applying it, to espouse a mechanical approach to the "good faith" effort rule such that it allows for no exceptions in the face of an explanation and/or conduct which evidences an unintended deviation from the "notice" requirement. See e.g., Feher, supra; Big Beaver Falls Area School District, supra; Jacob, supra.
*312 At bar, the plaintiff's counsel admits that with the issuance of the writ he took possession of it, instead of allowing the normal course of events under local practice (the prothonotary delivering the writ to the sheriff for service) to take its course, and had delivery to the defendants effectuated by first class mail, the receipt of which the defendants have not disputed. Counsel offers that the course taken was premised upon his "mistaken" belief that, pursuant to Pa.R.Civ.P. 402(b)[5] and with the consent of the defendants' insurance carrier, service of the writ could be accomplished through regular mail. (See Appellant's Brief at 11) Also, the plaintiff's counsel points to the notification of deposing the defendants and the forwarding of medical records to the defendants' insurer as his continuing belief that objection to the form of notice of instituting the lawsuit was not at issue. In fact, he first learned of the objections from the defendants' counsel only after the statute of limitations had expired. With this turn of events, the plaintiff's counsel obtained reissuance of the writ and had it served by the sheriff.
We find that what was written in a similar context is applicable here; to-wit:
We, of course, agree that the rules relating to service of process are important, notice being a constitutional touchstone for the power of the courts to act. However, we do not agree that every aspect of service is equally critical, so that any defect in process is necessarily mortal. Compare, e.g., Peterson v. Philadelphia Suburban Transp. Co., 435 Pa. 232, 255 A.2d 577 (1969). In the instant praecipe, the immediate consequence of which was the issuance of a technically defective writ. Had plaintiffs complied with Rule 1010 [rescinded effective January 1, 1986; current version at Pa.R.Civ.P. 401(b)] the instant controversy would not have arisen. On the other hand, if we sustain defendants' objections to service, plaintiffs *313 will be out of court on their trespass action because the two-year statute of limitations and Zarlinsky v. Laudenslager, [402 Pa. 290, 167 A.2d 317 (1961)], will operate as a bar. In our view, on the facts of the instant case, we cannot permit this to occur. Rule 126 of the Pennsylvania Rules of Civil Procedure requires that we abjure such a rigid application of procedural rules by providing:
"The rules shall be liberally construed to secure the just, speedy and inexpensive determination of every action or proceeding to which they are applicable. The court at every stage of any such action or proceeding may disregard any error or defect of procedure which does not affect the substantial rights of the parties."
We find it impossible to conclude that the defect in service in the instant case affected any substantial rights of the defendants. Although plaintiffs are culpable for the mistake which occurred, it would be unjust to sanction the result which sustaining defendants' preliminary objections would entail.
Hoeke v. Mercy Hospital of Pittsburgh, 254 Pa.Super. 520, 531-32, 386 A.2d 71, 77 (1978) (Footnote omitted).
As in Hoeke, we find that the defect in service has not affected any substantial rights of the defendants, nor is there any allegation that the defendants were prejudiced by the manner in which they received notice of the lawsuit. See Justice ZAPPALA's Dissenting Opinion in Farinacci, supra. More importantly, consistent with Lamp's teachings, we cannot in good conscience equate the plaintiff's attorney's actions with a "course of conduct which serve[d] to stall" the machinery of justice. For example, once the writ was mailed to the defendants, communication with and the submission of documents to their liability carrier began. Even the initial stages of discovery (notice of deposing the defendants) were underway before being discontinued at the behest of the defendants' counsel.
Thus, we do not view the plaintiff's actions as a "course of conduct" to be condemned under the guise of Lamp (an "issue & hold" case). Yet, we caution that, in reversing the *314 order of the court below, we in no way wish to signal to the bench and bar our approval of a circumvention of the Pennsylvania Rules of Civil Procedure and local practice. We are merely holding that, under the particular facts here, Lamp's "good faith" effort to notify the defendants was established in tandem with the absence of a "course of conduct" attributable to the plaintiff evidencing a stalling of the machinery of justice.
Order reversed.
TAMILIA, J., files a dissenting opinion.
TAMILIA, Judge, dissenting.
I respectfully dissent to the holding of the majority reversing the trial court in this matter as I believe it extends Farinacci v. Beaver County Industrial Development Authority, 510 Pa. 589, 511 A.2d 757 (1986), beyond its holdings and ignores the intent of Lamp v. Heyman, 469 Pa. 465, 366 A.2d 882 (1976).
In this case, appellant instituted an action in trespass by filing a writ of summons in the prothonotary's office on January 4, 1988. On the same day, counsel for appellant sent a handwritten note to appellees, by regular mail, enclosing a copy of the Writ of Summons. The writ was subsequently reissued pursuant to Pa.R.C.P. 401(b)(2), on May 17, 1988, and personally served by the sheriff of Dauphin County. However, the two-year statute of limitations had run on April 4, 1988.
The appellant acknowledged that service by regular mail is not permitted either under the Pennsylvania Rules of Civil Procedure or under local rules (except for special circumstances which do not apply here). Construing Lamp and Farinacci in relation to the facts of this case, I believe we are bound by the trial court's finding. As correctly stated by the majority, Lamp was promulgated to curb an abuse widely prevalent whereby a praecipe would be filed with the prothonotary, to toll the running of the statute of limitations, but the plaintiff would direct the sheriff to not *315 serve the writ. Lamp held that a plaintiff must refrain "from a course of conduct which serves to stall in its tracks the legal machinery he has just set in motion." Id., 469 Pa. at 478, 366 A.2d at 889. Subsequent cases have held the plaintiff has the burden of establishing a good faith effort to effect service to avoid dismissal under Lamp. Feher v. Altman, 357 Pa.Super. 50, 515 A.2d 317 (1986); Weiss v. Equibank, 313 Pa.Super. 446, 460 A.2d 271 (1983).
In further clarification of Lamp, Farinacci held that the trial court must evaluate each case on its facts, measured against compliance with Supreme Court and local rules to ascertain whether a good faith effort had been made to effectuate service. Lamp held the plaintiff could not obstruct service by directing the sheriff to hold service indefinitely. Here, in the absence of either statewide or local rules, appellant, whether inadvertently or not, obstructed proper service by failing to deliver the writ for service to the sheriff. Had he done so, service would have been made routinely in accordance with the local custom or rule. By retaining the summons and mailing a copy, appellant failed to make proper service and interfered with the process, a practice prohibited by Lamp.
The holding of the majority provides cart blanche right in every plaintiff to select a manner of service, outside that required by the rules, and creates more confusion and uncertainty than that cured by Lamp. Farinacci addressed only the issue of when a good faith effort to effect service within the rules was attempted. It did not consider nor does it approve attempted service outside the rules.
The majority spelled out in detail the contacts between the parties preliminarily, which showed some attempt at notice by reference. This is inadequate to meet the test of Lamp or Farinacci as negotiations may continue for considerable periods of time, and in and of themselves, are not evidence as to notice of commencement of an action for purpose of tolling the statute of limitations.
I believe case law instructs us that, in the absence of a gross abuse of discretion, we are bound by the trial court's *316 findings of fact in an issue such as the one presented here. I would, therefore, affirm on the basis of the Opinion of Honorable Herbert A. Schaffner.
NOTES
[1] The opinion of the court below at footnote 1 indicates that the January 4, 1987, date "was an error and was intended to mean 1988."
[2] The original writ was served on the agent of the company insuring the defendants on the same date, and this was done in agreement with the agent and the plaintiff's counsel. See Plaintiff's Answer To New Matter With Additional New Matter, Paragraph 31.
[3] In Dauphin County, it has been the practice for the prothonotary's office to prepare the writ, upon receiving the appropriate praecipe, and then for the prothonotary's clerk to deliver the writ to the sheriff for service. No act is required of the plaintiff to get the writ to the sheriff, and the Dauphin County sheriff imposes no requirement that its service costs be prepaid. Rather, the sheriff files his return, with an indication of his costs, and the costs are then docketed to the case or billed to the attorney. See Lower Court Opinion at page 4.
[4] Now found at Pa.R.Civ.P. 400(a).
[5] Rule 402(b) reads in relevant part:
In lieu of service under this rule, the defendant or his authorized agent may accept service of original process by filing a separate document. . . . | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2364146/ | 850 A.2d 548 (2004)
370 N.J. Super. 40
Charles P. VAN WINKLE, Petitioner-Appellant,
v.
NEW JERSEY DEPARTMENT OF CORRECTIONS, Respondent.
Superior Court of New Jersey, Appellate Division.
Argued May 3, 2004.
Decided June 16, 2004.
Jeffrey E. Fogel, argued the cause for appellant.
Tamara L. Rudow, Deputy Attorney General, argued the cause for respondent (Peter C. Harvey, Attorney General, attorney; Patrick DeAlmeida, Deputy Attorney General, of counsel; Ms. Rudow, on the brief).
Before Judges NEWMAN, PARRILLO and HOENS.
The opinion of the court was delivered by
NEWMAN, J.A.D.
Petitioner Charles Van Winkle appeals from a decision of respondent Department of Corrections (D.O.C.) denying him work *549 credits for the period of time he was incarcerated in Pennsylvania serving concurrent Pennsylvania and New Jersey sentences. We now reverse.
On February 11, 1978, petitioner began serving a seventeen and one-half to thirty-five year sentence in Pennsylvania. Pursuant to the Interstate Agreement on Detainers (IAD), petitioner was temporarily transferred from Pennsylvania to New Jersey to stand trial for pending charges.
On October 13, 1978, the court sentenced petitioner on Indictment No. 812-75, count two, to a term not less than five years nor more than seven years. On count three, petitioner was sentenced to a term not less than two years nor more than ten years to run consecutive to the sentence on count two. On count four, petitioner was sentenced to a term not less than two years nor more than six-year to run consecutive with the sentences imposed under counts two and three. On count five, petitioner was sentenced to a term not less than two years nor more than fifteen years, also to run consecutive with the terms from the other counts. The sentences imposed under all counts were ordered to run concurrent to petitioner's Pennsylvania sentence as well as a previous sentence out of Burlington County, New Jersey.
On Indictment No. 813-75, petitioner was sentenced on count six to a term not less than two years nor more than three years to run consecutive to all counts imposed under Indictment No. 812-75. On count seven, petitioner received a term of not less than three years nor more than five years to run consecutive to count six as well as all counts imposed under Indictment No. 812-75. The sentences imposed under counts six and seven were also ordered to run concurrent to petitioner's Pennsylvania and Burlington sentences.
On Indictment No. 1065-75, petitioner was sentenced on count one to a term not less than three years nor more than five years to run consecutive to all sentences imposed under Indictment Nos. 812-75 and 813-75. On count two, petitioner was sentenced to a term not less than three years nor more than four years to run consecutive to the count one sentence as well as all sentences imposed under Indictment Nos. 812-75 and 813-75. The sentences imposed under this indictment were also ordered to run concurrent to petitioner's Pennsylvania and Burlington sentences.
In sum, petitioner's aggregate New Jersey sentence totaled a minimum of twenty-two years and a maximum of fifty-five years.
Petitioner was returned to Pennsylvania, the sending state, in accordance with the provisions of the IAD where he continued serving his Pennsylvania sentence and concurrent New Jersey sentence. On June 14, 1994 Pennsylvania granted parole to petitioner and released him to the detainers filed against him by this State. Petitioner was transferred to the Adult Diagnostic & Treatment Center in Avenel, where he remains incarcerated. Between June 1994 and September 2001, petitioner earned 466 work credits towards his New Jersey sentence.
In early April 2001, petitioner wrote a letter to the Pennsylvania Department of Corrections requesting his work record so that New Jersey could use this information to award him additional work credits. The Pennsylvania D.O.C. informed the Avenel facility of petitioner's request. Upon learning of petitioner's request, Classification Officer Adele Aroneo wrote a letter to petitioner stating that work credits he may have earned in Pennsylvania are not credited against his sentence in this State.
*550 On appeal, petitioner raises the following issues for our consideration:
I. APPELLANT IS ENTITLED TO WORK CREDITS PURSUANT TO N.J.S.A. 30:4-92 FOR WORK PERFORMED WHILE SERVING A NEW JERSEY SENTENCE.
II. THE DEPARTMENT OF CORRECTION'S INTERPRETATION OF N.J.S.A. 30:4-92 WOULD VIOLATE VAN WINKLE'S RIGHT TO EQUAL PROTECTION OF THE LAW.
Petitioner argues in Point I that N.J.S.A. 30:4-92, governing the award of work credits, entitles him to receive credit for the work he performed while incarcerated in Pennsylvania.
N.J.S.A. 30:4-92 provides in relevant part:
inmates of all correctional and charitable, hospital, relief and training institutions within the jurisdiction of the State Board shall be employed in such productive occupations as are consistent with their health, strength and mental capacity and shall receive such compensation therefore as the State Board shall determine.
Compensation for inmates of correctional institutions may be in the form of cash or remission of time from sentence or both. Such remission from the time of sentence shall not exceed one day for each five days of productive occupation....
[emphasis added].
It is well settled that prison authorities can reduce an inmate's sentence only in a manner prescribed by statute. Trantino v. Dep't of Corr., 168 N.J.Super. 220, 225, 402 A.2d 947, 949 (App.Div.), certif. denied, 81 N.J. 338, 407 A.2d 1212 (1979). N.J.S.A. 30:4-92 provides for the grant of work credits only when an inmate is incarcerated in an institution "within the jurisdiction of the State Board." The list of correctional institutions under the jurisdiction of the D.O.C., which are enumerated under N.J.S.A. 30:1B-8, does not include any out-of-state institution. Consequently, the grant of work credits to petitioner based on his Pennsylvania incarceration is not authorized by N.J.S.A. 30:4-92. Although petitioner argues the legislative purpose behind N.J.S.A. 30:4-92 supports the award of work credits to him, the Legislature did not include a provision in the operative statute to provide work credits for a prisoner serving a superseding sentence in a sister state. N.J.S.A. 30:4-92 simply does not entitle petitioner to work credits from his Pennsylvania incarceration.
Petitioner argues in Point II that his right to equal protection of the law was violated since he would have been entitled to the work credits had he been transferred to Pennsylvania pursuant to the Interstate Corrections Compact (ICC), N.J.S.A. 30:7C-1 to -12. However, petitioner was transferred to New Jersey to dispose of pending charges under the IAD, N.J.S.A. 2A:159A-1 to -15, and then was returned to Pennsylvania to serve a superseding sentence. Ibid. Transfers facilitated under the IAD do not require a state to grant work credit for work done while detained in another state.
An examination of the provisions of the ICC and IAD reveals that petitioner was not eligible to be returned to Pennsylvania under the ICC. The ICC is an interstate compact, and as codified in this state, empowers New Jersey to enter into contracts with other states "for the confinement of inmates on behalf of a sending state in institutions situated within receiving states." N.J.S.A. 30:7C-4(a). New Jersey could be either the sending state or the receiving state. The purpose of the ICC is to provide more extensive options for the *551 treatment and rehabilitation of various offenders than may be available within each individual state. N.J.S.A. 30:7C-2; see also, e.g., Trantino v. N.J. State Parole Bd., 154 N.J. 19, 42, 711 A.2d 260, 271-72 (1998), certif. granted, 165 N.J. 523, 760 A.2d 778 (2000), aff'd in part, 166 N.J. 113, 764 A.2d 940, judgment modified, 167 N.J. 619, 772 A.2d 926 (2001) (discussing the possibility of an out-of-state transfer under the ICC so the prisoner could receive treatment in a halfway house).
The ICC expressly provides for an inmate confined in a receiving state to retain all rights he would have if confined in the sending state; accordingly, the D.O.C. concedes that petitioner would be entitled to work credits for the time served in Pennsylvania if petitioner had been transferred to Pennsylvania under the ICC. N.J.S.A. 30:7C-5(e).
The IAD, on the other hand, permits a state to make a written request for "temporary custody" of an individual against whom an indictment or complaint is pending, who is already incarcerated in a different state. N.J.S.A. 2A:159A-4. The purpose of the IAD is to expedite outstanding charges in order to protect prisoners from the adverse consequences of detainers. Johnson v. Cuyler, 535 F.Supp. 466, 473 (D.Pa.1982), aff'd, 714 F.2d 123 (3d Cir.1983) (applying New Jersey law). In other words, the IAD was designed to aid inmates incarcerated in other jurisdictions in securing a speedy trial in the forum state. State v. Buhl, 269 N.J.Super. 344, 356-57, 635 A.2d 562 (App. Div.), certif. denied, 135 N.J. 468, 640 A.2d 850 (1994). Unlike the ICC, the IAD does not provide for a prisoner to retain the rights entitled to him in the sending state while he remains incarcerated in the receiving state.
Quite obviously, situations in which IAD transfers occur differ greatly from those under which ICC transfers take place. The IAD is used to transfer a prisoner to a sister state to resolve pending charges in the receiving state. This is exactly what occurred here. Petitioner was transferred in 1978 to New Jersey for disposition of the charges against him. Since he was transferred to New Jersey under the IAD, he had to be returned to Pennsylvania the same way. Further, there is no indication that an ICC transfer to Pennsylvania was necessary or even appropriate. New Jersey apparently had adequate treatment facilities for petitioner, given that once he finished serving his Pennsylvania sentence, he was transported to New Jersey where he remains incarcerated at Avenel.
Petitioner's contention that he is being treated differently from a similarly situated prisoner transferred under the ICC is flawed. Simply stated, he is not similarly situated because he was not even eligible to be transferred to Pennsylvania under the ICC. The premise for petitioner's equal protection argument is absent and, therefore, the argument fails.
Petitioner also contends that his equal protection rights were violated by the failure to grant him work credits for the time he served in Pennsylvania when he was, at the same time, serving a concurrent sentence out of this State. Petitioner maintains that applying the balancing test utilized in analyzing claims under Art. I par. 1 of the New Jersey Constitution, petitioner is being denied equal protection of the law. Petitioner argues that there is no conceivable, much less rational, basis to distinguish, for purposes of work time credits, between prisoners serving a sentence in State and those serving concurrent time out-of-state such as petitioner. In both instances, petitioner maintains that the legislative interest and purpose of furthering the inmate's rehabilitation is satisfied.
*552 We agree with petitioner and hold N.J.S.A. 30:4-92 unconstitutional as applied to him.
It is clear that New Jersey sentenced petitioner to serve time to run concurrently with his Pennsylvania sentence and that detainers were filed against him. The D.O.C. offers no explanation for why defendant should be denied work credits for the work he performed in Pennsylvania beyond its contention that petitioner was not under New Jersey's "control" during this time. The D.O.C. does not dispute the same rehabilitative purpose is being furthered. Put another way, the D.O.C. does not provide a reasoned basis for distinguishing between petitioner serving a concurrent sentence out-of-state and a prisoner serving a sentence in State. Indeed, the legislative enactment of the ICC authorized work credits for an inmate who serves his or her state sentence in an out-of-state institution. Thus, absence of physical custody or control makes no difference. "Control" merely reflects a jurisdictional concept because the D.O.C. does not, nor did it claim, to supervise the work assignment performed by an inmate, even where the workplace is an in-state institution.
Rowe v. Fauver, 533 F.Supp. 1239 (D.C.N.J.1982) provides a telling contrast to what is presented here. There, the inmate suffered a serious injury at Rahway State Prison. He was successively confined at the prison hospital, the Vroom Readjustment Unit at Trenton State Prison and the Trenton State Prison Hospital. He requested a work assignment and an institutional job to earn work credits against his sentence but was denied work pursuant to a D.O.C. policy and practice of barring prisoners who are classified "medically disabled" from being assigned to any job assignment.
In challenging the policy and practice on equal protection grounds, the inmate pointed out that those inmates who attend school, perform "cell sanitation" or receive injuries on the job receive work credits while they are denied to him in violation of the Fourteenth Amendment. Id. at 1247. The D.O.C. provided a reasoned basis for each of the distinctions made between the class of which the disabled inmate was a member. Inmates injured on a prison job were awarded work credits for equitable reasons "as a form of `workers' compensation' designed to recompense them for injuries sustained while furthering the interests of the prison...." Those who suffered illnesses or injuries unrelated to prison work did not have an equitable claim for compensation. Ibid. Those inmates who attended school were encouraged to pursue an education in the prison. That promoted the institutional aim of rehabilitation. Id. at 1247-48. Lastly, a cell sanitation work program was designed for inmates restricted to close custody. That promoted the morale in an area of the prison which had special security risk. Id. at 1248.
In rejecting the equal protection argument, the District Court judge pointed out that while the lines might have been drawn differently between those who were entitled to receive work credits and those who were not, they were not drawn in an arbitrary fashion nor were the classifications not rationally related to legitimate institutional objectives. Ibid.
The same cannot be said here. The D.O.C. has not offered any reasoned basis to justify a denial of work credits to an inmate performing work while serving a concurrent New Jersey sentence out-of-state and an inmate performing work in New Jersey serving out his or her sentence.
*553 Furthermore, while petitioner was paid by Pennsylvania for the work he performed there, he did not receive a reduction in his Pennsylvania sentence as Pennsylvania does not award work credits. See 61 Pa. Cons.Stat. § 256 (2004). There is no concern that an award of work credits in this State to petitioner would result in "double-dipping." We therefore ascertain no basis to distinguish between work performed by an inmate incarcerated in New Jersey and work performed in Pennsylvania by an inmate serving a concurrent New Jersey sentence. Given that petitioner was serving a concurrent New Jersey sentence, he is entitled to work credits in this State for his work done while incarcerated in Pennsylvania.
Neither we nor the parties have been provided with the specifics of petitioner's Pennsylvania work experience. We remand to the D.O.C. to secure this information from Pennsylvania and determine the amount of work credits to which petitioner is entitled.
Reversed and remanded. Jurisdiction is not retained. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2364161/ | 850 A.2d 619 (2004)
Timothy J. SCHADLER, Appellant
v.
ZONING HEARING BOARD OF WEISENBERG TOWNSHIP, Appellee.
Weisenberg Township (Board of Supervisors), Intervenor.
Supreme Court of Pennsylvania.
Argued December 4, 2003.
Decided May 14, 2004.
*620 Jon A. Swartz, Charles E. Zaleski, for Timothy J. Schadler.
John Edward Roberts, Allentown, for Weisenberg Township Board of Supervisors.
Maria C. Mullane, Allentown, for Zoning Hearing Bd. of Weisenberg Tp.
Before: CAPPY, C.J., and CASTILLE, NIGRO, NEWMAN, SAYLOR, EAKIN and LAMB, JJ.
OPINION
Justice NIGRO.
We granted allowance of appeal in this zoning case to determine whether the Commonwealth Court erred in finding that a challenge to the validity of a zoning ordinance based on procedural defects in the ordinance's enactment was time-barred because it was filed more than thirty days after the ordinance's nominal effective date. For the following reasons, we hold that the court did err and we therefore reverse.
Appellant Timothy J. Schadler is the owner of approximately 41 acres of land in a rural-residential zoning district in Weisenberg Township, Lehigh County (the "Township"). In August 1997, Schadler, seeking permission to build a mobile home park on his property, filed a curative amendment with the Township's Zoning Hearing Board (the "ZHB"), alleging that the zoning ordinances then in effect in the Township placed unreasonable restrictions on mobile home parks and were therefore invalid.
In 1999, while Schadler's curative amendment was still pending, the Township Supervisors (the "Supervisors") began taking steps to enact a new zoning ordinance entitled "Proposed Ordinance 99-4 Mobile Home Parks" (the "Ordinance"), which would comprehensively regulate the construction, use, and maintenance of mobile home parks in the Township. The Supervisors held at least three separate meetings to discuss the proposed Ordinance and accept public comments, advertising each meeting in a local newspaper, the East Penn Press, as follows:
(1) A notice on July 28, 1999 that they would "conduct Hearings in the Municipal Building, 2175 Seipstown Road, Fogelsville, Pa. 18051, for the following considerations ... Oct. 4, 1999-7 p.m.Proposed Ord. 99-4, Mobile Home Parks."
(2) A notice on October 13, 1999, which read: "The following special meetings are scheduled for Weisenberg Township, Lehigh County, Pa. to be held at 2175 Seipstown Road, Fogelsville, Pa. 18051... Nov. 1, 1999-7:15 p.m.Public hearing on proposed Mobile Home Park Ordinance."
(3) A notice on February 2, 2000 that they would "conduct a Public Hearing on a Mobile Home Park Ordinance proposal on Monday, February 7, 2000 at 7:00 P.M. in the Municipal Building, 2175 Seipstown Road, Fogelsville, Pa. 18051."
At the close of the third such meeting, on February 7, 2000, the Supervisors voted to adopt the Ordinance and declared that it would take effect six days later, on February 13, 2000.
On August 31, 2000, two hundred days after the Ordinance's stated effective date, *621 Schadler filed a challenge with the ZHB, claiming that the Ordinance was invalid due to the Supervisors' failure to comply with certain statutory requirements governing the procedure for enacting municipal ordinances. Specifically, Schadler contended that the Supervisors' enactment of the Ordinance violated section 506 of the Municipalities Planning Code (the "MPC"), 53 P.S. § 10506, and section 1601 of the Second Class Township Code (the "SCTC"), 53 P.S. § 66601, each of which mandate, inter alia, that a municipality enacting a new ordinance must first either (a) publish the full text of the proposed ordinance in a newspaper of general circulation; or (b) publish a notice containing the title and a brief summary of the ordinance in a newspaper of general circulation, while also providing the newspaper with a copy of the full text and filing an attested copy of the full text in the county law library or other designated county office.[1] In addition, the two statutes require the municipality to publish newspaper notices designating a place where the public can examine the Ordinance's text. Significantly, the Township conceded that the Supervisors failed to follow these requirements, as none of their three notices included either the full text of the Ordinance or a brief summary of the Ordinance, and as none of the notices designated a place where the public could examine the full text.[2] Nevertheless, the ZHB dismissed Schadler's claim, concluding that it was untimely under section 909.1(a)(2) of the MPC, 53 P.S. § 10909.1(a)(2),[3] and section *622 5571(c)(5) of the Judicial Code, 42 Pa.C.S. § 5571(c)(5),[4] each of which requires procedural challenges to the validity of a land use ordinance to be raised within thirty days of the ordinance's effective date.
Schadler appealed the ZHB's dismissal to the trial court, which reversed, stating that the Supervisors' failure to follow statutory procedural requirements had rendered the Ordinance void ab initio. As a result, the trial court reasoned that the Ordinance had no effective date at all, and thus, the thirty-day time limit for procedural challenges was not applicable.
The Township appealed to the Commonwealth Court, which heard the matter en banc. On appeal, Schadler argued that the trial court's ruling should be affirmed because it was consistent with this Court's decision in Cranberry Park Assocs. ex rel. Viola v. Cranberry Township Zoning Hearing Bd., 561 Pa. 456, 751 A.2d 165 (2000), in which we held that the thirty-day limitations period in 42 Pa.C.S. § 5571(c)(5) did not bar a procedural challenge to a defectively enacted township ordinance, as those procedural infirmities had rendered the ordinance void ab initio. See id. at 165-67. However, a four-judge majority of the en banc panel disagreed, instead finding that Cranberry Park was not controlling because unlike the instant case, which hinged on the interpretation of section 1601 of the SCTC, 53 P.S. § 66601, Cranberry Park was based on section 1741 of the SCTC, 53 P.S. § 65741, a predecessor to section 1601.[5] Moreover, according to the majority, section 1601, unlike repealed section 1741, mandates that the thirty-day limitations period for procedural challenges always begins ticking on an ordinance's nominal effective date, irrespective of procedural defects in the ordinance's enactment.[6] Thus, the majority *623 rejected Schadler's argument, reversed the trial court, and upheld the validity of the Ordinance. Schadler v. Zoning Hearing Bd. of Weisenberg Township, 814 A.2d 1265 (Pa.Commw.2003).
President Judge Colins authored a dissent, which Judge Simpson joined.[7] The dissent argued that the majority had misinterpreted section 1601, which, in the dissent's view, does not provide that procedural defects in an ordinance's enactment can never render the ordinance void ab initio. Rather, according to the dissent, section 1601 only provides that two specific types of procedural defects, namely, a municipality's failure to file an attested copy of a proposed ordinance in its county law library or other designated county office, or its failure to record an ordinance within the allotted time, do not render the ordinance void ab initio. As the enactment of the Ordinance in this case was procedurally defective in many ways outside of these two areas, the dissent maintained that the logic of Cranberry Park remains applicable and that the Ordinance was void ab initio. Accordingly, the dissent concluded that the thirty-day limitations period for challenging the validity of a land use ordinance on procedural grounds did not bar Schadler's claim.
Schadler subsequently appealed the Commonwealth Court's decision to this Court, and we granted allocatur to consider whether the Ordinance was, in fact, void ab initio due to the Supervisors' failure to comply with the relevant statutory requirements for its enactment. For the reasons that follow, we agree with Schadler that the Ordinance was void ab initio and that therefore, the thirty-day limitations period set forth in 53 P.S. § 10909.1(a)(2) and 42 Pa.C.S. § 5571(c)(5) never began ticking and does not bar Schadler's procedural challenge.
Township ordinances enjoy a presumption of validity and it is the challenger who bears the burden of proving an ordinance's invalidity. See Commonwealth v. Ashenfelder, 413 Pa. 517, 198 A.2d 514, 515 (1964). Furthermore, under 53 P.S. § 10909.1(a)(2) and 42 Pa.C.S. § 5571(c)(5), any individual who wishes to challenge an ordinance's validity on procedural grounds must raise his claim within thirty days of the ordinance's effective date. Here, it is undisputed that Schadler filed his procedural challenge more than thirty days after the Ordinance's purported effective date, February 13, 2000. Accordingly, whether or not the Commonwealth Court correctly concluded that the challenge was untimely turns entirely on whether the Ordinance actually became law on February 13, 2000 or was void ab initio.
In the last fifteen years, we have found municipal ordinances to be void for procedural defects in two situations involving facts similar to those of the instant case: once in Lower Gwynedd Township v. Gwynedd Props., Inc., 527 Pa. 324, 591 *624 A.2d 285 (1991), and once in Cranberry Park, supra. In Lower Gwynedd, a second-class township purported to enact an ordinance authorizing the condemnation of a local developer's property for use as a conservation area. See 591 A.2d at 286. However, although the township published a summary of the ordinance's provisions in a newspaper, it did not publish the full text of the ordinance or file a copy of the ordinance in the county law library or other designated county office. See id. The township subsequently purported to adopt the new ordinance on December 22, 1987, and initiated condemnation proceedings to acquire the property pursuant to the ordinance's authority on December 30, 1987. See id.; Gwynedd Props., Inc. v. Lower Gwynedd Township, 970 F.2d 1195, 1197 (3d Cir.1992) (summary of procedural history in related federal court litigation). In response, the developer filed preliminary objections challenging the ordinance on the grounds that the township failed to follow the procedural requirements for enactment set forth in then-applicable 53 P.S. § 65741. See Lower Gwynedd, 591 A.2d at 286. While the township had no choice but to concede that it had not followed the requisite procedures, it contended that the ordinance was still valid because the enactment process had been in "substantial compliance" with the statutory requirements. Id. However, we rejected the township's position and declared the ordinance void on the grounds that "the procedures established by the legislature for the enactment of ordinances must be followed strictly in order for an ordinance to be valid." Id. at 287. "The precedents of this Court," we added, "have been consistent in holding that statutory publication requirements are mandatory and that ordinances adopted without strict compliance are void." Id. at 288.
Nine years later, in Cranberry Park, we elaborated upon the reasoning of Lower Gwynedd and applied it to a dispute over the thirty-day limitations period for procedural challenges to municipal ordinances. In Cranberry Park, a township sanctioned a local contractor for allegedly disobeying an eight-year-old ordinance dealing with the permitting process for grading operations. See Cranberry Park, 751 A.2d at 166. The contractor responded that the ordinance was void ab initio as the township had never numbered, dated, signed, or recorded it, again in violation of then-applicable 53 P.S. § 65741. See id. at 166-67. The township, however, rejected the void ab initio argument and dismissed the contractor's challenge as untimely, because it had been filed beyond the thirty-day limitations period set forth in 53 P.S. § 10909.1(a)(2) and 42 Pa.C.S. § 5571(c)(5). See id. at 166. On appeal, the trial court and the Commonwealth Court both affirmed the dismissal of the contractor's claim, but this Court reversed, agreeing with the contractor that the ordinance was void ab initio. In reaching that conclusion, we cited Lower Gwynedd for the general proposition that municipal ordinances are void unless enacted in compliance with statutory procedural requirements. See id. at 167-68 (citing Lower Gwynedd, 591 A.2d at 285-87). We further noted that the plain text of the last sentence of 53 P.S. § 65741 stated that "[s]uch ordinances shall be recorded in the ordinance book of the township and shall become effective five days after such adoption," which clearly indicated that recordation was required for adoption and that only upon adoption could an ordinance become effective. Id. at 167, 591 A.2d 285. Therefore, we stated that an unrecorded ordinance had no effective date and was void ab initio. See id. Based on this analysis, we concluded that the thirty-day limitations period, which begins ticking on an ordinance's effective date, does not bar a procedural challenge to an unrecorded ordinance, and thus did *625 not bar the contractor's challenge to the unrecorded grading ordinance at issue there. See id. at 168, 591 A.2d 285.
In spite of the similarities between the instant case and both Lower Gwynedd and Cranberry Park, the Township contends that those precedents are inapposite here because they were decided pursuant to a procedural statute, 53 P.S. § 65741, that has since been repealed. The Township further asserts that the repeal of 53 P.S. § 65741 and the simultaneous enactment of 53 P.S. § 66601 vitiates this Court's analysis in Cranberry Park. In support of these assertions, the Township notes that 53 P.S. § 66601, unlike 53 P.S. § 65741, contains a so-called "savings clause" to prevent procedural infirmities in the enactment of an ordinance from having any effect on its validity. Specifically, the Township points to the following emphasized sentence of 53 P.S. § 66601(a), which, in context, reads:
If the full text [of a proposed ordinance] is not included [in the township's newspaper advertisement notifying the public of a proposal to enact a new land use ordinance], a copy shall be supplied to the publishing newspaper when the notice is published, and an attested copy shall be filed within thirty days after enactment in the county law library or other county office designated by the county commissioners, who may impose a fee no greater than that necessary to cover the actual costs of storing the ordinances. The date of such filing shall not affect the effective date of the ordinance, the validity of the process of the enactment or adoption of the ordinance; nor shall a failure to record within the time provided be deemed a defect in the process of the enactment or adoption of such ordinance.
53 P.S. § 66601(a) (emphasis added). According to the Township, this savings clause negates the applicability of Cranberry Park and ensures that the thirty-day limitations period for procedural challenges always begins ticking on an ordinance's nominal effective date, whether or not the township has complied with statutory procedural requirements. We disagree, however, that the effect of 53 P.S. § 66601(a) is so sweeping.
Contrary to the Township's claims, it is clear from the plain language of 53 P.S. § 66601(a) that the statute is not meant to forgive all procedural infirmities in the enactment of an ordinance, and thus does not supersede Lower Gwynedd and Cranberry Park in all cases. As stated above, 53 P.S. § 66601(a) provides that "[i]f the full text [of an ordinance] is not included... [in the newspaper notice,] an attested copy shall be filed within thirty days after enactment in the county law library or other [designated] county office.... The date of such filing shall not affect the effective date of the ordinance, the validity of the process of the enactment or adoption of the ordinance." Id. (emphases added). When these two sentences are read together, it becomes clear that "such filing" refers only to the requirement mentioned immediately before those words that "an attested copy ... be filed within thirty days after enactment in the county law library or other [designated] county office." Id. (emphasis added); see also Cranberry Park, 751 A.2d at 167 (quoting Black's Law Dictionary 1432 (6th ed. 1990)) (defining "such" as "[i]dentical with, being the same as what has been mentioned").[8] Similarly, the second half of the savings clause states only that a failure to "record [an ordinance] within the time provided" will not be deemed a defect. Accordingly, *626 the statute merely provides that a township's failure to file a copy of an ordinance with the county law library or other designated county office within thirty days of enactment or its failure to record the ordinance within the time provided will not render the ordinance void ab initio, without addressing in any way the effect of other procedural deficiencies. As such, pursuant to Lower Gwynedd and Cranberry Park, a township's failure to comply with other statutory procedural requirements continues to render the resultant ordinance void. Indeed, the fact that the General Assembly specifically identified in the "savings clause" only two specific types of procedural defects that do not affect an ordinance's effective date is, if anything, a clear implication that it did not intend other types of defects also to have no effect. See, e.g., Atcovitz v. Gulph Mills Tennis Club, Inc., 571 Pa. 580, 812 A.2d 1218, 1223 (2002) ("We must infer that, under the doctrine of expressio uniusest exclusio alterius, the inclusion of a specific matter in a statute implies the exclusion of other matters.").[9]
In the instant case, the Township has conceded that the Supervisors not only failed to file an attested copy of the Ordinance in its county law library or other designated county office, but also failed to run pre-enactment newspaper advertisements that contained the full text of the Ordinance, a brief summary of the Ordinance, or any information regarding a place where the public could examine the text of the Ordinance. Due to these egregious procedural defects, it is difficult to see how the public could possibly have been on notice regarding the changes in the zoning laws that the Supervisors were devising in 1999 and 2000. Therefore, under this Court's prior decisions in Lower Gwynedd and Cranberry Park, as well as under 53 P.S. §§ 10506 and 66601, the Ordinance is void ab initio and had no *627 effective date, and the thirty-day limitations period in 53 P.S. § 10909.1(a)(2) and 42 Pa.C.S. § 5571(c)(5) never began to run. As a result, the Commonwealth Court's conclusions that Cranberry Park was no longer controlling and that 53 P.S. § 66601 excused the Township's procedural deficiencies were in error.[10]
The Township argues in the alternative that applying the holding of Cranberry Park to this case would engender unsound policy by creating an unreasonable situation in which any ordinance enacted with any sort of technical deficiency would then be forever subject to challenge. We disagree. While it is true that an overly aggressive application of the principles behind Cranberry Park could inject excessive uncertainty into a township's zoning laws, there is no such threat here. The purpose of requiring compliance with the procedural requirements for enacting township ordinances is premised on the importance of notifying the public of impending changes in the law so that members of the public may comment on those changes and intervene when necessary. While we may someday be presented with a case in which a procedurally defective ordinance has been "on the books" and obeyed in practice for such a long time that public notice and acquiescence can be presumed, this is not such a case.[11] To the contrary, when Schadler filed his challenge to the Ordinance in August 2000, the Ordinance was less than seven months old. Thus, the problems that the Township fears are not presently before us.[12]
Moreover, the Township appears to contend that the General Assembly's amendment of 42 Pa.C.S. § 5571(c)(5) on December 9, 2002, evinces a further legislative intent to overrule Cranberry Park. The amended text of that subsection provides that the thirty-day limitations period for challenging municipal ordinances begins ticking on an ordinance's "intended" effective date. 42 Pa.C.S. § 5571(c)(5) (as amended Dec. 9, 2002). In addition, the subsection adds: "As used in this paragraph, the term `intended effective date' means the effective date specified in the ordinance ... or, if no effective date is specified, the date 60 days after the date *628 the ordinance ... was finally adopted but for the alleged defect in the process of enactment of adoption." Id. However, Schadler filed his present claim with the ZHB in August 2000, prior to the effective date of the December 2002 amendment to 42 Pa.C.S. § 5571(c)(5). Thus, even if the amendment does affect subsequently filed procedural challenges to township ordinances, it clearly does not apply here. Likewise, we reject the Township's contention that the General Assembly's apparent intent in enacting the December 2002 amendment to section 5571(c)(5) should control the outcome of our decision here, where the meaning of the combination of statutes in effect in August 2000 is plain.
Finally, the Township asserts that the reasoning of Cranberry Park fails to take into account that smaller municipalities lack (a) the tax funding to employ the full-time staffs necessary to maintain required ordinance records, and (b) the "institutional memory" to recall details or locate records regarding the advertising of proposed ordinances. However, it is not the role of this Court to remedy any logistical problems that municipalities may face in complying with their statutory mandates. To the contrary, where, as here, those mandates are clear, responsibility lies with the municipalities both to develop internal procedures and to budget the funds that are necessary to comply.
Accordingly, we find that Schadler's challenge to the Ordinance is not time-barred and therefore reverse the order of the Commonwealth Court and remand for further proceedings consistent with this opinion.
Former Justice LAMB did not participate in the decision of this case.
NOTES
[1] Section 506(a) of the MPC reads, in full:
Proposed subdivision and land development ordinances and amendments shall not be enacted unless notice of proposed enactment is given in the manner set forth in this section, and shall include the time and place of the meeting at which passage will be considered, a reference to a place within the municipality where copies of the proposed ordinance or amendment may be examined without charge or obtained for a charge not greater than the cost thereof. The governing body shall publish the proposed ordinance or amendment once in one newspaper of general circulation in the municipality not more than 60 days nor less than seven days prior to passage. Publication of the proposed ordinance or amendment shall include either the full text thereof or the title and a brief summary, prepared by the municipal solicitor and setting forth all the provisions in reasonable detail. If the full text is not included:
(1) A copy thereof shall be supplied to a newspaper of general circulation in the municipality at the time the public notice is published.
(2) An attested copy of the proposed ordinance shall be filed in the county law library or other county office designated by the county commissioners, who may impose a fee no greater than that necessary to cover the actual costs of storing said ordinances.
53 P.S. § 10506(a). The full text of section 1601(a) of the SCTC is reproduced in note 6, infra.
[2] Schadler also alleged that the Supervisors failed to record a copy of the Ordinance in the Township ordinance book after its enactment, in violation of 53 P.S. § 66601(a). While the Supervisors admitted before the ZHB that they discontinued their practice of recording ordinances in an "Ordinance Book" circa 1990, they argued that they had since satisfied 53 P.S. § 66601(a) by maintaining an "Ordinance Log," a handwritten ledger that catalogs the titles, numbers, and enactment dates of all Township ordinances. See ZHB Op. at 4. The ZHB agreed with the Supervisors and declared that the "Ordinance Log" satisfied 53 P.S. § 66601(a), even though the log does not include the full texts of the enacted ordinances. See ZHB Op. at 12. On appeal, both the trial court and the Commonwealth Court resolved this case on other grounds and Schadler does not address the Supervisors' compliance with the recordation requirement in his brief to this Court. Accordingly, for purposes of this appeal, we need not consider whether recordation in the "Ordinance Log" in fact satisfied the recordation requirement.
[3] Section 909.1(a) of the MPC reads:
The zoning hearing board shall have exclusive jurisdiction to hear and render final adjudications in the following matters:
* * * *
(2) Challenges to the validity of a land use ordinance raising procedural questions or alleged defects in the process of enactment or adoption which challenges shall be raised by an appeal taken within 30 days after the effective date of said ordinance....
53 P.S. § 10909.1(a).
[4] On August 31, 2000, the date on which Schadler filed his challenge with the ZHB, section 5571(c)(5) of the Judicial Code read: "Questions relating to an alleged defect in the process of enactment or adoption of any ordinance, resolution, map or similar action of a political subdivision shall be raised by appeal commenced within 30 days after the effective date of the ordinance, resolution, map or similar action." 42 Pa.C.S. § 5571(c)(5) (prior to 2002 amendment). The General Assembly has since amended this subsection. See Act of December 9, 2002, P.L. 1705, No. 215, § 3. However, the amended section 5571(c)(5) is only applicable to challenges that were commenced after December 31, 2000 and thus, is not applicable here. See Act of December 9, 2002, P.L. 1705, No. 215, § 6.
[5] Section 1741 was repealed by Act of November 9, 1995, P.L. 350, No. 60, §§ 1, 3701. See also Cranberry Park, 751 A.2d at 167 n. 5. It read, in relevant part: "All such ordinances, unless otherwise provided by law, shall be published prior to passage at least once in one newspaper circulating generally in the township. Such ordinances shall be recorded in the ordinance book of the township and shall become effective five days after such adoption." See id. (quoting 53 P.S. § 65741) (emphasis omitted).
[6] Section 1601(a) of the SCTC reads, in relevant part:
All proposed ordinances ... shall be published not more than sixty days nor less than seven days before passage at least once in one newspaper circulating generally in the township. Public notices shall include either the full text or a brief summary of the proposed ordinance which lists the provisions in reasonable detail and a reference to a place within the township where copies of the proposed ordinance may be examined. If the full text is not included, a copy shall be supplied to the publishing newspaper when the notice is published, and an attested copy shall be filed within thirty days after enactment in the county law library or other county office designated by the county commissioners, who may impose a fee no greater than that necessary to cover the actual costs of storing the ordinances. The date of such filing shall not affect the effective date of the ordinance, the validity of the process of the enactment or adoption of the ordinance; nor shall a failure to record within the time provided be deemed a defect in the process of the enactment or adoption of such ordinance.. . . Ordinances shall be recorded in the ordinance book of the township and are effective five days after adoption unless a date later than five days after adoption is stated in the ordinance.
53 P.S. § 66601(a) (emphasis added). The General Assembly enacted the present version of this statute simultaneously with the repeal of 53 P.S. § 65741. See Act of November 9, 1995, P.L. 350, No. 60, §§ 1, 1601.
[7] Judge Friedman also dissented, without opinion.
[8] Our discussion of "such" in Cranberry Park arose in the context of interpreting the last sentence of then-applicable 53 P.S. § 65741, which read: "Such ordinances shall be recorded in the ordinance book of the township and shall become effective five days after such adoption." Cranberry Park, 751 A.2d at 167 n. 5. Upon examining this language, we determined that "such adoption" referred to recordation in the township ordinance book, as that was the concept that had just been mentioned. Accordingly, we concluded that an ordinance could not become effective in the absence of recordation. See id. at 167. Notably, the operative "such" in section 1741 was deleted in 53 P.S. § 66601, so that the corresponding sentence in section 1601(a) reads: "Ordinances shall be recorded in the ordinance book of the township and are effective five days after adoption...." 53 P.S. § 66601(a). Neither of the parties develops any arguments as to the effect of this excision, but we read it to support our ultimate conclusion that the Ordinance is void ab initio. Indeed, by removing the "such" that previously modified "adoption" in the sentence at issue, the General Assembly broadened the meaning of "adoption" such that it no longer refers to recordation alone but rather, signifies the enactment process as a whole. Consequently, whereas section 1741 only specified that an unrecorded ordinance was void ab initio, section 1601 also leaves room for other significant irregularities in an ordinance's enactment to prevent the ordinance from ever becoming effective. As such, the statute is more closely aligned with the general principle set forth in Lower Gwynedd and Cranberry Park that procedurally defective ordinances are void ab initio. See Cranberry Park, 751 A.2d at 167-68 (quoting Lower Gwynedd, 591 A.2d at 285-87).
[9] The Township claims that because Cranberry Park involved the failure to record an ordinance, and because section 1601 now states that "the failure to record within the time provided [shall not] be deemed a defect in the process of the enactment or adoption of such ordinance," the Cranberry Park analysis should now be wholly disregarded. However, irrespective of the nature of the particular defect at issue in Cranberry Park or the fact that section 1601 may have superseded the Cranberry Park analysis insofar as it applies to that particular defect, section 1601 does not "vitiate" the underlying analysis of Cranberry Park, which followed Lower Gwynedd in setting forth the general rule that defectively enacted township ordinances are void ab initio.
[10] Moreover, it should be noted that the Commonwealth Court below erred in finding that the enactment of 53 P.S. § 66601 had effectively overruled Valianatos v. Zoning Bd. of Richmond Township, 766 A.2d 903 (Pa. Commw.2001), which followed Cranberry Park in finding that a challenge to a procedurally defective local ordinance was not time-barred because the ordinance was void ab initio. See Schadler 814 A.2d at 1270 n. 9.
[11] We are aware that the ordinance in Cranberry Park was enacted eight years before the contractor in that case filed its procedural challenge. However, as that ordinance was never subsequently recorded in the township ordinance book, it was never "on the books" in such a way that the public could have had notice of or acquiesced in its terms.
[12] The Township also seems to insinuate that Schadler's procedural challenge should be barred because, even if the public at large had no notice of the Ordinance's enactment in February 2000, Schadler himself did have actual notice. See Appellee's Brief at 10 n. 5. However, the procedural requirements for the enactment of a law are nonwaivable, and when the lawfulness of the enactment is in question, the law is either void or not void, without regard to the identity of the challenger. Meanwhile, finding the notice of an individual litigant to have any bearing on the litigant's ability to challenge the law in the circumstances of this case would lead to the absurd result of a single township ordinance being valid with respect to some citizens and simultaneously invalid with respect to others. See also Lower Gwynedd, 591 A.2d at 287 (citing Fierst v. William Penn Mem. Corp., 311 Pa. 263, 166 A. 761, 763 (1933) ("If a published notice fails to satisfy the statutory requirements, the fact that members of the public, or even the appellants themselves, appeared at the hearing does not breathe life into an otherwise void ordinance")). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2640920/ | 203 P.3d 380 (2009)
165 Wash.2d 1020
STATE
v.
SHERRILL.
No. 81960-2.
Supreme Court of Washington, Department I.
February 3, 2009.
Disposition of petition for review. Denied. | 01-03-2023 | 11-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2367992/ | 452 F. Supp. 2d 133 (2006)
Donald MAC PHERSON, Plaintiffs,
v.
STATE STREET BANK AND TRUST COMPANY, as Trustee Defendant.
No. 05 Civ. 2960(DRH)(JO).
United States District Court, E.D. New York.
September 20, 2006.
*134 Irwin Popkin, Esq. Parkway Shirley, NY, for Plaintiff.
Shapiro & DiCaro, LLP by Robert S.. Leni, Esq., Rochester, NY, for Defendant.
MEMORANDUM & ORDER
HURLEY, Senior District Judge.
Plaintiff Donald Mac Pherson ("Plaintiff" or "Mac Pherson") brought the present suit after the foreclosure of his property by Defendant State Street Bank and Trust Company ("Defendant" or "State Street"). Plaintiff asserts that he was not served with proper notice prior to the foreclosure and, thereby, was deprived of his Fourteenth Amendment right to Due Process. Defendant moves to dismiss the Amended Complaint pursuant to Federal Rule, of Civil Procedure ("Rule") 12(c) on the ground that this Court lacks subject matter jurisdiction according to the Rooker-Feldman doctrine, which proscribes federal district courts from hearing cases that that amount to appeals of state court proceedings, or, alternatively according to the doctrine of res judicata. Plaintiff counter-moves for summary judgment. For the reasons set forth herein, the Court GRANTS Defendant's motion.
BACKGROUND
The following summary of facts is drawn from the Amended Complaint and the affidavits and evidence submitted by the parties with regard to the present motion.
*135 On April 24, 2000, Dortha Coakley ("Coakley") secured her purchase of 230 South Magee Street, Southampton, New York ("230 South Magee") when she executed a purchase money mortgage, with the mortgagee being IndyMac Mortgage Holdings, Inc. Six days later, on April 30, 2000, the mortgage was assigned to Defendant. Defendant is a corporation with its principal place of business in Vernon Hills, Illinois.
By deed dated May 1, 2000, and filed July 19, 2000, Coakley conveyed her full interest in the property by deed to Plaintiff. (See Aff. of Robert S. Leni, dated Oct. 10, 2005 ("Leni Aff."), Ex. B.) Due to a default in payment for the monthly installment due January 1, 2001, and for each subsequent monthly payment thereafter n May 21, 2001, Defendant commenced an action in the Supreme Court of the State of New York in and for the County of Suffolk ("state trial court") before the Honorable Robert A. Lifson. Defendant sought to foreclosure on the mortgage and secure 230 South Magee.
Defendant made efforts to personally serve Plaintiff, but represented to the state trial court, through an affirmation of its attorney John A. DiCaro, Esq. ("DiCaro"), that it had been unable to personally serve Plaintiff. As a result, Defendant requested to serve notice via publication, and the state trial court granted the request. (Leni Aff., Ex. D.) According to Plaintiff, DiCaro misrepresented his efforts to the state trial court because Plaintiff was then residing at the same street address that was indicated on the May 1, 2000 deed. (See Am. Compl. ¶ 7.)
On June 19, 2003, a judgment of foreclosure and sale was made. (See Leni Aff., Ex. E.) Plaintiff had not appeared. On February 24, 2004, however, Plaintiff submitted an Order to Show Cause in the state trial court, pursuant to New York CPLR 5015(4) to vacate and set aside the judgment of foreclosure and sale on the grounds that the state trial court lacked personal jurisdiction over Plaintiff due to the lack of proper notice. One month later, on March 25, 2004, the state trial court denied the motion to vacate "without prejudice to the right of either named defendant [i.e., Mac Pherson or Coakley] to redeem by payment of any amounts due pursuant to the judgment of foreclosure . . . on or prior to May 1, 2004." (See Leni Aff., Ex. F.) The court held not only that "service by publication can be sufficient to confer personal jurisdiction," but also that "the moving papers [were] utterly devoid of any assertion of a meritorious defense by one, possessed of personal knowledge." (Id.) The property was conveyed to Defendant on May 12, 2004 by the referee named in the foreclosure action.
Almost two weeks prior to the conveyance, on April 30, 2004, Plaintiff filed a Notice of Appeal with the Appellate Division, Second Department. Plaintiff argued that DiCaro had misrepresented the diligence of his efforts to the state trial court, and contended that the determination by the state trial court to allow service by publication did not "satisfy `due process' mandates" because Defendant had not established that "all reasonable efforts to locate and personally serve had been made." (See Affirm. of Irwin Popkin, dated Nov. 14, 2005, Ex. B, Mac Pherson Aff. (hereinafter "Mac Pherson Aff.") ¶ 8.) Plaintiff's attorney affirmed to the Appellate Division his belief that the service by publication ratified by the state trial court violated Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950). (See Affirm. of Irwin Popkin, dated Nov. 14, 2005, Ex. B, Popkin Aff. (hereinafter "Popkin Aff.") ¶ 8.)
*136 By Decision and Order dated March 7, 2005, the Appellate Division affirmed the state trial court's decision. The court first noted that "[a]lthough the impracticability standard is not capable of easy definition, it does not require the applicant to satisfy the more stringent standard of `due diligence' under CPLR § 308(4), or to make a showing that actual prior attempts to serve a party under each and every method provided in the statute have been undertaken." State Street Bank and Trust Co. v. Coakley, 16 A.D.3d 403, 790 N.Y.S.2d 412 (2d Dep't 2005). The court then held that "[c]ontrary to [Mac Pherson's] contention, the Supreme Court providently exercised its discretion in directing an alternative method for service of process upon him. Under the circumstances, the Supreme Court reasonably concluded that service pursuant to the other relevant sections of CPLR § 30$ was impracticable," Id. By Decision and Order dated June 7, 2005, the New York Court of Appeals dismissed Plaintiffs motion for leave to appeal on the grounds that the order from which Plaintiff was appealing did not finally determine the action within the meaning of the New York Constitution.
Plaintiff subsequently brought suit in federal court, asserting three claims against Defendant. As to Count One, brought pursuant to 42 U.S.C. § 1983, Plaintiff alleged that "[s]ervice by publication alone is constitutionally defective" (Am.Compl.¶ 23) and that, as a result, Defendant had "deprived Mac Pherson of his property without due process of law." (Id. ¶ 24.) Count Two alleged that Defendant's actions had been "deceptive acts and practices," in violation of New York General Business Law § 349. Count III simply requested entry of an order declaring that Plaintiff had title to 230 South Magee "in fee and is entitled to the possession of the real property." (Id. 35.) Defendant subsequently moved for judgment on the pleadings on the grounds that this Court lacked subject matter jurisdiction over the proceedings. Plaintiff opposed the motion and submitted a counter-motion for summary judgment demanding entry of the above-requested order.
STANDARD
Defendant moves for judgment on the pleadings pursuant to Rule 12(c), seeking to dismiss the complaint for lack of subject matter jurisdiction. Although subject matter jurisdiction is usually challenged by way of a Rule 12(b)(1) motion to dismiss, it may also be raised on a Rule 12(c) motion for judgment on the pleadings. See Scaglione v. Chappaqua Central Sch. Dist., 209 F. Supp. 2d 311, 312 (S.D.N.Y.2002); Peters v. Timespan Comm., Inc., No. 97 CIV. 8750(DC), 1999 WL 135231, at *3 (S.D.N.Y. Mar. 12, 1999). A Rule 12(c) motion for judgment on the pleadings based upon a lack of subject matter jurisdiction is treated as a Rule 12(b)(1) motion to dismiss the complaint. Weisman v. Internal Revenue Serv., 972 F. Supp. 185, 186-87 (S.D.N.Y.1997).
"A case is properly dismissed for lack of subject matter jurisdiction under [Rule] 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000); Reserve Solutions Inc. v. Vernaglia, 438 F. Supp. 2d 280, 286 (S.D.N.Y.2006). In contrast to the standard for a motion to dismiss for failure to state a claim under Rule 12(b)(6), a "plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Id. A district court may consider evidence outside the pleadings when resolving a challenge to the court's subject matter jurisdiction. Filetech S.A. v. France Telecom S.A., 157 F.3d 922, 932 *137 (2d Cir.1998); see also Flores v. S. Peru Copper Corp., 414 F.3d 233, 255 n. 30 (2d Cir.2003).
DISCUSSION
Defendant moves for judgment on the pleadings, dismissing this action for lack of subject matter jurisdiction under the Rooker Feldman doctrine, because Plaintiffs "express purpose" is to "overturn the state court judgment and, in fact the plaintiff is specifically attempting to evade the results there from." (Def.'s Mem. at 2.) Plaintiff counters that he "is not asking this Court to review or reject the prior state court foreclosure judgment, but rather to focus on the constitutional infirmities inherent in New York CPLR 308(5), the law that allows a New York judge to determine any alternative manner of service whenever service is otherwise impracticable." (Pl.'s Opp'n Mem. at 4.)
Rooker-Feldman establishes the clear principle that federal district courts lack jurisdiction over suits that are, in substance, appeals from state-court judgments. See Hoblock v. Albany County Bd. of Elections, 422 F.3d 77, 84 (2d Cir.2005). The doctrine grew out of two United States Supreme Court decisions, Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S. Ct. 149, 68 L. Ed. 362 (1923), and D.C. Court of Appeals v. Feldman, 460 U.S. 462, 103 S. Ct. 1303, 75 L. Ed. 2d 206 (1983). Taken together, Rooker and Feldman stand for the proposition that "lower federal courts lack jurisdiction to engage in appellate review of state-court determinations." Pennzoil Co. v. Texaco Inc., 481 U.S. 1, 21, 107 S. Ct. 1519, 95 L. Ed. 2d 1 (1987) (Brennan, J., concurring); accord ASARCO Inc. v. Kadish, 490 U.S. 605, 622, 109 S. Ct. 2037, 104 L. Ed. 2d 696 (1989) ("The Rooker-Feldman doctrine interprets 28 U.S.C. § 1257 as ordinarily barring direct review in the lower federal courts of a decision reached by the highest state court, for such authority is vested solely in this Court.").
The Supreme Court recently narrowed the doctrine in Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280, 125 S. Ct. 1517, 161 L. Ed. 2d 454 (2005), holding that Rooker-Feldman "is confined to cases of the kind from which the doctrine acquired its name: cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." 544 U.S. at 284, 125 S. Ct. 1517; see also Hoblock, 422 F.3d at 85.[1]
According to the Second Circuit's definitive articulation of Rooker-Feldman, the Hoblock opinion, courts must make four determinations before applying the doctrine. First, the federal-court plaintiff must have lost in state court. Second, the plaintiff must complain of injuries caused by a state-court judgment. Third, the *138 plaintiff must invite district court review and rejection of that judgment. Fourth, the state-court judgment must have been "rendered before the district court proceedings commenced," i.e., Rooker-Feldman has no application to federal-court suits proceeding in parallel with ongoing state-court litigation. Hoblock, 422 F.3d at 85. The first and fourth requirements are "procedural"; the second and third are "substantive." Id. If each of the above requirements is met, the case is barred by Rooker-Feldman.
Plaintiff lost in state court, satisfying the first factor, and this action was commenced after the completion of the state court proceedings, satisfying the fourth factor. Plaintiff clearly invites this Court to review and reject of the state court judgment. In his Amended Complaint, Plaintiff explicitly requests an order overturning the state court's June 19, 2003 Judgment of Foreclosure and Sale when he requests an order granting him title and possession of the real property at issue. (See Am. Compl. ¶ 35.) Furthermore, Plaintiff implicitly, though necessarily, requests an order overturning the state court's Match 25, 2004, denial of Plaintiffs Order to Show Cause and Motion to Vacate. Thus, the arguments and relief requested before this Court are precisely the arguments raised by Plaintiff in his Order to Show Cause before the state trial court. As a result, the third requirement for application of the Rooker-Feldman doctrine is met. Therefore, factors one, three, and four have been met, and only the second factor requires some elaboration.
As to the second requirement, the Court must determine whether the injury complained of by Plaintiff was caused by a state court judgment. The alleged injury is the deprivation of property without due process of law. (Am.Compl.¶¶ 20-26.) That much is clear. The alleged cause of the injury, however, is regrettably vague. Depending upon the argument he hopes to maintain, Plaintiff variously contends that he was deprived of his due process rights as a result of (1) the state court's opinion (see id. ¶ 25; Pl.'s Opp'n Mem. at 6); or (2) the state court's application of an unconstitutional statute (see Pl.'s Opp'n Mem. at 4; Pl.'s Opp'n Mem. at 13); or (3) Defendant's misrepresentations to the state trial court. The Court considers each possibly alleged injury in turn.
A. State Court's Judgment
At some points, the alleged cause of the injury is the unconstitutional service ratified by the state court. (Id. ¶ 25 (alleging that Plaintiff was deprived of due process as a result of the unconstitutional method of service being "ratified, acquiesced in, sanctioned and approved by the highest court in the State of New York."); Pl.'s Opp'n Mem. at 6 ("The state court's allowing the foreclosure judgment to stand constitute an acquiescence in and ratification of the intentional wrongful conduct complained of and permitted such conduct to go unpunished.").) To the extent that Plaintiff is complaining that the state court's judgment caused the injury, this Court clearly lacks jurisdiction pursuant to the classic articulation of the Rooker-Feldman doctrine: Rooker-Feldman prohibits "cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." Exxon Mobil, 544 U.S. at 284, 125 S. Ct. 1517; see also Hoblock, 422 F.3d at 85.
B. State Court's Application of an Unconstitutional Statute
Plaintiff alternatively argues that he is ultimately concerned with the "constitutional *139 infirmities in New York CPLR 308(5)" (Pl.'s Opp'n Mem. at 4), suggesting that the statute itself is the cause of the injury.[2](Id. at 13 (arguing, in support his own motion for summary judgment, that CPLR 308(5) is unconstitutional both facially and as applied).) This appears to be the actual injury complained of by Plaintiff, as he trains his arguments and citations to case law on the argument that "CPLR § 308(5) runs afoul of the constitutional protections. . . ." (Id. at 4.)
To the extent that Plaintiff is seeking review of a state court proceeding that applied an unconstitutional state statute, Plaintiffs suit is also barred by Rooker-Feldman. When he alludes to the unconstitutionality of § 308(5), he is basically appealing a prior state court ruling. Indeed, in his papers filed with the Appellate Division, Plaintiffs attorney affirmed to the Appellate Division his belief that the service by publication ratified by the state trial court violated Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950). (See Popkin Aff. ¶ 8.) If the injury is the state court's application of an unconstitutional statute, Plaintiffs claim is essentially a de facto appeal of a prior state court ruling and is prohibited by Rooker Feldman. See Exxon Mobil, 544 U.S. 280, 287, 125 S. Ct. 1517, 161 L. Ed. 2d 454 (2005); Howlett v. Rose, 496 U.S. 356, 369-70, n. 16, 110 S. Ct. 2430, 110 L. Ed. 2d 332 (1990) (citing Rooker and Feldman for "the rule that a federal district court cannot entertain an original action alleging that a state court violated the Constitution by giving effect to an unconstitutional state statute"); Rooker, 263 U.S. at 415, 44 S. Ct. 149 ("If the constitutional questions stated in the bill actually arose in the cause, it was the province and duty of the state courts to decide them; and their decision, whether right or wrong, was an exercise of jurisdiction."); Noel v. Hall, 341 F.3d 1148, 1155 (9th Cir.2003); Fastag v. Kelly, No. 04 Civ. 9037(SAS), 2005 WL 1705529, *3 (S.D.N.Y. July 19, 2005).
C. Defendant's Misrepresentations
Plaintiff sometimes asserts that Defendant's actions were actual cause of the injury. (See, e.g., Am. Compl. ¶ 25 ("State Street deprived Mac Pherson of his property under the color of the aforementioned state statute and such deprivation of Mac Pherson's property becomes the equivalent to a state action. . . ."); Pl.'s Opp'n Mem. at 5; id. at 6 ("The damages suffered by Mac Pherson . . . are not as a result of the state-court judgment, but the direct result of the actions of Di Caro and State Street to obtain a foreclosure judgment without regard to the fundamental `due process' protections. . . . ").) At these moments, Plaintiff asserts that the injury was caused not by the state court's ratification of the notice procedure nor by the unconstitutional statute, but rather by Defendant's misrepresentations and accompanying manipulation and misuse of the New York statute. (See Am. Compl. ¶ 24 ("New York CPLR § 308(5) was utilized by State Street and its attorneys in a manner which deprived Mac Pherson of his property without due process of law, in violation of his rights as guaranteed to him by the United States Constitution.").) Defendant's argue that if the alleged cause of the injury is Defendant's misrepresentations, it should be dismissed because the *140 claim is "inextricably intertwined" with the state court judgment.
After Exxon Mobil, the "inextricably intertwined" analysis from Moccio should not be read as an expansion of the Rooker-Feldman doctrine. Rather, as the Second Circuit iterated in Hoblock, "the phrase `inextricably intertwined' has no independent content. It is simply a descriptive label attached to claims that meet the requirements outlined in Exxon Mobil." Hoblock, 422 F.3d at 87. That being the case, it would appear that Plaintiffs argument that his injury was caused by Defendant's misrepresentations in procuring the state court judgment would avoid the Rooker-Feldman doctrine. See Goddard v. Citibank, NA, No. 04 Civ. 5317(NGG), 2006 WL 842925, at *6 (E.D.N.Y. Mar. 27, 2006) ("While the Plaintiffs remaining claims deny a legal conclusion reached by a state court, her claims are of the type held by the Court in Exxon Mobil to be independent from the state court judgment, because they allege fraud in the procurement of the judgment, independent from the barred claim that the state court issued an incorrect decision regarding the law or the evidence presented to it."). Accordingly, if the alleged cause of Plaintiffs injury is Defendant's misrepresentations, this Court seemingly has subject matter jurisdiction over the claim.
That being said, if the Court does have subject-matter jurisdiction over the claim based upon the cause of the injury being Defendant's misrepresentation, the Court must dismiss the claim pursuant to the principle of res judicata. (See Def.'s Mem. at 4.) Res judicata is a proper basis for dismissal under Rule 12(c). See Waldman v. Village of Kiryas Joel, 207 F.3d 105, 108 (2d Cir.2000) (affirming dismissal pursuant to Rule 12(c) on res judicata grounds).
The doctrine of res judicata bars a party from asserting claims that either (i) are duplicative of the claims between the parties that were previously decided on the merits, or (ii) claims that arise out of the same facts as claims between the same parties that were previously decided on the merits. See Northern Assur. Co. of Am. v. Square D. Co., 201 F.3d 84, 87 (2d Cir.2000). "Whatever legal theory is advanced, when the factual predicate upon which claims are based are substantially identical, the claims are deemed to be duplicative for purposes of res judicata." Berlitz Schools of Languages of Am., Inc. v. Everest House, 619 F.2d 211, 215 (2d Cir.1980). Thus, res judicata not only bars parties from relitigating the same cause of action, but also "prevents litigation of a matter that could have been raised and decided in a previous suit, whether or not it was raised." Murphy v. Gallagher, 761 F.2d 878, 879 (2d Cir.1985); see also Perez v. Danbury Hosp. 347 F.3d 419, 426 (2d Cir.2003) ("Res judicata precludes parties from litigating issues that were or could have been raised in a prior proceeding.") (internal quotation marks and citations omitted); Monahan v. N.Y. City Dep't of Corr., 214 F.3d 275, 284-85 (2d Cir.2000); L-Tec Elecs. Corp. v. Cougar Elec. Org., Inc., 198 F.3d 85, 87-88 (2d Cir.1999).
To determine whether res judicata applies to preclude later litigation, a court must find that "(1) the previous action involved an adjudication on the merits; (2) the previous action involved the [parties] or those in privity with them; [and] (3) the claims asserted in the subsequent action were, or could have been, raised in the prior action." Pike v. Freeman, 266 F.3d 78, 91 (2d Cir.2001); see also Fogel v. Secretary of Air Force, 351 F. Supp. 2d 47, 50 (E.D.N.Y.2005).
*141 There is little dispute regarding the first two elements: there was a final judgment on the merits in the state court proceedings and that the state court proceedings involved both of these parties. The decisive element is the third, i.e., whether the claims asserted in the subsequent action were, or could have been, raised in the prior action.
The state court proceedings did not explicitly reference § 1983. Nevertheless, the Second Circuit applies a transactional analysis to determine whether there is sufficient identity of issues to justify the dismissal of the subsequent claim on the grounds that it could have been raised in the prior action. See Woods v. Dunlop Tire Corp., 972 F.2d 36, 38-39 (2d Cir. 1992). "Whether or not the first judgment will have preclusive effect depends in part on whether the same transaction or connected series of transactions is at issue, whether the same evidence is needed to support both claims, and whether the facts essential to the second were present in the first." Id. at 38. It is this identity of facts surrounding the occurrence that constitutes the cause of action, not the legal theory upon which the plaintiff chooses to frame his complaint. See id. at 39.
Plaintiff's claims in the present action are identical to those raised and decided in the state trial court's determination of the merits of Plaintiffs Order to Show Cause and Motion to Vacate. In his case before the Appellate Division, Plaintiff referenced the alleged misrepresentations by DiCaro as depriving him of "due process." (Mac Pherson Aff. ¶ 8.) The factual predicate of Plaintiff's present complaint is precisely the factual predicate raised as violations of "due process" before the state trial court and the Appellate Division. Because it is precisely the same set of facts found inadequate in the prior suit, the state trial court's denial of the Order to Show Cause and Motion to Vacate is a final decision for res judicata purposes. See United States v. McGann, 951 F. Supp. 372, 382-83 (E.D.N.Y.1997). Additionally, there is nothing substantively different about Plaintiffs complaint in the present case other than his reliance on a new legal theory, i.e. his invocation of § 1983. New legal theories do not amount to a new cause action so as to defeat res judicata. See Norman v. Niagara Mohawk Power Corp., 873 F.2d 634, 638 (2d Cir.1989); see also In re Teltronics Services, Inc., 762 F.2d 185, 193 (2d Cir.1985) ("New legal theories do not amount to a new cause of action so as to defeat the application of the principle of res judicata.").
All of the allegations that form the crux of Plaintiffs complaint were identical to the facts before the state trial court and Appellate Division. As such, the claims asserted in the present action were, or could have been, raised in the prior action and are precluded by res judicata. See Pike, 266 F.3d at 91; see also Fogel, 351 F.Supp.2d at 50. Accordingly, the Court grants Defendant's motion to dismiss.
CONCLUSION
In sum, Plaintiffs suit is barred by either the Rooker-Feldman doctrine or, alternatively, res judicata. Accordingly, Defendant's motion for judgment on the pleadings is GRANTED. The Clerk of the Court is directed to close this case.
SO ORDERED.
NOTES
[1] Exxon Mobil explicitly abbrogated Moccio v. New York State Office of Court Admin., 95 F.3d 195 (2d Cir.1996). Moccio improperly articulated the Rooker-Feldman doctrine as essentially co-extensive with the doctrines of res judicata and collateral estoppel. See 95 F.3d at 199; id. at 199-200 ("We agree that the Supreme Court's use of `inextricably intertwined' [in Feldman] means, at a minimum, that where a federal plaintiff had an opportunity to litigate a claim in a state proceeding (as either the plaintiff or defendant in that proceeding), subsequent litigation of the claim will be barred under the Rooker-Feldman doctrine if it would be barred under the principles of preclusion."). Though the ultimate outcome is generally identical, Exxon Mobil clarified that Rooker-Feldman is a jurisdictional doctrine, whereas res judicata and collateral estoppel are not. See Exxon Mobil, 544 U.S. at 293, 125 S. Ct. 1517 ("Preclusion, of course, is not a jurisdictional matter. See Fed. Rule Civ. Proc. 8(c) (listing res judicata as an affirmative defense).").
[2] 308(5) of the CPLR authorizes service "in such manner as the court, upon motion without notice, directs, if service is impracticable under paragraphs one [personal service], two [mail service] and four [affixing service to door of residence] of this section." N.Y. CPLR § 308(5). The state trial court exercised this authority to authorize notice by publication. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2368003/ | 412 F. Supp. 1392 (1976)
Arthur RAYMOND
v.
ELI LILLY AND COMPANY.
Patricia RAYMOND
v.
ELI LILLY AND COMPANY.
Civ. A. Nos. 75-80 and 75-81.
United States District Court, D. New Hampshire.
May 5, 1976.
*1393 *1394 W. Wright Danenbarger, Wiggin & Nourie, Manchester, N. H., for plaintiffs.
John A. Graf, McLane, Graf, Greene, Raulerson & Middleton, Manchester, N. H., R. H. Beatie, Ballantine, Bushby, Palmer & Wood, New York City, for defendant.
MEMORANDUM OPINION
BOWNES, District Judge.
In this diversity action, plaintiff, Patricia I. Raymond, alleges that an oral contraceptive medication, C-Quens, manufactured and distributed by defendant, Eli Lilly and Company, caused hemorrhages of the optic nerves in each of her eyes leaving her legally blind.[1] Plaintiff is a resident of Nashua, New Hampshire. Defendant is a corporation which is incorporated in and has its principal place of business in the State of Indiana. The amount in controversy exceeds $10,000. Jurisdiction is conferred by 28 U.S.C. § 1332.
Defendant has moved for summary judgment on the grounds that the New Hampshire statutes of limitations bar plaintiff's action.
Plaintiff's complaint was filed in the Superior Court for Hillsborough County, New Hampshire, on February 28, 1975, and, upon defendant's petition, was removed to this court. Plaintiff's complaint raises three separate claims against defendant: one in negligence, one in breach of warranty, and one in strict liability. Defendant claims that plaintiff's cause of action accrued prior to February 28, 1969, and that her tort claims are barred by NH RSA 508:4 (Supp. 1975), and her contract claim by NH RSA 382-A:2-725.
Both parties have agreed that there are two central issues to be resolved at this juncture: first, whether or not New Hampshire's malpractice discovery rule in reference to the statute of limitations applies to a drug products liability case; and, second, if it does, should the plaintiff, in the exercise of reasonable diligence, have learned of the alleged causal connection between the oral contraceptives and her blindness prior to February 28, 1969. The New Hampshire discovery rule provides:
. . . [A]ctions for malpractice based on the leaving of a foreign object in a patient's body do not accrue until the patient learns or in the exercise of reasonable care and diligence should have learned of its presence. Shillady v. Elliot Community Hosp., 114 N.H. 321, 324, 320 A.2d 637, 639 (1974).
The first issue is a question of law properly to be resolved by this court on a motion for summary judgment. By agreement, the parties have submitted the second issue, one of fact, to this court for resolution on this motion. A hearing was held on March 24, 1976, and evidence in the form of plaintiff's testimony was taken. The parties have both submitted other evidence in the forms of depositions and medical records.
I rule that the New Hampshire discovery rule does apply in a drug products liability case and find that plaintiff is not barred by the New Hampshire statute of limitations.
THE FACTS[2]
Patricia Raymond, thirty-five, is married and the mother of four children. She graduated from high school in Philadelphia and, after she became blind, went to college through the New Hampshire Department *1395 of Vocational Rehabilitation and graduated in June of 1973. Prior to June, 1968, she had been employed as a receptionist, a secretary trainee, and a desk clerk receptionist. Her health had been good except for a variety of "female problems" for which she had several operations culminating in a total hysterectomy in December, 1968.
In early 1968, plaintiff experienced "female problems and stomach distress" and consulted her gynecologist, Robert R. Moheban, M.D. (Dep. at 52-53.) Dr. Moheban ran a series of tests on her and, unable to determine the exact nature of her problem, recommended a D & C (dilation and curettage). In order to schedule her for this procedure, he needed to regulate her menstrual periods and prescribed C-Quens, an oral contraceptive manufactured by defendant. Plaintiff filled the prescription on April 9, 1968, and renewed it on May 20, 1968. (Deft's. Ex. A.) At the end of May, in the middle of the second cycle of birth control pills, plaintiff experienced a "blurriness" in her left eye. (Dep. at 54.) She had problems focusing and was unable to perform her work as a desk clerk at the Nashua Country Club. She suffered no pain at any time. Within approximately one week, she consulted her regular ophthalmologist, Maurice Chagnon, M.D., who advised her "that it looked as if [she] had had a hemorrhage." (Dep. at 74.) Dr. Chagnon asked her if she was taking any medication. Plaintiff told him of the C-Quens, and he advised her to cease taking them "just as a precaution." (Dep. at 75.) In plaintiff's presence, Dr. Chagnon called Dr. Moheban's office, advised them of the situation and of his recommendation that Mrs. Raymond cease taking "the pill." Dr. Chagnon told plaintiff that he did not know what the cause of the hemorrhage was or whether she would regain the sight in her eye. "There was no way of knowing he said. We would just have to wait and see." (Dep. at 78.)
Prior to April 9, 1968, plaintiff had not taken any oral contraceptive nor did she take any after she was advised not to by Dr. Chagnon. Plaintiff was not informed by Dr. Moheban, the prescribing doctor, of any possible side effects from taking C-Quens other than some possible weight gain or swelling, spotting or bleeding. There was no discussion at all concerning plaintiff's eyes or any possible side effects that might concern her eyes. Plaintiff claimed that she did not receive at any time from Dr. Moheban or anyone else any writing or printed matter about C-Quens or any other oral contraceptive. Neither did she read anything about them in any outside source or discuss the subject with anyone.
Plaintiff continued to see Dr. Chagnon, her ophthalmologist, in June, 1968. He tested her, but prescribed no medication. She experienced some improvement in her peripheral vision in the left eye a couple of weeks after the initial hemorrhage. She stopped seeing Dr. Chagnon sometime in the summer of 1968.
In October, plaintiff went to the Lahey Clinic in Boston. Dr. Arthur F. Calnan, the head of the ophthalmology department at the Clinic, treated her. He gave her a cortisone injection, some oral cortisone, and referred her to the other departments of the Clinic for a complete examination. No systemic disease was found, but during her "work-up" the doctor in the Gynecology Department, Dr. Takacs, recommended that she have a hysterectomy. After that operation in December, 1968, she ceased to visit the Lahey Clinic until her right eye hemorrhaged in June, 1969.
The diagnosis of the Lahey Clinic is somewhat unclear. Plaintiff testified, both at her deposition and in court, that she was never given any indication by any doctor that there was a causal connection between the birth control pills and the hemorrhage in her left eye. She claimed that Dr. Calnan never told her of any specific diagnosis or prognosis either before or after the tests. She claims to have specifically "asked him if he thought it [the C-Quens] might have something to do with that, and he told me he didn't know, he didn't think so." (Record at 11.) Dr. Calnan's notes for October *1396 11, 1968, in the medical record confirm that this was his initial response.
Original opinion was that it was a sequellae to use of C-Quens birth control pill later said no idiopathic. The pills were used from April 26May 15 V.A. began to decrease during the last 5 days of use. Pills discontinued on June 6 on advice of ophthalmologist.
The record reveals that on November 13 a decision was made to delay the hysterectomy until plaintiff's ophthalmology status was clarified. On December 13, Dr. Calnan noted:
I favor hysterectomy if any possible relationship to BC pills which certainly exists here.
However, in the Report on Eye Examination given November 7, 1969, and dated December 30, 1969, Dr. Calnan found that the "Etiological factor responsible for primary eye condition" was "Unknown." He further noted that "Chances at improved vision now very small."
After her hysterectomy in December, 1968, Mrs. Raymond did not return to the Lahey Clinic until June 5, 1969. On June 4 she had a second hemorrhage of an optic nerve, this time in her right eye. She immediately consulted Dr. Chagnon, who called the Lahey Clinic directly and made an appointment for her. At the Clinic, Dr. Calnan recommended cortisone injections. She continued treatments at the Clinic through April, 1970. The medical record from this treatment period does not mention in any way plaintiff's consumption of the birth control pills.
Plaintiff stopped going to the Lahey Clinic in April, 1970. She continued to see Dr. Chagnon until 1973, when she went to Eduardo A. Lopez, M.D. Dr. Lopez continued the cortisone treatments started at the Lahey Clinic. Upon Dr. Lopez's recommendation, she went to Retina Associates in Boston in February, 1974, and was examined there by Robert J. Brockhurst, M.D. Neither Drs. Lopez nor Brockhurst assigned any cause to the hemorrhaging of plaintiff's eyes. Plaintiff claims that Dr. Brockhurst stated that he didn't think that there was any causal connection between the C-Quens and her blindness. After her visit to Retina Associates, Dr. Lopez thought that there was nothing else he could do for Mrs. Raymond and stopped treatment. Plaintiff never recovered full vision in either eye and is presently considered legally blind.
Sometime in 1970 or 1971, plaintiff learned of a newspaper article concerning a woman who had recovered a verdict for blindness allegedly caused by oral contraceptives. At the hearing, Mrs. Raymond testified that ". . . then we [Mr. and Mrs. Raymond] started to wonder about it, and we talked about it at length. But neither of us knew what we should do about it at this point." They "decided to go and see a lawyer and see if he could find out what were the circumstances behind it; in fact, get more information about it." (Record at 13-14.) They did at that time seek legal counsel. "After putting the matter in the hands of what we supposed to be a competent attorney, we then turned our attention to dealing with the problems caused by my blindness." (Affidavit of Plaintiff at 1-2.) Plaintiff asserts that she was assured by her attorney that he was working on the case. In late 1974, she became doubtful of the lawyer's competence and in January, 1975, sought further legal advice. The new lawyer suggested that plaintiff bring suit immediately. This action was filed on February 28, 1975.
THE APPLICABILITY OF THE NEW HAMPSHIRE DISCOVERY RULE
The initial issue to be decided by this court is whether the highest court of the State of New Hampshire would apply the state's malpractice discovery rule to a drug products liability case. The rule provides:
. . . actions for malpractice based on the leaving of a foreign object in a patient's body do not accrue until the patient learns or in the exercise of reasonable care and diligence should have learned of its presence. Shillady, supra, 114 N.H. at 324, 320 A.2d at 639.
*1397 Because there are no New Hampshire Supreme Court cases which directly address this issue, I must determine what the New Hampshire Court would most likely decide in this case. Meredith v. Winter Haven, 320 U.S. 228, 237, 64 S. Ct. 7, 12, 88 L. Ed. 9, 15 (1943).
Nevertheless, even though a state's relevant law is unclear or difficult to ascertain, it is still our duty to render a decision by attempting to apprehend the result that the state courts would reach. Patch v. Stanley Works (Stanley Chemical Co. Div.), 448 F.2d 483, 488 (2d Cir. 1971).
In determining what course the New Hampshire Supreme Court would take if faced with the issue presented by this case, I am mindful of the admonition that
. . . we must proceed with caution to avoid imposing a duty on [the defendant] which would not be imposed by the courts of New Hampshire. MacLean v. Parkwood, Inc., 354 F.2d 770, 772 (1st Cir. 1966).
However, after careful consideration, Shillady, supra, 114 N.H. 321, 320 A.2d 637 in conjunction with other case law, leads me to believe that, under the facts of this case, the discovery rule would not be rigidly limited and that the rule followed in malpractice cases would be applied here.
I also determine that certification of this issue to the New Hampshire Supreme Court is not necessary. Counsel for both the plaintiff and the defendant have submitted this issue to this court for determination; there is no question of abstention, Railroad Comm'n v. Pullman Co., 312 U.S. 496, 61 S. Ct. 643, 85 L. Ed. 971 (1941); and, finally, this court is not composed of "`outsiders' lacking the common exposure to local law which comes from sitting in the jurisdiction." Lehman Brothers v. Schein, 416 U.S. 386, 391, 94 S. Ct. 1741, 1744, 40 L. Ed. 2d 215, 220 (1974).
In actions for personal injuries, NH RSA 508:4 (Supp.1975), the appropriate statute of limitations for plaintiff's tort claims, states that:
Except as otherwise provided by law all personal actions may be brought within six years after the cause of action accrued, and not afterwards.
The traditional interpretation of the statute of limitations held that the
[n]ecessary elements of a cause of action based upon negligence are the causal negligence of the defendant, plus resulting harm to the plaintiff. Putting it another way, there must be negligence and harm, and they must have a causal connection. White v. Schnoebelen, 91 N.H. 273, 275, 18 A.2d 185, 186 (1941).
Under this reading, plaintiff's tort claims are clearly barred. The causal negligence of the defendant occurred upon the manufacture and the distribution of the birth control pills. The harm occurred to her when her first eye hemorrhaged in June, 1968. Although plaintiff has raised the argument that the harm did not occur until she was completely blind, in June of 1969, I find no merit in it. Patrick v. Morin, 115 N.H. ___, 345 A.2d 389 (1975) is dispositive. In that case, the New Hampshire Supreme Court held:
It is not necessary . . . that [plaintiff's] ultimate damage . . . have occurred before the statute of limitations starts to run. She could have recovered that damage under proper proof in an action begun when the harmful effects of defendant's discovered negligence . . became manifest . . .. Id., 345 A.2d at 391. (Emphasis added.)
Therefore, under the traditional reading of the statute, plaintiff's cause of action accrued in June, 1968.
However, in 1974 in the Shillady case, the New Hampshire Supreme Court adopted the malpractice discovery rule. Shillady concerned a plaintiff who had retained a needle in her spine which had broken off during a spinal tap performed in 1940. Ms. Shillady had initially experienced a great deal of pain, but it had gradually subsided over the years. The needle was not discovered until 1971 when suit was immediately commenced. Finding it an "`undue strain *1398 upon common sense, reality, logic and simple justice' to say that a cause of action has accrued to plaintiff and has been outlawed before she was or should have been aware of its existence" the New Hampshire court found that Ms. Shillady's cause of action accrued when she ascertained the existence of the foreign object in her body. This was a logical extension of the fraudulent concealment doctrine which holds that, if a plaintiff's ignorance of either his injury or of the defendant's culpability is due to the fraudulent concealment on the part of the defendant, the action does not accrue until the plaintiff discovers or, in the exercise of reasonable diligence, should have discovered the concealment or the harm.
This rule . . . is based on the unfairness which would result to a plaintiff blamelessly ignorant of her injury whose action would be cut off before she was aware of its existence.
* * * * * *
. . . Adoption of the [malpractice discovery rule] is a reasonable interpretation of the terms and the purpose of the statute. Shillady, supra, 114 N.H. at 323-324, 320 A.2d at 638-639.
The New Hampshire Supreme Court has not considered the applicability of the discovery rule outside the area of medical malpractice,[3] but it is an issue that has been considered by other courts. While these decisions are not binding precedent on this court, I am free to evaluate the reasoning and weigh the conclusions reached by other courts faced with the same issue while deciding this case. Glassman Construction Co. v. Fidelity & Casualty Co. of N. Y., 123 U.S.App.D.C. 1, 356 F.2d 340, 342 n.7, cert. den. 384 U.S. 987, 86 S. Ct. 1890, 16 L. Ed. 2d 1005 (1966); Summers v. Wallace Hospital, 276 F.2d 831 (9th Cir. 1960); Wendt v. Lillo, 182 F. Supp. 56 (N.D.Iowa 1960). See Wright, Federal Courts § 58 at 240 (1970).
Both the Fifth and the Eighth Circuits have held that a state medical malpractice discovery rule applies to a drug products liability case. Roman v. A. H. Robins Company, Inc., 518 F.2d 970 (5th Cir. 1975); Schenebeck v. Sterling Drug, Inc., 423 F.2d 919 (8th Cir. 1970). In Roman the plaintiff was barred by the state two year statute of limitations because she had been advised five years prior to filing suit that there was probably a causal relationship between her physical injury, blindness, and the drug she had taken. In its holding, the court, without discussion, applied the heretofore unexpanded state medical malpractice discovery rule. In Schenebeck the plaintiff also knew of the causal relationship between her harm, again blindness, and the defendant's product long before she filed suit. However, because the plaintiff's physicians had relied on the defendant's published assurances as to the safety of the product and the temporary nature of the side effects, the court, in its application of the state discovery rule, found that the plaintiff was not barred on the theory that she had not been injured until she knew that she was permanently blind.[4] The discovery rule had been applied by the state courts only in medical malpractice and subjacent support cases.
Several federal district courts have also considered the question of whether a state's malpractice discovery rule applies to a products liability case. In Goodman v. Mead Johnson & Co., 388 F. Supp. 1070 (D.N.J. 1974), the plaintiff had ceased to use the defendant's product three and one-half years before she filed suit in a jurisdiction that had a three year tort statute of limitations. Because the plaintiff had been aware of her condition, thrombophlebitis, *1399 the question presented to the court was when did the plaintiff become aware of its alleged correlation with defendant's drug. In addressing this issue, the court applied the New Jersey discovery rule, even though the New Jersey courts had not applied the rule in a products liability case. The New Jersey courts had stated, however, that the doctrine should be applied ". . . in an appropriate case." Lopez v. Swyer, 62 N.J. 267, 300 A.2d 563, 565 (1973). In Goodman the suit was barred because plaintiff had filed three and one-half years after she knew she had an actionable claim.
In 1964, in the first of a series of statute of limitation cases, the federal court for the Eastern District of Pennsylvania applied the state's discovery rule in a case where the plaintiff's wife had contracted beryllium poisoning allegedly caused by the fumes from the operation of the defendant's manufacturing plant. The condition of plaintiff's wife had been diagnosed five years before she ascertained the alleged cause of her illness. The court applied the rule that "notice of the invasion of legal rights" was required even though the rule had previously been applied only in malpractice suits and subterranean property damage cases. Daniels v. Beryllium Corporation, 227 F. Supp. 591, 595 (E.D.Pa.1964). In 1967 the same court in a negligence action stated:
We think the correct rule, distilled from the authorities, is this: the statute begins to run as of the date of the injury unless, in the exercise of reasonable diligence the plaintiff could not have ascertained defendant's culpability within the statutory period. Carney v. Barnett, 278 F. Supp. 572, 575 (E.D.Pa.1967).[5]
Carney held that the plaintiff was barred because his decedent had known of both the harm and the cause of the harm and "that with the use of reasonable diligence the suit could have been instituted within two years." Id. at 575. In 1968 the court applied this rule to a drug products liability case before the state courts had had a chance to address the issue. Hoeflich v. William S. Merrell Company, 288 F. Supp. 659 (E.D.Pa.1968).
Finally, in Louisiana a federal district court applied the state malpractice discovery rule in an action brought against both the physician for malpractice and the drug company for negligence.
Thus, as to both aspects of this suit, prescription would not begin to run until the plaintiff knew or, as a reasonable person, should have known that the product involved and/or the negligence of the physician caused the alleged injury. Breaux v. Aetna Casualty & Surety Company, 272 F. Supp. 668, 672 (E.D.La.1967).
The court found that the evidence showed that the plaintiff either knew or should have known of the causal nexus between his harm, deafness, and the defendant's drug. Louisiana's evolving discovery rule was recently reconsidered by the Fifth Circuit in Nivens v. Signal Oil & Gas Co., Inc., 520 F.2d 1019 (1975), cert. denied, ___ U.S. ___, 96 S. Ct. 1509, 47 L. Ed. 2d 763, 44 U.S.L.W. 3560 (4/6/76). Nivens had unknowingly sustained a hairline fracture of the skull when he struck his head against an allegedly defectively designed cupboard door. The trial jury found that he had not known within the prescriptive period, nor should he have known, that he had sustained physical harm from the incident and had awarded damages. The Court of Appeals reversed.
In this case Nivens knew of the incident and . . . the nasal drainage as a manifestation of abnormality, he knew that his injuries were from an identified cause by an identifiable defendant. * * These manifestations of injury and injuries *1400 actually known were in every sense `sustained' under the Louisiana statute as construed. Id. at 1024. (Emphasis added.)
Counsel have brought to this court's attention two state cases which address the question of when a cause of action accrues in a drug products liability case. In Gilbert v. Jones, 523 S.W.2d 211 (Tenn.Ct.App. 1974), the court broadly construed the state malpractice discovery rule and applied it in a suit against a physician and a manufacturer of oral contraceptives. The court found that the statute of limitations did not begin to run until the plaintiff "was apprised of this causal relationship between her high blood pressure and the contraceptive pills." Id. at 213. Ruling the other way, the Illinois Supreme Court in Berry v. G. D. Searle & Co., 56 Ill. 2d 548, 309 N.E.2d 550 (1974), another birth control pill case, held that the statute of limitations began to run as soon as the plaintiff became aware of the harm that she had suffered. The court specifically refused to hold that the statute began to run when the plaintiff knew or should have known of the causal relationship between the pills she had taken and her physical difficulties.
When there is no state law on a question, a federal court may look to its own prior decisions. Entron, Inc. v. General Cablevision of Palatka, 435 F.2d 995 (5th Cir. 1970); Merritt-Chapman & Scott Corp. v. Pennsylvania Turn. Com'n, 387 F.2d 768 (3d Cir. 1967). Accordingly, I will consider this court's decision in Nelson v. Volkswagen of America, Inc., 315 F. Supp. 1120 (D.N.H.1970), in which I held that the New Hampshire statute of limitations in a products liability case begins to run from the date of the alleged injury rather than the date of the sale of the product.[6]
. . . [W]here the consumer is dependent on a remote manufacturer for many of the products he uses[,] [t]he "repose" of the manufacturer must give way to the welfare of the consuming public, and if this means liability in perpetuity, so be it. Id. at 1122. (Emphasis in original.)
In Nelson, the plaintiffs had become aware of the alleged defect in the defendant's product only when they were injured in the process of using it. But, unlike the plaintiff in the present case, they knew immediately that their harm was due to the fault of someone: the fault was either theirs, the defendant's, the other driver's or a combination of all of these; but it was clear that the accident was not purely spontaneous. Here, the plaintiff alleges that she had no reason to suspect that her blindness was due to the fault of another and was, in fact, advised by her physicians that it was probably idiopathic. In other words, plaintiff knew that she had been harmed, but not that she had been injured in the legal sense that she had sustained an invasion of a protected interest.
The United States Supreme Court used the distinction between an awareness of a harm and knowledge of an injury in deciding when the Federal Employers' Liability Act's statute of limitations begins to run. Urie v. Thompson, 337 U.S. 163, 69 S. Ct. 1018, 93 L. Ed. 1282 (1949). Urie had contracted silicosis during thirty years of work as a fireman on steam locomotives. The silicosis, a slowly developing disintegration of the lungs, was first diagnosed in 1940. Suit was filed in 1941. In holding that Urie was not barred, the Court stated:
Nor do we think those consequences can be reconciled with the traditional purposes of statutes of limitations, which conventionally require the assertion of claims within a specified period of time after notice of the invasion of legal rights. Id. at 170, 69 S. Ct. at 1025, 93 L.Ed. at 1292. (Emphasis added.)
Accord, Quinton v. United States, 304 F.2d 234 (5th Cir. 1962) (medical malpractice suit, discovery rule applicable). See Ricciuti *1401 v. Voltarc Tubes, Inc., 277 F.2d 809 (2d Cir. 1960) (strict liability case, federal discovery rule applied where no state law applicable). The Court found it anomalous to charge Urie with knowledge of his cause of action even before he knew that harm had occurred to him.
Plaintiff's situation is not unlike that of the malpractice victim, and a drug can be likened to a hidden instrument left in the body of an unsuspecting patient. Both suffer the onset of physical harm a considerable period of time prior to the discovery of the alleged cause of that harm, and both the malpractice victim and the victim of drug side-effects may be unaware for some time that they are suffering an invasion of a protected interest. In the instant case, the plaintiff experienced a sudden and unexpected hemorrhage in her left eye, a harm of which she was immediately aware. Like all Americans, she uses and consumes an endless variety of products every day, and she alleges that she had no reason to make any connection at all between any single product that she had used and the blindness inflicted upon her.
Following the reasoning of Shillady, Nelson and Urie, I hold that in a drug products liability case, the New Hampshire statute of limitations, NH RSA 508:4 (Supp. 1975), does not begin to run until the plaintiff is aware or, in the exercise of reasonable diligence, should have been aware of his or her injuries. "[I]f this means [for the defendant] liability in perpetuity, so be it." Nelson, supra, 315 F.Supp. at 1122.
APPLICATION OF THE DISCOVERY RULE
Having concluded that the New Hampshire discovery rule applies in this case, I now turn to the issue of whether, prior to February 28, 1969, the plaintiff knew or, in the exercise of reasonable diligence, should have known that she had an actionable claim. I note that in several of the cases cited above, this determination of fact was left for the jury, e. g., Schenebeck, supra, 423 F.2d 919. However, in the instant case, counsel, by agreement, have submitted this factual issue to this court for resolution.
The facts are virtually undisputed and have already been recited. Defendant, as the moving party, carries the burden of establishing that the plaintiff is barred by the operation of the statute as interpreted by this court.
Initially, defendant asserts that plaintiff knew or should have known of the alleged causal relationship between her blindness and defendant's product when Dr. Chagnon, the first ophthalmologist she visited, took her off "the pill." I disagree. Plaintiff states that she was told by Dr. Chagnon that this was "just a precautionary measure." Plaintiff also testified that she understood that she was thoroughly tested at the Lahey Clinic precisely because the doctors were looking for a cause of her problems. Further, she was specifically told by the doctors that they didn't know whether the C-Quens might have been the cause. The search for cause and the professed ignorance of the physicians could only serve to emphasize to plaintiff the precautionary nature of Dr. Chagnon's advice. I conclude that Dr. Chagnon's action of taking plaintiff off "the pill" was insufficient to warn plaintiff that there was a correlation between the drug and her vision problems.
Defendants also rely upon the December 13, 1968, notation by Dr. Calnan:
I favor hysterectomy if any possible relationship to BC pills which certainly exists here.
This notation is the single piece of evidence which clearly gives a medical opinion as to a causative link. Defendant has not submitted any evidence that this notation was seen by plaintiff or that its message was conveyed to her, and plaintiff denies knowing of any opinion by Dr. Calnan as to the cause of the hemorrhage. The question is, therefore, should the plaintiff, in the exercise of reasonable diligence, have known of this opinion. In fact, this notation is but one comment in the middle of the medical *1402 record which both begins and ends with negative opinions by Dr. Calnan as to causation. On October 11, 1968, the doctor wrote that he thought her condition was "idiopathic," and on December 30, 1969, he stated that the "Etiological factor responsible for primary eye condition" was "Unknown." Further, this notation must also be considered in light of all the evidence. Plaintiff asserts that her several physicians all made inconclusive remarks as to any possible causative link between "the pill" and her blindness; at best, a few gave her negative opinions. She asserts that the very reason she sought a lawyer in 1971 was to get some information. "I wanted to know what was going on, what I had to look forward to or if this was just one thing with me. So we went to see Mr. . .." (Record at 99.) I cannot charge plaintiff with knowledge of the exact contents of her medical record. In light of the medical record taken as a whole and the oral assurances she says she received from her physicians, I conclude that "reasonable diligence" in this situation does not include actual research into a medical record.
Finally, defendant claims that the Physicians' Desk Reference (PDR) and the package inserts for C-Quens which were given to all prescribing physicians contained information about visual side-effects. As of October 2, 1967, (Affidavit John Graf, Esq.) the PDR and the inserts contained this warning:
The following occurrences have been observed in users of oral contraceptives. A cause-and-effect relationship has been neither established nor disproved.
* * * * * *
Neuro-ocular lesions. PDR at 775 (1968) (Deft's. Ex. D).
Defendant contends that this fact should be considered by this court in deciding whether plaintiff, in the exercise of reasonable diligence, should have known of the alleged causal relationship. Defendant has not established that this information was conveyed by plaintiff's physicians to her, and I do not think that "reasonable diligence" includes, for the average consumer, research into technical volumes such as the PDR or into package inserts specifically designed for physicians. And, even assuming that such research could be included within the meaning of "reasonable diligence," I find, as a matter of fact, that, in this case, it is not. Plaintiff asked her physicians whether there might be a causative link, and she was told that they didn't know. A reasonable person could well assume that a physician would be aware of the information released by the manufacturer, and that, at the very least, had read the inserts provided by the company and would convey that information to the patient if asked. Plaintiff, once she received an answer to her inquiries, should not be expected to research material she could properly conclude had already been read by her physicians. Further, I find that the unanimity of ignorance expressed to her by her various physicians could only serve to impress upon her the unavailability of any medical explanation for her difficulties.
In conclusion, I find, as a matter of fact, that the plaintiff did not know of a correlation between her consumption of the C-Quens and the hemorrhages of her eyes prior to February 28, 1969. Further, I conclude that, under these circumstances, the exercise of reasonable diligence would not have led her to believe that there was a causative link between them. From the evidence submitted to this court, I find that plaintiff had no reason to believe that her blindness was other than idiopathic until she learned, through the newspaper article, that another user of oral contraceptives had suffered the same fate. She then had reasonable grounds to believe that there might be a causal connection between her blindness and defendant's drug. At that time, her cause of action accrued.
As a final step in deciding whether or not plaintiff should receive the benefit of the discovery rule, I must identify, evaluate and weigh the interests of each of the parties to determine whether "harsh and unjust results [would] flow from a rigid and *1403 automatic adherence to a strict rule of law." Shillady, supra, 114 N.H. at 325, 320 A.2d at 639. Defendant has not shown that its interests have changed or been prejudiced in any way by the delay in this case. A rigid application of the statute of limitations would begin the period of prescription before plaintiff had any knowledge or reason to know that she was the victim of any invasion of a protected interest and would bar her completely from any remedy. Through no fault of either the plaintiff or the defendant, the filing of this action was delayed approximately eight months after the end of the strict prescription period. Because the defendant has shown neither prejudice nor intentional delay on the part of the plaintiff, I find that to bar plaintiff would be a harsh result.
Therefore, defendant's motion for summary judgment as to plaintiff's complaint in strict liability is denied.
Based on the same reasoning, defendant's motion for summary judgment as to plaintiff's complaint in negligence is also denied.
BREACH OF WARRANTY
Plaintiff, in Count II of her complaint, alleges breach of express and implied warranties. It is unclear whether New Hampshire recognizes an action for breach of implied warranty at common law. Stephan v. Sears Roebuck & Co., 110 N.H. 248, 250, 266 A.2d 855 (1970); Nelson, supra, 315 F. Supp. 1120. The existing causes of action under New Hampshire Commercial Code provisions, NH RSA 382-A:2-313, 314 and 315, together with the doctrine of strict liability, provide a plaintiff with a complete remedy, thus mitigating the need for a common law cause of action in breach of implied warranty. Stephan, supra, 110 N.H. at 250, 266 A.2d 855. Therefore, any claim plaintiff has for relief for a breach of warranty must be based on New Hampshire's provisions of the Uniform Commercial Code.
NH RSA 382-A:2-725(1) establishes a four year statute of limitations for any action based upon a contract for sale. The statute begins to run from the time a cause of action accrues, which is when the breach occurs. The breach of warranty occurs when the tender of delivery is made regardless of the aggrieved party's knowledge of the breach. NH RSA 382-A:2-725(2). Plaintiff's last purchase of C-Quens was on or about May 20, 1968, more than four years prior to the commencement of her action. She is, therefore, barred from pursuing her breach of warranty claim against defendant by NH RSA 382-A:2-725(1).
Defendant's motion for summary judgment as to Count II is granted.
SO ORDERED.
NOTES
[1] In Civil Action No. 75-80, Arthur Raymond has sued defendant, Eli Lilly and Company, for damages resulting from his wife's blindness. His case rises and falls with the main action brought by his wife, Civil Action No. 75-81. Therefore, for the purposes of this opinion, the plaintiffs are treated as one.
[2] The facts are taken from Mrs. Raymond's deposition, her in-court testimony and the medical records submitted by counsel. Unless directly quoted, the exact source is not cited.
[3] In Roberts v. Richard & Sons, Inc., 113 N.H. 154, 304 A.2d 364 (1973), the New Hampshire Supreme Court refused to apply the discovery rule to a complaint which sounded in contract even though the plaintiff had alleged negligence.
. . . the discovery exception has generally been limited to tort actions and the plaintiff's labeling of a count as tort is not determinative. Id. at 156, 304 A.2d at 366.
[4] See also, Sterling Drug, Inc. v. Cornish, 370 F.2d 82 (8th Cir. 1966); Withers v. Sterling Drug, Inc., 319 F. Supp. 878 (S.D.Ind.1970).
[5] In 1974 the court refused to literally apply the language "defendant's culpability" to a personal injury case arising from an explosion. However, the court specifically reaffirmed that:
. . . the statute begins to run from the time the plaintiff discovers the injury or the cause of his harm or reasonably should have discovered such injury or cause. Huber v. McElwee-Courbis Construction Co., 392 F. Supp. 1379, 1382 (E.D.Pa.1974).
[6] This court is not aware of any New Hampshire Supreme Court product liability case which addresses the issue of when a cause of action accrues in strict liability. Therefore, Nelson is still the law in this jurisdiction. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2368011/ | 452 F. Supp. 2d 972 (2006)
USF INSURANCE COMPANY Plaintiff,
v.
CLARENDON AMERICA INSURANCE COMPANY, Clarendon National Insurance Company, and Does 1 through 20, inclusive, Defendants.
No. 05CVO4138 MMMRZX.
United States District Court, C.D. California.
February 16, 2006.
*973 *974 *975 *976 James F. Weintre, Judith A. Blick, Keith R. Denny, Mark A. Poppett, Susan J. Gill, Buick and Rhoades, San Diego, CA, for Plaintiff.
David S. Blau, David S. Blau Law Offices, Los Angeles, CA, for Defendants.
AMENDED ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT; GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
MORROW, District Judge.
This action involves a dispute between insurance carriers regarding their duties *977 in connection with Alvizuri, et al. v. Fieldstone Communities Inc., et al., Orange County Superior Court Case No. 03CC00227 (the "Underlying Action"). In Alvizuri, the owners of more than one hundred single-family dwellings sued, inter alia, Hondo Construction & Development, Inc. for damages resulting from alleged construction defects. On May 5, 2005, USF Insurance Company filed this action in Los Angeles Superior Court against Clarendon America Institute Company ("Clarendon America") and Clarendon National Insurance Company ("Clarendon National"), alleging that defendants had wrongfully refused to participate in the defense and indemnification of Hondo in the Underlying Action. USF sought (1) a declaration that defendants had a duty to defend Hondo in the Underlying Action; (2) a declaration that defendants had a duty to indemnify Hondo in the Underlying Action; (3) equitable contribution of an equal share of the defense costs USF paid in the Underlying Action; and (4) a declaration apportioning any indemnity obligation owed by the insurers in connection with the Underlying Action.
Defendants removed the action to federal court on June 8, 2005. On October 3, 2005, they filed a motion for summary judgment, or, alternatively, partial summary judgment on USF's first and third causes of action. That same day, USF filed its own motion for summary judgment or partial summary judgment
I. FACTUAL BACKGROUND
A. Underlying Action
Alvizuri v. Fieldstone Communities Inc., the Underlying Action that gives rise to this dispute, was filed in state court on June 20, 2003.[1] A group of 49 plaintiffseach *978 of whom owned a single-family home in Rancho Santa Margarita, Californiasued Fieldstone Communities, Inc. and other developers, designers, and contractors involved in building the houses for alleged design and construction defects.[2] Plaintiffs alleged that
"[a]t the time of the purchase by Plaintiffs, the PROPERTY was defective and unfit for its intended purposes because Defendants did not construct the PROPERTY in a workmanlike manner as manifested by, but not limited to, numerous defects which have resulted in damage to the homes and their component parts. The defects include, without limitations and to various degrees on the plaintiffs' respective residences, the following:
Faulty soil compaction, faulty existing underlying soils and expansive soils resulting in soil movement and damage to the structures; concrete slabs, flatwork and foundation defects; plumbing defects; electrical defects; drainage defects; roof defects; HVAC defects; waterproofing defects; window and door defects; landscaping and irrigation defects; framing, siding and structural defects; ceramic tile, vinyl flooring and countertop defects; drywall defects; fence and retaining wall defects; cabinet and wood trim defects; fireplace and chimney defects; tub and shower door defects; painting defects; sheet metal defects; and stucco defects."[3]
Plaintiffs asserted that these defects were not apparent by reasonable inspection of the property at the time of purchase, and that it was only afterwards that "[t]he defects . . . manifested."[4] They alleged that they had become aware of the defects only within the prior three years, and that they had given the developers timely notice of the defects upon discovery.[5]
Based on these allegations, plaintiffs asserted claims for strict products liability, breach of implied warranty, breach of express warranty, breach of contract, negligence, and negligence per se.[6] They *979 prayed for (1) costs of restoration and repairs to the homes in excess of $150,000 per, home; (2) costs of investigation; (3) damages for diminution of value of the property; (4) attorneys' fees, expert fees, and costs of suit; (5) damages for loss of use of the property and relocation expenses; and (6) other appropriate relief.[7]
The complaint was amended multiple times after June 20, 2003 to join more plaintiffs. The fifth amended complaint, filed March 4, 2004, was the final operative pleading.[8] It alleged that 127 single-family homes in Rancho Santa Margarita were defective.[9]
The complaint and amended complaints asserted claims for negligence and negligence per se against Hondo,[10] which had framed, or performed rough carpentry on, 90 of the 127 homes.[11] Plaintiffs alleged that defendants' carelessness and negligence in performing the construction work, as well as their failure to comply with applicable building codes, proximately caused the defects and other unspecified damage to their property.[12] It is undisputed *980 that the homes included in the action had Notice of Completion dates ranging from July 22, 1993 to July 29, 1997.[13] Hondo completed its work on the houses in or before July 1997.[14]
The Underlying Action also included "claims based in whole or in, part upon earth movement."[15] Plaintiffs' geotechnical experts alleged that eight of the houses on which Hondo had worked showed signs of damage from soil movement.[16] It is undisputed that it rained several times, and that more than twelve inches fell, in Rancho Santa Margarita from June 1997 through March 1999.[17]
B. Insurance Carriers
All of the parties to this suit issued commercial general liability ("CGL") policies naming Hondo as the insured.[18] USF insured Hondo from July 15, 1998 through July, 15, 1999, on policy form USFOCCUR (Ed. 12/97, Rev.6/98) (the "USF Policy").[19] Clarendon National issued. a CGL policy to Hondo for the period from April 13 to July 15, 2000, on policy form OCC117 (Ed. 09/01/01, Rev.6/15/96) (the "Clarendon National Policy").[20] Clarendon America issued a CGL policy to Hondo with effective dates of July 15, 2000 through July 15, 2001, on policy form OCC1-17 (Ed. 09/01/01, Rev.6/15/96) (the "Clarendon America Policy").[21]
Prior to the issuance of USF's policy, Hondo was insured by Golden Bear Insurance Company (the "Golden Bear Policy"). The Golden Bear Policy was effective July 15, 1995 through July 15, 1996, and was written on policy form CL 100 (11-85) CG 00 01 11 85.[22] The carriers that issued policies that were effective between the expiration of the Golden Bear Policy and the inception of USF's first Policy are presently in liquidation and/or are insolvent.[23]
USF and Golden Bear defended Hondo in the Underlying Action, and funded a *981 settlement on its behalf.[24] Hondo's defense and indemnity were tendered to Clarendon America en February 2, 2004,[25] via a tender letter that enclosed a copy of the third amended complaint, the developers' cross-complaint, and Hondo's answer to the cross-complaint[26] The letter also enclosed a homeowner matrix, which showed Notices of Completion on plaintiffs' homes with dates ranging from September 1993 to December 1998.[27] Clarendon National and Clarendon America declined to defend or indemnify Hondo on July 30, 2004, and confirmed their position on December 30, 2004.[28] When the parties in the Underlying Action reached a settlement, defendants refused to fund any part of the settlement on Hondo's behalf.[29]
*982 USF incurred a total of $117,429.81 in attorneys' fees, costs, and expert fees defending Hondo in the Underlying. Action[30] Hondo's portion of the settlement was $225,000.00, or $2,500.00 per home for the 90 homes it framed.[31] USF funded 58.35 percent of this amount, or $131,287.50, while Golden Bear funded 41.65 percent, or $93,712.50.[32]
C. Language Of The Policies
The USF, Clarendon National, and Clarendon America Policies have nearly identical insuring language.[33] All three provide:
"COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. INSURING AGREEMENT
a. We will pay those sums that an insured becomes legally obligated to pay as damages for bodily injury or property damage to which this insurance applies. We will have the right and duty to defend any suit seeking those damages. However, we will have no duty to defend the insured against any suit seeking damages for bodily injury or property, damage to which this insurance does not apply. We may, at our sole discretion investigate any occurrence and settle any claim or suit that may result. . . .
(4) Our duty to defend is excess over and shall not contribute where theinsured has any other insurance under which, but for the existence of this Policy, any other insurer is obligated to provide a defense.
b. This insurance applies to bodily injury and, property damage only if: . . .
(1) The, bodily injury or property damage is caused by an occurrence which takes place in the coverage territory; and
(2) The bodily injury or property damage is caused by an occurrence which takes place during the policy period whether such occurrence is known to the Insured; and
(3) The bodily injury or property damage resulting from such occurrence first takes place during the policy period.
c. All property damage or bodily injury arising from, caused by or contributed to by, or in consequence of an occurrence shall be deemed to take place at the time of the first such damage, even though the nature and extent of such damage or injury may change and even though the damage may be continuous, progressive, cumulative, changing or evolving, and even though the occurrence causing such bodily injury or property damage may be continuous or repeated exposure to substantially the same general, harm."[34]
*983 The USF, Clarendon National, and Clarendon America Policies define the terms "property damage" and "occurrence" identically. "Property damage" is "[p]hysical injury to tangible property including all resulting loss of use of that property" "[a]ll . . . loss of use shall be deemed to occur at the time of the physical injury that caused it."[35] An "occurrence" is "[a]n accident, including continuous or repeated exposure to substantially the same general harm."[36]
All three Policies also contain an identical Absolute Earth Movement Exclusion, which excludes from coverage:
"Bodily injury or property damage claimed, in whole or in part, to arise from or be aggravated by, or claimed to result from or be the consequence of earth movement, whether the earth movement is combined with any other cause. Earth movement includes, but is not limited to earthquake, landslide, subsidence, mudflow, sinkhole, erosion, or the sinking, rising, shifting, expanding or contracting of earth or soil.
This exclusion applies regardless of the cause or causes of the earth movement and includes defects or negligence in design, construction or materials, or any other event, conduct or misconduct which may have or is claimed to have precipitated, caused or acted jointly, concurrently, or in sequence with earth movement in causing the bodily injury or property damage.
Notwithstanding any provision of this policy to the contrary, where any claim or suit is based in whole or in part upon earth movement, as set forth above, the Company shall have the right, but not the obligation, to defend such lawsuit. The Company shall reimburse the insured upon the conclusion or resolution of the claim or suit, based upon the proportion of damages covered by the policy to damages excluded herein.
This exclusion only applies to bodily injury and property damage that is included in the Products-Completed Operation Hazard."[37]
D. USF's Claims
USF does not dispute that its Policy and Golden Bear's Policy covered the claims asserted against Hondo.[38] It contends, however, that Clarendon National and Clarendon America also had a duty to defend Hondo in the Underlying Action, and that they should have participated in the defense on an "equal share" basis[39] USF, requests that the court order each defendant to reimburse USF a third of the total defense fees and costs it paid, or $39,143.27 each.[40]
USF also contends that defendants should be ordered to contribute a share of the settlement paid on Hondo's behalf. USF asserts that Clarendon National and Clarendon America should have indemnified Hondo on a "time-on-risk" basis, as measured by the dates of the Notices of Completion for the allegedly defective *984 homes.[41] USF contends that Clarendon National should be ordered to pay $14,587.50 as its share of the indemnification obligation, while Clarendon America should be ordered to pay $58,250.00.[42]
II. DISCUSSION
A. Legal Standard Governing Motions For Summary Judgment
A motion for summary judgment must be granted when "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.Proc. 56(c). A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying those portions of, the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Where the moving party will have the burden of proof on an issue at trial, the movant must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party. On an issue as to which the nonmoving party will have the burden of proof, however, the movant can prevail merely by pointing out that there is an absence of evidence to support the nonmoving party's case. See id. If the moving party meets its initial burden, the nonmoving party must set forth, by affidavit or as otherwise provided in Rule 56, "specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); FED.R.Cw.Paoc. 56(e).
In judging evidence at the summary judgment stage, the court does not make credibility determinations or weigh conflicting evidence. Rather, it draws all inferences in the light most favorable to the nonmoving party. See T.W. Electrical Service, Inc. v. Pacific Electrical Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir. 1987). The evidence presented by the parties must be admissible. FED.R.Cw.Paoc. 56(e). Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. See Nelson v. Pima Community College, 83 F.3d 1075, 1081-82 (9th Cir.1996) ("mere allegation and speculation do not create a factual dispute for purposes of summary judgment"); Thornhill Pub. Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir.1979).
In this case, the parties have filed cross motions for summary judgment or partial summary judgment "[T]he mere fact that the parties make cross-motions for summary judgment does not necessarily mean that there are no disputed issues of material fact and does not necessarily permit the judge to render judgment in favor of one side or the other." Starsky v. Williams, 512 F.2d 109, 112 (9th Cir.1975) (citation omitted). Summary judgment in favor of one party may be appropriate, however, where, as here, "the parties in fact agree[ ] that all of the underlying material facts [are] those reflected by the written record before the court," and the only remaining dispute is a legal one. Id.
In their motion, Clarendon National and Clarendon America assert that their Policies (collectively, the "Clarendon. Policies") did not cover the claims asserted against Hondo in the Underlying Action because: "(1) The alleged `property damage' [did] *985 not arise from an `occurrence' that took place during either of the Clarendon policy periods as required by the Insuring Agreements . . .; AND (2) The alleged `property damage' did not `first take place' during either of the Clarendon policy periods as required by the Insuring Agreements . . .[43] Consequently, defendants contend, they had no duty to indemnify Hondo in the Underlying Action, and have no obligation to reimburse USF for any part of the settlement payment it made on Hondo's behalf.[44] Defendants also contend that they had no duty to defend Hondo in the Underlying Action because of two exclusionary provisions in their Policies, namely, the "absolute earth movement exclusion" and the "excess defense" clause.[45] Thus, they assert they are entitled to summary judgment or partial summary judgment on USF's first and third causes of action.
USF counters that summary judgment or partial summary judgment should be entered in its favor because the undisputed facts show that both the "occurrence" and "property damage" took place during the Clarendon policy periods.[46] USF contends that defendants' reliance on the "excess insurance" and "absolute earth movement exclusion" provisions is contrary to California law, and asserts that nothing in the Policies absolved defendants of their clear duty to defend Hondo in the Underlying Action.[47] It requests that the court order defendants to pay an equitable share of the defense fees and settlement payment.
B. Whether Defendants Had A Duty To Indemnify Hondo In The Underlying Action And Whether Plaintiff Is Entitled To Equitable Contribution
To decide whether defendants had a duty to indemnify Hondo, the court must first interpret the coverage provisions and exclusions in the Clarendon Policies. See Modern Dev. Co. v. Navigators Ins. Co., 111 Cal. App. 4th 932, 939, 4 Cal. Rptr. 3d 528 (2003) (" [I]n determining whether allegations in a particular complaint give rise to coverage under a comprehensive general liability policy, courts must consider both the occurrence language in the policy, and the endorsements or exclusions affecting coverage, if any, included in the policy terms," citing Collin v. Am. Empire Ins. Co., 21 Cal. App. 4th 787, 803, 26 Cal. Rptr. 2d 391 (1994)).
1. Standard Governing Interpretation Of An Insurance Policy
Under California law,[48] interpretation of an insurance policy is a legal *986 matter for the court . . . See Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 18, 44 Cal. Rptr. 2d 370, 900 P.2d 619 (1995); see also Armstrong World Industries, Inc. v. Aetna Casualty & Surety Co., 45 Cal. App. 4th 1, 10-11, 52 Cal. Rptr. 2d 690 (1996) ("Interpretation of an, insurance policy is primarily, a judicial function"). The principles governing the interpretation of insurance policies are well-settled. Because insurance policies are contracts, ordinary rules of contractual interpretation apply. See La Jolla Beach & Tennis Club, Inc. v. Industrial Indemnity Co., 9 Cal. 4th 27, 37, 36 Cal. Rptr. 2d 100, 884 P.2d 1048 (1994); Bank of the West v. Superior Court, 2 Cal. 4th 1254, 1264, 10 Cal. Rptr. 2d 538, 833 P.2d 545 (1992).
"The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties." Bank of the West, 2 Cal.4th at 1264, 10 Cal. Rptr. 2d 538, 833 P.2d 545 (citing CAL. CIVIL CODE § 1636); see also La Jolla Beach & Tennis Club, 9 Cal.4th at 37, 36 Cal. Rptr. 2d 100, 884 P.2d 1048. To ascertain the parties' intent, the court must look first to the language of the policy itself. See A.B.S. Clothing Collection, Inc. v. Home Ins. Co., 34 Cal. App. 4th 1470, 1478, 41 Cal. Rptr. 2d 166 (1995); La Jolla Beach & Tennis Club, Cal.4th at 37, 36 Cal. Rptr. 2d 100, 884 P.2d 1048. If, given their "common and popular meaning," the contract terms are clear and explicit, they control. See Bank of the West, 2 Cal.4th at 1264, 10 Cal. Rptr. 2d 538, 833 P.2d 545 (citing Cal. Civil Code § 1638); A.B.S., 34 Cal. App. 4th at 1478, 41 Cal. Rptr. 2d 166; see also Republic Indemnity Co. of America v. Schofield, 47 Cal. App. 4th 220, 225, 54 Cal. Rptr. 2d 637 (1996) (provisions are to be "interpreted in their `ordinary and popular sense'").
A policy provision is "ambiguous when it is capable of two or more constructions, both of which are reasonable." La Jolla Beach & Tennis Club, 9 Cal.4th at 37,. 36 Cal. Rptr. 2d 100, 884 P.2d 1048 (quotations omitted). "`Courts will not adopt a strained or absurd interpretation [of policy language, however,] in order to create an ambiguity where none exists." Id. (quoting Reserve Ins. Co. v. Pisciotta, 30 Cal. 3d 800, 807, 180 Cal. Rptr. 628, 640 P.2d 764 (1982)). Where ambiguity is found, policy terms must be construed to give effect to the objectively reasonable expectations of the insured. Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Ins. Co., 5 Cal. 4th 854, 867, 21 Cal. Rptr. 2d 691, 855 P.2d 1263 (1993); A.B.S., 34 Cal. App. 4th at 1478, 41 Cal. Rptr. 2d 166. If application of these rules does not eliminate or resolve an ambiguity in the policy, it is resolved against the insurer and in favor of liability under the policy. La Jolla Beach & Tennis Club, 9 Cal.4th at 37, 36 Cal. Rptr. 2d 100, 884 P.2d 1048; Bank of the West, 2 Cal.4th at 1265, 10 Cal. Rptr. 2d 538, 833 P.2d 545.
2. Coverage Terms In The Clarendon Policies
The Clarendon Policies require that the insurer "pay those sums that an insured becomes legally obligated to pay as damages for bodily injury or property damage to which this insurance applies.[49] The Policies condition coverage on two key requirements: *987 (1) "The bodily injury or property damage [must be] caused by an occurrence which takes place during the policy period whether such occurrence is known to the Insured"; and (2) "The bodily injury or property damage resulting from such occurrence [must] first take[ ] place during the policy period."[50] The Policies also contain a "deemer clause," which provides: "All property damage or bodily injury arising from, caused by or contributed to by, or in consequence of an occurrence shall be deemed to take place at the time of the first such damage, even though the nature and extent of such damage or injury may change and even though the damage may be continuous, progressive, cumulative, changing or evolving, and even though the occurrence causing such bodily injury or property damage may be continuous or repeated exposure to substantially the same general harm."[51]
The Policies provide a standard definition of "property damage," i.e., "[p]hysical injury to tangible property including all resulting loss of use of that property."[52] "Occurrence" is defined as "[a]n accident, including continuous or repeated exposure to substantially the same general harm."[53]
Defendants argue it is clear under these coverage provisions that "occurrence" is not synonymous with "property damage," and that it refers to the cause of the property damage.[54] They assert that the operative "occurrence" in this case was either Hondo's purportedly negligent work on 90 of the 127 homes at issue in the Underlying Action, or the exposure of its work to the elements.[55] Defendants contend that because Hondo completed its framing work in or before July 1997, and because more than twelve inches of rain fell in Rancho Santa Margarita between June 1997 and March 1999,[56] the "occurrence" could not have transpired during their policy periods.[57] They also assert that the property damage caused by Hondo's defective work first occurred before the inception of the Policies. In support, they cite the report of their agent, Dynamic Claims Services, Inc., which contains a summary of homeowner complaints between 1994 and 1998, regarding cracks and splits in the walls and stucco, water leakage, and other damages that appear to have resulted from defects in the framing and rough carpentry of the houses.[58] Because *988 they assert that neither the accident constituting the "occurrence" nor the first instance of "property damage" caused by the occurrence took place within their policy periods, defendants contend the Policies did not provide coverage to Hondo for the Underlying Action.[59]
USF counters that because the homeowners filed their action on June 20, 2003 and alleged that they had only discovered the defects within the prior three years, "all of the damages plaintiffs were seeking became manifest at the earliest during the Clarendon policies."[60] While acknowledging that the "manifestation" of property damage is not synonymous with an "occurrence," USF asserts that "in the absence of other evidence [manifestation] is the only evidence of the `occurrence of damage.'"[61] USF also contends that the "continuous injury trigger" rule, adopted by, the California Supreme Court in Montrose Chemical Con). v. Admiral Ins. Co., 10 Cal. 4th 645, 42 Cal. Rptr. 2d 324, 913 P.2d 878 (1995) ("Montrose II "), controls here. Under that rule, USF argues, the Clarendon Policies afforded coverage to Hondo because the homeowners continued to experience property damage between April 2000 and July 2001.[62]
In Montrose II, a chemical company that had produced the pesticide dichloro-diphenyl-trichlorethane (DDT) from 1947 to 1982 was sued in five separate actions alleging improper disposal of hazardous wastes. Id. at 656, 42 Cal. Rptr. 2d 324, 913 P.2d 878. From January 1960 to March 1986, the chemical company was insured by seven different carriers; each policy covered a distinct time period within the twenty-six year span. Id. Admiral Insurance Company had issued four CGL policies with effective dates from October 1982 to March 1986. Id. The question on appeal was whether Admiral had a duty to defend the chemical company in the third-party suitsthat is, whether there was a possibility that events took place during Admiral's policy periods that triggered coverage under its policies. Id.; see also id. at 655 n. 2, 42 Cal.Rptr2d 324, 913 P.2d 878 (". . . . `[T]rigger of coverage' is a term of convenience used to describe that which, under the specific terms of an insurance policy, must happen in the policy period in order for the potential for coverage to arise. The issue is largely one of timing what must take place within the policy's effective dates for the potential of coverage to be `triggered'?" (emphasis original)).
To answer this question, the California Supreme Court carefully examined the coverage provisions of Admiral's policies, which used the standard language of CGL policies at the time. Id. at 656, 42 Cal. Rptr. 2d 324, 913 P.2d 878. Admiral's policies provided that the insurer would "pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of . . . bodily injury, or . . . property damage to which this insurance applies, caused by an occurrence." Id. The policies defined "property damage" as "(1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom. . . ." Id. at 668, 42 Cal. Rptr. 2d 324, 913 P.2d 878 (emphasis original). They defined "occurrence" as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured," *989 Id. at 656, 42 Cal. Rptr. 2d 324, 913 P.2d 878.
The Court concluded that these provisions were plain and unambiguous. It observed first that "property damage" definition "Clearly and explicitly provide[d] that the occurrence of bodily injury or property damage during the policy period [was] the operative event that trigger[ed] coverage." Id. at 669, 42 Cal. Rptr. 2d 324, 913 P.2d 878. Reading all of the clauses together, the Court determined that the policies distinguished between the causative "occurrence" and the resulting "property damage," and unambiguously provided that it was the "the latter injury or damage that must `occur' during the policy period" before coverage would be triggered. Id. Because plaintiffs in the pending actions had alleged that their bodily injury and property damage "continuously or progressively deteriorat[ed] throughout Admiral's policy periods," the Court held that there was a potential for coverage under Admiral's policies. Id.; see also id. at 673, 42 Cal. Rptr. 2d 324, 913 P.2d 878 ("[T]he weight of authority, consistent with our own interpretation of Admiral's express policy language, is that bodily injury and property damage that is continuous or progressively deteriorating throughout successive CGL policy periods, is potentially covered by all policies in effect during those periods").
The Clarendon Policies contain contractual language that is different than that of the policies at issue in Montrose II. In fact, as USF concedes, the coverage terms of defendants' Policies were revised in 1996 to "circumvent the continuous injury trigger of the coverage rule laid down" in Montrose II.[63] Insurance companies are not required to use the standard policy form; they are free to modify the standard language or adopt their own non-standard policy. See Dart Indus., Inc. v. Commercial Union Ins. Co., 28 Cal. 4th 1059, 1074 & n. 5, 124 Cal. Rptr. 2d 142, 52 P.3d 79 (2002); cf. La Jolla Beach & Tennis Club, 9 Cal.4th at 37, 36 Cal. Rptr. 2d 100, 884 P.2d 1048 ("`While insurance contracts have special features, they are still contracts to which the ordinary rules of contractual interpretation apply" (citations omitted)). Thus, to determine whether Clarendon National and Clarendon America had a duty to defend Hondo in the Underlying Action, the court must look to the particular language of their Policies. Garriott Crop Dusting Co. v. Superior Court, 221 Cal. App. 3d 783, 790, 270 Cal. Rptr. 678 (1990) ("The proper initial focus for a court in resolving a question of insurance coverage is on the language of the insurance policy itself, rather than on judicially created `general' rules that are not necessarily responsive to the policy language or facts of the dispute," citing Harbor Ina Ca v. Central National Ins. Co., 165 Cal App.3d 1029, 1034-35, 211 Cal. Rptr. 902 (1985)).
Like the policies at issue in Montrose II, the Clarendon Policies make a clear distinction between the "occurrence," which is the accident or exposure that causes damage to the claimant, and the resulting "physical damage." See Montrose II, 10 Cal.4th at 669, 42 Cal. Rptr. 2d 324, 913 P.2d 878. Where the Clarendon Policies depart from the Montrose II policies is in the requirements for coverage. The standard policy language in 1995 provided coverage so long as some bodily injury or property damage took place within, the policy period, regardless of when the injury or damage began. See id. at 676, 42 Cal. Rptr. 2d 324, 913 P.2d 878 ("The timing of the accident, event, or conditions causing `the bodily injury or *990 property damage, e.g., an insured's negligent act, is largely immaterial to establishing coverage; it can occur before or during the policy period. Neither is the date of discovery of the damage or injury controlling. . . . It is only the effectthe occurrence of bodily injury or property damage during the policy period, resulting from a sudden accidental event or the `continuous or repeated exposure to conditions'that triggers potential liability coverage"). The Clarendon Policies, by contrast, require that both the occurrence and the first instance of property damage take place during the policy period.[64] Additionally, they explicitly deem that all property damage caused contributed to by an occurrence takes place "at the time of the first such damage." This is so "even though the nature and extent of such damage or injury may change and even though the damage may be continuous, progressive, cumulative, changing or evolving, and even though the occurrence causing such bodily injury or property damage may be continuous or repeated exposure to substantially the same general harm."[65] These provisions make clear that progressive property damage that starts before the insurers' policy period, but continues into the period, does not trigger coverage. Rather, the Policies explicitly place property damage of this type outside the scope of the insuring agreement. As a result, the unequivocal language of the Clarendon Policies is not susceptible of the interpretation given the older policy language in Montrose II. See David L. Leitner, Reagan W. Simpson, and John M. Bjorkman, 4 LAW AND Pam. OF INS. COVERAGE LITIG., § 46:21 (2005) ("In response to Montrose and those courts that have adopted it, the ISO recently revised the standard CGL policy to exclude from coverage injury or damage that occurs `in part' before the policy begins. This change will obviously reduce the number of insurers deemed responsible to defend and indemnify an insured under the continuous trigger theory," citing Insurance Risk Management Institute, Executive BRIEFING IN COMMERCIAL LIABILITY INSURANCE, Vol I (July 1999)); see also La Jolla Beach & Tennis Club, 9 Cal.4th at 37, 36 Cal. Rptr. 2d 100, 884 P.2d 1048 ("If contractual language is clear and explicit, it governs" (citations omitted)); St. Paul Fire & Marine Ins. Co. v. Coss, 80 Cal. App. 3d 888, 896, 145 Cal. Rptr. 836 (1978) ("An insurance policy is a contract, and when the terms are plain and unambiguous, it is the duty of the court to hold the parties to such contract. The courts will not indulge in a forced construction of an insurance policy so as to fasten a liability on the insurance company which it has not assumed" (citation omitted)).
USF concedes that there is coverage under its Policy, which contains the same insuring language as the Clarendon Policies.[66] It is therefore undisputed that at least some "property damage" to the Rancho Santa Margarita homes took place during USF's policy period, i.e., between July 15, 1998 and July 15, 1999.[67] Consequently, the first instance of "property damage" could not have taken place during subsequent policy periods when defendants were on the risk. Having admitted coverage under its own Policy, USF's contention that coverage under defendants' Policies was also triggered essentially asks the court to ignore or rewrite Section I.A.b(3), which plainly requires that "[t]he bodily injury or property damage resulting *991 from such occurrence first take[ ] place during the policy period."[68] This the court declines to do. See Safeco Ins. Co. v. Cilstrap, 141 Cal. App. 3d 524, 532-33, 190 Cal. Rptr. 425 (1983) ("Although we construe all provisions, conditions, or exceptions that tend, to limit liability strictly against the, insurer, strict construction does not mean strained construction. We may not; under the guise of strict construction, rewrite a policy to bind the insurer to a risk that it did not contemplate and for which it has not been paid" (citations omitted)).
Because the homeowners' property damage did not first take place during the. Clarendon policy periods, the court concludes that defendants had no duty to indemnify Hondo in the Underlying Action. USF, moreover, has identified no compelling equitable reason to impose liability on defendants where none exists under their Policies. See Truck Ins. Exchange v. Unigard Ins. Co., 79 Cal. App. 4th 966, 974, 94 Cal. Rptr. 2d 516 (2000) ("In the insurance context, the right to contribution arises when several insurers are obligated to indemnify or defend the same loss or claim, and one insurer has paid more than its share of the loss or defended the action without any participation by the others. . . . Equitable contribution permits reimbursement to the insurer that paid on the loss for the excess it paid over its proportionate share of the obligation, on the theory that the debt it paid was equally and concurrently owed by the other insurers. . . . [A]bsent compelling equitable reasons, courts should not impose an obligation on an insurer that contravenes a provision in its insurance policy" (citations omitted and emphasis added)); see also Signal Companies, Inc. v. Harbor Ins. Co., 27 Cal. 3d 359, `369, 165 Cal. Rptr. 799, 612 P.2d 889 (1980) ("To, impose an obligation on Harbor to reimburse Pacific in contravention of the provisions of its policy could only be justified, however, by same compelling equitable consideration. We find no such consideration here. Before seeking Harbor's contribution to the settlement, Pacific acted in all respects for its own benefit. The defense costs at issue were incurred by Pacific in the performance of its contractual obligation to its insured to afford a defense"). The court therefore concludes that Clarendon National and Clarendon America have neither a legal duty nor an equitable obligation to *992 contribute to the settlement amount. Accordingly, the court grants defendants' motion for summary judgment on plaintiffs' second and fourth causes of action, and denies USF's cross-motion as to these claims.
C. Whether Defendants Had A Duty To Defend Hondo In The Underlying Action
1. Legal Standard Governing An Insurer's Duty To Defend
Under California law, an insurer has a broad duty to defend its insured, which "may apply even in an action where no damages are ultimately awarded." Scottsdale Ins. Co. v. MV Transp., 36 Cal. 4th 643, 654, 31 Cal. Rptr. 3d 147, 115 P.3d 460 (2005) (citing Horace Mann Ins. Co. v. Barbara B., 4 Cal. 4th 1076, 1081, 17 Cal. Rptr. 2d 210, 846 P.2d 792 (1993)). In Montrose Chemical Corp. v. Superior Court, 6 Cal. 4th 287, 24 Cal. Rptr. 2d 467, 861 P.2d 1153 (1993) ("Montrose I"), and again in Montrose II, 10 Cal. 4th 645, 42 Cal. Rptr. 2d 324, 913 P.2d 878, the California Supreme Court held that when a suit against an insured alleges a claim that "potentially" or even "possibly" may subject the insured to liability for covered damages, an insurer must defend unless and until it can derrionstrate, by reference to "undisputed facts," that the claim is not covered. Montrose I, 6 Cal.4th at 299-300, 24 Cal. Rptr. 2d 467, 861 P.2d 1153; see also Montrose II, 10 Cal.4th at 661-62 n. 10, 42 Cal. Rptr. 2d 324, 913 P.2d 878; Pardee. Construction Co. v. Insurance Co. of the Wrest, 77 Cal. App. 4th 1340, 1351, 92 Cal. Rptr. 2d 443 (2000).
California courts consider all facts available to the insurer at the time the insured tenders a claim in determining the scope of the insurer's defense obligation. Montrose I, 6 Cal.4th at 287, 24 Cal. Rptr. 2d 467, 861 P.2d 1153 (stating that the court must examine "the policy, the complaint, and all facts known to the insurer from any source"); Barnett v. Fireman's Fund Ins. Co., 90 Cal. App. 4th 500, 508-09, 108 Cal. Rptr. 2d 657 (2001) ("The existence of the duty to defend turns on all facts known by the insurer at the inception of the third party lawsuit"); CNA Casualty of Cal. v. Seaboard Surety Co., 176 Cal. App. 3d 598, 605, 222 Cal. Rptr. 276 (1986) ("An insurer's duty to defend must be analyzed and determined on the basis of any potential liability arising from facts available to the insurer from the complaint or other sources available to it at the time of the tender of defense"); see also Systems XIX, Inc. v. United Capitol Ins. Co., No. C 98-0481 MJJ, 1999 WL 447599, * 5 (N.D.Cal. June 23, 1999) (Unpub.Disp.) (the duty-to-defend inquiry "focuses on what the insurer knew or should have known at the time of declining coverage").
To determine whether an insurer has a duty to defend, the court first compares the allegations of the complaint with the terms of the policy, and ascertains whether the facts alleged, together with facts not alleged but known to the insurer at the inception of the lawsuit or tender of defense, reveal a possibility that the claim is covered. Montrose I, 6 Cal.4th at 295, 24 Cal.Rptr.al 467, 861 P.2d 1153; see also State Farm Fire & Casualty Co. v. Century Indemnity Co., 59 Cal. App. 4th 648, 657, 69 Cal. Rptr. 2d 403 (1997). Facts outside the allegations of the complaint are considered because of the possibility that the pleadings could be amended to state a covered claim. See Scottsdale Ins. Co. v. MV Transp., 36 Cal. 4th 643, 654, 31 Cal. Rptr. 3d 147, 115 P.3d 460 (2005) ("But the duty also exists where extrinsic facts known to the insurer suggest that the claim may be covered"); Montrose I, 6 Cal.4th at 296, 24 Cal. Rptr. 2d 467, 861 P.2d 1153 ("[F]acts known to the insurer *993 and extrinsic to the third party complaint can generate a duty to defend, even though the face of the complaint does not relied a potential for liability under the policy. This is so because current pleading rules liberally allow amendment; the third party plaintiff cannot be the arbiter of coverage" (citations omitted)); State Farm Fire & Casualty Co., 59 Cal.App.4th at 657, 69 Cal. Rptr. 2d 403 ("In determining whether an insurer has a duty to defend, a court first compares the allegations in the complaint with terms of the policy. Next, it looks to facts that may not have been alleged but were known to the insurer when the action was filed").
"[T]he insured is entitled to a defense if the underlying complaint alleges the insured's liability for damages potentially covered under the policy, or if the complaint might be amended to give rise to a liability that would be covered under the' policy." Montrose I, 6 Cal.4th at 299, 24 Cal. Rptr. 2d 467, 861 P.2d 1153 (citing Gray v. Zurich Ins. Co., 65 Cal. 2d 263, 275-76, 54 Cal. Rptr. 104, 419 P.2d 168 (1966)); see also Pepperell v. Scottsdale Ins. Co., 62 Cal. App. 4th 1045, 73 Cal. Rptr. 2d 164 (1998). "Any doubt as to whether the facts give rise to a duty to defend is resolved in the insured's favor." Horace Mann Ins. Co., 4 Cal.4th at 1081, 17 Cal. Rptr. 2d 210, 846 P.2d 792; see also Modern. Dev. Co. v. Navigators Ins. Co., 111 Cal. App. 4th 932, 942, 4 Cal. Rptr. 3d 528 (2003).
The duty to defend is not without limits, however. "`[T]he insurer need not defend if the third party complaint can by no conceivable theory raise a single issue which could bring it within the policy coverage.'" La Jolla Beach & Tennis Club, 9 Cal.4th at 39, 36 Cal. Rptr. 2d 100, 884 P.2d 1048 (quoting Gray, 65 Cal.2d at 276 n. 15, 54 Cal. Rptr. 104, 419 P.2d 168); see also Uhrich v. State Farm Fire & Cas. Co., 109 Cal. App. 4th 598, 135 Cal. Rptr. 2d 131, (2003) (" [T]he obligation to defend is not without limits. . . . [T]he duty to defend derives from, the insurer's coverage obligations assumed under the insurance contract. Thus, where there is no potential for coverage, there is no duty to defend," quoting Quart v. Truck Ins. Exchange, 67 Cal. App. 4th 583, 591-92, 79 Cal. Rptr. 2d 134 (1998) (internal quotations and citations omitted)). Stated differently, "[w]here there is no potential for the third party to recover on a covered claim, there is no duty to defend." Devin v. United Services Auto. Assn., 6 Cal. App. 4th 1149, 1157, 8 Cal. Rptr. 2d 263 (1992) (citations omitted). The insured "may not speculate about unplaced third party claims to manufacture coverage.'" Michaelian State Comp. Ins. Fund, 50 Cal. App. 4th 1093, 1106, 58 Cal. Rptr. 2d 133 (1996) (quoting Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co., 14 Cal. App. 4th 1595, 1605, 18 Cal. Rptr. 2d 692 (1993)). Moreover, the insurer has no duty to defend where the potential for liability is "tenuous and farfetched.'" Id. (quoting American Guar. & Liability v. Vista Medical Supply, 699 F. Supp. 787, 794 (N.D.Cal. 1988)). The ultimate question is whether the facts alleged "fairly apprise" the insurer that suit is being brought on a covered claim. Id. (quoting Gray, 65 Cal. 2d at 275 n. 15, 54 Cal. Rptr. 104, 419 P.2d 168).
An insurer has a duty to defend where there is a factual possibility of coverage. The mere fact that the courts have not previously construed the policy provision on which the insurer relies to deny a defense does not give rise to a duty on its part. Waller, 11 Cal.4th at 25, 44 Cal. Rptr. 2d 370, 900 P.2d 619 ("Plaintiffs' related claim, that the lack of authority on the duty to defend issue required a defense by T.I.E. of the Amey lawsuit because `uncertainty of policy interpretation *994 compels a duty to defend in this case,' is equally unmeritorious. CNA Casualty does not hold, as plaintiffs suggest, that the insurer must always defend a third party lawsuit absent a published judicial opinion definitively construing the specific policy provision on which the insurer relies, or, as plaintiffs assert, `until the extent of "the policy coverage" is legally certain,' to deny the defense. This has never been the law," citing McLaughlin v. Nat'l Union Fire Ins. Co., 23 Cal. App. 4th 1132, 1151, 29 Cal. Rptr. 2d 559 (1994)). "[T]he law governing the insurer's duty to defend need not be settled at the time the insurer makes its decision. As several courts have explained, subsequent case law can establish, in hindsight, that no duty to defend ever existed." Scottsdale Ins. Co., 36 Cal.4th at 657, 31 Cal. Rptr. 3d 147, 115 P.3d 460 (citations omitted); see Waller, 11 Cal.4th at 26, 44 Cal. Rptr. 2d 370, 900 P.2d 619 ("If the terms of the policy provide no potential for coverage, . . . the insurer acts properly in denying a defense even if that duty is later evaluated under case law that did not exist at the time of the defense tender" (citations omitted)).
Clarendon National, and Clarendon America "do not dispute that at the time of tender, . . . the Underlying Action did, in fact, present the possibility of damage within, the coverage grant." They concede that they "would have had an obligation to defend Hondo, or more accurately to participate in the defense along with Golden Bear and USF," but for the "absolute earth movement exclusion" and "excess defense" provisions in the Policies.[69] The *995 court must therefore interpret these provisions and determine whether they absolved defendants of the duty to defend Hondo in the Underlying Action. See Watts Industries, Inc. v. Zurich Am. Ins. Co., 121 Cal. App. 4th 1029, 1046, 18 Cal. Rptr. 3d 61 (2004) ("Even if there is a possibility of covered damage to property under the CGL coverage provisions, coverage may be defeated by policy exclusions").
2. Absolute Earth Movement Exclusion
The "absolute earth movement exclusion" in the Clarendon Policies states, in part:
"Bodily injury or property damage claimed, in whole or in part, to arise from or be aggravated by, or claimed to result from or be the consequence of earth movement, whether the earth movement is combined with any other cause. . . . This exclusion applies regardless of the cause or causes of the earth movement and includes defects or negligence in design, construction or materials, or any other event, conduct or misconduct which may have or is claimed to have precipitated, caused or acted jointly, concurrently, or in sequence with earth movement in causing the bodily injury or property damage. . . . Notwithstanding any provision of this policy to the contrary, where any claim or suit is based in whole or in part upon earth movement, as set forth above, the Company shall have the right, but not the obligation, to defend such lawsuit. The Company shall reimburse the insured upon the conclusion or resolution of the claim or suit, based upon the proportion of damages covered by the policy to damages excluded herein." [70]
Citing this exclusion, defendants contend they had no duty to defend Hondo because the Underlying Action was based, at least in part, on claims of earth movement. They point to the allegation in the complaint that "[t]he defects include, without limitation and to various degrees on the plaintiffs' respective residences, the following: . . . faulty soil compaction, faulty existing underlying soils and expansive soils resulting in soil movement and damage to the structures . . . [71]
USF does not dispute that the Underlying Action included "claims based in whole or in part upon earth movement."[72] It argues, however, that the absolute earth *996 movement exclusion did not eliminate defendants' duty to defend because expert reports revealed that only eight of the 127 homes at issue in the Underlying Action had damage caused by earth movement.[73] USF also notes that the complaint listed soil movement as a separate defect, and did not allege that earth movement caused or contributed to other purported defects in the homes.[74]
Under California law, a defense duty is presumed unless it is "excluded by clear and unambiguous language." Maryland Casualty Co. v. Nationwide Ins. Co., 65 Cal. App. 4th 21, 30, 76 Cal. Rptr. 2d 113 (1998); see id. at 31, 76 Cal. Rptr. 2d 113 ("Under Civil Code section 2778, subdivision 4, a defense obligation is implied in all indemnity agreements `unless a contrary intention appears,'" citing CAL. CIV. CODE § 2778; Save Mart `Supermarkets v. Underwriters, 843 F. Supp. 597, 602 (N.D.Cal.1994); DiMugno & Glad, CAL. INSURANCE LAW HANDBOOK (1997) §§ 46.01, 46.18(25), pp. 785, 860.) To narrow its defense duty, an insurer must make the exclusion "conspicuous, plain and clear," so that the insured is put on reasonable notice of the limitation. Gray, 65 Cal.2d at 273, 54 Cal. Rptr. 104, 419 P.2d 168; see Save Mart Supermarkets, 843 F.Supp. at 603 ("The duty to defend must be `negated by language clear enough to meet the requirement of Gray v. Zurich . . . that "any exception to the performance of the underlying obligation must be so stated `as clearly to apprise the insured of its, effect,"" quoting Mt. Hawley Ins. Co. v. Federal Savings & Loan Ins. Corp., 695 F. Supp. 469, 474 (C.D.Cal.1987)). As the California Supreme Court confirmed in MacKinnon v. Truck Ins. Exchange, 31 Cal. 4th 635, 3 Cal. Rptr. 3d 228, 73 P.3d 1205 (2003):
". . . [I]nsurance coverage is interpreted broadly so as to afford the greatest possible protection to the insured, [whereas] . . . exclusionary clauses are interpreted narrowly against the insurer. [A]n insurer cannot escape its basic duty to insure by means of an exclusionary clause that is unclear. As we have declared time and again any exception to the performance of the basic underlying obligation must be so stated as clearly to apprise the insured of its effect. Thus, the burden rests upon the insurer to phrase exceptions and exclusions in clear and unmistakable language. The exclusionary clause must be conspicuous, plain and clear. This rule applies with particular force when the coverage portion of the insurance policy would lead an insured to reasonably expect coverage for the claim purportedly excluded. The burden is on the insured to establish that the claim is within the basic scope of coverage and on the insurer to establish that the claim is specifically excluded" (internal quotations and citations omitted). Id. at 648, 3 Cal. Rptr. 3d 228, 73 P.3d 1205.
Defendants' absolute earth movement exclusion falls short, of this standard. The exclusions to coverage set forth in the Clarendon National and Clarendon America policies comprise slightly more than six pages of text. The absolute earth movement exclusion appears on the third of these pages, four pages after the general insuring clauses. It is the only exclusion in the Policies that contains any language altering the defense obligation set forth in the insuring clauses, and there is no heading *997 or language in the Policies that puts the insured on notice of this fact. The relationship between the statement of the duty to defend found in the insuring clauses, and the limitation on that duty inserted in the absolute earth movement exclusion, therefore, is not plain and conspicuous. See Gray, 65 Cal. 2d at 272, 54 Cal. Rptr. 104, 419 P.2d 168 ("This clause is not `conspicuous' since it appears only after a long and complicated page of fine print, and is itself in fine print; its relation to the remaining clauses of the policy and its effect are surely not `plain and clear'").[75]
Additionally, the scope of the exclusion's limitation on the duty to defend is ambiguous. The exclusion states that "where any claim or suit is based in whole or in part on earth movement," the insurers will have the right, but not the obligation, to defend the "lawsuit." "Claim" and "suit" are defined terms; "suit" means "a civil proceeding in which damage because of bodily injury [or] property damage . . . to which this insurance applies are alleged." "Claim" means "a request or demand received by any insured . . . for money . . . including the service of suit . . . against any insured."[76] Clarendon National and Clarendon America contend that under the absolute earth movement exclusion, they have no duty to defend if the underlying complaint contains an allegation of earth movement, whether or not that allegation concerns the insured or some other defendant. The reference to "claim or suit" can be read more restrictively, however, to mean that the insurers have no duty to defend a lawsuit if it includes, an allegation that property damage caused by the insured resulted, in whole or in part, from earth movement.
This narrower interpretation is consistent with the Policies' definition of "claim" as a demand or suit "against [the] insured." It is also consistent with the definition of "suit," which incorporates the insuring clauses of the Policies. As these clauses makes clear, the insurers undertake to "pay [only] those sums that an insured becomes legally obligated to pay for damages for bodily injury or property damage to which this insurance applies," and to "defend any suit" seek seeking those damages.[77] The mere fact that other defendants are joined with the insured in a single lawsuit, and that they may have caused damage involving earth movement, cannot absolve the insurers from providing the insured a defense so long as the insured's work did not result in damage caused, in whole or in part, by earth movement. Stated differently, where multiple defendants are named in a single lawsuit, and multiple types of damage are alleged, an insurer can invoke the absolute earth movement exclusion to deny a defense only if it is clear from the allegations of the complaint and other information in its possession that the damage caused by the insured's work was also caused in whole or in part by earth movement. See Community Redevelopment Agency of City of Los Angeles v. Aetna Casualty and Surety Co., 50 Cal. App. 4th 329, 337, 57 Cal. Rptr. 2d 755 (1996) (Croskey, J.) ("United disputes that the subsidence exclusion [in Scottsdale's *998 policy] precludes a defense duty because there were other `claims' of defective construction of improvements asserted in the underlying damage actions. Although ultimately found to be without merit by the trial court (all of the damages suffered by homeowners were found to be due to subsidence), the allegation of those claims was sufficient to raise a potential of coverage and therefore a duty to defend. Th[is] . . . argument[ ] may have some merit. However, we do not reach [it]. . . . . ").
Such an interpretation is supported by the fact that the absolute earth movement exclusion applies only to property damage that is included in the ProductsCompleted Operations Hazard. The Products Completed Operations Hazard includes all bodily injury and property damage "arising out of your product or your work."[78] "Your work" means, inter alia, "[w]ork or operations performed by you or on your behalf."[79] "You" refers to the named insured, i.e., Hondo.[80] Because the exclusion is limited by its terms to work performed by the named insured, the limitation on the insurers' defense obligations it includes must be read to extend only to property damage caused by that work and also by earth movement
Such an interpretation is consistent with, the objectively reasonable expectations of the insured. See Bay Cities Paving & Grading, Inc., 5 Cal.4th at, 867, 21 Cal. Rptr. 2d 691, 855 P.2d 1263; A.B.S., 34 Cal. App. 4th at 1478, 41 Cal. Rptr. 2d 166. An insured might reasonably anticipate, based on the absolute earth movement exclusion, that if it is sued for property damage caused in part by soil movement, the insurer will have no duty to defend that suit. An insured would not reasonably expect that its entitlement to a defense would disappear any time it is joined in a multi-defendant suit where a third-party claimant asserts a claim involving earth movement against some defendants, but not specifically against it. Compare Garamendi v. Golden Eagle Ins. Corp., No. A099011, 2003 WL 21030255, *1-3 (Cal.App. May 8, 2003) (Unpub.Disp.) (finding that a similar earth movement exclusion absolved an insurer of all defense and indemnity obligations because "[t]he collapse was attributed to inadequate compaction of the underground utility trenches, including those constructed by" the insured).
The homeowners in the Underlying Action did not allege that any damage caused by earth, movement was attributable to Hondo's work, nor did they allege that the property damage resulting from Hondo's work had been caused or aggravated by earth movement. Indeed, from the face of the complaint, it is impossible to determine whether the "framing, siding and structural defects" alleged have any relation to the "[u]aulty soil compaction, faulty existing underlying soils and expansive soils resulting in soil movement and damage to the structures" about which the homeowners complain. Nothing in the summary judgment record suggests that Clarendon National and Clarendon America had additional information linking the two types of damage at the time they declined to defend the Underlying Action. Therefore, the court concludes that the absolute earth movement exclusion did not *999 relieve defendants of their duty to defend Hondo in the Underlying Action.
3. Excess Defense Provision
The insuring clauses of the Clarendon Policies provide: "Our duty to defend is excess over and shall not contribute where the insured has any other insurance under which, but for the existence of this Policy, any other insurer is obligated to provide a defense."[81] USF contends that this is essentially an "excess" or "other insurance" provision that cannot be given effect under California law.[82] It argues that Century Surety Co. v. United Pacific Insurance Co., 109 Cal. App. 4th 1246, 135 Cal. Rptr. 2d 879 (2003), and Travelers Casualty Surety Co. v. Century Surety Co., 118 Cal. App. 4th 1156, 13 Cal. Rptr. 3d 526 (2004), clearly hold that where, as here, two or more primary CGL policies contain identical "excess insurance" language, the provisions cancel one another out, and all insurers are required to contribute to defense of the insured.[83] Thus, USF asserts, to permit defendants to use this "excess insurance" provision as a "escape clause" to avoid their defense duty and contribution obligation would contravene California law.
Clarendon National and Clarendon America counter that the provision is not an "excess insurance" clause, but an "excess defense" clause.[84] They argue that Century Surety Co. and Travelers Casualty & Surety Co. are inapplicable because, unlike the "excess insurance" provision at issue in those cases, the provision in their Policies does not affect the scope of coverage or their duty to indemnify the insured for covered losses.[85]
In Century Surety Co., a group of homeowners sued the general contractor that had constructed their houses. Century Surety Co., 109 Cal.App.4th at 1250-51, 135 Cal. Rptr. 2d 879. The general contractor filed across-complaint against several of the subcontractors involved in the construction, including County Line Framing, Inc. County Line tendered defense of the suit to four commercial general liability insurers, which provided successive coverage over a five-year period. Id. at 1250, 135 Cal. Rptr. 2d 879. Three of the insurers accepted the tender, defended County Line, and eventually settled the matter. Id. The fourth insurer, Century Surety Company, rejected the tender, asserting that it had no duty to defend because its coverage was "excess" to that provided Under the other policies. Id.
The four policies contained nearly identical insuring language. Each obligated the insurer to "pay those sums the insured becomes legally obligated to pay as damages because of . . . `property damage' to which this insurance applies," and to defend any "suit" seeking such damages. Id. at 1251, 135 Cal. Rptr. 2d 879. The principal difference between Century's policy and the other insurers' coverage was the "other insurance" provision. The policies of the three defending companies contained a standard "other insurance" provision, which stated:
"4, Other Insurance
If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A and B of this Coverage Part, our obligations are limited as follows:
*1000 a. Primary Insurance.
This insurance is primary. . . . If this insurance is primary, our obligations are not affected unless any of the other insurance is primary. Then, we will share with that other insurance by the method described in c. below. . . .
c. Method of Sharing. If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach, each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first. If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer's share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers." Id. at 1251-52, 135 Cal. Rptr. 2d 879.
Century's policy, by contrast, included an endorsement that explicitly replaced the standard "other insurance" language with the following provision:
"4. Other Insurance
If other valid and collectible insurance is available to any insured for a loss we cover under the Coverage A or B of this Coverage Part, then this insurance is excess of such insurance and we have no duty to defend any claim or `suit' that any other insurer has a duty to defend." Id. at 1252, 135 Cal. Rptr. 2d 879.
Century argued that this provision clearly nullified any potential coverage under its policy and absolved it of the duty to defend County Line in the underlying action.
Writing for the court, Justice Croskey concluded that Century's "excess insurance" provision was contrary to public policy, since it permitted a primary insurer "to make a seemingly ironclad guarantee of coverage, only to withdraw that coverage (and thus escape liability) in the presence of other insurance." Id. at 1256, 135 Cal. Rptr. 2d 879 (quoting Commerce & Industry Ins. Co. v. Chubb Custom Ins. Co., 75 Cal. App. 4th 739, 740, 89 Cal. Rptr. 2d 415 (1999)); see also id. ("Whatever may be said about the merits of Century's attempt to limit its liability to `excess' coverage, it is clear that it was not, and it cannot claim to be, a true excess or secondary insurer as we have described that term"). The court also held that Century's "excess insurance" provision and the "other insurance" provisions in the remaining policies were "mutually repugnant" such that it could not enforce Century's policy without contravening the others. Id. at 1260, 135 Cal. Rptr. 2d 879. For these reasons, the court concluded that the appropriate course was "to ignore all of the clauses and require some equitable prorata apportionment" amongst all four insurers. Id.; see also Signal Companies, 27 Cal.3d at 369, 165 Cal. Rptr. 799, 612 P.2d 889 ("The reciprocal rights and duties of several insurers who have covered the same event do not arise out of contract, for their agreements are not with each other. . . . Their respective obligations flow from equitable principles designed to accomplish ultimate justice in the bearing of a specific burden. As these principles do not stem from agreement between the insurers their application is not controlled by the language of their contracts with the respective policy holders"); Commerce & Industry Ins. Co., 75 Cal.App.4th at 749, 89 Cal. Rptr. 2d 415 ("[E]quity overrides the terms of the insurance policies").
In Travelers Casualty & Surety Co, a second California appellate court invalidated Century's "excess insurance" provision as an "escape clause" and equitably apportioned a loss between the successive insurers. *1001 Travelers Casualty & Surety Co., 118 Cal.App.4th at 1159-64, 13 Cal. Rptr. 3d 526. Citing language in Dart Industries, Inc. v. Commercial Union Insurance Co., 28 Ca1.4th 1059, 1079-80, 124 Cal. Rptr. 2d 142, 52 P.3d 79 (2002), the court predicted that, when presented with the issue, the California Supreme Court would reach the same conclusion. See id. at 1162, 124 Cal. Rptr. 2d 142, 52 P.3d 79 (quoting Dart Industries, 28 Ca1.4th at 1079-80, 124 Cal. Rptr. 2d 142; 52, P.3d 79) ("Historically, `other insurance' clauses were designed to prevent multiple recoveries when more than one policy provided coverage for a particular loss. On the other hand, `other insurance' clauses that attempt to shift the burden away from one primary insurer wholly or largely to other insurers have been the objects, of judicial distrust. [P]ublic policy disfavors `escape' clauses, whereby coverage purports to evaporate in the presence of other insurance. . . . [T]he modern trend is to require equitable contributions on a pro rata basis from all primary insurers regardless of the type of `other insurance' clause in their policies" (internal quotations and citations omitted)).
The "excess defense" clause in the Clarendon Policies differs from the "excess insurance" provision analyzed in Century Surety Co. and Travelers Casualty & Surety Co. in that it does not affect the scope of coverage. While the Century provision purported to make both coverage and the duty to defend "excess" where there was other applicable primary insurance, the Clarendon provision leaves coverage intact, and purports to eliminate only the insurers' defense obligation. Despite this difference, the reasoning of Century Surety Co. and Travelers Casualty & Surety Co. is equally applicable here. The excess defense provision found in the Clarendon Policies is a type of "escape clause"albeit a narrower one than an excess insurance clausesince it allows a primary insurer "to make a seemingly ironclad guarantee" that it will defend the insured, "only to withdraw that [guarantee] . . . in the presence of other insurance." Century Surety Co., 109 Cal. App.4th at 1256, 135 Cal. Rptr. 2d 879. An excess defense clause therefore deprives the insured of the benefit of its bargain. As the. California appellate court held in Fireman's Fund Ins. Co. v. Maryland Casualty Co., 65 Cal. App. 4th 1279, 77 Cal. Rptr. 2d 296 (1998):
"Where two or more primary insurers' policies contain `other insurance' clauses purporting to be excess to each other, the conflicting clauses will be ignored and the loss prorated among the insurers on the ground the insured would otherwise be deprived of protection.. Thus, although a true excess insurer one that is solely and explicitly an excess insurer providing only secondary coveragehas no duty to defend or indemnify until all the underlying primary coverage is exhausted or otherwise not on the risk, primary insurers with conflicting excess `other insurance' clauses can have immediate defense obligations." Id. at 1304, 77 Cal. Rptr. 2d 296 (citations omitted and emphasis added).
Such a result is appropriate since "so far as the insured is concerned, the duty to defend may be as important as the duty to indemnify." Buss v. Superior Court, 16 Cal. 4th 35, 45, 65 Cal. Rptr. 2d 366, 939 P.2d 766 (1997); see also Montrose I, 6 Cal.4th at 295-96, 24 Cal. Rptr. 2d 467, 861 P.2d 1153 ("The insured's desire to secure the right to call on the insurer's superior resources for the defense of third party claims is, in all likelihood, typically as significant a motive for the purchase of insurance as is the wish to obtain indemnity for possible liability. As a consequence, California courts have been consistently solicitous *1002 of insureds' expectations on this score"); Woodliff v. California Insurance Guarantee Ass'n., 110 Cal. App. 4th 1690, 1699, 3 Cal. Rptr. 3d 1 (2003) (citing Buss). "An insured buys liability insurance in large part to secure a defense against all claims potentially within policy coverage, even frivolous claims unjustly brought." Horace Mann Ins. Co. v. Barbara B., 4 Cal. 4th 1076, 1086, 17 Cal. Rptr. 2d 210, 846 P.2d 792 (1993). It is just as inequitable to permit an insurer to escape its bargained-for obligation to provide this type of protection to the insured as it is to permit the insurer to avoid its obligation to indemnify, against an ultimate loss.[86] An excess defense clause is also inequitable from the standpoint of other insurers who have undertaken to defend the insured. Like excess insurance provisions, excess defense clauses essentially "attempt to shift the burden away from one primary insurer wholly or largely to other insurers," and must thus "be[ ] the objects of judicial distrust." Dart Industries, 28 Ca1.4th at 1079-80, 124 Cal. Rptr. 2d 142, 52 P.3d 79.
The California Supreme Court has not yet squarely addressed whether excess defense provisions are unenforceable as a matter of public policy. Based on Dart Industries, 28 Cal.4th at 1079-80, 124 Cal. Rptr. 2d 142, 52 P.3d 79, and the California appellate decisions invalidating excess insurance provisions, however, the court concludes that the California Supreme Court would hold that the excess defense provisions in the USF and Clarendon Policies are escape clauses that are against public policy. For this reason, and because the identical provisions in the USF and Clarendon Policies are mutually irreconcilable,[87] the court concludes that the proper course is to ignore the excess defense clauses and equitably apportion defense costs among the three insurers. See Travelers Casualty & Surety Co., 118 Cal. App.4th at 1160, 13 Cal. Rptr. 3d 526 ("While generally, an insurer's coverage terms will be honored if possible, there are exceptions, to this rule. . . . One exception arises where the policies of two or more insurers of a common insured, providing primary coverage for the same risk, contain conflicting `other insurance' clauses . . . if one insurer pays more than its share of the loss or defense costs without participation from the other insurer or insurers, a right to contribution arises. . . . `The purpose *1003 of this rule of equity is to accomplish substantial justice by equalizing the common burden shared by coinsurers, and to prevent one insurer from profiting at the expense of others,'" quoting Fireman's Fund Ins. Co., 65 Cal.App.4th at 1293, 77 Cal. Rptr. 2d 296); Commerce & Industry Ins. Co., 75 Cal.App.4th at 744 45, 89 Cal. Rptr. 2d 415 (holding that where two insurance policies have the same "excess only" clauses, the costs of defense should be prorated because "[i]f given effect [the] competing clauses would strand an insured between insurers disclaiming coverage in a manner reminiscent of Alphonse and Gaston").
4. Equitable Contribution
"[T]he right to equitable contribution arises when several insurers are obligated to indemnify or defend the same loss or claim, and one insurer has paid more than its share of the loss, or defended the action without participation by the others." Truck Ins. Exchange, 79 Cal.App.4th at 974, 94 Cal. Rptr. 2d 516. The purpose of the rule "is to accomplish substantial justice by equalizing the common burden shared by coinsurers, and to prevent one insurer from profiting at the expense of others." Fireman's Fund Ins. Co., 65 Cal. App.4th at 1293, 77 Cal. Rptr. 2d 296. Equitable contribution is "predicated on the common sense principle that where multiple insurers or indemnitors share equal contractual liability for the primary indemnification of a loss or the discharge of an obligation, the selection of which indemnitor is to bear the loss should not be left to the often arbitrary choice of the loss claimant, and no indemnitor should have any incentive to avoid paying a just claim in the hope the claimant will obtain full payment from another coindemnitor." Id. at 1295, 77 Cal. Rptr. 2d 296.
Citing Centennial Insurance Co v. United States Fire Ins. Co., 88 Cal. App. 4th 105, 105 Cal. Rptr. 2d 559 (2001), USF contends that defense costs should be divided on an "equal share" basis, with each of the three insurance companies paying one-third of the total costs.[88] Defendants argue that the "equal shares" method of allocation does not necessarily apply; they do not identify an alternative formula that the court should employ, however.[89]
There is no fixed rule for allocating defense costs among primary insurers covering the same loss. California courts consider "the varying equitable considerations which may arise. . . . and which depend on the particular policies of insurance, the nature of the claim made, and the relation of the insured to the insurers." Signal Companies, 27 Cal.3d at 369, 165 Cal. Rptr. 799, 612 P.2d 889; see also Fireman's Fund Ins. Co., 65 Cal.App.4th at 1306-07, 77 Cal. Rptr. 2d 296; Stonewall Ins. Co. v. City of Palos Verdes Estates, 46 Cal. App. 4th 1810, 1853-54 n. 14, 54 Cal. Rptr. 2d 176 (1996); Armstrong World Industries, Inc., 45 Cal.App.4th at 52-53, 52 Cal. Rptr. 2d 690; CNA Casualty of Cal., 176 Cal.App.3d at 619-20, 222 Cal. Rptr. 276. Thus, the exact allocation is a decision that ultimately rests in the discretion of the court.
Centennial Insurance Co. is not to the contrary. There, the California appellate court held:
"In choosing the appropriate method of allocating defense costs among multiple liability insurance carriers, each insuring the same insured, a trial court must determine which method of allocation will most equitably distribute the obligation *1004 among the insurers `pro rata in proportion to their respective coverage of the risk,' as `a matter of distributive justice and equity.' As such, the trial court's determination of which method of allocation will produce the most equitable results is necessarily a matter of its equitable judicial discretion." Id. at 111-12, 105 Cal. Rptr. 2d 559.[90]
The court held that the trial court had not abused its discretion by employing the "time on the risk" method of allocation instead of an "equal shares" approach. Id. at 112, 105 Cal. Rptr. 2d 559. Specifically, it concluded that the "time on the risk" method was more equitable under the facts of the underlying case because one of the insurers had only covered the mutual insured for a period of less than six months, "only a small fraction of the total insurance coverage period of four and one-half years provided" to the insured by the other three insurance companies. Id. at 113, 105 Cal. Rptr. 2d 559. To ignore the relative periods of coverage and require each insurer to pay the same amount of defense costs, the court stated, "would have been patently arbitrary and inequitable." Id. at 113-14, 105 Cal. Rptr. 2d 559.
Similarly here, it would be inequitable to apportion defense costs in equal shares because Clarendon National insured Hondo for only three months,[91] while USF and Clarendon America each provided coverage for twelve months.[92] Given the particular `circumstances of this case, the court finds that allocation according to "time on the risk" would be more equitable and "accomplish substantial justice" among the parties.[93]Fireman's Fund Ins. Co., 65 Cal.App.4th at. 1293, 77 Cal. Rptr. 2d 296. It is undisputed that USF incurred a total of $117,429.81 in attorneys' fees, costs, and expert fees defending Hondo in the Underlying Action.[94] Apportioning that expense *1005 according to the insurers' time on the risk, the court concludes that Clarendon National is liable for 1/9 of the defense fees and costs, or $13,047.75. Clarendon America is liable for 12/27 of the defense fees and, costs,, or $52,191.03.
III. CONCLUSION
Having, reviewed the record supporting the cross-motions for summary judgment, the court finds that there are no triable issues of fact, and that defendants are entitled to judgment as a matter of law on plaintiffs second and fourth causes of action. The court further finds that plaintiff is entitled to summary, judgment on its first and third causes of action.
The court will enter a judgment declaring that:
1. Defendants had no duty to indemnify the parties' mutual insured, and should not, in equity, be required to contribute to indemnification of the insured in the Underlying Action.
2. Defendants had a duty to defend the parties' mutual insured in the Underlying Action. Clarendon National must pay USF $13,047.75 and Claren don America must pay USF $52,191.03, as, their respective shares of the fees and costs incurred in the defense of the insured in the Underlying Action.
NOTES
[1] Stipulation of Facts in Support of Cross-Motions for. Summary Judgment and/or Adjudication ("Fact Stip."), ¶ 1. See Clarendon America Insurance Company's Statement of Uncontroverted Facts in Support of Motion for Summary Judgment or, in the Alternative Summary Adjudication rDefs.' Facts"), ¶ 1; Statement of Genuine Issues in Opposition to Clarendon's Motion for Summary Judgment, or in the Alternative for Summary Adjudication as to Plaintiff's. First and Third. Causes of Action ("Pl.'s Genuine Issues"), ¶ 1.
USF requests that the court take judicial notice of the pleadings in the Underlying Action, and defendants do not object. (See Request for Judicial Notice of Pleadings in Underlying Action in Considering the Parties' Cross-Motions for Summary Judgment; Stipulation re Mutual Waiver/Withdrawal of Certain Evidentiary Objections to Documents Offered by Each Side in Support of the Cross-Motions for Summary Judgment/Summary Adjudication ("Evid.Stip."), ¶ 3.) The court "may take judicial notice of a document filed in another court not for the truth of the matters asserted in the litigation, but rather to establish the fact of such litigation and related filings." San Luis v. Badgley, 136 F. Supp. 2d 1136, 1146 (E.D.Cal.2000) (quoting United States v. Jones, 29 F.3d 1549, 1553 (11th Cir.1994)); see Biggs v. Capital Factors, Inc., 120 F.3d 268, 1997 WL 415340, *1-2 (9th Cir. July 22, 1997) (Unpub.Disp.) ("[A]lthough a court may take judicial notice of its own records, it cannot take judicial notice of the truth of the contents of all documents found therein"); Hill v. Goord, 63 F. Supp. 2d 254, 256 (S.D.N.Y.1999) ("It also is entirely, proper for this Court t to take judicial notice of the actions taken in these related proceedings `to establish the fact of such litigation and related filings,'" citing Liberty Mutual Ins. Co. v. Botches Pork Packers, Inc., 969 F.2d 1384, 1388 (2d Cir.1992), and Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2d Cir.1991)). Because USF's request is limited to the fact of the pleadings, and not the truth of their contents, the court finds that judicial notice is proper. (See Declaration of Jeffrey S. Behar in Support of USF Insurance Company's Opposition to Clarendon's Motion for. Summary Judgment, or in the Alternative, for Summary Adjudication of the Plaintiff's First and Third Causes of Action ("Behar Decl."), Exh. O (Alvizuri v. Fieldstone Communities Inc., Complaint for Damages, filed June 20, 2003), Exh, P (First Amended Complaint for Damages, filed July 21, 2003), Exh. Q (Second Amended Complaint for Damages, filed September 8, 2003), Exh. R (Third Amended Complaint for Damages, filed Nov. 26, 2003), Exh. S (Fourth Amended Complaint for Damages, filed January 22, 2004); Exh. T (Fifth Amended Complaint for Damages, filed March 2, 2004).)
[2] Behar Decl., Exh. O (Complaint for Damages, ¶¶ 1-9), Exh. P (First Amended Complaint for Damages, ¶¶ 1-9), EA. Q (Second Amended Complaint for Damages, ¶¶ 1-9), Exh. R (Third Amended Complaint for Damages, ¶¶ 1-9), Exh. S (Fourth Amended Complaint for Damages, ¶¶ 1-9), Exh. T (Fifth Amended Complaint for Damages, ¶¶ 1-9).
[3] Id., Exh. O (Complaint for Damages, ¶ 15), Exh. P (First Amended Complaint for Damages, ¶ 15), Exh. Q (Second Amended Complaint for Damages, ¶ 15), Exh. R (Third Amended Complaint for Damages, ¶ 15), Exh. S (Fourth Amended Complaint for Damages, ¶ 15), Exh. T (Fifth Amended Complaint for Damages, ¶ 15).
[4] Id., Exh. O (Complaint for Damages, ¶ 18), Exh. P (First Amended Complaint for Damages, ¶ 18), Exh. Q (Second Amended Complaint for Damages, ¶ 18), Exh. R (Third Amended Complaint for Damages, ¶ 18), EA. S (Fourth Amended Complaint for Damages, ¶ 18), Exh. T (Fifth Amended Complaint for Damages, ¶ 18).
[5] Id., Exh. O (Complaint for Damages, ¶ 17), Exh. P (First Amended Complaint for Damages, ¶ 17), Exh. Q (Second Amended Complaint for Damages, ¶ 17), Exh. R (Third Amended Complaint for Damages, ¶ 17), Exh. S (Fourth Amended Complaint for Damages, ¶ 17), Exh. T (Fifth Amended Complaint for Damages, ¶ 17).
[6] Id., Exh. O (Complaint for Damages, ¶¶ 10-54), Exh. P (First Amended Complaint for Damages, ¶ 18), Exh. Q (Second Amended Complaint for Damages, ¶¶ 10-54), Exh. R (Third Amended Complaint for Damages, ¶¶ 10-54), Exh. S (Fourth Amended Complaint for Damages, ¶¶ 10-54), Exh. T (Fifth Amended Complaint for Damages, ¶¶ 10-54).
[7] Id., Exh. O (Complaint for Damages at 11-12), Exh. P (First Amended Complaint for Damages at 15), Exh. Q (Second Amended Complaint for Damages at 15), Exh. R (Third Amended Complaint for Damages at 16), Exh. S (Fourth Amended Complaint for Damages at 16), Exh. T (Fifth Amended Complaint for Damages at 16).
[8] Defs.' Facts, ¶ 2; Pl.'s Genuine Issues, ¶ 2.
[9] See Behar Decl., Exh. T (Fifth Amended Complaint for Damages).
[10] Hondo was not named as a defendant in the original complaint or the subsequent amendments. On December 10, 2003, however, the named defendants filed a cross complaint against other entities that had participated in constructing the Rancho Santa Margarita homes, including Hondo. (See Declaration of Jon T. Moseley ("Moseley Decl."), Exh. B (Cross-Complaint of Fieldstone Communities, Inc., The Fieldstone Company, Fieldstone Trabuco Partners, Rancho Trabuco Partners I, L.P., Rancho Trabuco Partners II, L.P. and Rancho Trabuco III, L.P., filed Dec. 10, 2003). On April 23, 2004, plaintiffs amended their complaint to name Hondo as "Doe 235." (See Moseley Decl., Exh. C (Doe Amendment, filed Apr. 23, 2004).) As "Doe 235," Hondo was considered a "Contractor Defendant," as that term was defined in the complaint and amendments. (See, e.g., Behar Decl., Exh. T (Fifth Amended Complaint for Damages, ¶ 8 ("In order to build and construct said project the DEVELOPER DEFENDANTS hired, retained, employed, or contracted with persons or entities to provide for labor and materials in the construction of the PROPERTY and project(s). The identities of said persons or entities, whether individual, corporate, or otherwise, sued herein as Does 201 through 300 are presently unknown to Plaintiffs who therefore sue such persons by their fictitious names. Plaintiffs are informed and believe and thereon allege that said persons or entities are wholly or in some part responsible for the occurrences set for[th] in the Cornplaint. These Defendants will hereinafter be referred to as the `CONTRACTOR DEFENDANTS'").)
[11] Fact Stip., If 10; see Supplemental Stipulation of Facts in Support of Cross-Motions for Summary Judgment and/or Adjudication ("Supp. Fact Stip."), ¶¶ 2, 3, Exh. 1 (listing the 90 homes included in the Underlying Action for which Hondo performed framing work); see also Defs.' Pacts, ¶ 9; Pl.'s Genuine Issues, ¶ 9; Separate Statement of Uncontroverted Facts in Support of USF Insurance Company's Motion for Summary Judgment, or in the Alternative Summary Adjudication ("Pl.'s Fats"), ¶ 5.0; Clarendon America Insurance Company and Clarendon National Insurance Company's Statement of Genuine Issues in Support of Opposition to USF's Motion for Summary Judgment/Adjudication ("Defs.' Genuine Issues"), ¶ 5.0.
[12] Behar Decl., Exh. O (Complaint for Damages, ¶¶ 39-43, ¶¶ 44-47), Exh. P (First Amended Complaint for Damages, ¶¶ 39-43, ¶¶ 44-47), Exh. Q (Second Amended Complaint for Damages, ¶¶ 39-43, ¶¶ 44-47), Exh. R (Third Amended Complaint for Damages, ¶¶ 39-43, ¶¶ 44-47), Exh. S (Fourth Amended Complaint for Damages, 111 39-43, 11144-47), Exh. T (Fifth Amended Complaint for Damages, 4139-43, 44 44-47).
[13] Fact Stip., ¶ 11; see Defs.' Facts, ¶ 10; Pl.'s Genuine Issues, ¶ 10.
[14] Fact Stip., ¶ 12; see Defs.' Fac ¶ 11; Pl.'s Genuine Issues, ¶ 11.
[15] Defs.' Facts, ¶ 17; Pl.'s Genuine Issues, ¶ 17.
[16] Fact Stip., ¶ 17; see Defs.' Facts, ¶ 17; Pl.'s Genuine Issues, ¶ 17.
[17] Fact Stip., ¶ 18; see Defs.' Pacts, ¶ 18; Pl.'s Genuine Issues, ¶ 18.
[18] Fact Stip., ¶ 3; see Defs.' Facts, ¶ 3; Pl.'s Genuine Issues, ¶ 3.
[19] Fact Stip., ¶¶ 3(A), 5, Exh. 4 (USF Policy); see Defs.' Facts, ¶ 3(A); Pl.'s Genuine Issues, 1 3(A); Pl.'s Facts, ¶ 1.0; Defs.' Genuine Issues, ¶ 1.0.
[20] Fact Stip., ¶ 3(B) (modified by Joint Notice of Errata to Stipulation of Facts in Support of Cross-Motions for Summary Judgment and/or Adjudication); see id., ¶ 5, Exh. 5 (Clarendon National Policy); see also Defs.' Facts, ¶ 3(B); Pl.'s Genuine Issues, ¶ 3(B); Pl.'s Facts, 12.0; Defs.' Genuine Issues, ¶ 2.0. Clarendon National did not technically issue a policy to Hondo; rather, it issued a cut-through endorsement that was made part of the Hondo policy (Policy No. GLA 1253810) issued by United Capitol Insurance Company ("United Capitol"). This policy provided that Clarendon National would assume Hondo's coverage in the event United Capitol was liquidated. Because United Capitol is currently in the process of liquidation, Clarendon National is the effective liability carrier for Hondo for the period April 13 through July 15, 2000. (Fact Stip., ¶ 3(B), n. 2.)
[21] Fact Stip., ¶¶ 13(C), 5, Exh. 6 (Clarendon America Policy); see Defs.' Facts, ¶ 3(C); Pl.'s Genuine Issues, ¶ 3(C); Pl.'s Facts, ¶ 3.0; Defs.' Genuine Issues, ¶ 3.0.
[22] Fact Stip., ¶¶ 4, 5, Exh. 3 (Golden Bear Policy); see Defs.' Facts, ¶ 4; Pl.'s Genuine Issues, ¶ 4.
[23] Fact Stip., ¶ 4; see Defs.' Facts, ¶ 4; Pl.'s Genuine Issues, ¶ 4.
[24] Fact Stip., ¶ 13; see Defs.' Facts, ¶ 12; Pl.'s Genuine Issues, ¶ 12.
[25] Pl.'s Facts, ¶ 8.0; Defs.' Genuine Issues, 118.0. USF asserts that the defense and indemnity of Hondo were tendered both to Clarendon America and Clarendon National in February 2004. The supporting declaration proffered, however, shows that the tender was made only to Clarendon America. (See Moseley Decl., ¶ 8, Exh. D (Feb. 2, 2004 Letter from Ford, Walker, Haggerty & Behar to Claim Manager, Clarendon America, re: Alvizuri v. Fieldstone Communities ("Tender Letter")); see id., ¶ 2 (stating that Ford, Walker, Haggerty & Behar was retained by USF to defend Hondo in the Underlying Action).)
[26] Id., Exh. D at 69 (Tender Letter); see also id., Exh. E (July 30, 2004 Letter from Kenneth A. Hearn, Hamrick & Evans, LLP to Jon T. Moseley, Esq., Ford, Walker, Haggerty & Behar re: Eduardo Alvizuri, et al. v. Fieldstone Communities, Inc., etc., et al. ("July 30, 2004 Response to Tender Letter").).
[27] Id., Exh. D at 70 (Tender Letter); Exh. E (July 30, 2004 Response to Tender Letter) (stating that an independent investigation conducted by North American Risk Services, Inc., defendants' third-party administrator, showed that Hondo furnished rough carpentry and framing services for plaintiffs' homes under contracts signed between May 1993 and the end of April or beginning of May 1997).
[28] Pl.'s Facts, 118.1; Defs.' Genuine Issues, ¶ 8.1. The July 30, 2004 letter gave the following reasons for the denial of defense and indemnity: (1) because the Clarendon National and Clarendon America Policies "expressly make[ clear each carrier's duty to defend any insured contingent on the absence of any other insurance policy obligated to do so," the fact that Hondo was already being defended by other liability carriers "eliminat[ed] the conditions necessary . . . to trigger any duty to defend"; (2) "to the extent any covered `property damage' arising from Hondo's work first occurred prior to the inception of either the Clarendon Policy or LTC Policy, neither Clarendon America[ ][nor] Clarendon National would have any obligation to indemnify for such damages, consistent with the express language of the policies"; and (3) "under the Absolute Earth Movement Exclusion cited above, if Plaintiffs' damages were caused in whole or in part by any `earth movement,' as that term is defined, neither policy would have any obligation to defend or indemnify Hondo." (Moseley Decl., Exh. E at 77-78 (July 30, 2004 Response to Tender Letter).) Defendants' agent also cited the contractual liability exclusion, "damage to your work" exclusion, and "damage to impaired property" exclusion in the Policies as a basis for denying coverage. (Id., Exh. E at 75-77).
Defendants confirmed their initial position on December 30, 2004. (Id., Exh. F at 80 (Dec. 30, 2004 Letter from Kenneth A. Hearn, Hamrick & Evans, LLP to Jon T. Moseley, Esq., Ford, Walker, Haggerty & Behar re: Eduardo Alvizuri, et al. v. Fieldstone Communities, Inc., etc., et, al. ("First of all, Clarendon National's and Clarendon America's previously expressed position on the duty to defend has never changed since my July 30 correspondence. . . . Secondly, with respect to the proposed settlement, I had earlier indicated that, to the extent covered `property damage' arising from Hondo's work did not first occur during the Clarendon policy or the United Capitol policy, neither Clarendon America or Clarendon National would have any obligation to indemnify for such damages, consistent with the express language of the policies").)
[29] Fact Stip., ¶ 13, ¶ 14; see Defs.' Facts, ¶ 13; Pl.'s Genuine Issues, ¶ 13.
[30] Pl.'s Facts, ¶¶ 6.0-6.3 (stating that USF paid defense fees of $34,246.50, costs of $7,214.62, and $75,968.69 in expert fees, for a total of $117,429.81); Defs.' Genuine Issues, ¶¶ 6.0-6.3 ("[A]ccording to Defendants' information, USF incurred a total of $117,429.81 in defense fees and costs on behalf of Hondo in connection with the Underlying Action"); see also Defs.' Facts, ¶ 16(A); Pl.'s Genuine Issues, ¶ 16(A).
[31] Fact Stip., ¶ 15; see Defs.' Facts, ¶ 14; Pl.'s Genuine Issues, ¶ 14.
[32] Fact Stip., ¶ 15; see Defs.' Facts, ¶ 14; Pl.'s Genuine Issues, ¶ 14; Pl.'s Facts, ¶ 7.0; Defs.' Genuine Issues, ¶ 17.0.
[33] Pl.'s Facts, ¶ 4.0; Defs.' Genuine Issues, ¶ 4.0.
[34] Fact Stip., ¶ 6, Exh. 4 at 3 (USF Policy), Exh. 5 at 3 (Clarendon National Policy), Exh. 6 at 3 (Clarendon America Policy); see Defs.' Facts, ¶¶ 5, 7; Pl.'s Genuine Issues, ¶¶ 5, 7; Pl.'s Facts, ¶¶ 11.1, 11.2; Defs.' Genuine Issues, ¶¶ 11.1, 11.2.
[35] Fact Stip., ¶ 7(A); see Defs.' Facts, ¶ 6(4); Pl.'s Genuine Issues, ¶ 6(A).
[36] Fact Stip., ¶ 7(B); see Defs.' Facts, ¶ 6(B); Pl.'s Genuine Issues, ¶ 6(B).
[37] Fact Stip., ¶ 9; see Defs.' Facts, ¶ 8; Pl.'s Genuine Issues, ¶ 8; Pl.'s Facts, ¶ 11.3; Defs.' Genuine Issues, ¶ 11.3.
[38] Defs.' Facts, ¶ 16; Pl.'s Genuine Issues, ¶ 16.
[39] Fact Stip., ¶¶ 16, 16(A); see Deis.' Facts, ¶ 16(A); Pl.'s Genuine Issues, 1116(A).
[40] Fact Stip., ¶ 16(A); see Defs.' Facts, ¶ 16(A); Pl.'s Genuine Issues, ¶ 16(A).
[41] Id., ¶ 16(B); see Defs.' Facts, 1116(B); Pl.'s Genuine Issues, ¶ 16(B).
[42] Fact Stip., ¶ 16(B); see Defs.' Facts, ¶ 16(B); Pl.'s Genuine Issues, ¶ 16(B).
[43] Memorandum of Points and Authorities in Support of Defendants Clarendon America and Clarendon National's Motion for Summary Judgment, or, in the Alternative, for Summary Adjudication of the Plaintiff's First and Third Causes of Action ("Defs.' Mot.") at 3; see id. at 10-20. Defendants, oppose plaintiff's motion on the same grounds. (See Memorandum of Points and Authorities in Opposition to USF's Motion for Summary Judgment, or in the Alternative Summary Adjudication ("Defs.' Opp.") at 3.)
[44] Defs.' Mot. at 20; Defs.' Opp. at 10-12.
[45] Def.' Mot. at 20-28; Defs.' Opp. at 12.
[46] Memorandum of Points and Authorities in Support of USF Insurance Company's Motion for Summary Judgment, or in the Alternative Summary Adjudication ("Pl.'s Mot.") at 12-14. Plaintiff opposes defendants' motion on the same grounds. (See Memorandum of Points and Authorities in Support of USF Insurance Company's Opposition to Clarendon's Motion for Summary Judgment, or in the Alternative Summary Adjudication to Plaintiff's First and Third Causes of Action ("Pl.'s Opp.") at 1-13.)
[47] Pl.'s Mot. at 15-21.
[48] USF argues that California law governs this case. (Pl.'s Mot. at 11.) Clarendon National and Clarendon America do not challenge this assertion, and, like USF, cite California law in support of their motion. Because the parties are in agreement, and because the subject matter of the insurance contract was located in California, the court will apply California law. See Stonewall Surplus Lines Ins. Co. v. Johnson Controls, Inc., 14 Cal. App. 4th 637, 646, 17 Cal. Rptr. 2d 713 (1993) (California choice of law rules place particular importance on the location of the insured risk).
[49] Fact Stip., ¶ 6.
[50] Id. The third requirement for coverage is that "The bodily injury or property damage is caused by an occurrence which takes place in the coverage territory." Id. Because the parties do not dispute that the property damage took place within the coverage territory, the court does not analyze this issue.
[51] Id.
[52] Id., ¶ 7(A).
[53] Id., ¶ 7(B).
[54] Defs.' Mot. at 10-11.
[55] Id. at 13-14.
[56] Fact Stip., ¶ 18. See Defs.' Facts, ¶ 18; Pl.'s Genuine Issues, ¶ 18.
[57] See Defs.' Mot. at 20.
[58] See Declaration of James F. Berry in Support of Defendants' Motion for Summary Judgment or, in the Alternative, for Summary Adjudication ("Berry Decl."), Exh. 1. Plaintiff objects to the Dynamic Claims Services report on multiple grounds: (1) that it is inadmissible hearsay under Rules 801(c) and 802 of the Federal Rule of Evidence; (2) that it is irrelevant under Rules 401 and 402; (3) that it is unfairly prejudicial and will confuse the issues under Rule 403; (4) that the author of the report lacks personal knowledge of the facts recited therein, making it inadmissible under Rule 602; (5) that the report has not been authenticated as required by Rule 901; and (6) that it is improper opinion testimony under Rule 701. (Pl.'s Genuine Issues, ¶ 19.) Because the court finds it unnecessary to refer to the report in deciding the coverage issue, it declines to rule on USF's objections at this time.
[59] Defs.' Mot. at 11-20.
[60] Id. at 12.
[61] Id.
[62] Pl.'s Mot. at 1.
[63] Pl.'s Opp. at 10.
[64] See Fact Stip., ¶ 6.
[65] Id.
[66] Defs.' Facts, ¶ 16; Pl.'s Genuine Issues, ¶ 16.
[67] Fact Stip., ¶ 3(A), ¶ 5, Exh. 4 (USF Policy).
[68] To prevail on summary judgment, defendants need only point to an absence of evidence to support USF's cause of action. The only evidence in the record concerning the cause of the property damage suffered by the Rancho Santa Margarita homeowners is the parties' factual stipulations regarding Hondo's negligent framing work, which was completed in or before July 1997, and the amount of rainfall that feel in Rancho Santa Margarita between June 1997 and March 1999. USF has adduced no evidence tending to show that the occurrence that caused property damage during defendants' policy periods was different than that which caused property damage during its own policy period. As a result, under the degmer clause, all property damage that took place during defendants' policy periods must be treated as having first taken place during plaintiff's policy period or earlier. When the damage or defects first "manifested" is irrelevant. See Montrose II, 10 Cal.4th at 676, 42 Cal. Rptr. 2d 324, 913 P.2d 878 (in determining whether property damage took place within the policy period, "the date of discovery of the damage or injury [is not] controlling"); Pepperell, 62 Cal.App.4th at 1055, 73 Cal. Rptr. 2d 164 (holding, in a case where the third-party claimant "alleged defective design and construction involving virtually every part of the home" and latent defects "were not discovered until [several years after the completion of the construction] . . ., when [they] began to manifest themselves to varying degrees," that the injury was potentially a "continuing and progressively deteriorating process which began with defective design and construction admittedly within the pertinent policy period" (emphasis added)).
[69] Defs.' Opp. at 11-12. In other parts of their opposition to plaintiff's motion, defendants argue that "if there is no coverage then there is no defense or indemnity obligation," i.e., that a finding that there was no coverage under the Clarendon Policies automatically absolves them of any duty to defend Hondo in the Underlying Action. (Defs.' Opp. at 3.) Montrose I makes clear that a duty to defend arises if there is any potential for coverage, measured at the time the third-party suit is commenced or the defense tender is made. See Montrose I, 6 Cal.4th at 295, 24 Cal. Rptr. 2d 467, 861 P.2d 1153 (the duty to defend "turns upon those facts known by the insurer at the inception of a third party lawsuit" (internal quotations omitted)); CNA Casualty of Cal., 176 Cal.App.3d at 605, 222 Cal Aptr. 276 ("An insurer's duty to defend must be analyzed and determined oh the basis of any potential liability arising from facts available to the insurer from the complaint or other sources available to it at the time of the tender of defense"). Therefore, an insurer can be held liable for breaching its duty to defend the insured, even if it is later determined that the policy did not provide coverage for the claim. See Borg v. Transamerica Ins. Co., 47 Cal. App. 4th 448, 454, 54 Cal. Rptr. 2d 811 (1996) ("An insurer may have a duty to defend even when it ultimately has no obligation to indemnify, either because no damages are awarded in the underlying action against the insured or because the actual judgment is for damages not covered under the policy"); see also Wausau Underwriters Ins. Co. v. Unigard Security Ins. Co., 68 Cal. App. 4th 1030, 1033, 80 Cal. Rptr. 2d 688 (1998) ("Years after the defense tender, the action was terminated by a stipulated judgment relating wholly to on-site contamination. That fact does not retrospectively establish that the tenant-insureds had no exposure to a recovery for off-site contamination at the earlier time of tender. Whether there was, or was not, off-site contamination was unknown at the time of tender. The defense duty issue concerns whether the tenant-insureds faced potential liability covered by the policies, not whether that liability ever actually materialized" (footnote omitted)); Mullen v. Glens Falls Ins. Co., 73 Cal. App. 3d 163, 173-74, 140 Cal. Rptr. 605 (1977)(" [M]ay an insurance company, without making an investigation of any kind, deny an insured a defense at a time when it has reason to believe that there is potential liability under the insurance policy, and then rely upon the results of the personal injury lawsuit and subsequent factors to prove that there was in reality no potential liability in the first instance? . . . We believe that public policy alone mandates a negative answer to the question; otherwise an insurance carrier could refuse to defend its insured on the slightest provocation and then resort to hindsight for the justification. Furthermore, a contrary holding would force the insured to finance his own investigation and the defense of the lawsuit, and then to seek reimbursement in a second lawsuit against the insurance company. This, in turn, could not only impose an undue financial burden on persons who have purchased insurance protection, but it could deprive them of the expertise and resources available to insurance carriers in making prompt and competent investigations as to the merits of lawsuits filed against their insureds"). Thus, this argument by defendants is without merit.
[70] Fact Stip., Exh. 5 at 3 (Clarendon National Policy), Exh. 6 at 3 (Clarendon America Policy). The absolute earth movement exclusion only applies to bodily injury or property damage included in the "Products-Completed Operation Hazard." Neither party disputes that the property damage claimed in the Underlying Action falls within the "Products-Completed Operation Hazard" provision of defendants' Policies.
[71] Behar Decl., Exh. 0 (Complaint for Damages, ¶ 15), Exh. P (First Amended Complaint for Damages, ¶ 15), Exh. Q (Second Amended Complaint for Damages, ¶ 15), Exh. R (Third Amended Complaint for Damages, ¶ 15), Exh. S (Fourth Amended Complaint for Damages, ¶ 15), Exh. T (Fifth Amended Complaint for Damages, ¶ 15).
[72] Defs.' Facts, ¶ 17; Pl.'s Genuine Issues, ¶ 17.
[73] Pl.'s Opp. at 18; see Defs.' Facts, ¶ 17; Pl.'s Genuine Issues, ¶ 17.
[74] Id.
[75] In their motion, defendants argue that the "excess defense" provision "is conspicuously contained in the Insuring Agreement, on the first page of the policy, and not in a separate endorsement at the end of the policy." (Defs.' Mot. at 23.) They do not make a similar argument respecting the absolute earth movement exclusion.
[76] Fact Stip., Exh. 5 at ¶ 6, 18 (Clarendon National Policy), Exh. 6 at 18, 20 (Clarendon America Policy).
[77] Fact Stip., ¶ 6, Exh. 5 at 3 (Clarendon National Policy), Exh. 6 at 3 (Clarendon America Policy) (emphasis added).
[78] Fact Stip., Exh. 5 at 18 (Clarendon National Policy), Exh. 6 at 20 (Clarendon America Policy).
[79] Id., Exh. 5 at 19 (Clarendon National. Policy), Exh. 6 at 21 (Clarendon America Policy).
[80] Id., Exh. 5 at 3 (Clarendon National Policy), Exh. 6 at 3 (Clarendon America Policy).
[81] Fact Stip., Exh. 5 at 3 (Clarendon National Policy), Exh. 6 at 3 (Clarendon America Policy).
[82] Pl.'s Mot. at 15-16.
[83] Id. at 16.
[84] Defs.' Mot. at 21-26.
[85] Id.
[86] This is particularly true where, as here, more than one of the insurers obligated to defend included an excess defense provision in its policy. Had USF and defendants been the only insurers on the risk, and had USF, like defendants, elected not to defend based on its excess defense provision, Hondo would have been left to pay for its own defense in the Underlying Action, and been denied one of the primary benefits of the insurance coverage for which it paid.
[87] The Golden Bear Policy contains an "other insurance" clause, which provides that when its coverage is primary, and "the other insurance is also primary," it "will share with all that other insurance by the [following] method: . . . If all, of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach, each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first. If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer's share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance by all insurers." (Fact Stip., Exh. 3 (Golden Bear Policy).) Although it does not specify a single method of contribution, Golden Bear's "other insurance" clause requires that defense costs be apportioned in some way among all primary insurers that are on the risk. Contrary to defendants' assertion, therefore, it is clear that the "other insurance" clause in Golden Bear's Policy directly conflicts with the "excess defense" provisions in the USF and Clarendon Policies. (See Defs.' Mot. at 20-21.)
[88] PL's Mot. at 20.
[89] Defs.' Opp. at 19.
[90] The Centennial court identified six methods that California courts have used to apportion defense and indemnity costs:
"(1) apportionment based upon the relative duration of, each primary policy as compared with the overall period of coverage during which the `occurrences' `occurred' (the `time on the risk' method); (2) apportionment based upon the relative policy limits of each primary policy (the `policy limits' method); (3) apportionment based upon both the relative durations and the relative policy limits of each primary policy, through multiplying the policies' respective durations by the amount of their respective limits so that insurers issuing primary policies with higher limits would bear a greater share of the liability per year than those issuing primary policies with lower limits (the `combined policy limit time on the risk' method); (4) apportionment based upon the amount of premiums paid to each carrier (the `premiums paid' method); (5) apportionment among each carrier in equal shares up to the policy limits of the policy with the lowest limits, then among each carrier other than the one issuing the policy with the lowest limits in equal shares up to the policy limits of the policy with the next-to-lowest limits, and so on in the same fashion until the entire loss has been apportioned in full (the `maximum loss' method); and (6) apportionment among each carrier in equal shares (the `equal shares' method)." Id. at 112-13, 105 Cal. Rptr. 2d 559 (citations omitted),
[91] Fact Stip., ¶ 3(B) (modified by Joint Notice of Errata to Stipulation of Facts in Support of Cross-Motions for Summary Judgment and/or Adjudication); see id., ¶ 5; see also Defs.' Facts, ¶ 3(B); Pl.'s Genuine Issues, ¶ 3(B); Pl.'s Facts, ¶ 2.0; Defs.' Genuine Issues, ¶ 2.0.
[92] Fact Stip., ¶¶ 3(A), 3(C); see Defs.' Facts, ¶¶ 3(A), 3(C); Pl.'s Genuine Issues, ¶¶ 3(A), 3(C); Pl.'s Facts, ¶¶ 1.0, 3.0; Defs.' Genuine Issues, ¶¶ 1.0, 3.0.
[93] Because the USF, Clarendon America, and Clarendon National Policies have identical per occurrence policy limits, the "time on the risk" method yields the same ratio as the "combined time on the risk" method of apportionment.
[94] Pl.'s Facts, 1116.0-6.3; Defs.' Genuine Issues, ¶¶ 6.0-6.3; Defs.' Facts, ¶ 16(A); Pl.'s Genuine Issues, ¶ 16(A). Defendants argue that they should not be compelled to pay a share of USF's defense costs because their Policies limit their obligation to pay for a defense to counsel selected by them. (Defs.' Mot. at 28.) It is well-settled, that an insurer that declines to defend waives its right to challenge the reasonableness of defense costs.
See Am, Star Ins. Co. v. Ins. Co. of the West, 232 Cal. App. 3d 1320, 1332-33, 284 Cal. Rptr. 45 (1991). Having rejected Hondo's tender of defense, defendants cannot now dispute the reasonableness of the defense costs incurred on the basis that their Policies give them a right to retain counsel of their choice. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1256757/ | 116 Ga. App. 465 (1967)
157 S.E.2d 793
ATLANTIC COAST LINE RAILROAD COMPANY et al.
v.
STREET et al.
43018.
Court of Appeals of Georgia.
Argued September 11, 1967.
Decided October 6, 1967.
*466 H. J. Quincey, Jay, Garden & Jay, Allan C. Garden, Clayton Jay, Jr., for appellants.
George E. Maddox, Preston & Preston, M. L. Preston, for appellees.
DEEN, Judge.
1. (a) "If the plaintiff by ordinary care could have avoided the consequences to himself caused by the defendant's negligence, he is not entitled to recover. In other cases the defendant is not relieved, although the plaintiff may in some way have contributed to the injury sustained." Code § 105-603. The first sentence of this Code section is taken to mean that the doctrine of comparative negligence is not applicable where, after the negligence of the defendant is actually apparent, the consequences of such negligence could have been avoided by ordinary care on the part of the plaintiff. Central of Ga. R. Co. v. Roberts, 213 Ga. 135 (97 SE2d 149). Neither can the plaintiff recover in a tort action, regardless of the negligence of the defendant, if she assumed the risk incident thereto. The latter statement is really an extension of the former; it arises where the proximate cause of the injury is a matter of knowledge and *467 choice rather than mere carelessness and is referable to the conduct of the injured party after knowledge of the risk of injury rather than to the defendant who first created the risk. One assumes the risk of danger when he voluntarily places himself in a situation where it is likely to strike. In the present case the decedent had actual knowledge of the approach of the train. Her view of it was at no time impeded. From the testimony it appears that she made a last minute decision to enter on the track immediately in front of it, apparently misjudging its speed, distance, width or her own ability to get out of its way. The question of misjudging speed and distance as making a comparative negligence case was discussed in Yandle v. Alexander, 116 Ga. App. 165 (156 SE2d 504), where it was held applicable in an intersection collision case, the opinion, however, stating by way of obiter that assumption of risk is "the situation in which one voluntarily takes the risk of a danger which is so obvious that he knows or must know of it, as in trying to beat a rapidly approaching train across the track." P. 167. The distinction is thus quantitative rather than qualitative. Among cases holding that in such a situation recovery must be denied see Western & A. R. v. Bloomingdale, 74 Ga. 604; Thomas v. Central of Ga. R. Co., 121 Ga. 38 (48 SE 683); Southern R. Co. v. Hogan, 131 Ga. 157 (62 SE 64); Shroeder v. Ga. R. & Elec. Co., 142 Ga. 173 (82 SE 553); Rome R. & Light Co. v. Barna, 16 Ga. App. 1 (2) (84 SE 209); Kirk v. Savannah Elec. &c. Co., 50 Ga. App. 468 (1) (178 SE 470); Laseter v. Clark, 54 Ga. App. 669 (1) (189 SE 265); Central of Ga. R. Co. v. Roberts, 213 Ga. 135, supra.
(b) Did the emergency created in the decedent's mind by the fact that her dog was endangered by the approaching train relieve her of the duty to exercise ordinary care for her own safety? It was held in Louisville &c. R. Co. v. Cline, 136 Ga. 863, 867 (72 SE 405): "For a person engaged in his ordinary affairs, or in the mere protection of property, knowingly and voluntarily to place himself in a position where he is liable to receive a serious injury, is negligence, which will preclude a recovery for an injury so received." Generally a person is not excused from the consequences of his own acts in exposing himself to the danger of injury for the mere purpose of saving personal property, where the danger *468 is so apparent that a reasonable person should have seen and recognized it. Bullock v. Benjamin Moore & Co., (Mo. App.) 392 SW2d 10, 14. So far as the rescue of property is concerned, the emergency created by the negligence of the defendant may well be sufficient to reduce the quantum of care which an ordinary person would exercise under the circumstances, but where the peril is so obvious that even under the circumstances it must be apprehended and the risk is then knowingly and voluntarily assumed, the assumption of risk doctrine rather than that of comparative negligence must control.
The trial court erred in denying the motion for judgment notwithstanding the verdict.
Judgment reversed. Jordan, P. J., and Quillian, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2368544/ | 246 P.3d 1162 (2010)
240 Or. App. 108
PORTLAND STATE UNIVERSITY CHAPTER OF the AMERICAN ASSOCIATION OF UNIVERSITY PROFESSORS, Respondent,
v.
PORTLAND STATE UNIVERSITY, Petitioner.
UP3605; A138895.
Court of Appeals of Oregon.
Argued and Submitted January 13, 2010.
Decided December 29, 2010.
*1164 Jeff J. Payne, Assistant Attorney General, argued the cause for petitioner. With him on the briefs were Hardy Myers, Attorney General, and Mary H. Williams, Solicitor General.
Elizabeth A. Joffee argued the cause for respondent. With her on the brief was McKanna Bishop Joffee & Arms, LLP.
Before SERCOMBE, Presiding Judge, and WOLLHEIM, Judge, and RIGGS, Senior Judge.
WOLLHEIM, J.
The Portland State University Chapter of the Association of University Professors (Association) represents academic professionals employed by Portland State University (PSU). The Association and PSU entered into a collective bargaining agreement that established a grievance process for dispute resolution (CBA). One provision of the CBA allowed PSU to decline to use that grievance process after a member of the Association sought resolution of the grievance from an administrative agency or in a court. Here, a member of the Association alleged gender discrimination in complaints filed with the Equal Employment Opportunity Commission (EEOC) and the Bureau of Labor and Industries (BOLI). Thereafter, PSU declined to use the grievance process. The Association filed an unfair labor practice complaint with the Employment Relations Board under ORS 243.672(1)(g), alleging that PSU's refusal to enter into the grievance process constituted unlawful retaliation under ORS 659A.030(1)(f) and Title VII of the Civil Rights Act of 1964, specifically, 42 USC section 2000e-3(a). The board agreed with the Association and ordered PSU to submit to the grievance process. PSU seeks judicial review of that order. We agree with PSU that the board erred in ordering PSU to submit to the grievance process because it applied the wrong standard. Accordingly, we reverse and remand for reconsideration.[1]
The following facts are undisputed. The CBA defined a grievance process to resolve disputes that arose between the Association and PSU. The grievance process established deadlines for the filing of grievances, provided for various stages of informal and formal negotiations involving the Association and PSU, and, ultimately, granted the Association the right to submit grievances to binding arbitration. However, the agreement allowed PSU to withdraw from the grievance process if a member sought resolution of the same matter through alternative channels. Specifically, Article 28.B.2 of the agreement provided:
"Resort to Other Procedures. If, prior to seeking resolution of a dispute by presenting a grievance hereunder, or while the grievance proceeding is in progress, a member seeks resolution of the matter through any agency outside [PSU], whether administrative or judicial, [PSU] shall have no obligation to entertain or proceed further with the matter pursuant to this grievance procedure or pursuant to Division C (ARBITRATION) of this Article."
(Boldface and capitalization in original.)
Wilson was employed on annual fixed-term contracts as a faculty member from September 1998 through August 2004 and was a member of the Association. In the fall of *1165 2003, Wilson met with her department head on behalf of a colleague who had accused a third faculty member in the department of sexual harassment. Thereafter, PSU informed Wilson that her contract would not be renewed and, later that academic year, Wilson came to believe that she suffered discrimination in retaliation for her support of her colleague's claims. Wilson then filed a complaint with PSU's Office of Affirmative Action and Equal Opportunity (AA/EO office) and spoke with the Association about filing a grievance under the CBA.
While the Association investigated whether to pursue a grievance, the AA/EO office completed its investigation and issued a report recommending that PSU take no action on Wilson's complaint. PSU adopted that recommendation. The Association requested a copy of the report, which PSU declined to provide based on confidentiality and relevance.
In February 2005, the Association filed a grievance under the CBA, alleging that PSU had improperly failed to provide a copy of the AA/EO report. Separately, Wilson filed an intake questionnaire with the EEOC in pursuit of a potential gender discrimination action against PSU. The Association informed PSU that Wilson had filed an EEOC complaint. PSU then notified the Association that it would not process the grievance because Wilson had sought resolution through an outside agency. PSU relied on Article 28.B.2. The Association responded that Article 28.B.2 was illegal and unenforceable.[2]
Wilson then filed a complaint with BOLI, alleging that her nonrenewal was discriminatory and retaliatory. Subsequently, the Association filed a second grievance, alleging that the nonrenewal of Wilson's contract was discriminatory and retaliatory. PSU again refused to process that grievance, relying on Article 28.B.2.
The Association filed a complaint with the board and sought declaratory relief, asserting that PSU's failure to comply with the grievance process violated ORS 243.672(1)(g), which provides that "[i]t is an unfair labor practice to * * * [v]iolate the provisions of any written contract with respect to employment relations, including an agreement to arbitrate."[3] Citing Article 28.B.2, PSU countered that it did not violate any contractual provision because, it had never agreed to process any grievances involving a matter that was also submitted to an outside agency such as EEOC or BOLI. The Association responded that Article 28.B.2 of the CBA was not enforceable because it sanctioned discrimination against an employee who has filed a discrimination complaint, citing Title VII of the Civil Rights Act of 1964, specifically, 42 USC section 2000e-3(a), and ORS 659A.030(1)(f).
The board concluded that "[u]nder the express and unambiguous terms of the collective bargaining agreement, * * * [PSU] had no contractual obligation to further process the grievance once Wilson commenced EEOC proceedings." However, the board agreed with the Association that Article 28.B.2, by allowing the employer to penalize an employee who chooses to seek resolution of a discrimination claim, "constitutes unlawful retaliation under both state and federal law." Consequently, the board concluded that Article 28.B.2 was "unenforceable as applied" to Wilson's grievances and that PSU's refusal to process Wilson's grievances violated ORS 243.672(1)(g). Consequently, the board ordered PSU to process the grievances.
PSU seeks judicial review of the order of the board, raising two assignments of error. First, PSU argues that the board erred by *1166 failing to dismiss the complaint because it lacked the authority to determine that Article 28.B.2 constituted retaliation. Second, PSU argues that the board erred in concluding that Article 28.B.2 was illegal and unenforceable and, on that basis, erred in ordering PSU to enter into the contractual grievance process. The Association counters that the board had the authority to interpret the contract and that Article 28.B.2 constituted unlawful retaliation. As explained below, we agree with the Association that the board had authority over the contract dispute claim. But we agree with PSU that the board erred in ordering PSU to process the grievance because it applied the wrong standard.
Under its first assignment of error, PSU asserts that, because the Association's unlawful labor practice complaint was predicated upon ORS 243.672(1)(g), the board was limited to considering whether the board's refusal to process the grievances "[v]iolate[d] the provisions of any written contract" under ORS 243.672(1)(g). PSU argues that the board had no authority to "determin[e] that an employer has retaliated against an employee under Title VII or ORS 659A.030(1)(f)."[4]
The Association has correctly identified the problem with PSU's argument: PSU confuses the board's authority to declare a contractual term unenforceable with the board's authority to find liability under state and federal antidiscrimination laws. The board did not decide whether Wilson or the Association is entitled to a remedy under either Title VII or ORS 659A.030(1)(f). Rather, the board determined that Article 28.B.2 was not enforceable because Article 28.B.2 "cannot lawfully apply to Title VII complaints."
The board has the authority to determine whether a public employer has engaged in an unfair labor practice. ORS 243.676(2). The legislature has defined an unfair labor practice under ORS 243.672(1)(g) to include the "[v]iolat[ion of] the provisions of any written contract * * * including an agreement to arbitrate." PSU does not argue that the board lacks the authority to declare unenforceable any contractual provision that is in conflict with other provisions of statutory law-including Title VII and ORS 659A.030(1)(f). In fact, the legislature contemplated that the board would have such authority. See ORS 243.702(1) (contemplating circumstances under which the terms in "a collective bargaining agreement are declared to be invalid * * * by the Employment Relations Board"). Consequently, we conclude that the board had statutory authority to determine whether Article 28.B.2 of the CBA, permitting PSU to avoid the grievance procedure, was an enforceable contractual provision. For that reason, we reject PSU's first assignment of error.
Next we consider PSU's second assignment of error: the correctness of the board's legal conclusion that "the provisions of Article 28.B.2 are unenforceable as applied to the Wilson grievance." We review that conclusion for errors of law. ORS 183.482(8)(a). As the board recognized, the issue of whether a collective bargaining agreement may permit an employer to withdraw from a contractual grievance procedure solely because an Association member filed a discrimination complaint with the EEOC or BOLI presents an issue of first impression for Oregon appellate courts.
Although the board cited both federal law, 42 USC section 2000e-3(a), and state law, ORS 659A.030(1)(f), in reaching its conclusion that Article 28.B.2 is unenforceable as applied in this case, the board's reasoning and analysis depended entirely on the federal statute. Before the board, the Association cited ORS 659A.030(1)(f)[5] only in its post-trial brief and did not develop any argument under the state statutory framework. On appeal, the Association similarly does not develop any separate argument that relies on *1167 the state statute. Rather, the Association argues that "discrimination and retaliation claims under ORS 659A.030 are subject to the same legal standards as those under Title VII." (Emphasis added.) Consequently, as the issue is framed by the Association, this case depends on whether federal employment law bars the enforceability of Article 28.B.2.
Title VII protects against employment discrimination on the basis of "race, color, religion, sex, or national origin." 42 USC § 2000e-2(a). In particular, 42 USC section 2000e-3(a) makes it "an unlawful employment practice for an employer to discriminate against any * * * employee[] * * * [who has] made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing." To demonstrate that an employer has unlawfully discriminatedthat is, retaliated against an employeeunder 42 USC section 2000e-3(a), the aggrieved employee must prove three facts:
"(1) the [employee] engaged in protected activity opposing discrimination; (2) the [employee] experienced a materially adverse action, that is, an action that a reasonable employee would find materially adverse; and (3) a causal connection exists between the protected activity and the adverse action. Somoza v. University of Denver, 513 F.3d 1206, 1212 (10th Cir. 2008)."
Steele v. Mayoral, 231 Or.App. 603, 616, 220 P.3d 761 (2009) (emphasis added). The employee has the ultimate burden of persuasion as to each element of a retaliation claim. St. Mary's Honor Center v. Hicks, 509 U.S. 502, 511, 113 S. Ct. 2742, 125 L. Ed. 2d 407 (1993).
On review, PSU argues that the Association did not make an adequate showing as to the second of the requisite three facts: that PSU's refusal to process Wilson's grievance was a materially adverse action. To establish retaliation, the adverse action need not affect the terms or conditions of employment, but the adverse action must be material. Burlington N. & S.F.R. Co. v. White, 548 U.S. 53, 64, 68, 126 S. Ct. 2405, 165 L. Ed. 2d 345 (2006). Accordingly, not all adverse actions give rise to retaliation claims; an adverse action is material only if it is "likely to dissuade employees from complaining or assisting in complaints about discrimination." Id. at 70, 126 S. Ct. 2405. That is an objective standard, assessed from the likely impact that an employer's acts may have on a reasonable employee. Id. at 68, 126 S. Ct. 2405.
The determination whether an adverse act is material distinguishes "significant from trivial harms"; an adverse act gives rise to an actionable retaliation claim only if, from the perspective of a reasonable person, the adverse action rises to a "level of seriousness" that would deter someone from complaining about discriminatory practices. Id. at 67-68, 126 S. Ct. 2405; see also Steele, 231 Or.App. at 618-19, 220 P.3d 761 (distinguishing trivial and significant adverse actions). An adverse action gives rise to actionable retaliation only if the adverse action is so serious that it would dissuade a reasonable employee from bringing a discrimination action in the first instance. See Burlington, 548 U.S. at 67-68, 126 S. Ct. 2405. Thus, whether Article 28.B.2 sanctions a materially adverse action depends on whether PSU's decision to decline to enter into a grievance process after an employee complains about discrimination is likely to dissuade a reasonable employee from making such a complaint in the first instance.
Central to that analysis is the legal significance of the grievance process that PSU declined to enter. As the United States Supreme Court has explained, a right to antidiscrimination established under a contract may differ from the right to antidiscrimination established by statute. 14 Penn Plaza LLC v. Pyett, ___ U.S. ___, ___, 129 S. Ct. 1456, 1468-69, 173 L. Ed. 2d 398 (2009). In addition, a contract cannot prospectively waive an employee's substantive statutory antidiscrimination protections. Id. at 1469. Thus, where a contract provides a grievance or arbitration process to resolve disputes concerning claims of discrimination, the grievance or arbitration process does not have preclusive effect over any statutory claims unless the contract expressly incorporates the statutory law. Id. at 1468-69. Here, the CBA does not expressly incorporate *1168 the statutory law. Accordingly, the adversity of PSU's decision under Article 28.B.2 to decline to enter into the grievance process was limited to Wilson's contractual right to the grievance process.
Within the context of the Burlington standard, we similarly conclude that a reasonable employee would not likely be dissuaded from filing a discrimination complaint because an employer defends against the complaint by seeking to consolidate the resolution of the matter into one proceeding. Accordingly, in order to establish that PSU's reliance on Article 28.B.2 constitutes unlawful retaliation, the Association must show that Article 28.B.2 does something more than allow PSU to undertake such a defensive measure.[6]
The board did not address the Burlington standard. Rather, the board relied on numerous cases that were decided by various federal courts before the Supreme Court enunciated the material adverse action standard in Burlington. Nor could the board address the rule announced in 14 Penn Plaza LLC because the Supreme Court decided that case after the board's decision in this case.
Nonetheless, the Association argues that the board's reliance on various pre-Burlington federal cases was correct, because this case involves a facially discriminatory policy, whereas Burlington involved an individual claim of retaliation. However, nothing in either the antiretaliation statute, 42 USC section 2000e-3(a), or the Supreme Court's opinion in Burlington suggests that the antiretaliation provision would be applied differently under those circumstances. Accordingly, we reject the Association's argument.
Because the board did not apply the standard of material adversity in determining whether Article 28.B.2 is unenforceable under 42 USC section 2000e-3(a), and because the board did not have the opportunity to consider the impact of 14 Penn Plaza LLC, we reverse and remand for reconsideration under the appropriate standard.[7]
Reversed and remanded for reconsideration; otherwise affirmed.
SERCOMBE, P.J., dissenting.
SERCOMBE, P.J., dissenting.
With respect, I am unable to agree with the views of my colleagues and am compelled to dissent. I disagree with the test proposed by the majority for whether the "resort to other procedures" (ROP) provision in the collective bargaining agreement is lawful under 42 USC section 2000e-3(a). That statute makes it "an unlawful employment practice for an employer to discriminate against any * * * employee[] * * * [who] has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, *1169 or hearing." On its face, the ROP provision "discriminates" against, or treats differently, employees who make a charge to the Equal Employment Opportunity Commission (EEOC) from those employees who do not complain. That different treatment is that the former group of employees loses a contractual right to grieve a discrimination claim and the latter group retains that right. There is little question that the contractual right to grieve a discrimination claim is significant, and the loss of that right of the union representing an employee would be adverse to the employee's interests. Therefore, the ROP provision is unlawful as a matter of law because it penalizes the exercise of a federal statutory right by taking away a significant contractual right if the federal remedy is invoked.
That was the logic adopted by the Employment Relations Board (board) in the order under review. The board relied on E.E.O.C. v. Board of Governors of State Colleges, 957 F.2d 424 (7th Cir.), cert. den., 506 U.S. 906, 113 S. Ct. 299, 121 L. Ed. 2d 223 (1992), a case presenting a nearly identical question to the issue raised in this case. In Board of Governors of State Colleges, the EEOC challenged the legality of a ROP-type provision in a collective bargaining agreement between a university and its employees under an antiretaliation section of the Age Discrimination in Employment Act (ADEA). 957 F.2d at 426. That part of the ADEA, 29 USC section 623(d), provided:
"It shall be unlawful for an employer to discriminate against any of his employees * * * because such individual * * * has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or litigation under this chapter."
The EEOC questioned the lawfulness of Article 17.2 of the collective bargaining agreement, which read:
"If prior to filing a grievance hereunder, or while a grievance proceeding is in progress, an employee seeks resolution of the matter in any other forum, whether administrative or judicial, the Board or any University shall have no obligation to entertain or proceed further with the matter pursuant to this grievance procedure."
Board of Governors of State Colleges, 957 F.2d at 426.
The court found that application of Article 17.2 would necessarily violate the antiretaliation section of the ADEA:
"Under the collective bargaining agreement between the Board and the Union, an employee has a contractual right to an in-house grievance procedure. However, an employee loses that right if he files a charge of discrimination. Article 17.2 authorizes the Board to take an adverse employment action (termination of the in-house grievance proceeding) for the sole reason that the employee has engaged in protected activity (filing an ADEA claim). Under Article 17.2, an employee must forfeit his contractual right to a grievance proceeding, a condition of his employment, or surrender his legal right to participate in litigation under the ADEA."
Board of Governors of State Colleges, 957 F.2d at 429-30. The court treated Article 17.2 as a retaliatory policy, and unlawful per se, without regard to the good faith of the university or the particular characteristics of an individual application of Article 17.2. Id. at 430-31.
The majority eschews this analysis, apparently reasoning that the loss of a contractual right to grieve a dispute is not an adverse employment action. The opinion assumes that the standard for assessing the legality of an employment policy under the antiretaliation section of Title VII of the Civil Rights Act of 1964, 42 USC section 2000e-3(a), is the same as the test used by courts to evaluate the validity of an individual claim for retaliation. See 240 Or.App. at 116-17, 246 P.3d at 1167-68. The test for an individual claim for retaliation is that an aggrieved employee must show that (1) the employee engaged in protected activity under the statute ("made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing"); (2) the employee experienced a materially adverse action, one that a reasonable employee would find materially adverse; and (3) the protected activity caused the adverse action. Somoza *1170 v. University of Denver, 513 F.3d 1206, 1212 (10th Cir.2008).
In Burlington N. & S.F.R. Co. v. White, 548 U.S. 53, 67, 126 S. Ct. 2405, 165 L. Ed. 2d 345 (2006), the Supreme Court determined that a materially adverse action could include actions "beyond workplace-related or employment-related retaliatory acts and harm." However, in determining the "level of seriousness to which this harm must rise before it becomes actionable retaliation" and "to separate significant from trivial harms," the Supreme Court explained that
"a reasonable employee would have [to find] the challenged action materially adverse, which in this context means it well might have dissuaded a reasonable worker from making or supporting a charge of discrimination."
Id. at 67-68, 126 S. Ct. 2405 (citation and internal quotation marks omitted).
Based on Burlington N. & S.F.R. Co., the majority appears to conclude that enforcement of the ROP provision is not materially adverse to a reasonable employee because that employee "would not likely be dissuaded from filing a discrimination complaint because an employer defends against the complaint by seeking to consolidate the resolution of the matter into one proceeding." 240 Or.App. at 117, 246 P.3d at 1168. The majority seems to say that the board was wrong to find the ROP provision to be unlawful. But then it remands to see if the board agrees with its conclusion: "Because the board did not apply the standard of material adversity in determining whether Article 28.B.2 is unenforceable under 42 USC section 2000e-3(a), * * * we reverse and remand for reconsideration under the appropriate standard." 240 Or.App. at 117-18, 246 P.3d at 1168 (footnote omitted).
In my view, there are a number of problems with that analysis. First, it is not clear what the majority is decidingwas the board wrong as a matter of law in concluding that loss of a grievance contract right is not "materially adverse" (because, as the majority concludes, an employee "would not likely be dissuaded from filing a discrimination complaint") or must the board engage in some factfinding on remand in order to apply the "appropriate standard" (presumably whether a reasonable employee would be dissuaded from engaging in protected activity) in order to resolve the "materially adverse" issue?
Second, I am not persuaded that the same legal test is used to assess the legality of an employer policy under the antiretaliation statute as is used to determine whether an employee has a retaliation claim based on an a particular employer action. It seems to me that if an employer policy categorizes employees on a facially impermissible basis (those who engage in protected activities and those who do not) and then attaches any adverse consequence to those in the protected class as matter of course, that should be enough to vitiate the policy. Suppose an employer adopts a policy that all employees are to shun any of their colleagues who files an EEOC complaint during the week after that filing. In my view, that policy would be unlawful under 42 USC section 2000e-3(a) because it is targeted at the protected conduct, even if, in an individual case, the shunning might not have dissuaded a reasonable employee from filing the claim. I understand that the case law neither confirms nor precludes the employment policy/action distinction that I make.
More importantly, however, in my view, there is no question that the loss of a bargained-for employment right in a collective bargaining agreement is both an adverse and material consequence under any test. It is adverse because it is the loss of an advantagethe right to an efficient and prompt dispute resolution mechanismthat is contractually secured. The loss is material because it is functionally significant as well as the result of collective bargaining. In 14 Penn Plaza LLC v. Pyett, ___ U.S. ___, 129 S. Ct. 1456, 1464, 173 L. Ed. 2d 398 (2009), the Supreme Court underscored the importance of grievance arbitration provisions in collective bargaining agreements:
"In this instance, the Union and the RAB, negotiating on behalf of 14 Penn Plaza, collectively bargained in good faith and agreed that employment-related discrimination claims, including claims brought under the ADEA, would be resolved in arbitration. This freely negotiated *1171 term between the Union and the RAB easily qualifies as a `conditio[n] or employment' that is subject to mandatory bargaining under § 159(a) [of the National Labor Relations Act]. See Litton Financial Printing Div., Litton Business Systems, Inc. v. NLRB, 501 U.S. 190, 199, 111 S. Ct. 2215, 115 L. Ed. 2d 177 (1991) (`[A]rrangements for arbitration of disputes are a term or condition of employment and a mandatory subject of bargaining'); Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 578, 80 S. Ct. 1347, 4 L. Ed. 2d 1409 (1960) (`[A]rbitration of labor disputes under collective bargaining agreements is part and parcel of the collective bargaining process itself'); Textile Workers v. Lincoln Mills of Ala., 353 U.S. 448, 455, 77 S. Ct. 912, 1 L. Ed. 2d 972 (1957) ('Plainly the agreement to arbitrate grievance disputes is the quid pro quo for an agreement not to strike')."
That context drawn by the Court illustrates that the bargained-for collective right to grieve discrimination claims is a valuable one; axiomatically, a valuable right will be prized by a reasonable employee in the sense of protecting that right from loss. That necessarily means that a reasonable employee might well be dissuaded from taking actions that result in the loss of valuable grievance rights, such as making or supporting a claim of discrimination. That legal quality of grievance rightsthe quid pro quo for an agreement not to strikenecessarily makes the loss of those rights material for purposes of 42 USC section 2000e-3(a).
I cannot support the majority's conclusion that loss of grievance rights is immaterial or its instruction to the board to think about it some more. To me, the opposite conclusion is necessary, and the board's order should be affirmed. For those reasons, I dissent.
NOTES
[1] In addition, the board ruled that PSU violated ORS 243.672(1)(c) when it failed to provide a report to the Association and ordered PSU to provide the report. On judicial review, PSU does not challenge that ruling. We affirm the board's ruling on that issue without further discussion.
[2] Wilson mistakenly believed that the questionnaire she had completed was a complaint, and the Association relied on her belief when it informed PSU that Wilson had filed an EEOC complaint. The EEOC subsequently determined that any complaint based on Wilson's questionnaire would be untimely.
[3] The Association also sought orders requiring PSU to enter into collective bargaining to renegotiate the terms of Article 28.B.2, ORS 243.702(1), and to disclose the investigation report of the AA/EO office. The board did not order PSU to enter into collective bargaining over the terms of Article 28.B.2, but did order PSU to disclose the investigation report. Only the second grievance filed by the Association is at issue on judicial review.
[4] The Association argues that PSU failed to properly preserve this assignment of error. After reviewing the parties' arguments, we conclude that PSU adequately preserved this assignment of error and, therefore, consider the merits of PSU's argument.
[5] ORS 659A.030(1)(f) defines an unlawful employment practice as including discriminating against any employee because that employee filed a complaint under ORS chapter 659A.
[6] The dissent suggests that 14 Penn Plaza LLC v. Pyett, ___ U.S. ___, 129 S. Ct. 1456, 173 L. Ed. 2d 398 (2009), supports the proposition that, where an employer exercises its rights under the undisputed terms of an arbitration provision, the employer subjects the employee to a materially adverse consequence. See 240 Or.App. at 122, 246 P.3d at 1171 (Sercombe, J., dissenting) ("[T]he bargained-for collective right to grieve discrimination claims is a valuable one; axiomatically, a valuable right will be prized by a reasonable employee in the sense of protecting that right from loss."). We do not share that understanding of 14 Penn Plaza LLC, which holds that a contract to arbitrate disputes is enforceable. Here, where the parties agree that, under Article 28.B.2, they agreed to grieve under limited conditions, we are remanding to the board to determine whether Article 28.B.2 does something more. And, if so, whether that is materially adverse under the standard set forth in Burlington N. & S.F.R. Co. v. White, 548 U.S. 53, 64, 126 S. Ct. 2405, 165 L. Ed. 2d 345 (2006).
[7] The dissent criticizes our holding as unclear, asking whether we are holding that "loss of a grievance contract right is not `materially adverse'" or that the board must "engage in some factfinding on remand in order to apply the `appropriate standard.'" 240 Or.App. at 121, 246 P.3d at 1170 (Sercombe, J., dissenting). To be clear, the board erred in ordering PSU to submit to the grievance process because it applied the incorrect standard in determining whether Article 28.B.2 is unenforceable under 42 USC section 2000e-3(a). We reverse and remand so that the board may apply the correct standard as enunciated in Burlington. ORS 183.482(8)(a)(B). Cf. Nakashima v. Board of Education, 344 Or. 497, 185 P.3d 429 (2008) (concluding that the Board of Education applied an incorrect legal standard and remanding to the board to apply the correct standard). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2368550/ | 49 Md. App. 87 (1981)
430 A.2d 104
ROLAND I. HANNA ET UX.
v.
JAMES M. BAUGUESS ET AL.
No. 1080, September Term, 1980.
Court of Special Appeals of Maryland.
Decided June 4, 1981.
*88 The cause was argued before MOORE, MELVIN and MASON, JJ.
Philip V. Tamburello, for appellants.
Harry S. Shapiro, with whom was Marc H. Baer, on the brief, for appellees.
MOORE, J., delivered the opinion of the Court.
The appellants-lessees of real property improved by a furniture store sought specific performance by the appellee-lessor of an option in the lease which gave the lessees the right to purchase at the expiration of the fifth year. The option provided for a purchase price "arrived at by three independent realty appraisors [sic]." Finding uncertainty with respect to the determination of the price and the method of selection of the appraisers, the chancellor denied specific performance. We hold that specific performance should have been granted and shall reverse. We shall also vacate a judgment in the amount of $28,800 which was awarded to the appellee-lessor for unpaid rent subsequent to the date of the lessees' exercise of the option.
I
On April 6, 1973, James M. Bauguess, the appellee-lessor, and his former wife, Wanda,[1] entered into a lease agreement with Roland I. Hanna, and his wife, Gail, the appellants-lessees, for the lease of approximately two and one-half acres of land in Jarrettsville, Harford County, Maryland which was improved by a furniture store described as an A-frame block building approximately 120 feet by 60 feet in size.[2] At the time of the execution of the lease, the lessor and his wife were conducting a retail furniture business on the premises.
*89 The lease was a single page in length, and was prepared by the manager of a local bank. It contained nine numbered paragraphs with few detailed provisions. The term was five years, renewable for another five years. The monthly rental was $1150 for the first year and $1200 thereafter. Paragraph 3 contained the disputed option clause, as follows:
"3. At the expiration of the fifth year the Lessee may elect to continue payment of $1200.00 rental or exercise his option to purchase above stated property at price arrived at by three independent Realty appraisors [sic]."
The Hannas took exclusive possession of the premises under the lease on June 1, 1973, and began operating the furniture store. It was stipulated below that the rent was paid by the Hannas until the end of May of 1978 (the end of the five-year lease period) and nothing further has been paid since that time. The appellants, however, remain in possession.
Shortly after the Hannas took possession, and presumably in anticipation of purchasing the property pursuant to the option clause, they began making extensive improvements to both the furniture store and the land.[3] Mr. Bauguess testified that consent was given by him for the Hannas to black-top the store's parking lot and nothing more. The Hannas testified, in effect, that it was "understood" that any improvements which increased the value of the property were permissible and that Bauguess made periodic visits to the property at which times he observed and approved the various changes taking place. All of the improvements were completed by approximately September, 1976.
*90 The first mention of the Hannas' election to purchase the property occurred some time in 1976 in a conversation between Mr. Hanna and Mr. Bauguess. The substance of that conversation is disputed but, in any event, counsel for the Hannas notified Mr. Bauguess by certified letter dated February 13, 1978 that the Hannas were exercising their option to purchase the property pursuant to paragraph 3 of the lease.[4] It is undisputed that the appellee received the letter. Prior to the Hannas' election to purchase, Mr. Bauguess had filed lawsuits against them in November, 1976 and July, 1977. The first was an action for waste; the second was for ejectment.[5]
As for their financial ability to purchase the property, the Hannas had contacted a local bank, and its president, James Magness, as early as February 1978, to discuss a mortgage loan. Magness testified that although no formal application was made to the bank, and no loan commitment was given, he was very familiar with the property, the Hannas, and *91 their financial affairs because they had several accounts with the bank, and that financing would be available to the Hannas for the purchase of the property.
Subsequent to the Hannas' election to purchase, Bauguess left Maryland and could not be located. He testified that he was away from approximately April, 1978 to November, 1979. He did not respond to the letter of February 13, 1978, nor did he speak with the Hannas about it. No appraiser was ever appointed by Bauguess. While Bauguess was away, the Hannas, on May 3, 1978, filed the instant suit for specific performance and other relief. They also had the property appraised. The appraiser's report, dated March 15, 1979, stated that the fair market value on February 16, 1978 was $200,000, including the improvements made by the Hannas which he valued at $25,000.
In his answer to the amended bill of complaint, Bauguess admitted that a lease was executed but said that "said Lease was invalid and that it had been altered and modified without the authorization or consent of the Defendant." He denied that there was an option to purchase "since the Lease which created the said option was invalid." Bauguess also filed a cross bill of complaint seeking a monetary decree for unpaid rent, damages for waste, and an injunction to prevent further acts of waste.
In a Memorandum Opinion, dated May 27, 1980, the court dismissed the Hannas' amended bill of complaint and Bauguess' waste claim in the cross bill. With respect to the Hannas' suit for specific performance, the court concluded:
"On the basis of ... uncertainty in the method of selection of appraisers and the further uncertainty of the determination of the purchase price, this Court finds that the option does not establish the purchase price with sufficient clarity to permit a conclusion that the contract is definite in all its terms."
The court also entered a judgment for Bauguess in the amount of $28,800, representing accrued rent from June 1, *92 1978 to May 31, 1980. For reasons stated infra, we reverse the court's dismissal of the lessees' bill of complaint for specific performance. It necessarily follows that the $28,800 judgment for accrued rent granted in favor of the appellee is vacated.
II
The primary issue for our consideration is whether the option clause contained in paragraph 3 of the lease is sufficiently certain to permit a court of equity to grant specific performance. For convenient reference, we repeat its provisions:
"3. At the expiration of the fifth year the Lessee may elect to continue payment of $1200.00 rental or exercise his option to purchase above stated property at price arrived at by three independent Realty appraisors [sic]." (Emphasis added.).
We begin our analysis with several well-established principles of law dealing with the remedy of specific performance. In Boyd v. Mercantile-Safe Deposit and Trust Co., 28 Md. App. 18, 344 A.2d 148 (1975), Judge Davidson, speaking for this Court, said:
"The principles applicable to specific performance of contracts relating to the ownership and use of land have been well established in Maryland. The questions of whether specific performance of a contract relating to the ownership and use of land shall be decreed and what shall be the terms of the decree rest within the sound discretion of the equity court. The exercise of the court's discretion, however, must not be arbitrary and is controlled by established principles of equity. Where a contract for the sale of real estate is fair, reasonable and certain in all of the terms, it is as much the duty of a court of equity to decree specific performance as *93 it is for a court of law to award damages for breach of contract." (Emphasis added.) (Footnote omitted.)
Id. at 22, 344 A.2d at 152.
With respect to certainty of terms, the cases have held that contracts must be definite and free from all ambiguity. In Dixon v. Dixon, 92 Md. 432, 438, 48 A. 152, 153 (1901), the Court observed that the discretion afforded the courts in granting relief by specific performance "is one which is regulated by fixed and established rules. * * * The contract must be definite and certain in its terms and must be free not only from all ambiguity, but likewise free from all shade or color of ambiguity. * * * These terms include ... the price to be paid...." Accord, Applestein v. Royal Realty Corp., 180 Md. 274, 23 A.2d 684 (1941); Anshe Sephard Congregation v. Weisblatt, 170 Md. 390, 185 A. 107 (1936).
Notwithstanding the rather unequivocal pronouncements in the earlier cases, the courts in Maryland and elsewhere have come to interpret this language in a fashion which has permitted specific performance despite the presence of terms which might appear less than "certain." Thus, although price is an essential element in a contract for the conveyance of land, it has been held in this State that specific performance may be granted even though the exact price is not stated, provided the contract defines a method which renders the price readily ascertainable. In Foard v. Snider, 205 Md. 435, 109 A.2d 101 (1954), the Court of Appeals quoted approvingly the following language from 1 A. Corbin, Contracts § 98 (1963):
"An agreement is not unenforceable for lack of definiteness of price or amount if the parties specify a practicable method by which the amount can be determined by the court without any new expression by the parties themselves." (Emphasis added.)
Id. at 445, 109 A.2d at 105. Judge Hammond, later Chief Judge, also quoted in Foard the language of the Restatement of Contracts § 370, which appears in Trotter v. Lewis, 185 *94 Md. 528, 45 A.2d 329 (1946), a case involving, in part, the issue of definiteness as to the terms of an option:
"`Expressions that at first appear incomplete or uncertain are often readily made clear and plain by the aid of common usage and reasonable implications of fact. Apparent difficulties of enforcement due to uncertainty of expression may disappear in the light of courageous common sense.'"
See also Hagan v. Dundore, 185 Md. 86, 43 A.2d 181 (1945).
Accordingly, where a contract specifies that the price is to be measured by the "fair market value," "reasonable value" or "current market value," of the services or the property involved, courts have generally held that the price is sufficiently certain in order to have an enforceable obligation. Miller v. Bloomberg, 26 Ill. App. 3d 18, 324 N.E.2d 207, 208 (1975) (rehearing denied); Portnoy v. Brown, 430 Pa. 401, 243 A.2d 444, 447 (1968); Williston, Contracts, Vol. 1, § 41 (3rd ed. 1957); Annot., 2 A.L.R. 3d 701 (1965). In Hagan v. Dundore, supra, this general trend was recognized in Maryland in the context of a suit for the construction of a partnership agreement and for specific performance where the plaintiff was given an option to purchase defendant's interest in the partnership "for a sum not exceeding the book value of the share of the [appellant]." On this point, the Court of Appeals held:
"As to the price `for a sum not exceeding the book value of the share of the said James A. Hagan in said partnership. In the event the said Harry A. Dundore exercises his said option to purchase a part or parts of the interest of James A. Hagan, the sum or sums so paid by him to said James A. Hagan * * *', it is plain that this expression means that when the option is exercised if James A. Hagan will not accept less than the book value of his interest he must accept the full book value of that interest. *95 Similar expressions have been held certain enough to support specific performance in a number of cases." (Citations omitted.)
Id. at 96, 43 A.2d at 185. See Foard v. Snider, supra.
In at least one relevant out-of-state case involving the interpretation of the term "current market value," the Court's grant of specific performance was based, in part, on a holding that "the law recognizes in the area of enforceability of contracts the maxim, `id certum est quod certum reddi potest' (that is certain which can be made certain)." Portnoy v. Brown, supra, 243 A.2d at 447; and in Shayeb v. Holland, 321 Mass. 429, 73 N.E.2d 731 (1947), the court granted specific performance where an option clause to purchase real estate contained no reference whatsoever to the price. The Supreme Judicial Court of Massachusetts there stated:
"It is true that the option in question does not in terms provide for the determination of the price by any subsequent agreement. We think that the offer to sell in the present case should be reasonably understood to be an offer to sell for a fair and reasonable price. Otherwise, the offer would have no practicable value but would be a mere illusion or perhaps a snare to the unwary. In somewhat similar situations, the provisions in leases for a renewal of the term or for a sale of the demised premises have been held to imply a fair rental or price."
73 N.E.2d at 733.
In the instant case, the option clause does not specify a sale price, nor does it provide that the property be measured by "current market value," "reasonable value" or other similar terms. In our view, however, there is no just reason for an approach to the issue in this case different from that manifested in the cases previously cited. Here, the price "arrived at by three independent realty appraisers" would *96 perforce be the fair market value of the property at the time the option was to be exercised. See generally, Annot., 167 A.L.R. 727 (1947); 71 Am.Jur.2d Specific Performance § 40 (1973); 5A A. Corbin, Contracts § 1174 (1964). But see Griffith v. Frederick County Bank, 6 G & J 424 (1834); Milnes v. Gery, 14 Ves Jr 400, 33 Eng Reprint 574, 6 Eng Rul Cas 684 (1807). The option clause itself, therefore, provided a practical method by which the price could be determined; and it should not be overlooked that the understanding of the parties, according to the uncontradicted testimony of Mrs. Hanna, was that the average of the three appraisals would be determinative.[6]
We do not think that the absence of a specified method by which the appraisers were to be selected is critical. In this respect, the suggestion made by the Hannas' counsel in his letter dated February 13, 1978, that each of the parties select an appraiser, and the two thus chosen select a third, was in accordance with time-honored practice. On remand, the court is free to prescribe the method by which the appraisers are to be selected either by the parties themselves or by the court, in its own discretion.
III
It follows that the judgment in the amount of $28,800 against the appellants for rent due from June 1, 1978 through May 31, 1980 should be stricken. The relationship of the parties, upon the termination of the lease on May 31, 1978 and the exercise of the option, became that of vendor-vendee and rent was no longer due. Young v. Cities *97 Service Oil Co., 33 Md. App. 315, 319-20, 364 A.2d 603, 606 (1976).
Decree dismissing appellants' amended bill of complaint reversed; judgment for appellee in the amount of $28,800 reversed; case remanded for further proceedings consistent with this opinion; costs to be paid by appellee.
NOTES
[1] Appellee's former wife transferred all her interest in the subject property to the appellee by quit-claim deed in 1975 and is not a party to this appeal.
[2] Mr. Bauguess had constructed the store in compliance with a covenant in the deed from his grantor.
[3] The Hannas, through the work of private contractors insulated the walls and ceiling, panelled the walls, installed a lighting system, advertising signs, an interior partition wall, six wall air-conditioners, a carpet, and electrical receptacles. They also tiled the bathroom, constructed a new loading dock, black-topped the parking lot, and extended the retail area of the store by enclosing the front porch. With respect to the improvements to the land, they leveled and seeded the front and back yard, and placed a baseball diamond on one end of the property. Several large trees were cut down.
[4] The full text of the letter was as follows:
"This is to advise that Mr. and Mrs. Roland I. Hanna are hereby exercising their option to purchase the above described property as provided in said lease and in particular paragraph three thereof.
In as much as the lease does not provide for a purchase price, but does state that the purchase price will be determined by three independent real estate appraisers, I suggest that you select an appraiser, that the Hanna's select an appraiser and that the two appraisers select a third appraiser for the purpose of arriving at a fair market value as of this date.
If you have any further questions regarding this matter, please do not hesitate to contact me.
Yours truly,
/s/ Philip V. Tamburello."
[5] On November 23, 1976, Bauguess filed an action for waste against the Hannas in the Circuit Court for Harford County (law case No. 9932). The court (Higinbothom, J.) granted the Hannas' demurrer with leave to the plaintiff to amend. The waste case was stayed, by Order dated January 23, 1980, pending final determination of the instant specific performance suit.
The action of ejectment was filed July 11, 1977 in the District Court for Harford County and subsequently transferred to the Circuit Court. Bauguess sought $2,400.00 for alleged arrearages representing two months unpaid rent. The docket entry states that the Hannas' Motion for Summary Judgment was granted by Order filed on January 23, 1980, and that "Motion to Strike Amended Declaration granted without prejudice, to the right of pltf. to file new Amended Declaration." This confused state of the pleadings is not before us. We do not consider it.
[6] There is present here no issue concerning financing or the terms of the financing. Cf. Imas Gruner & Associates, Ltd. v. Stringer, 48 Md. App. 364, 427 A.2d 1038 (1981). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1256750/ | 480 P.2d 900 (1971)
94 Idaho 54
AMERICAN SILVER MINING COMPANY, an Idaho corporation, Plaintiff-Appellant,
v.
COEUR D'ALENE MINES CORPORATION, an Idaho corporation, Defendant-Respondent.
No. 10368.
Supreme Court of Idaho.
February 8, 1971.
*901 William A. Reagan, Coeur d'Alene, D.L. Holland, John A. Frankovich and R. Lewis Brown, Jr., Butte, Mont., for plaintiff-appellant.
James P. Keane, William F. Boyd, Kellogg, and Dennis E. Wheeler, Wallace, for defendant-appellee.
SHEPARD, Justice.
This case involves the interpretation of a contract, wherein one mining corporation agreed to explore the property of another mining corporation and receive one-half of the ore discovered as a result of such exploration. The parties entered into the contract in 1946, and in 1965, plaintiff-appellant gave notice that it was rescinding the contract. Plaintiff-appellant thereafter brought a quiet title action to remove any cloud upon the title to the property which might have resulted from the contract and defendant's explorations. The trial court found for the defendant, and plaintiff appeals. We affirm.
Plaintiff-appellant primarily assigns error in various findings and conclusions of the trial court as being unsupported by the evidence and we are therefore required to discuss the factual happenings during the period of 1946-1965 as revealed by the evidence.
In 1946, the defendant-respondent (hereinafter Coeur d'Alene Mines) owned mining claims in what is commonly known as the "Coeur d'Alene Mining District" in Shoshone County, Idaho. This area has a long history of mining activity and exploration. Some of such exploration has resulted in fantastically successful mining strikes and there have been and still are a number of successful and profitable mining operations being carried on. Most of such operations are conducted at considerable *902 depths underground, some of them as deep as 7,000 feet.
Adjoining the mining property of Coeur d'Alene Mines on the south was and is the mining claim of plaintiff-appellant (hereinafter American Silver). To the south of the American Silver property is the mining claim of Silver Standard, and south of that property is the mining claim of Coeur d'Alene Consolidated Silver-Lead Mine. Contracts with all three of said corporations were entered into by Coeur d'Alene Mines, which in general provided for the exploration of those corporations' properties. Only the contract between American Silver and Coeur d'Alene Mines is at issue herein.
In 1946, Coeur d'Alene Mines had on its property a shaft 2,400 feet in depth, together with surface buildings and implements necessary to operate a producing mine. It was proposed that Coeur d'Alene Mines would continue sinking its shaft to a depth of 2,800 feet and then drive a crosscut horizontally into the mining claims of the other mining companies. The contract between the parties hereto provided that any ore found upon or within the claims of American Silver would be divided equally between the parties. However, if Coeur d'Alene Mines were to abandon the contract, it would receive only 10 per cent of the ore so discovered. In addition, Coeur d'Alene Mines would do all the necessary assessment work on the properties it was exploring.
Assessment work is "(t)he labor or improvements that a miner is required to perform or make upon his unpatented claim in order to prevent its appropriation by others, and thus maintain his right to possession * * *". The American Law of Mining, Volume 2, § 7.1 at 101. The purpose of assessment work is to assure good faith and diligence and thus prevent a claimant from locating numerous mining claims and then holding such claims without working them, preventing others from developing the property. Chambers v. Harrington, 111 U.S. 350, 4 S.Ct. 428, 28 L.Ed. 452 (1884). See also Udall v. Oil Shale Corp., 406 F.2d 759, 761 (10th Cir.1969), cert. granted sub nom. Hickel v. Oil Shale Corp., 396 U.S. 817, 90 S.Ct. 77, 24 L.Ed.2d 68 (1969); Note, "Annual Assessment Work as Notice to Prospectors," 6 Utah L.Rev. 391 (1959). Such assessment work is required in the State of Idaho by virtue of I.C. §§ 47-606, 47-618 and 47-619. These provisions merely supplement the federal statutory provisions which require such work. 17 Stat. 92 (1872), 30 U.S.C. § 28 (1958).
During the years in question, Coeur d'Alene Mines did sink its shaft the additional 400 feet and did drive the crosscut in the direction of and into the American Silver claims at the 2,800 foot level. In addition, crosscutting and other tunneling were performed within the vertical boundaries of the Silver Standard property and the Coeur d'Alene Consolidated Silver-Lead Mines. From the crosscut shafts certain veins of ore were found and explored. In addition, certain diamond drilling was performed. Assessment work was performed by Coeur d'Alene Mines on the properties of the other corporations and proofs of labor were filed. The assessment work by Coeur d'Alene Mines was continued up to the time of the initiation of this suit.
In May of 1953, the parties to the 1946 contracts entered into a new agreement with Polaris Mining Company. Under that 1953 contract the previous 1946 contracts were to be held in abeyance and to return to full force and effect at such time as Polaris might abandon or surrender the 1953 contract. Polaris, a subsidiary of Hecla Mining Company, was thereafter merged into Hecla and on June 3, 1960, Hecla abandoned and surrendered the 1953 agreement. At the time of the Hecla abandonment of its contract, the facilities of Coeur d'Alene Mines were not in condition for continued operation and Coeur d'Alene Mines sued Hecla therefor and received a judgment in the amount of approximately $129,000.00.
*903 In 1964, Coeur d'Alene Mines entered into another agreement with American Smelting & Refining Company which allowed that company the use of Coeur d'Alene Mines' shaft and the ground workings.
The parties hereto shortly thereafter fell into disagreement over the terms of the 1946 contract between themselves and American Silver filed this action. American Silver contended that the contract terms were uncertain and ambiguous; that the contract required Coeur d'Alene Mines to explore all of American Silver's property, not merely at the 2,800 foot level; that the 2,800 foot level had not been thoroughly explored as required by the contract; that the contract had been abandoned by Coeur d'Alene Mines; that American Silver had not been benefited by the exploration work done by Coeur d'Alene Mines; that the contract of August 31, 1964 between Coeur d'Alene Mines and American Smelting & Refining Company violated the 1946 contract between the parties hereto; and that Coeur d'Alene Mines was not entitled to any interest in any of the commercial ore discovered by virtue of the work of Coeur d'Alene Mines or others under the 1946 contract. The trial court made findings contrary to American Silver's allegations and entered judgment for Coeur d'Alene Mines. These findings are assigned as error as not being supported by the evidence and thus not supportive of the judgment.
It should be first stated that upon appeal
"We approach this case with full recognition of the long established rule of this court that our province is to examine the record in the light most favorable to the judgment and that when findings of the trial court are supported by competent substantial evidence they are binding and conclusive on appeal." Olsen v. Hawkins, 90 Idaho 28, 408 P.2d 462 (1965)
Thus, even though there might well be conflicting evidence presented to the trial court, so long as there is competent and substantial evidence which will support the findings, such findings must be sustained. Clayton v. Jones, 91 Idaho 87, 416 P.2d 34 (1966).
We consider first the contention of American Silver that Coeur d'Alene Mines was to explore more of American Silver's property than the 2,800 foot depth area. The contract must be taken as the best evidence of the intentions of the parties. That contract speaks first of the existence of the 2,400 foot shaft of Coeur d'Alene Mines and then states:
"Although extensive exploration work has been done in and upon the claims owned by the party of the second part [American Silver] none of such work has been done at a depth which is comparable to the depth of the first party's [Coeur d'Alene Mines] shaft and other underground workings * * *."
The contract further states:
"The second party's ground could be advantageously and economically explored and developed at depth from and to the openings of the property of the first party * * *." (Emphasis added)
And that, therefore
"The party of the first part hereby agrees that it will drive a crosscut from its shaft in a southwesterly direction * * * such crosscut to be of sufficient length to permit the exploration therefrom of any and all veins or vein systems which may be found to exist * * *. It is understood and agreed that the aforementioned crosscut shall be driven by the party of the first part from its said 2800 foot level * * *."
The contract itself provides ample support to the finding of the trial court that the intention of the parties was to explore the property of American Silver at the 2,800 foot level and we reject the assertion of American Silver, as did the trial court, that all levels of the property were to have been explored and, particularly, we do so in view of the foregoing recital that "extensive exploration work" had been done *904 by American Silver on other levels of its property.
American Silver then contends that even if the above construction of the contract is correct, it was error for the court below to find that the 2,800 foot level of American Silver's property had been thoroughly explored within the meaning of the contract. In support thereof American Silver cites testimony by its witnesses that the exploration should have been performed in a different manner. However, other expert witnesses who were called by Coeur d'Alene Mines testified that the property had been correctly explored. The contract itself appears to have specifically recognized the importance of the economic factor in the minds of the parties regarding the contemplated exploration work. The contract further specifically stated that the exploration would be under the direction and supervision of Coeur d'Alene Mines and that the "decision as to character of such exploration work and extent thereof shall rest with the party of the first part [Coeur d'Alene Mines]."
Coeur d'Alene Mines points to the following facts established at trial: that it did sink its shaft an additional 400 feet in depth and drove the crosscut into the claims of American Silver and further performed 8,500 feet of crosscutting and drifting within the vertical boundaries of the American Silver property. Also, Coeur d'Alene Mines performed 6,219 feet of diamond drill work within the vertical boundaries of American Silver. Additional work was performed in exploring the so-called "Siderite Vein" which was claimed by Coeur d'Alene Mines, but at the 2,800 foot level was located within the vertical boundaries of American Silver property. Coeur d'Alene Mines further performed 3,570 feet of drifting and crosscutting and 7,984 feet of diamond drilling within the vertical boundaries of the Silver Standard property, however in an area where American Silver claimed ownership of ore by reason of extralateral rights. During the time of the existence of the Polaris contract, there was 2,700 feet of drifting and crosscutting and 3,270 feet of diamond drilling within the vertical boundaries of American Silver. Also, during the time of the Polaris contract, 3,700 feet of drifting and crosscutting and 6,800 feet of diamond drilling took place within the vertical boundaries of the Silver Standard property, however within an area where American Silver claimed ownership by reason of extralateral rights.
Coeur d'Alene Mines also points to the following facts established at trial: that Coeur d'Alene Mines expended $442,298.70 within the area of American Silver's vertical boundaries and $259,462.85 in area wherein American Silver claimed extralateral mineral rights; that American Smelting & Refining Company, as the agent of Coeur d'Alene Mines, expended $293,185.00 primarily for shaft expenditures in the Coeur d'Alene Mines' shaft. It will be recalled that Coeur d'Alene Mines was required by the terms of the 1946 agreement to do the assessment work on the American Silver claims. It had been agreed between the parties that the assessment work requirement on American Silver's property could be met and satisfied by work done in the Coeur d'Alene Mines shaft, since that work was presumably done for the benefit of all the mining claims. Therefore, to some extent, the moneys expended on the Coeur d'Alene Mines shaft and facilities must be construed as having benefited American Silver.
American Silver contends certain areas within the limits of the American Silver properties were not explored. While such was a fact established at the trial, the reasons for the lack of exploration of the particular areas varied considerably as between the witnesses testifying for Coeur d'Alene Mines and the witnesses testifying for American Silver. There was sharp disagreement between such witnesses as to the directional trends of potential veins and the significance, or lack thereof, of the existence of bleached rock. It is sufficient to say that the lack of probability of significant mineral discovery in the areas *905 which were not explored was the subject of sharp disagreement between witnesses of Coeur d'Alene Mines as contrasted with the witnesses of American Silver.
The evidence indicated that the exploration work carried out by Coeur d'Alene Mines resulted in the discovery of certain vein structures. Some of these veins, such as the North Vein and the Siderite Vein, although located within the boundaries of American Silver, were claimed by Coeur d'Alene Mines under extralateral rights. Vein structures denominated "A," "B" and "C" were discovered within the Silver Standard ground but were claimed by American Silver as being within their extralateral rights area. Also discovered through the exploration was the Wire Silver Vein, which was located at or near the boundary line of American Silver and Silver Standard and which vein was claimed by both American Silver and Silver Standard. In contrast with the above work performed by Coeur d'Alene Mines or its agent, American Silver's only testimony was that from 1946 to 1966 it expended approximately $2,000.00 for development of its property.
We hold therefore that there was ample evidence upon which the trial court could base its findings of fact that the 2,800 foot level of American Silver's property had been explored by Coeur d'Alene Mines in conformity with its duties under the 1946 contract. Although the evidence thereon was at times sharply conflicting, the resolution of such conflict in the testimony is for the trier of the fact, in this case the trial court.
The trial court held that since there was no breach of the contractual duty on the part of American Silver to thoroughly explore the 2,800 foot level of American Silver's property, American Silver was not entitled to rescind the 1946 contract because of Coeur d'Alene Mines breach. Both parties concede the law to be that, in rescission, the party seeking to rescind must restore the other (in this case Coeur d'Alene Mines) to the status quo. American Silver, however, contends that it is not subject to that rule since the performance by Coeur d'Alene Mines has conferred no benefit upon American Silver.
As hereinbefore pointed out, Coeur d'Alene Mines performed the necessary assessment work on American Silver's property, thereby preserving its rights to its unpatented claims. That work took place between the years 1946 to 1953 and 1960 to 1967. Although there was again sharp conflict in the testimony of expert geologists, the trial court concluded that American Silver learned a great deal more about the geology of its property and was benefited by the discovery of new veins previously unknown. Testimony, although contraverted, also indicated a substantial enhancement of the value of American Silver's property as a result of the exploration work and the discovery of the vein structures.
We hold therefore that there was ample and sufficient evidence supporting the trial court's findings of fact that the exploration work conferred a benefit on American Silver.
We turn now to the contention of American Silver that Coeur d'Alene Mines has abandoned the contract. We have herein affirmed the correctness of the trial court's holding that Coeur d'Alene Mines was only required to explore the property of American Silver at the 2,800 foot level and that such level was explored within the meaning of the contract. Hence, as to that portion of the contractual duties of Coeur d'Alene Mines, there was no "abandonment" of the contract. Mr. Wafford Conrad, an officer of American Silver, testified that he had negotiated the Polaris contract of 1953 on behalf of American Silver. That contract recited that Coeur d'Alene Mines had performed extensive exploration work in American Silver's property and that Coeur d'Alene Mines had fully complied with all of the terms, conditions and work requirements of the 1946 contract. Conrad also testified that he did not contend that the 1946 contract was *906 void prior to 1953. The period 1953 to 1960 can have no significance in the dispute between the parties hereto since it was agreed by all parties in the 1953 Polaris agreement that the 1946 contract was to be held in abeyance and inoperative, so long as the Polaris contract remained in effect.
Following Hecla's abandonment of the Polaris contract in June of 1960, Coeur d'Alene Mines has done no work underground within the vertical boundaries of American Silver's property, nor in any property in which American Silver has claimed extralateral rights. During the period 1960-1967, Coeur d'Alene Mines work consisted of work within its shaft and own workings and assessment work performed on the surface of American Silver's property. As hereinbefore mentioned, American Silver has stipulated that Coeur d'Alene Mines work on its own shaft would be deemed sufficient to satisfy the annual assessment requirements on American Silver's property.
Abandonment is a matter of intent with corresponding conduct and may be shown by surrounding facts and circumstances. Union Grain and Elevator Co. v. McCammon Ditch Co., 41 Idaho 216, 240 P. 443 (1925). The trial court held that the conduct of Coeur d'Alene Mines was inconsistent with an intent to abandon, and based on the foregoing facts we find no error in that finding of the trial court, nor in its conclusion that Coeur d'Alene Mines had not abandoned the 1946 contract.
This brings us to the contention of American Silver that the 1964 contract entered into between Coeur d'Alene Mines and American Smelting & Refining Company (hereinafter Asarco) constituted a breach of the 1946 contract between the parties hereto. American Silver contends that under the 1946 contract American Silver was to have the right to use certain of Coeur d'Alene Mines facilities to continue exploration or mining in its [American Silver's] property if it should desire to do so when Coeur d'Alene Mines discontinued its exploration.
The trial court determined that under the terms of the 1964 Asarco contract, which was "subject to the terms of the * * * agreement dated May 23, 1946 between Coeur d'Alene and American Silver Mining Company," such contract constituted neither a breach nor abandonment of the 1946 contract. It should be pointed out that American Silver is not a party to the 1964 Asarco contract. The trial court further found that since the Asarco contract was "subject to" the terms of the 1946 contract, Coeur d'Alene Mines intended to and could transfer to Asarco only such rights as remained in Coeur d'Alene Mines following the execution of the 1946 agreement. Under that 1946 agreement, Coeur d'Alene's shaft could be used in the following priorities: first by Coeur d'Alene Mines in exploring or mining its own properties; and secondly, by American Silver for exploring or mining in American Silver's property; and thirdly, by Coeur d'Alene Mines for exploring or mining in properties other than its own. The trial court held that Asarco's usage of the shaft could not interfere unnecessarily with American Silver's right of use and that American Silver's rights under the 1946 contract were not impaired or rendered impossible by the Asarco contract. The Asarco contract adequately supports the findings and conclusions of the trial judge in holding that that contract constituted neither abandonment nor breach of the 1946 contract.
It is agreed by the parties hereto that American Silver has made no tender to Coeur d'Alene Mines to restore the parties to the status quo. We have affirmed the findings of the trial judge that there has been no breach or abandonment of the 1946 contract and therefore American Silver is not entitled to rescind without restoration of Coeur d'Alene Mines to the status quo. The trial court further found that Coeur d'Alene Mines by virtue of the 1946 contract and the work done thereunder *907 is the owner of a one-half undivided interest in any commercial ore found in the vein system discovered by its work done under the 1946 contract.
Judgment affirmed. Costs to respondent.
McQUADE, C.J., and McFADDEN, DONALDSON and SPEAR, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1795580/ | 974 So. 2d 1074 (2008)
MOORE
v.
STATE.
No. 2D07-5632.
District Court of Appeal of Florida, Second District.
January 16, 2008.
Decision without published opinion. Hab.Corp.denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2368901/ | 795 S.W.2d 326 (1990)
Danny WARNER, Appellant,
v.
Krishna SUNKAVALLI, M.D., M.L. Smith, M.D., and Hamlin Memorial Hospital, Appellees.
No. 11-89-230-CV.
Court of Appeals of Texas, Eastland.
August 30, 1990.
Aubrey Roberts, Moore, Dickson, Roberts & Ratliff, Inc., Sweetwater, for appellant.
Timothy D. Yeats, Jack N. Little, Little, Palmer & Williams, Big Spring, Roger L. Glandon, Glandon, Erwin, Scarborough, Baker & Choate, David R. Cobb, McMahon, Smart, Surovik, Suttle, Buhrmann & Cobb, Abilene, for appellees.
OPINION
DICKENSON, Justice.
A former patient, Danny Warner, sued two doctors[1] who operated on him on January 9, 1985, and the hospital[2] where the operation was performed, alleging medical malpractice.[3] The two doctors and the hospital moved for summary judgment based upon limitations since the lawsuit was not filed until November 2, 1987. The patient responded to the summary judgment motions by claiming that the statute of limitations was tolled by the "discovery rule." After the summary judgment hearing the trial court granted leave for the patient to file an amended petition urging "fraudulent concealment." The trial court subsequently granted the three motions for summary judgment, and the patient appeals. We affirm as to the hospital, but we reverse and remand as to the two doctors.
Points of Error
Appellant has briefed three points of error. He claims the trial court erred in granting the three motions for summary judgment because: (Point One) there is a genuine issue of material fact as to whether the physician-patient relationship continued until November 29, 1987, which he argues would make the suit timely filed; (Point Two) there is a genuine issue of *327 material fact as to whether the doctors and hospital fraudulently concealed the fact that all of the gallstones had not been removed; and (Point Three) the statute of limitations did not commence to run until the patient discovered the malpractice, relying upon the "discovery rule."
Relevant Summary Judgment Proof
The patient filed an affidavit in response to the motions for summary judgment which reads in part as shown:
On January 9, 1985, I was operated on by Hamlin Clinic Doctors, Dr. Krishna Sunkavalli, M.D. and Dr. M. L. Smith, for removal of my gallbladder at the Hamlin Memorial Hospital, Hamlin, Jones County, Texas. After I was discharged on January 15, 1985, I continued to suffer with abdominal pains and was admitted into the Hamlin Memorial Hospital on January 25, 1985 for observation and was told at that time by both Dr. Sunkavalli and Dr. Smith that I was suffering from a condition that happens following gallbladder surgery called "phantom pain", which they described as being like false labor pains.
On November 29, 1985, I went to the Hamlin Clinic, a part of Hamlin Memorial Hospital, with severe abdominal pains, and Dr. Sunkavalli refused to see me. I sat in the Hamlin Clinic for 45 minutes and no one would see or help me. I left the clinic and it was not until after I had surgery on December 10, 1985 that I learned or discovered I still had gallstones that were not removed by Dr. Sunkavalli, Dr. Smith, Hamlin Clinic or Hamlin Memorial Hospital.
The medical records from Hamlin Memorial Hospital include a "Record of Operation" dated 1-9-85 which shows that a cholecystectomy was performed on Danny Warner by K.K. Sunkavalli, M.D., surgeon, and M.L. Smith, M.D., assistant. Those medical records also contain a "Report of Roentgenographic Examination" dated 1-10-85 and signed by Wayne V. Ramsey, M.D., which states:
Operative cholangiogram shows multiple filling defects in the common duct, one in the distal without passage of the opaque media into the small bowel. These therefore presume to be stones.
Second film shows a tiny amount in the small bowel and less evidence of filling defect but the technique due to the patient's size is such that small stones cannot be ruled out. (Emphasis added)
The medical records from the Methodist Hospital in Lubbock contain operative notes showing that T.L. West, M.D., operated on Danny Joe Warner on December 10, 1985, and that "two large common duct stones" were removed.
First Point of Error
The first point of error does not concern the hospital, and it becomes moot as to the two doctors in view of our holding on the second point of error.
Fraudulent Concealment
There is no summary judgment proof of any fraudulent concealment by the hospital, and the second point of error is overruled as to the motion for summary judgment filed by the hospital.
The case is more difficult as to the two doctors. When the trial court permitted the patient to amend his pleadings to allege fraudulent concealment after the summary judgment hearing, that issue was then in the case for appellate review under Tex.R. Civ.P. 166a because that amended pleading was "filed thereafter and before judgment with permission of the court."
The Supreme Court discussed the relevant statute of limitations[4] in Borderlon v. Peck, 661 S.W.2d 907 at 908 (Tex.1983):
*328 Fraudulent concealment is based upon the doctrine of equitable estoppel. In the proper case, invocation of fraudulent concealment estops a defendant from relying on the statute of limitations as an affirmative defense to plaintiff's claim. Where a defendant is under a duty to make disclosure but fraudulently conceals the existence of a cause of action from the party to whom it belongs, the defendant is estopped from relying on the defense of limitations until the party learns of the right of action or should have learned thereof through the exercise of reasonable diligence.
Because the physician-patient relationship is one of trust and confidence, Texas recognizes a duty on the part of the physician to disclose a negligent act or fact that an injury has occurred. Failure to disclose in such situations constitutes fraudulent concealment which will prevent the wrongdoer from perpetrating further fraud by using limitations as a shield.
* * * * * *
We hold, therefore, that Article 4590i, section 10.01 [see footnote 4] does not abolish fraudulent concealment as an equitable estoppel to the affirmative defense of limitations under that statute.
Our holding does not imply a right of recovery by [the patient]. It merely permits [him] to present evidence, which, if believed, would estop [the doctors] from pleading limitations as a bar to [his] claim for relief. (Citations omitted, Emphasis added)
The patient has the burden of supporting his allegation of fraudulent concealment with summary judgment proof "raising a fact issue." Nichols v. Smith, 507 S.W.2d 518 at 520 (Tex.1974); Rhodes v. McCarron, 763 S.W.2d 518 at 524 (Tex.App.- Amarillo 1988, writ den'd).
In reviewing a summary judgment, we must consider all evidence favorable to the non-movant as true; we must indulge every reasonable inference in the non-movant's favor; and we must resolve any doubt in favor of the non-movant. MMP, Ltd. v. Jones, 710 S.W.2d 59 at 60 (Tex. 1986); Nixon v. Mr. Property Management Company, Inc., 690 S.W.2d 546 at 548 (Tex.1985).
We hold that the "Report of Roentgenographic Examination" which is dated January 10, 1985, and which came from the medical records of Hamlin Memorial Hospital, considered with the patient's complaints when he was readmitted to the hospital on January 25, 1985, is circumstantial evidence from which a jury could believe the two doctors knew that gallstones were still in the patient's body when both of them told him that he was "suffering from a condition that happens following gallbladder surgery called `phantom pain'." This is sufficient to "raise the issue" of fraudulent concealment under the summary judgment rules of review. Consequently, the second point of error is sustained insofar as it challenges the doctors' motions for summary judgment.
The Discovery Rule
The third point of error is overruled because the Supreme Court held in Morrison v. Chan, 699 S.W.2d 205 at 207 (Tex.1985), that the special statute of limitations for medical malpractice claims is constitutional except for those situations in which it cuts off a patient's right to sue "before the person has a reasonable opportunity to discover the wrong and bring suit." The Supreme Court also held in Morrison v. Chan, supra at 208:
[T]he Legislature's intent in passing Art. 4590i, § 10.01 was to abolish the discovery rule in cases governed by the Medical Liability Act.
See also Kimball v. Brothers, 741 S.W.2d 370 (Tex.1987); Cestro v. Medina, 781 S.W.2d 640 at 642 (Tex.App.-Eastland 1989, no writ); Miller v. Providence Memorial Hospital, 690 S.W.2d 335 (Tex.App.- Eastland 1985, writ ref'd n.r.e.).
The patient in the case before us waited more than a year after discovery of his claim before filing suit. The special *329 statute of limitations is not unconstitutional in abolishing the "discovery rule" as to him because he had "a reasonable opportunity to discover the wrong and bring suit." Morrison v. Chan, supra. Consequently, the only basis upon which he can hope to avoid limitations is if the jury accepts his claim that the two doctors actually knew that they had left the gallstones in him when they both assured him that the problem was only "phantom pain."
Appellate Ruling
The summary judgment of the trial court is affirmed insofar as it ordered that Danny Warner take nothing against Hamlin Memorial Hospital.[5] The summary judgment of the trial court is reversed insofar as it ordered that Danny Warner take nothing against Krishna Sunkavalli, M.D., and M.L. Smith, M.D., and those causes of action are remanded to the trial court.
Affirmed in part; reversed and remanded in part.
NOTES
[1] Krishna Sunkavalli, M.D., performed the surgical procedure and was primarily responsible for the patient's postoperative care. M.L. Smith, M.D., assisted in the surgery and also saw the patient in the hospital.
[2] Hamlin Memorial Hospital is owned and operated by Hamlin Hospital District, a governmental entity. See Tex.Rev.Civ.Stat. art. 4494q (Vernon 1976).
[3] The patient also sued Hamlin Clinic, but those claims have been severed and are now pending in a separate lawsuit.
[4] TEX.REV.CIV.STAT.ANN. art. 4590i, § 10.01 (Vernon Supp.1990) which states:
Notwithstanding any other law, no health care liability claim may be commenced unless the action is filed within two years from the occurrence of the breach or tort or from the date the medical or health care treatment that is the subject of the claim or the hospitalization for which the claim is made is completed; provided that, minors under the age of 12 years shall have until their 14th birthday in which to file, or have filed on their behalf, the claim. Except as herein provided, this subchapter applies to all persons regardless of minority or other legal disability.
[5] The hospital district is also entitled to summary judgment because it did not receive notice of the patient's claim within six months after he learned of his cause of action. See TEX.CIV. PRAC. & REM.CODE ANN. § 101.101 (Vernon 1986). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2369041/ | 795 S.W.2d 532 (1990)
William A. GEE, Appellant,
v.
BELL PEST CONTROL and National Union Fire Insurance Company, Respondents.
No. WD 42912.
Missouri Court of Appeals, Western District.
July 24, 1990.
Motion for Rehearing and/or Transfer Denied August 28, 1990.
Application to Transfer Denied October 16, 1990.
*533 Thomas E. Thompson of Stoup & Thompson, Kansas City, for appellant.
Randa Rawlins and Jill Frost of Niewald, Waldeck, Norris & Brown, P.C., Kansas City, for respondents.
Before TURNAGE, P.J., and MANFORD and BERREY, JJ.
Motion for Rehearing and/or Transfer to Supreme Court Denied August 28, 1990.
MANFORD, Judge.
This is a direct appeal from a ruling by the Missouri Labor and Industrial Relations Commission which denied worker compensation benefits. The ruling is reversed and the cause remanded with instructions.
Appellant presents four points on appeal which, in summary, charge the Commission erred in reversing the award of benefits because (1) the facts found by the Commission did not support the award, (2) there was not sufficient competent evidence on the record to warrant the making of the award, (3) the Commission acted without or in excess of its powers, and (4) expert testimony relating to appellant's blood alcohol content was inadmissible as it was based on hearsay evidence, speculation and conjecture.
*534 Commissioner Hannelore D. Fischer wrote the majority opinion for the Commission. Commissioner Robert L. Fowler filed a dissenting opinion. The Commission found that Mr. Gee's blood alcohol content supported the conclusion that claimant was so intoxicated that he could not physically or mentally engage in his employment. The Commission further opined that public policy did not allow them to condone an award of benefits to an individual whose intoxicated state caused his own injuries. The Commission further found that Mr. Gee had deviated from his path of duty to conduct personal business and, thus, was outside the course and scope of his employment.
William Gee was employed by Bell Pest Control Company ("Bell Pest") beginning in mid-June of 1986. He was employed as a service technician and his duties included treating homes for bugs as well as calling on prospective customers in order to sell them regular bug or termite treatment for their home or commercial space. To complete these tasks, a truck was provided to Mr. Gee by Bell Pest. Mr. Gee, as well as all other technicians employed by Bell Pest, was offered commissions as an incentive to sell bug and termite treatments to customers.
When Mr. Gee was hired by Bell Pest, his work would take him to many different job sites in the Kansas City area. Each day, Mr. Gee would receive a certain number of tickets which would give the location of the site to be treated. In one day he might travel to Lee's Summit, Blue Springs, and Grain Valley, Missouri and then over to Overland Park, Kansas. Mr. Gee would typically work six days a week, but the hours during the day would sometimes vary because Bell Pest technicians would treat business locations during the hours when they were closed.
Mr. Gee was encouraged by Bell Pest management to sell bug and termite treatments. He was to solicit new jobs and orders after he had finished his assigned treatment tasks. Technicians were encouraged by Bell Pest management to solicit new accounts from their friends because these were the easiest accounts to sell. Mr. Gee was never given a set territory by Bell Pest. He was never given formal instruction as to the servicing or selling of accounts because he had plenty of past experience. He had previously worked for a pest control company in the Lake Perry, Lawrence, and Ozawkie, Kansas areas. Bell Pest's territory ranged from Odessa to Excelsior Springs to Harrisonville, Missouri and from Spring Hill to Olathe to Bonner Springs, Kansas, and all of Wyandotte and Johnson Counties. Mr. Gee was never informed of any company policies regarding the use of alcohol on the job.
On Saturday, November 22, 1986, Mr. Gee reported for work at Bell Pest, located in Independence, Missouri, at approximately 8:00 a.m. He picked up his job tickets for the day and proceeded to his first job in Independence, Missouri. He then went back to Bell Pest, contacted his next customer, and proceeded to the work site in Lee's Summit, Missouri, where he performed a flea eradication. He finished at approximately 1:00 p.m.
Mr. Gee then went to his home to eat lunch, shower, and change into a fresh uniform. He ate a sandwich and drank a can of beer while at home. He left his home and went to a gas station to fill up with gas and check his oil. From the gas station, he headed to Lake Village, outside of Lake Perry, Kansas in order to give an estimate on a termite job to Mr. and Mrs. Craven, who were friends of his. He arrived at Lakeside Village around 4:00 p.m., and went to the Craven house. No one was at the house at the time, so he left and came back at approximately 4:30 p.m. Mrs. Craven answered the door and Mr. Gee told her he was there to check on a termite job for her home which he had previously discussed with her husband. He then went about his business of estimating the amount of a termite eradication for the Cravens' home. While estimating the job, Mr. Gee drank a beer. He drew a rough diagram of the home and the areas to be treated, and quoted to Mrs. Craven a price of $225.00 for termite and flea eradication. Mrs. Craven gave Mr. Gee a check *535 for $225.00. Mr. Gee left between 5:30 and 5:45 p.m.
Mr. Gee then proceeded to Bill Mercer's grocery store at the entrance to Lakeside Village. There, he had a small pizza and a beer and spoke with Mr. Mercer about the pest control business. He used the telephone at Bill Mercer's to call his former boss, Gene Cumpton, at the other pest control company. The Cumptons live close to Bill Mercer's grocery. On his way home to Independence, Mr. Gee stopped by the Cumpton home at approximately 7:00 p.m., but Mr. Cumpton had just left to go to his child's school for a wrestling meet.
From the Cumpton home, located about one mile east of County Road 1029, Mr. Gee took Longview Road, also called Apple Valley Road, which runs in an east-west direction and intersects with County Road 1029. County Road 1029 to Highway 92 is the route Mr. Gee usually traveled back to Kansas City. At the intersection of Longview or Apple Valley Road and County Road 1029 were two stop signs which were situated on Longview or Apple Valley Road. As Mr. Gee was traveling west, attempting to make a left turn to put him in a northerly direction onto Highway 1029, he collided with another truck that was coming across the intersection from the west, which was also attempting to make a left-hand turn in a southerly direction onto Highway 1029. The two trucks were apparently trying to turn at approximately the same time. From the damage that occurred to the two trucks, it seems as though the truck driven by Mr. Gee was attempting to travel through the intersection and turn behind the other truck, while the other truck was attempting to turn in front of the truck driven by Mr. Gee. In any event, a violent collision took place at approximately 7:15 p.m. and Mr. Gee was severely injured. Mr. Gee does not remember much about the accident due to the impact. The Bell Pest truck ended up in a ditch in the northeast corner of the intersection.
Deputy Dubach was the first to arrive at the scene at approximately 7:35 p.m. The deputy testified that Mr. Gee appeared to have a broken neck, and, that under the circumstances, his speech was fairly normal.
Officer Taylor arrived next at 7:40 p.m. The officer suspected alcohol involvement in the accident as there were empty and full beer cans found in the Bell Pest truck and the smell of alcohol on Mr. Gee. The ambulance arrived, and paramedics placed Mr. Gee in a neck collar for a broken neck. Mr. Gee was experiencing partial paralysis. He has since recovered somewhat, but Mr. Gee suffers and will continue to suffer from his condition as a result of the accident. Deputy Dubach went with the ambulance to the emergency room at St. Francis Hospital. Officer Taylor arrived around 9:00 p.m. to obtain a blood sample from Mr. Gee. Hospital personnel took the sample, which was later tested and found to have a blood alcohol content of approximately.25%.
What is at the heart of the issue is whether (1) Mr. Gee's visit to the Cumpton house was a deviation from his employment, and, at the time of the accident, the deviation had not ended, and (2) that Mr. Gee was so intoxicated that his accident cannot be said to have arisen out of and in the course and scope of his employment.
In a worker's compensation case, this Court must review the record in the light most favorable to the Labor and Industrial Relation Commission's (Commission's) findings. Swillum v. Empire Gas Transport, Inc., 698 S.W.2d 921, 925 (Mo. App.1985); Nelson v. Consol. Housing Dev. and Mgmt. Co., Inc., 750 S.W.2d 144, 148-149 (Mo.App.1988). Our review is of the Commission's award and only when that award is not supported by substantial evidence or is clearly contrary to the overwhelming evidence will we disturb it. Tate v. Southwestern Bell Telephone, 715 S.W.2d 326, 328 (Mo.App.1986). The Commission is the sole judge of the credibility of the witnesses and this Court cannot substitute its view of the facts for those found by the Commission if the Commission's findings are supported by sufficient competent evidence. Id. Additionally, all doubt should be resolved in favor of the employee *536 and in favor of worker's compensation coverage, unless some element needed to validate his claim is lacking. Id. Keeping these principles firmly in mind, we now look at the award before us.
The Commission found that Mr. Gee was on a purely personal errand when he visited the Cumpton home and that he was still in the midst of his personal errand when the collision took place. The Commission stated that Mr. Gee's personal errand would not have ended until he was again traveling in a northerly direction on County Road 1029 (the road which would eventually, after catching Highway 92, take Mr. Gee back to Independence, Missouri). Mr. Gee contends that he went to the Cumpton residence in furtherance of business for Bell Pest and, therefore, was within the course and scope of his employment at the time of the accident. The Commission could, and did, conclude that Mr. Gee was on a personal errand to the Cumpton's, but erroneously decided when the errand came to an end. The errand ended when Mr. Gee began to drive the Bell Pest truck away from the Cumpton home.
A significant part of Mr. Gee's job was driving the Bell Pest truck to and from different job sites. Mr. Gee was driving the company truck on company business. He had, just two hours previous to the accident, secured payment on an account. He was bringing the check back to his employer at the time of the collision.
Analogous to the case at bar is Tate v. Southwestern Bell Telephone Co., supra. In Tate, the Southern District stated the general rule is that an injury arises in the course of a claimant's employment if the accident occurs within the period of employment at a place the employee may reasonably be, while he is in furtherance of the employer's business or performing activities incidental to employment. Tate at 328. Moreover, the court stated that because claimant's duties required him to drive a company vehicle, any deviation from the course of employment had terminated when he began driving the vehicle after finishing his personal errand.
Tate is consistent with similar, earlier cases dealing with salesmen, solicitors, and other workers whose duties involve driving where there is no fixed route or destination. This line of cases holds that an employee has returned to his respective course and scope of employment the moment the personal errand has been completed. See Kinkead v. Management and Engineering Corporation, 103 S.W.2d 545, 547 (Mo.App.1937), citing Beem v. H.D. Lee Mercantile Co., 337 Mo. 114, 85 S.W.2d 441, 445 (1935); Schulte v. Grand Union Tea & Coffee, 43 S.W.2d 832, 835 (Mo.App. 1931). Thus, claimant returned to his course and scope of employment the moment he left the Cumpton residence and resumed the logical route back to Independence, Missouri. Mr. Gee was clearly on the direct route back to Bell Pest and thus within the course and scope of his employment. There was not sufficient competent evidence in the record to warrant the finding that Mr. Gee was not in the course and scope of his employment as Mr. Gee was at a place where he may have reasonably been while he was reasonably fulfilling the duties of his employment. See Page v. Green, 686 S.W.2d 528, 532 (Mo.App.1985).
The Commission also found that Mr. Gee was so intoxicated that his accident did not arise out of and in the course of his employment. For intoxication to bar claimant's recovery, there must be evidence that, at the time of injury, appellant was intoxicated to such an extent that it was impossible for him to physically and mentally engage in his employment. Haynes v. R.B. Rice, Div. of Sara Lee, 783 S.W.2d 403, 406 (Mo.App.1989). The law in the area of intoxication defense has consistently held that mere evidence of a high blood alcohol content is insufficient to support a denial of a claim on the basis of intoxication. See Coonce v. Farmer Ins. Exchange, 228 S.W.2d 825 (Mo.App.1950); McCue v. Studebaker Automotive Sales, Inc., 389 S.W.2d 408 (Mo.App.1965); Begey v. Parkhill Trucking Co., 546 S.W.2d 529 (Mo.App.1977); Page, supra. To be denied compensation, claimant must be intoxicated to the point where his mind is a "total *537 blank" due to intoxication. O'Neil v. Fred Evens Motor Sales Co., 160 S.W.2d 775, 779 (Mo.App.1942). Whether an employee was intoxicated to such an extent that he could not be engaged in the furtherance of his employer's business is a question of fact to be determined by the Commission. O'Neil, at 778-779. In reviewing the question of fact, we must consider whether upon the whole record and in looking at the evidence in the light most favorable to the Commission's findings, the Commission could have reached the result it did. Swillum at 925. There is not sufficient competent evidence on the record as a whole to support the Commission's holding that Mr. Gee was intoxicated to the extent that he was out of his course and scope of employment.
The uncontroverted evidence in the case at bar is that Mr. Gee was able to estimate a flea and termite eradication at the Craven residence between approximately 4:00 and 5:30 p.m. Mrs. Craven testified that he spoke normally, did not stagger or sway, nor did he appear physically impaired when he left her home. Mrs. Craven, who had known Mr. Gee for several years, testified that he acted in a normal manner. Mr. Mercer, owner of Bill Mercer's grocery store, saw Mr. Gee between approximately 5:30 and 6:30 in the evening, right before the accident. Mr. Mercer testified that Mr. Gee did not appear intoxicated. He stated that Mr. Gee looked normal, did nothing unusual, and did not slur his words. Mr. Cumpton, Mr. Gee's former employer, spoke with Mr. Gee on the telephone while Mr. Gee was at Bill Mercer's and testified that there was nothing unusual about Mr. Gee's speech.
After eating a pizza and having a beer, Mr. Gee left for the Cumpton residence and arrived there close to 7:00 p.m. Approximately fifteen minutes later, he was involved in the accident. Of the people who observed Mr. Gee in the critical time frame prior to the accident, not one indicated that Mr. Gee was so intoxicated that he was incapable of driving or performing his duties as a service technician.
Further, Deputy Dubach testified that Mr. Gee's speech was normal for a man with a broken neck. Mr. Gee himself testified to the events of the accident all the way up to the point where he hit his head on the windshield. If his mind at any point was a total blank, it is attributable to the injuries he sustained and not to his intoxication. Without anymore evidence other than the fact that Mr. Gee was intoxicated as a matter of law, it cannot be established that it was impossible for Mr. Gee to physically or mentally engage in his employment. For the three hours preceding his accident, appellant was able to drive, perform an estimate, and speak normally with at least three witnesses without appearing intoxicated. Nothing on the record before us indicates that it was impossible for him to work.
To borrow the words from Commissioner Fowler's dissent, "[T]he Commission has proceeded on a tangent with the obvious ill advised attempt to forge new law." In Phillips v. Air Reduction Sales Co., 337 Mo. 587, 85 S.W.2d 551, 555 (1935), the Supreme Court was explicit when it stated: "Until the legislature sees fit to do so, we cannot deny compensation because of intoxication..." Any change in the Phillips rule will have to come from the Supreme Court of Missouri or the legislature.[1] Mo. Const. Article V, § 2 (1945). Likewise, the Commission has no power to make new policy in this matter but must follow the Phillips rule.
The final point appellant raises is that the Commission erred in admitting and relying on the testimony of Dr. Thomas Fritzlen in that the testimony proffered was based on hearsay evidence, and in reaching his determination used speculation and conjecture. Dr. Fritzlen testified to the effects a .261% blood alcohol content (the percentage reported from the official Kansas lab report) would have on a person weighing approximately 155 pounds and *538 stood 70 inches tall. This is approximately the same weight and height of Mr. Gee. Dr. Fritzlen based his analysis upon a gas chromatographic method of blood alcohol analysis. His calculation was based on the assumption that 70% of the total body weight of the average person is water. Based on this evidence and these assumptions, he further testified that it was his opinion that Mr. Gee had drank either 9.24 12-ounce cans of 4-8% beer or 8.8 12-ounce cans of 5% beer at the time of the accident. Dr. Fritzlen testified that a blood alcohol level of at least .25% would substantially affect one's motor skills and brain function. After a hypothetical was posed to him, Dr. Fritzlen opined he was reasonably certain that Mr. Gee's brain function at the time of the blood alcohol test would have impaired his ability to safely and properly operate a motor vehicle. He testified that Mr. Gee's brain function would have been impaired. He also testified, however, that his conclusion would be wrong if any of the figures supplied to him were wrong. He further testified that a person with this level of alcohol could move about, communicate, operate a motor vehicle for a while, play cards, and go through the exercise of their work duties.
The evidence in this case is clear. Three witnesses testified to the fact that just prior to the accident, Mr. Gee was perfectly able to perform an estimate which was part of his employment duties, to take a check from a customer, to communicate without slurring his speech, and to function normally. Not one of these three witnesses testified that Mr. Gee appeared to be intoxicated. Deputy Dubach testified that Mr. Gee's speech was normal for a man with a broken neck. Dr. Fritzlen testified upon cross-examination that a person with at least a .25% level of alcohol in his blood could move about, communicate, operate a motor vehicle for a while, play cards, and go through the exercise of their work duties.
The Supreme Court of Missouri stated, "We cannot deny compensation because of intoxication, at least unless it was shown that the degree of intoxication was such that the injury did not arise out of the employment because the employee could not have been engaged in it." Phillips 85 S.W.2d at 555. The evidence, as deduced herein, does not point to such a showing.
Bell Pest contends that the issue of Dr. Fritzlen's testimony is not properly before this court for review because Mr. Gee's objection to the testimony was not renewed before the Commission. Our review is only of the Commission's decision and not that of the administrative law judge. Long v. City of Hannibal, 670 S.W.2d 567, 570 (Mo.App.1984), citing Conover v. Missouri State Highway Dept., 618 S.W.2d 470, 471 (Mo.App.1981). Mr. Gee filed a motion in limine in opposition to Dr. Fritzlen's testimony. The motion was to serve as a standing objection to the testimony of Dr. Fritzlen before the administrative law judge. This motion was overruled. This issue does not affect the final disposition of the case. Since our review is limited to the findings and conclusions of the Commission, we cannot review this issue as it was not addressed by the Commission.
By application of the rule in Phillips, a rule this court must apply because it emanated from the Missouri Supreme Court, the ruling by the Commission herein must be reversed. With the rule in Phillips, this court must conclude upon the evidence herein that the Commission ruling cannot stand. The ruling by the Commission is reversed and the cause remanded with instructions to the Commission that it enter an award affirming the findings and order of the Administrative Law Judge awarding benefits to appellant in conformity with Missouri Worker Compensation laws.
All concur.
NOTES
[1] The legislature has seen fit to make some major revisions regarding injuries arising from alcohol and drug use which are to take effect August 28, 1990. These revisions, however, set no legal precedent for the case at bar. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2368996/ | 344 F. Supp. 2d 345 (2004)
ANYWHERE, INC. d/b/a The Cruise Brothers, Plaintiff,
v.
Manuel ROMERO Defendant.
No. CIV.03-2395 HL.
United States District Court, D. Puerto Rico.
November 5, 2004.
*346 Edilberto Berrios-Perez, Hato Rey, PR, Angel Caban-Bermudez, Berrios & Longo, PSC, San Juan, PR, James S. Lawrence, Warwick, RI, for Plaintiff.
ORDER
LAFFITTE, District Judge.
Before the Court is plaintiff's counsel James S. Lawrence and Angel F. Cabán-Bermúdez's memorandum on attorneys' fees and expenses (Docket No. 36, pt. 4; Docket No. 37 (amending Docket No. 36, pt. 6)) requested under § 35(a) of the Lanham Act, 15 U.S.C. § 1117(a) (2002). No opposition was filed to said memorandum.
Section 35 of the Lanham Act provides, "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a) (2002). Exceptional cases are cases in which the acts of trademark infringement were malicious, fraudulent, deliberate, or willful. *347 Tamko Roofing Products v. Ideal Roofing, 282 F.3d 23, 31 (1st Cir.2002). Bad faith or fraud is not a necessary condition to an award of attorneys' fees under section 35 of the Lanham Act. Id. at 27. "[W]illful conduct may be sufficient when the trial court takes into account all the facts and equities of the case." Id.
In the present case, there is no question that plaintiff is a prevailing party. The Court entered the defendant in default on July 15, 2004. (Docket No. 26.) A damages hearing was held on September 29, 2004, in which the Court found that the defendant willfully and fraudulently reproduced and utilized the plaintiff's service mark, "The Cruise Brothers," without authorization. (Docket No. 34.) The Court found that plaintiff suffered: actual damages of $24,014.31, lost profits in the sum of $13,856.95, and damage to the mark in the amount of $50,000.00, for a total judgment of $87,871.26. (Docket No. 34.) The Court also entered an order permanently enjoining the defendant from using the mark or variation thereof. (Docket No. 38.) The Court finds that the present case qualifies as an "exceptional case" under section 35 of the Lanham Act, as the acts of trademark infringement perpetrated by the defendant were clearly willful, deliberate, fraudulent, and malicious.
In their memorandum for attorneys' fees and expenses, Attorney Lawrence claims to have spent one hundred and nine (109) hours and forty-two (42) minutes, which at a rate of $250 an hour totals $27,425.00. (See Docket No. 36, pt. 5.) Attorney Cabán-Bermúdez claims to have spent one hundred six (106) hours and six (6) minutes, which at a rate of primarily $150 an hour (with some hours billed at a rate varying from $75 to $225 an hour),[1] totals $15,697.50. (See Docket No. 37, pt. 1)
"In fashioning fee awards, the attorneys contemporaneous billing records constitute the usual starting point, but the court's discretion is by no means shackled by those records .... [I]t is the court's prerogative (indeed, its duty) to winnow out excessive hours, time spent tilting at windmills, and the like." Gay Officers Action League v. Puerto Rico, 247 F.3d 288, 295-96 (1st Cir.2001)(citing Coutin v. Young & Rubicam Puerto Rico, Inc., 124 F.3d 331, 337 (1st Cir.1997)); see also Grendel's Den, Inc. v. Larkin, 749 F.2d 945 (1st Cir.1984) (discussing the issue of excessive and repetitive hours in attorneys' fees submissions). In other words, the district court may in its discretion exclude those hours which were not reasonably expended. Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S. Ct. 1933, 1939-40, 76 L. Ed. 2d 40 (1983).
The Court has reviewed the itemization of time-sheets submitted by Attorney Lawrence and Attorney Cabán-Bermúdez, and finds that a number of items appear to be duplicative and unnecessary. Accordingly, the Court reduces the amount of time claimed by Attorney Lawrence by 33.5 hours, for a total of 76.2 hours.[2] The *348 Court reduces the amount of time claimed by Attorney Cabán-Bermúdez by 24.5 hours, for a total of 81.6 hours.[3]
Attorney Lawrence seeks an hourly rate of $250. Attorney Cabán-Bermúdez seeks an hourly rate of primarily $150, but bills some hours at a rate of $75 and other hours at a rate of $225.[4] Once again, as with the amount of time spent working on a case, the "court may take guidance from, but is not bound by, an attorneys' standard billing rate." Gay Officers Action League v. Puerto Rico, 247 F.3d at 296 (citing Brewster v. Dukakis, 3 F.3d 488, 492-93 (1st Cir.1993)). The hourly rate should be "in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Blum v. Stenson, 465 U.S. 886, 895 n. 11, 104 S. Ct. 1541, 1547 n. 11, 79 L. Ed. 2d 891 (1984); Andrade v. Jamestown Housing Auth., 82 F.3d 1179, 1190 (1st Cir.1996). In reaching its determination, the court may rely upon its own knowledge of attorneys' fees in the community. Missouri v. Jenkins by Agyei 491 U.S. 274, 285, 109 S. Ct. 2463, 2470, 105 L. Ed. 2d 229 (1989).
In the present case, based on the counsels' level of experience and the issues in this case, the Court finds the rate of $250 to be appropriate for Attorney Lawrence and the rate of $150 per hour, with some hours billed at $75, to be appropriate rates for the hours submitted by Attorney Cabán-Bermúuez. Thus, Attorney Lawrence is entitled an award of attorneys fees for 76.2 hours at an hourly rate of $250, for a total of $19,050.00. Attorney Cabán-Bermúdez is entitled to 77.85 hours at an hourly rate of $150 and 3.75 hours at an hourly rate of $75, for a total of $11,958.75. Therefore, a grand total of $31,008.75 of attorneys fees are awarded in this case.
Plaintiff's counsel also seek payments of the expenses incurred in this litigation, which according to the present motion total $2,745.88. An award of costs and expenses is available to a prevailing plaintiff under the Lanham Act. See Tamko Roofing Products v. Ideal Roofing, 282 *349 F.3d 23 (1st Cir.2002).The Court has reviewed the itemized expenses report provided by Attorney Cabán-Bermúdez and finds that some items appear to be excessive. Therefore, the Court will reduce counsel's expenses by $868.56,[5] for a total of $1,877.32.
CONCLUSION
In conclusion, the Court finds that Attorney Lawrence is entitled to an award of attorneys' fees totaling $19,050.00, and Attorney Cabán-Bermúdez is entitled to an award of attorneys' fees totaling $11,958.75 and expenses totaling $1,877.32. Thus, the grand total of attorneys fees and expenses awarded in this case is $32,886.07. WHEREFORE, the Court GRANTS in part plaintiff's counsel's motion for attorneys' fees (Docket No. 36, pt. 4; Docket No. 37).
IT IS SO ORDERED.
NOTES
[1] See Docket No. 37, pt. 1. The following entries were billed at a rate of $225 an hour: Dec. 23, 2003; July 15, 2004; July 19, 2004; July 23, 2004; Sept. 20, 2004. The following entries were billed at a rate of $75 an hour: Feb. 23, 2003; Apr. 23, 2004; June 28, 2004; July 22, 2004. Id.
[2] The Court reduces the following entries in the itemized invoice submitted by Attorney Lawrence (See Docket No. 36, pt. 5): the work done on Dec. 24, 2003 is reduced by 0.25 hours; the work done on Dec. 28, 2003 is stricken in its entirety of 0.5 hours; the work done on Dec. 30, 2003 is stricken in its entirety by 0.6 hours; the work done on Jan. 19, 2004 is reduced by 6.3 hours; the work done on Jan. 20, 2004 is reduced by 3.4 hours; the work done on Jun. 30, 2004 is reduced by 5.5 hours; the work done on July 1, 2004 is reduced by 5.5 hours; the work done on Sept. 27, 2004 is reduced by 1.2 hours; the work done on Sept. 28, 2004 is reduced by 5.25 hours; the work done on Sept 29, 2004 is reduced by 5 hours.
[3] The Court reduces the following entries in the itemized invoice submitted by Attorney Cabán-Bermúdez (See Docket No. 37, pt. 1): the work done on Dec. 23, 2003 is reduced by 1 hour; the work done on Dec. 24, 2003 is reduced by .25 hours; the work done on Dec. 28, 2003 is reduced by .25 hours; the work done on Dec. 30, 2003 is reduced by 1 hour; the work done on Dec. 31, 2003 is reduced by 1.25 hours; the work done on Jan. 16, 2004 is reduced by .75 hours; the work done on Jan. 22, 2004 is reduced by 1.75 hours; the work done on Jan. 26, 2004 is reduced by 2.25 hours; the work done on Jan. 28, 2004 is reduced by .25 hours; the work done on Jan. 30, 2004 is reduced by .5 hours; the work done on Feb. 2, 2004 is reduced by .25 hours; the work done on Feb. 13, 2004 is reduced by.5 hours; the work done on Feb. 23, 2004 is reduced by 1 hour; the work done on Feb. 27, 2004 is reduced by 1.5 hours; the work done on March 1, 2004 is stricken in it's entirety of.25 hours; the work done on May 10, 2004 is reduced by .25 hours; the work done on May 27, 2004 is reduced by 1 hour; (he work done on June 22, 2004 is reduced by .5 hours; the work done on June 28, 2004 is reduced by 1.5 hours; the work done on June 29, 2004 is reduced by .5 hours; the work done on June 30, 2004 is reduced by .5 hours; the work done on July 15, 2004 is reduced by .5 hours; the work done on Aug. 2, 2004 is reduced by.25 hours; the work done on Aug. 3, 2004 is reduced by .5 hours; the work done on Aug. 4, 2004 is reduced by 2 hours; the work done on Aug. 5, 2004 is reduced by 2.25 hours; the work done on Aug. 11, 2004 is reduced by .25 hours; and the work done on Sept. 28, 2004 is reduced by 1.75 hours.
[4] See supra, note 1.
[5] The Court reduces the following entries from the expense report submitted by Attorney Cabán-Bermúdez (Docket No. 36, pt. 6); the expenses incurred on Dec. 31, 2003 are reduced by $ 16; the expenses incurred on March 1, 2004 are reduced by $51.25; the expenses incurred on June 30, 2004 are reduced by $27.21; the expenses incurred on July 2, 2004 are stricken in their entirety of $427.75; the expenses incurred on Aug. 31, 2004 are reduced by $325.60; the expenses incurred on September 29, 2004 are reduced by $1.75; the expenses incurred after the hearing on damages held September 29, 2004 are stricken in their entirety of $19. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/6363756/ | Opinion by
Judge Crumlish, Jr.,
The Department of Transportation, Bureau of Traffic Safety (PennDOT) appeals an order of the Court of Common Pleas of Dauphin County which *383sustained the appeal of Re jean Nelson Morin (Appellee).
Appellee’s difficulties began on November 29,1974, when his flight across the Dauphin-Lebanon County Line resulted in his being charged in Lebanon County with failing to stop, Section 1027(a) of The Vehicle Code (Code), Act of April 29,1959, P.L. 58, as amended, 75 P.S. §1027A, and his being charged with driving under the influence of alcohol in Dauphin County, Section 1037 of the Code, 75 P.S. §1037. He was convicted and sentenced in Dauphin County on January 30, 1975. He was adjudged guilty and .sentenced for the Lebanon County offense on May 22, 1975.
PennDOT, through the Director of Traffic Safety’s office, subsequently notified Appellee that his operating privileges were being revoked for one year effective January 30, 1975 as a result of the driving under the influence conviction.1 Thereafter, Appellee was notified on October 29, 1975, that as a result of the sentence for failure to stop in Lebanon County, Ms privileges were being revoked for a period of one year effective January 30, 1976.
Appellee’s appeal, sustained by the court below, was from the second order of PennDOT which hitched the additional one-year revocation to the revocation previously imposed.
We cannot agree with the court below, and the position taken by Appellee herein, that an individual convicted of more than one revocable offense, with each offense occurring in close proximity to the other, must have his privileges revoked forthwith upon conviction for the subsequent offense notwithstanding the fact *384he is still undergoing a prior revocation. Thus, we reverse.
Section 616(a), 75 P.S. §6616(a), states in relevant part:
(a) Upon receiving a certified record, from the clerk of the court, of proceedings in which a person pleaded guilty, entered a plea of nolo contendere, or was found guilty by a judge or jury, of any of the crimes enumerated in this section, the secretary shall forthwith revoke, for a period of one (1) year from the date of revocation, the operating privileges of any such person: Provided, however, That if such person is serving or has served a period of suspension for the same offense under the provisions of clause (1) of subsection (b) of section 618 of this act, he shall be credited with the suspension time served against the one (1) year revocation, and where such person was convicted, or entered a plea of guilty or nolo contendere, of any one of the crimes enumerated in this section, such operating privilege shall not be restored, unless and until the fine and costs imposed in such cases, have been fully paid. . ..
We have on two prior occasions faced situations bearing on the present case: first, in Department of Transportation v. Hosek, 3 Pa. Commonwealth Ct. 580, 284 A.2d 524 (1971), and second, in Department of Transportation v. Thompson, 17 Pa. Commonwealth Ct. 505, 333 A.2d 478 (1975). In each of those cases, we enunciated the proposition that unreasonable delay from the date of receipt of notice of conviction to the date of actual revocation was violative of the forthwith provision of Section 616 if the violation was unduly or unreasonably prejudicial.
In Hosek, we held that a 16-mo.nth delay between notice of conviction and revocation, together with *385prejudice, violated Section 616, while in Thompson, we held that entry of a supersedeas had the effect of staying the revocation and that revocation within seven weeks of the expiration of the supersedeas was not such an undue delay as to violate the forthwith provision of the section.
Neither Hosek nor Thompson, however, specifically addressed the undue delay dilemma as it relates to the instant case.
PennDOT argues that acceptance of Appellee’s contention that its failure to immediately revoke operating privileges, i.e., by notifying Appellee on October 29, 1975, that a revocation will take effect on January 30, 1976, is in conflict with the clear meaning of Section 616, and the proper interpretation of the term forthwith as used in that section.
That an individual could commit two or more revocable offenses in a short space of time, be convicted and sentenced on different dates, thus causing certification to the Secretary on different dates, and expect that the civil penalties of revocation of necessity run concurrently rather than consecutively, is inapposite given the dictates of the statute.
Recognizing the deterrent effect of revocation as sanction for violations of the Code, it is incongruous that a multiple violator should, and could, expect a sanction equivalent to that imposed on a unitary violator. If this were so, there would exist little deterrent, if any, to those who are adjudged guilty of multiple violations of the Code.
The remaining question raised by Hosek and Thompson is the notification on October 29, 1975, of the revocation to become effective January 30, 1976. It is undisputed that the notice of revocation was “immediate” notwithstanding the delay in imposition of the revocation. If the interpretation of the court below of imposing the revocation immediately upon re*386oeipt of certification were adopted, numerous instances in our extraordinary traffic flow would arise wherein the additional period of revocation would partially merge into the period of prior revocation, thereby decreasing the time of multiple violators’ revocations.
We must hold that in situations of multiple convictions and revocations arising under Section 616(a), time periods for revocation can be imposed consecutively, and that the term “shall forthwith revoke” in the section refers to notification of the subsequent revocation rather than to its effective date.
Undoubtedly, Appellee will be inconvenienced by the imposition of consecutive revocations; but that inconvenience in no way rises to the level of prejudice enunciated in Hoseh and Thompson.
In light of the foregoing, the order of the court below is reversed.
Order
And Now, this 2nd day of June, 1977, the order of the Court of Common Pleas of Dauphin County is reversed and the penalties imposed are.reinstated.
Section 616 of the Code, 75 P.S. §616, mandates a one-year revocation for each of the offenses for which Appellee was found guilty. At this time of sentencing on the Dauphin County charge, January 30, 1975, Appellee voluntarily surrendered his operator's license to the court, thus the effective date of the order revoking privileges commenced on that date. | 01-03-2023 | 06-24-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/2369681/ | 938 S.W.2d 631 (1997)
McKESSON CORPORATION, Plaintiff/Respondent,
v.
COLMAN'S GRANT VILLAGE, INC., Defendant, and
Colman H. Kraus and Ronald Gorman, Defendants/Appellants.
No. 69369.
Missouri Court of Appeals, Eastern District, Division Two.
February 11, 1997.
*632 Rexford H. Caruthers, The Holloran Law Firm, St. Louis, for appellants.
Timothy M. Bosslet, Kramer & Frank, P.C., St. Louis, for respondent.
CRANE, Presiding Judge.
Plaintiff McKesson Corporation (McKesson) filed an action for breach of guaranty and replevin against defendants Colman's Grant Village, Inc. (Colman's), debtor, and Colman H. Kraus and Ronald Gorman, guarantors of two promissory notes and of an open account, to obtain a deficiency judgment after sale of collateral securing the promissory notes and to recover the outstanding balance on the open account. The trial court found that McKesson failed to give reasonable notice of the disposition of certain collateral and entered a reduced deficiency judgment in McKesson's favor. Kraus and Gorman appeal. We reverse that part of the judgment awarding McKesson a reduced deficiency judgment in the amount of $345,302.55 because the failure to give notice bars McKesson from recovering a deficiency judgment on the promissory notes. We affirm that part of the judgment awarding McKesson $102,121.19 plus interest in the amount of $9,250.20 on the open account.
McKesson, a Colman's supplier, was assignee of Cass Bank and Trust Company's interest in promissory notes and security agreements executed by Colman's and guaranteed by Kraus and Gorman. Kraus and Gorman also executed an additional guaranty with McKesson to guarantee the full and prompt payment of Colman's present and future obligations to McKesson. As of March 18, 1994, the balance due on the notes was $406,393.36. Interest on that balance was to run from March 18, 1994 at 18% per year.
Colman's purchased goods on account from McKesson between June 21, 1993 and March 15, 1994. As of March 15, 1994, the principal balance due on the open account was $93,096.73.
After demanding payment of the notes and the open account, McKesson filed this action. In Count I McKesson sought to collect the outstanding balance on the promissory notes and open account. In Count II, McKesson sought to replevy the property pledged as collateral under the promissory notes.
Between April 5, 1994 and April 13, 1994, pursuant to an Order of Delivery in Replevin issued by the circuit court on the date the action was filed, McKesson conducted a replevin of the collateral in which it had a perfected security interest, including pharmaceuticals, pharmacy records and customer lists (the pharmacy collateral). McKesson did not give notice of the sale of the pharmacy collateral before the sale. The parties stipulated that the sale of the other collateral was conducted in a commercially reasonable manner.
The contested issue at trial was whether the pharmacy collateral was perishable or threatened to speedily decline in value, thus falling under the exception to the notice requirement of § 400.9-504 RSMo 1994. The trial court found that McKesson was required to notify Kraus and Gorman prior to the sale of the pharmacy collateral and failed to do so. The trial court entered a reduced deficiency judgment on Count I against Kraus and Gorman on their guaranty of the promissory notes for $345,302.55 and on their guaranty of the open account for $102,121.19 with additional interest of $9,250.20. On Count II, the court ordered that the Order of Delivery in Replevin entered March 31, 1994 be made final, entered judgment against defendant Colman's for possession of the property described in the order, and released the replevin bond.
*633 On appeal, Kraus and Gorman assert that McKesson's failure to provide reasonable notice of the sale of the pharmacy portion of the collateral absolutely bars the recovery of any deficiency judgment. We agree that the failure to provide reasonable notice absolutely bars recovery of a deficiency judgment on the promissory notes secured by the collateral. However, we do not agree that the failure to give notice bars a judgment on the balance of the open account.
Section 400.9-504(3) RSMo, "Secured party's right to dispose of collateral after defaulteffect of disposition" sets forth the notice requirement:
Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor.
A guarantor is a debtor within the meaning of this section and is therefore entitled to notice. Lendal Leasing v. Farmer's Wayside Stores, 720 S.W.2d 376, 379 (Mo.App. 1986); Clune Equipment Leasing Corp. v. Spangler, 615 S.W.2d 106, 108 (Mo.App. 1981). Notice is required in order to apprise a debtor of the details of a sale so that he may take whatever action necessary to protect himself. Chrysler Capital Corp. v. Cotlar, 762 S.W.2d 859, 861 (Mo.App.1989).
Compliance with the notice provision of § 400.9-504(3) is a prerequisite to a recovery of a deficiency after resale of the collateral. Id. A secured party's failure to give reasonable notice of the sale of collateral as mandated by this section precludes that party from obtaining a deficiency judgment. Id.[1] Strict compliance is required because deficiency judgments after repossession of collateral are in derogation of common law. Gateway Aviation, 577 S.W.2d at 863; Springfield Chrysler-Plymouth v. Harmon, 858 S.W.2d 240 (Mo.App.1993). In other words, since deficiency judgments were unheard of at common law, the right to a deficiency judgment accrues only after strict compliance with the relevant statute. Executive Financial Services, Inc. v. Garrison, 722 F.2d 417, 418 (8th Cir.1983).
We have not been directed to any Missouri case where the failure to give reasonable notice applied only to a portion of the collateral. In California, which applies the absolute bar rule, the court of appeals has held that a creditor's failure to give notice or conduct a commercially reasonable sale with respect to thirteen of fifty-two items of the collateral bars a deficiency judgment, stating, "The right to a deficiency judgment is conditional and depends on strict compliance with the statutory requirements." Crocker National Bank v. Emerald, 221 Cal. App. 3d 852, 270 Cal. Rptr. 699, 704 (3d Dist.1990). In Crocker the secured party urged that the debtor had not been damaged because it had credited the debtor with debtor's valuation of the collateral in question and had obtained a deficiency judgment reduced by that amount. The court of appeals rejected this argument in the following language:
Again, we disagree. Crocker focuses only on the value of collateral as a measure *634 of Emerald's damages, and ignores the greater damage: allowing the creditor who has not complied with the requirements of § 9504 to collect a deficiency judgment. If the secured creditor fails to meet the requirement of a commercially reasonable sale, it cannot collect a deficiency judgment of the balance owed by the creditor. (Buran Equipment Co. v. H & C Investment Co. (1983) 142 Cal. App. 3d 338, 341, 190 Cal. Rptr. 878. This deficiency judgment is precisely what Crocker seeks to collect.
Id.
The trial court did not apply the absolute bar rule. Instead, the trial court awarded the amount the parties stipulated was the net deficiency, $394,493.15, less the amount of net proceeds for the sale of the pharmacy, $49,190.60, (which amount had already been deducted to compute the net deficiency) and entered a reduced deficiency judgment in the amount of $345,302.55.
McKesson argues that the trial court's order was a "set-off of damages against the deficiency balance on the notes" under the damage provision of § 400.9-507(1). McKesson asserts that Kraus and Gorman failed to prove a specific dollar amount of damages so the trial court fixed the amount of damages as the net sale proceeds of the pharmacy. McKesson contends that the rule barring collection of deficiency judgments in the absence of reasonable notice is not codified in the U.C.C. and the only codified remedy is the damage remedy found in section 400.9-507(1), entitled "Secured party's liability for failure to comply with this part" which provides:
(1) ... If the disposition has occurred the debtor or any person entitled to notification or whose security interest has been made known to the secured party prior to the disposition has a right to recover from the secured party any loss caused by a failure to comply with the provisions of this part....
McKesson states that the "set-off remedy provided by § 400.9-507" was recognized in Commercial Credit Equipment Corp. v. Parsons, 820 S.W.2d 315 (Mo.App.1991). In Commercial Credit, the Western District of this court found the sale of collateral commercially reasonable and affirmed a deficiency judgment. It then reversed a $10,000.00 judgment in favor of the debtor awarded as damages for commercial unreasonability. By way of dicta the opinion identified three remedies available to a debtor where secured property has been disposed of in a commercially unreasonable manner: an absolute bar against a deficiency judgment, the rule of rebuttable presumption, and the rule of set-off under § 400.9-507. Id. at 324. It criticized the absolute bar rule and advocated the rebuttable presumption rule, which appears in an Arkansas case quoted in Wirth v. Heavey, 508 S.W.2d 263, 268 (Mo.App.1974). Id. at 324.[2] In its discussion Commercial Credit criticized the set-off rule because it placed the burden of proving damages on the debtor:
The set-off rule allows a misbehaving creditor to collect a deficiency judgment, subject however to whatever damages are awarded to the debtor under section 400.9-507(1). The impediment of this rule is that the burden to prove damages rests on the debtor. See 9 R. Anderson, Anderson on the Uniform Commercial Code Sec. 9-507:8 (3d ed.1985). It has no currency in our decisions. That is the rule that the trial court mistakenly applied.
Id. at 324. Accordingly, Commercial Credit is not authority for application of a set-off rule to award a reduced deficiency judgment.
In Camden National Bank v. St. Clair, 309 A.2d 329 (Me.1973), cited by Gateway Aviation, the Maine Supreme Court analyzed in detail whether that state's absolute bar rule survived the enactment of the U.C.C. in Maine. In Camden, as here, the secured party argued that after adoption of the U.C.C. the debtor's sole remedy for non-compliance with U.C.C. § 9-504(3) was U.C.C. § 9-507(1). The court disagreed and *635 held that the rule that compliance with notification requirements as to disposition of collateral was a condition precedent to a secured creditor's right to recover a deficiency was consistent with the U.C.C. Camden, 309 A.2d at 332. It held that the cause of action established by U.C.C. § 9-507(1) is not an exclusive remedy for the secured creditor's failure to meet the notification requirements for three reasons:
First, the language in § 9-507(1) itself speaks only of the existence of a cause of action in favor of the debtor and omits any express statement reasonably suggestive of an intention that such cause of action shall be the exclusive remedy available to the debtor.
* * *
Second, in view of the omission of § 9-507(1) expressly to state that it provides an exclusive remedy for notification deficiencies, U.C.C. § 1-103 becomes most significant. Its import is that the right of action established by § 9-507(1), absent clear expression to the contrary, must be held cumulative in the context of remedies previously, or otherwise, afforded.
* * *
[Third], [a]n after-the-fact cause of action for damages clearly is of no benefit to a debtor who, because of a secured creditor's disposition of the collateral without proper compliance with statutory requirements for notification, may have lost his right to reacquire the collateral in specie [under U.C.C. § 9-506].
Id. at 332-33.
Missouri courts have consistently applied the absolute bar rule since 1978. Under this rule McKesson is barred from recovering a deficiency judgment on the notes. The judgment of the trial court awarding McKesson $345,304.55 against Kraus and Gorman as guarantors on the notes must be reversed.
Kraus and Gorman further argue that McKesson is not only barred from recovering a deficiency judgment on their guaranties for the notes, but also barred from collecting a judgment on their guaranties of the open account. They assert McKesson's failure to give notice bars any deficiency judgment. We disagree.
The only authorities Kraus and Gorman cite in support of their argument that McKesson waived its right to recover a deficiency on both the note and the open account debt are Chrysler Credit, 762 S.W.2d at 861 and Gateway Aviation, 577 S.W.2d at 863. However, these cases do not address the specific situation where the note and account obligations are separate.
Nothing in the record indicates that the collateral securing the promissory notes also secured the open account. The failure to give notice of the sale of the collateral does not affect the debtor's liability on a debt distinct from that in connection with which the collateral was sold. 9 Anderson on the Uniform Commercial Code § 9-504.63 at 761; see also Hallmark Cards, Inc. v. Peevy, 293 Ark. 594, 739 S.W.2d 691, 694 (1987). Because the open account debt was not secured by collateral, failure to give notice of the sale of the pharmacy collateral did not preclude a deficiency judgment on the open account debt. The judgment awarding McKesson $102,121.19 on the open account debt is not subject to the bar on deficiency judgments.
That portion of the trial court's judgment awarding McKesson $345,302.55 as a deficiency judgment on the promissory notes is reversed. In all other respects the judgment is affirmed.
GERALD M. SMITH and PUDLOWSKI, JJ., concur.
NOTES
[1] This rule, first expressed in Missouri in Gateway Aviation, Inc. v. Cessna Aircraft Co., 577 S.W.2d 860, 862-63 (Mo.App.1978), has been adopted and followed by all the districts of the Missouri Court of Appeals. See e.g.: Eastern District: First Missouri Bank & Trust Co. v. Newman, 680 S.W.2d 767, 770 (Mo.App.1984); Modern Auto Co., Inc. v. Bell, 678 S.W.2d 443, 444 (Mo.App.1984); Ford Motor Credit Co. v. Freihaut, 871 S.W.2d 129, 130-31 (Mo.App.1994); Commerce Bank of St. Louis v. Dooling, 875 S.W.2d 943, 946 (Mo.App.1994). Western District: Boatmen's Bank of Nevada v. Dahmer, 716 S.W.2d 876, 877 (Mo.App.1986); Sedalia Mer. Bank & Tr. Co. v. Loges Farms, 740 S.W.2d 188, 195 (Mo.App.1987). Southern District: Clune, 615 S.W.2d at 108; Cherry Manor, Inc. v. American Health Care, Inc., 797 S.W.2d 817, 820-21 (Mo.App.1990); Boatmen's Bank v. Brooks, 869 S.W.2d 781, 783 (Mo.App.1994); RWR, Inc. v. DFT Trucking, Inc., 899 S.W.2d 875, 878 (Mo. App.1995).
It has also been applied by federal courts applying Missouri law. See Executive Financial Services Inc. v. Garrison, 722 F.2d 417, 418 (8th Cir.1983); Chemical Sales Co., Inc. v. Diamond Chemical Co., 766 F.2d 364, 369 (8th Cir.1985); U.S. v. Friesz, 690 F. Supp. 843, 845 (E.D.Mo. 1988). Other states follow this rule. See 9 Anderson on the Uniform Commercial Code § 9-504.96 & Cum.Supp.1992.
[2] The rebuttable presumption rule has been applied in Missouri only in Wirth, a 1974 case predating Gateway Aviation. In adopting the absolute bar rule, Gateway Aviation refused to follow Wirth on the grounds that it did not involve lack of notice of a private sale, but purchase by a secured party at his own private sale. Gateway Aviation, 577 S.W.2d at 862. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2369913/ | 323 Md. 408 (1991)
593 A.2d 1094
JEFFREY C. WEIDIG ET AL.
v.
BRAD CRITES.
Misc. No. 43, September Term, 1990.
Court of Appeals of Maryland.
August 19, 1991.
Motion for Reconsideration Denied October 4, 1991.
Albert D. Brault (Daniel L. Shea, Janet S. Zigler, Brault, Graham, Scott & Brault, all on brief), Rockville, for appellant.
Deborah A. Vitale (Miller & Vitale, both on brief), Alexandria, for appellee.
Argued before MURPHY, C.J., and ELDRIDGE, RODOWSKY, McAULIFFE, CHASANOW, KARWACKI and BELL, JJ.
CHASANOW, Judge.
The following question has been certified to this Court by the United States District Court for the District of Maryland pursuant to the Uniform Certification of Questions of Law Act, Maryland Code (1974, 1989 Repl.Vol.), Courts & Judicial Proceedings Article, §§ 12-601 through 12-609:
"DOES THE HEALTH CARE MALPRACTICE CLAIMS ACT (COURTS AND JUDICIAL PROCEEDINGS ARTICLE, SECTION 3-2A-01, et seq.) AFFORD THE HEALTH CLAIMS ARBITRATION OFFICE SUBJECT MATTER JURISDICTION OVER A NON-HEALTH CARE PROVIDER WHO IS ALLEGED TO BE AN EMPLOYEE OF A HEALTH CARE PROVIDER AND WHICH EMPLOYEE IS ALLEGED TO HAVE PROVIDED HEALTH CARE TO THE PLAINTIFF, RESULTING IN A CLAIMED MEDICAL INJURY?"
Procedurally, this case is not new to us. It began when Brad Crites (Crites) filed a health claims arbitration proceeding against Jeffrey C. Weidig, M.D.; Jeffrey C. Weidig, M.D., Chartered; and Joseph Kies (Kies). Kies filed a motion for summary judgment in that proceeding based on the fact that he was not a "health care provider" within the meaning of the Health Care Malpractice Claims Act, Md. Code (1974, 1989 Repl.Vol., 1990 Supp.), Courts & Judicial Proceedings Art., §§ 3-2A-01 through 3-2A-09, (the Act). The panel chairman denied Kies' motion, and Kies filed a complaint for injunctive relief in the Circuit Court for Montgomery County requesting a preemptory writ prohibiting the exercise of jurisdiction over him in the arbitration proceedings and mandating that he be dismissed from those proceedings for want of jurisdiction. The circuit court denied the requested relief, and Kies appealed to the Court of Special Appeals. The intermediate appellate court affirmed the judgment of the circuit court. Weidig v. Tabler, 81 Md. App. 488, 568 A.2d 868, vacated, sub nom., 321 Md. 1, 580 A.2d 701 (1990). We granted Kies' petition for a writ of certiorari, but while that action was pending, an arbitration award was entered against Kies and Weidig. A notice of rejection and an action to nullify the award were filed in the Circuit Court for Montgomery County, at which time Crites filed a complaint in the United States District Court for the District of Maryland. In view of those proceedings, we determined that the issue before us had become moot. We vacated the judgment of the Court of Special Appeals, remanding to that court with directions to vacate the judgment of the Circuit Court for Montgomery County and remand to the circuit court with directions to dismiss the action as moot. Kies v. Tabler, 321 Md. 1, 580 A.2d 701 (1990). We now reach the issue as a certified question.
The parties have referred to the issue in this case as one of jurisdiction, that is, whether the Health Claims Arbitration Office (HCAO) has "jurisdiction" over a non-health care provider. Jurisdiction is the authority by which a court hears and determines a judicial proceeding. Black's Law Dictionary 766 (5th ed. 1979). Health claims arbitration is not a judicial proceeding, nor is it an administrative proceeding. Attorney General v. Johnson, 282 Md. 274, 283-88, 385 A.2d 57, 63-65, appeal dismissed, 439 U.S. 805, 99 S. Ct. 60, 58 L. Ed. 2d 97 (1978); Oxtoby v. McGowan, 294 Md. 83, 91, 447 A.2d 860, 864-65 (1982). Furthermore, the HCAO "exercises no judicial function whatever." Johnson, 282 Md. at 286, 385 A.2d at 64. The term "jurisdiction," therefore, is a misnomer. Perhaps more accurately, the issue before us is not whether the HCAO has power or authority over a non-health care provider; it is whether a non-health care provider can come within the class of persons that are required by statute to submit to arbitration under the Act. See Ott v. Kaiser-Georgetown Health Plan, 309 Md. 641, 645, 526 A.2d 46, 49 (1987) (The requirement of mandatory arbitration creates a condition precedent to institution of court action; it does not divest courts of subject matter jurisdiction over health claims).
Generally, "[a] party cannot be required to submit any dispute to arbitration that it has not agreed to submit." Gold Coast Mall v. Larmar Corp., 298 Md. 96, 103, 468 A.2d 91, 95 (1983); accord United Steelwkrs. of Am. v. Warrior & Gulf N. Co., 363 U.S. 574, 582, 80 S. Ct. 1347, 1353, 4 L. Ed. 2d 1409, 1417 (1960); C.W. Jackson & Associates v. Brooks, 289 Md. 658, 666, 426 A.2d 378, 382 (1981). The statute at issue in the instant case is an exception to that general rule. It requires that certain health care providers in this state must submit to arbitration of medical malpractice claims.
We recently summarized the rules of statutory construction in State v. Bricker, 321 Md. 86, 581 A.2d 9 (1990):
"When interpreting a statute, the starting point is the wording of the relevant provisions. If `the language in question [is] so clearly consistent with apparent purpose (and not productive of any absurd result) ... further research [is] unnecessary.' Kaczorowski v. City of Baltimore, 309 Md. 505, 515, 525 A.2d 628, 633 (1987). In the event that ambiguity clouds the precise application of the statute, the cardinal rule of statutory construction is to ascertain and effectuate legislative intent. Taxiera v. Malkus, 320 Md. 471, 480, 578 A.2d 761, 765 (1990); Harford County v. University, 318 Md. 525, 529, 569 A.2d 649, 651 (1990); Jones v. State, 311 Md. 398, 405, 535 A.2d 471, 474 (1988); In re Ramont K., 305 Md. 482, 484, 505 A.2d 507, 508 (1986). To perform this task, legislative intent should be gleaned first from the phrasing of the statute itself, giving the words their `ordinary and popularly understood meaning, absent a manifest contrary legislative intention.' In re Arnold M., 298 Md. 515, 520, 471 A.2d 313, 315 (1984). See also Jones, 311 Md. at 405, 535 A.2d at 474. When engaging in the interpretive process, however, the purpose, aim or policy of the legislature cannot be disregarded. Taxiera, 320 Md. at 480, 578 A.2d at 765; Harford County v. University, 318 Md. at 529, 569 A.2d at 651; Kaczorowski, 309 Md. at 513, 525 A.2d at 632. Resultant conclusions are to be reasonable, logical and consistent with common sense. Harford County v. University, 318 Md. at 529-30, 569 A.2d at 651; Potter v. Bethesda Fire Dept., 309 Md. 347, 353, 524 A.2d 61, 64 (1987)."
Bricker, 321 Md. at 92-93, 581 A.2d at 12. The particular statute at issue in this case is Courts & Judicial Proceedings Art., § 3-2A-01(e), which provides,
"`Health care provider' means a hospital, a related institution as defined in § 19-301 of the Health-General Article, a physician, an osteopath, an optometrist, a chiropractor, a registered or licensed practical nurse, a dentist, a podiatrist, a psychologist, a licensed certified social worker-clinical, and a physical therapist, licensed or authorized to provide one or more health care services in Maryland. `Health care provider' does not mean any nursing institution conducted by and for those who rely upon treatment by spiritual means through prayer alone in accordance with the tenets and practices of a recognized church or religious denomination."
Kies was an employee of Dr. Weidig or of Jeffrey C. Weidig, M.D., Chartered. He worked in Dr. Weidig's office and was not a licensed physician. No allegation was made, and it does not appear, that he was a registered or licensed practical nurse. As we shall explain, Crites' claim that Kies is governed by the Act is based on his argument that Kies was a "physician," albeit an unlicensed one.
Crites would have us ignore the plain meaning principle of statutory construction, which holds:
"The threshold inquiry in any issue of statutory construction is whether the language is ambiguous or of uncertain meaning. If it is not, then the Court applies its plain and ordinary meaning. Only where the language is of uncertain meaning or doubtful import should the Court seek to judicially construe the statute." (Citations omitted.)
Taylor v. Dep't of Employment, 308 Md. 468, 472-73, 520 A.2d 379, 381 (1987). Because the Act does not define the word "physician," Crites urges that we should go outside the Act in defining the phrase "physician, ... licensed or authorized to provide ... health care services in Maryland," and urges that we consult the Health Occupations Article of the Maryland Code.[1] The theory he presents is a creative one.
Maryland Code (1981, 1991 Repl.Vol.), Health Occupations Art., § 14-101(i), defines "physician" as "an individual who practices medicine." "Practice medicine" is defined in subsection (j) of the same section, which states, in pertinent part,
"(1) ... to engage, with or without compensation, in medical:
(i) Diagnosis; ...
(iii) Treatment; or
(iv) Surgery.
(2) `Practice medicine' includes doing, undertaking, professing to do, and attempting any of the following:
(i) Diagnosing, ... treating, preventing, prescribing for, or removing any physical, mental, or emotional ailment or supposed ailment of an individual:
1. By physical, mental, emotional, or other process that is exercised or invoked by the practitioner, the patient, or both; or
2. By appliance, ... operation, or treatment. .. ."
According to Crites, Kies was a physician as defined in the Health Occupations Article because he practiced medicine by diagnosing Crites' baldness and by assisting at surgery. If we accept this analysis, a boy scout who renders medical aid to an injured person on a mountain trail has "practiced medicine," making him a physician. A waitress who performs the Heimlich maneuver on a choking restaurant patron has "practiced medicine," making her a physician.
As we recognized in Kaczorowski, 309 Md. at 515, 525 A.2d at 633, if "the language in question [is] so clearly consistent with apparent purpose (and not productive of any absurd result) ... further research [is] unnecessary." In the instant case, the plain meaning of the word "physician" is clearly consistent with the Act's apparent purpose, obviating the need to go outside the statute in defining it. Furthermore, the strained construction urged by Crites may be productive of an absurd result.
We do not believe that the Legislature intended the Act to require anyone who "practices medicine" to submit to arbitration of a claim of negligence related to that activity. Judge Couch, writing for the Court in Cannon v. McKen, 296 Md. 27, 36, 459 A.2d 196, 201 (1983), stated, "the Act covers only those claims for damages arising from the rendering or failure to render health care where there has been a breach by the defendant, in his professional capacity, of his duty to exercise his professional expertise or skill." (Emphasis added.) Accord Nichols v. Wilson, 296 Md. 154, 460 A.2d 57 (1983). Kies no more rendered health care "in his professional capacity" than the helpful boy scout or the resourceful waitress. The term "physician" in the Act enjoys its plain and ordinary meaning, that is, a doctor of medicine.
Crites further argues that Kies was authorized to provide health care services in Maryland by virtue of Md.Code (1981, 1991 Repl.Vol.), Health Occupations Art., § 14-306, which permits certain individuals "to whom duties are delegated by a licensed physician [to] perform those duties without a license." The statute to which Crites refers exempts persons from prosecution for practicing medicine without a license when they perform duties delegated to them by licensed physicians. It does not confer upon them the status of a physician for purposes of the Act. Kies may or may not have been lawfully engaged in the practice of medicine, but he is not a physician as that term is generally understood.
Although we make no factual findings in this regard, we note that Kies may have been an agent of a physician who had delegated certain duties to him, which might be construed as the practice of medicine. A doctor cannot bestow upon another the status of physician simply by delegating duties related to the practice of medicine. It matters not that he may have been, arguendo, authorized to provide health care. Kies was not a physician. The Act requires that a "physician, ... licensed or authorized to provide ... health care services in Maryland" must submit to arbitration. "[L]icensed or authorized" is an adverbial phrase that denotes which physicians are covered; it does not extend the definition of physician beyond its plain meaning.[2]
In construing the Act, we must consider its "purpose, aim or policy.... Resultant conclusions are to be reasonable, logical and consistent with common sense." Bricker, 321 Md. at 92, 581 A.2d at 12 (citations omitted). It has been recognized that the Act was enacted in response to a perceived "medical malpractice insurance `crisis.'" Cannon, 296 Md. at 34, 459 A.2d at 200; Johnson, 282 Md. at 280-81, 385 A.2d at 61. In Cannon, we held,
"[T]he legislature did not intend that claims for damages against a health care provider, arising from non-professional circumstances where there was no violation of the provider's professional duty to exercise care, to be covered by the Act. It is patent that the legislature intended only those claims which the courts have traditionally viewed as professional malpractice to be covered by the Act."
296 Md. at 34, 459 A.2d at 200. We found "support for this conclusion" from Zobac v. Southeastern Hospital Dist., Etc., 382 So. 2d 829 (Fla.Ct.App. 1980), in which the court held:
"`[I]t is clear to us that the legislative intent was to submit to Medical Liability Mediation only claims arising out of those acts or conduct which are peculiarly malpractice.... Malpractice by definition means "a dereliction from professional duty or a failure of professional skill or learning that results in injury, loss or damage." It does not include janitorial negligence....'" (Footnote omitted.)
Cannon, 296 Md. at 34, 459 A.2d at 200 (quoting Zobac, 382 So.2d at 830-31). A physician in a medical malpractice action, which is the subject of compulsory arbitration under the Act, is held to "`that degree of care and skill which is expected of a reasonably competent [physician] in the same class to which he belongs, acting in the same or similar circumstances.'" Figueiredo-Torres v. Nickel, 321 Md. 642, 650, 584 A.2d 69, 73 (1991) (quoting Shilkret v. Annapolis Emergency Hosp., 276 Md. 187, 200, 349 A.2d 245, 253 (1975)). Obviously, Kies cannot be held to the professional standard of a physician. Therefore, requiring that Kies submit to mandatory arbitration does not serve the purposes of the Act and results in a conclusion that is illogical and inconsistent with common sense.
The only case cited to us in which a non-health care provider was compelled to arbitrate under the Act is Group Health Ass'n v. Blumenthal, 295 Md. 104, 453 A.2d 1198 (1983), involving a health maintenance organization (HMO) that employed an allegedly negligent obstetrician. Although the Court concluded that the HMO was not a health care provider under the Act, the HMO was required to submit to arbitration. The Court reasoned,
"The Blumenthals do not allege that [the HMO] itself was negligent; instead, the complaint against [the HMO] is based on the doctrine of respondeat superior. Simply stated, the Blumenthals hope to prove that Dr. Barrows and other [HMO] employees were negligent in treating Mrs. Blumenthal, and that [the HMO] as their employer is vicariously liable for that negligence."
Id. at 111, 453 A.2d at 1203. Blumenthal may easily be distinguished from the case at bar. In Blumenthal, the HMO's potential liability stemmed wholly from the alleged negligence of its employees. If the employees, who were health care providers under the Act, were not negligent, the HMO was not liable. Any claim against the HMO was dependent upon the negligence claims against the health care providers and was not capable of being sustained independently of those claims. The negligence claims could only be resolved by first submitting the claims to arbitration. If the claims against the employees perished in the arbitration process, so did the claim against the HMO. It would be an absurd waste of judicial and litigant resources to require filing of a claim that could not exist independently in circuit court before the outcome of arbitration of the negligence claims upon which it was based. We found that such a result was not the intention of the Legislature when it enacted the Act. The instant case presents the reverse situation. Negligence is alleged directly against Kies and Dr. Weidig. Kies is not a health care provider under the Act and may not be compelled to arbitrate. Dr. Weidig is a health care provider and must arbitrate. The claim against Kies survives regardless of the outcome of the arbitration; it is not dependent upon the claim against the doctor.
Crites also relies on footnote 4 of Cannon, which states, "We hasten to add that claims of strict liability and breach of warranty may not always be arbitrable; however, if such claims are related to and incorporate a negligence claim, ... which may be arbitrable, then all counts will be arbitrable." 296 Md. at 38 n. 4, 459 A.2d at 202 n. 4. The instant case does not present the question whether other claims may be joined when all parties are properly before an arbitration panel; rather, it presents the question whether other parties may properly be compelled to submit to arbitration under the Act.
The difficulty presented where claims arise jointly against health care providers and non-health care providers is not insurmountable. In such circumstances, a plaintiff might file two actions, one with the HCAO under the Act against the health care provider, the other in court against the non-health care provider. At that point, a stay may be requested in the court action to avoid undue expense and preserve judicial resources until the arbitration process can be completed. If a trial of the claim against the health care provider is sought following arbitration, the cases may then be consolidated; otherwise, trial would proceed only against the non-health care provider. Alternatively, if all parties agree, arbitration could be waived under Md.Code (1974, 1989 Repl.Vol.), Courts & Judicial Proceedings Art., § 3-2A-06A, and trial could proceed on all claims together.[3]
It is manifest that the Legislature intended that the word "physician" as used in the Act should have its ordinary meaning. The modifying phrase "licensed or authorized" does not change that meaning. Absent an agreement to do so, a person who is not a health care provider as defined by the Act may not be compelled to submit to binding arbitration. It follows that the answer to the certified question is no.
CERTIFIED QUESTION ANSWERED AS SET FORTH ABOVE. COSTS IN THIS COURT TO BE PAID BY APPELLEE.
NOTES
[1] It has also been suggested that a recently enacted statute regarding medical records, which defines the phrase "health care provider," might illuminate the legislative intent as to whether employees fall within the scope of this phrase. Maryland Code (1982, 1990 Repl.Vol., 1990 Supp.), Health-General Article, § 4-301(h). The Legislature made clear its intention with regard to the definition of "health care provider" within the Act itself. The Act defines "health care provider" in section 3-2A-01(e). We need not go outside the Act for the meaning of this phrase.
[2] Crites also makes an argument that Kies had apparent authority to practice medicine. Since we find that authority, whether express or apparent, does not make Kies a physician under the Act, this argument likewise fails.
[3] We are cognizant that this option was not available to Crites, as Maryland Code (1974, 1989 Repl.Vol.), Courts & Judicial Proceedings Article, § 3-2A-06A is applicable only to actions arising on or after July 1, 1987. Chapter 596 of the Acts of 1987, §§ 4, 5. Nevertheless, this alternative may assist future non-health care providers who find themselves confronted with this situation. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2369907/ | 593 A.2d 173 (1991)
Linda C. WHEELER, et al., Appellants,
v.
William GOULART, et al., Appellees.
Nos. 91-442, 91-450.
District of Columbia Court of Appeals.
Argued May 10, 1991.
Decided May 17, 1991.
Patrick J. Carome, with whom A. Douglas Melamed and Ross A. Albert were on the briefs, Washington, D.C., for appellants.
Candida Staempfli Steel, with whom Philip A. Gagner and Lawrence H. Mirel were on the briefs, Washington, D.C., for appellees.
David S. Barr filed a brief, Washington, D.C., for The Newspaper Guild, as amicus curiae.
Lee Levine, Elizabeth C. Koch, Lisa A. Burns, and Jane E. Kirtley, Washington, D.C., were on the brief filed by the Reporters Committee for Freedom of the Press, et al., as amici curiae.
Before STEADMAN and WAGNER, Associate Judges, and KERN, Senior Judge.
PER CURIAM:
This is an expedited appeal from the trial court's order entered during the course of a civil trial now in progress adjudging appellant, a news reporter under subpoena as a witness, in civil contempt for refusing to answer certain questions put to her by counsel for the litigants. Also before us is the consolidated appeal from the trial court's memorandum opinion and order (the "Opinion") entered two days previously which denied the motion to quash the trial subpoena directed to appellant.
We attach a copy of that Opinion as an appendix. There, the trial court succinctly set forth the issue and its ruling: "The issue before the Court on this particular motion is whether Ms. Wheeler may be compelled to testify as to the identity of the person who provided her with information regarding an on-going police department investigation. In short, the answer is yes and the Motion to Quash will be denied." This conclusion of the trial court is supported by the special facts of this case as found by the trial court and the law applicable thereto, and consequently the order of contempt as based upon that conclusion is equally supported.
I.
We briefly summarize the facts and procedural posture as set forth in the Opinion. In this regard, we reiterate the oft-stated limited nature of appellate review imposed by statute; namely, that trial court findings of fact are determinative, *174 unless "plainly wrong or without evidence to support [them]." Frog, Inc. v. Dutch Inns of America, Inc., 488 A.2d 925, 928 (D.C.1985), quoting D.C.Code § 17-305(a) (1981).[1] Appellant is a news reporter who in 1986 wrote several stories published in a local newspaper, which is also an appellant in this case,[2] about a significant police operation then directed at drug trafficking in this city. Once it took place, appellant reported that she had obtained a classified plan for such secret operation before its execution.
Appellant moved to quash a subpoena for trial, asserting that because newsgathering is the essence of a free press she had a constitutional right not to testify concerning her 1986 news story. She cited, inter alia, Zerilli v. Smith, 211 U.S.App.D.C. 116, 656 F.2d 705 (1981); Carey v. Hume, 160 U.S.App.D.C. 365, 492 F.2d 631, cert. denied, 417 U.S. 938, 94 S. Ct. 2654, 41 L. Ed. 2d 661 (1974).
The trial court held a pre-trial hearing on appellant's assertion that she was constitutionally privileged not to appear and testify. Testimony under oath was presented at the hearing that before appellant's news stories were published by the newspaper employing her, she had disclosed to two different individuals, in no way connected with her employer, that her source for obtaining the classified information and document detailing the confidential police operation was the then Assistant Chief of Police, Isaac Fulwood.
Fulwood is now the Chief of Police of the Metropolitan Police Department in Washington, D.C., and also one of defendants in the on-going civil action presided over by the trial court. The gravamen of such action is the allegedly tortious conduct on the part of Fulwood and the other defendants subsequent to the 1986 police operation towards the plaintiffs who were among the various high-ranking police officers allegedly responsible for the lack of success of the police operation.
At the hearing on whether the trial court should quash the subpoena, each of the two individuals to whom appellant had made her disclosures in 1986 testified that she told him that she obtained detailed information about the confidential police operation from Chief Fulwood, and one of them testified that she told him that Fulwood had given her a copy of the operation handbook. Neither witness indicated in his testimony that appellant had imposed upon or extracted from him a promise or pledge to keep her disclosure confidential. One witness testified without contradiction that he initiated the call to the reporter and sought and obtained from her the identity of the source of her information. Having resolved all questions of credibility, the trial court found that appellant's disclosures of her sources were not part of her newsgathering or investigative function. The trial court also found that the reporter did not impose upon either of them a stricture to keep what she told them confidential.
The trial court refused to quash the subpoena commanding appellant to appear and testify, and ultimately directed appellant to answer certain questions propounded to her in the trial, on alternative grounds. First, the trial court concluded that appellant could not disclose in 1986 to others the identity of her source and then in 1991, being called as a witness in a court of law, claim the privilege not to identify her source. Second, the trial court applied the balancing test "between the civil litigant's interest in compelled disclosure and the public interest in protecting a newspaper's confidential sources," as set forth by our sister appellate court in the District of Columbia in Zerilli v. Smith, supra. There, the court noted that "[t]he civil litigant's need for the information he seeks [must be] *175 of central importance" and "[e]ven when the information is crucial to a litigant's case, reporters should be compelled to disclose their sources only after the litigant has shown that he has exhausted every reasonable alternative source of information." Id., 211 U.S.App.D.C. at 123, 656 F.2d at 713.
In the view of the trial court here, as we interpret it, appellant's testimony that the Chief of Police was her source of obtaining the classified information and document detailing the confidential police operation was "of prime importance" to the plaintiffs' case against the Chief and the other defendants for their alleged wrongful treatment subsequent to the conduct of this less than successful operation in 1986. The trial court also concluded that there was no one other than appellant who could tell where the operation handbook came from or who was the source of the information that she conveyed to the two individuals.
II.
Appellant forcefully attacks the trial court's ruling. Appellant asserts that the federal court of appeals in this jurisdiction expressly recognized in Zerilli v. Smith, supra, 211 U.S.App.D.C. at 122, 656 F.2d at 712, "the preferred position of the First Amendment and the importance of a vigorous press." Appellant also calls our attention to Branzburg v. Hayes, 408 U.S. 665, 92 S. Ct. 2646, 33 L. Ed. 2d 626 (1972), a much-cited judicial decision relating to the task of addressing the competing interests of affording full and fair judicial hearings to litigants and protecting the freedom of the press.
This appeal at this point does not present the occasion for a far-reaching examination of the existence and scope of the asserted constitutionally-founded privilege. As did the trial court, we postulate only for purposes of this appeal such a qualified privilege, as defined in Zerilli.[3] Our adjudication upon the facts and circumstances peculiar to this case is that appellant cannot choose to disclose to others in 1986 with no request for confidentiality and under circumstances which did not involve any newsgathering functionthat Fulwood was her source for the classified information detailing the confidential police operation, and then choose in 1991as a witness in a judicial proceedingnot to make this same disclosure. See Tofani v. State, 297 Md. 165, 465 A.2d 413 (1983); Las Vegas Sun v. Eighth Jud. Dist. Ct., 104 Nev. 508, 761 P.2d 849, 852-53 (1988); Pinkard v. Johnson, 118 F.R.D. 517, 523 (M.D.Ala. 1987). Cf. Bruno & Stillman, Inc. v. Globe Newspaper Co., 633 F.2d 583, 597-98 (1st Cir.1980). In short, what she chose to say to others out-of-court she cannot now refuse to repeat in court.
Appellant urges that where "the reporter has previously talked to others outside the courtroom" this court should not adopt what she terms "an automatic, all-or-nothing waiver rule." We do not do so by our decision in the instant case. We base our decision upon the particular facts and circumstances here rather than adopting an "all-or-nothing" rule on waiver. Appellant chose to reveal to others the identity of her source without imposing a stricture of confidentiality upon them in a situation not in pursuit of her investigation. Thus, having disclosed the information unconditionally, appellant cannot follow an "on-and-then-off" practice of maintaining the confidentiality of her source.[4]
Appellant cites several cases for the proposition that the First Amendment newsgatherer's privilege applies even to non-confidential information. However, *176 the great majority of those cases involved discovery requests for all of a reporter's notes and source material underlying a given story.[5] That type of broad request is far different from the narrow questions that we hold were properly propounded to appellant under the facts of this case. Once a newspaper reporter discloses the source under the circumstances presented here, the rationale for upholding any qualified privilege ceases. See Las Vegas Sun v. Eighth Jud. Dist. Ct., supra, 761 P.2d at 852-53.
Moreover, this appeal does not present the question whether the disclosure eliminates an invocation of the privilege in any and all circumstances.[6] As the trial court rightly observed, the disclosure bears directly upon the application of the postulated two-pronged balancing test.[7] The now non-confidential nature of the testimony sought could quite rightly be taken into account in consideration of the several factors at issue.
Thus, this special factual feature presented here provides significant support to the trial court's application of the two-pronged test. While appellant challenges the trial court's conclusion as to the importance of her testimony in the context of this case, it is well-established that a trial court determination of the relevancy of proffered evidence, of which this conclusion is simply a variant, is almost always deferred to, Roundtree v. United States, 581 A.2d 315, 328 (D.C.1990), and we think much the same fact-specific analysis applies to a determination of the availability of alternate sources. In sum, we see no basis for upsetting the trial court's application of the Zerilli test here to inquiries with respect to previously disclosed information.[8]
III.
Appellant argues, more generally, that beyond issues of confidentiality of sources, "important First Amendment interests are at stake whenever a reporter is compelled to testify about the newsgathering process." Some thirty questions were propounded to appellant,[9] with respect to which she invoked the privilege and with respect to which the contempt order by its terms applied.[10]
*177 We deal at this point only with those questions relating to what the trial court defined, already quoted above, as the issue before it in its Opinion, upon which the contempt order was based and to which the prior disclosure related; viz., the source of the information. This was the core upon which the privilege was invoked and argued both in the trial court and on appeal.
Thus, as to those questions asked of appellant in the trial court which are not closely related to the information she has already disclosed, it may be that such disclosure would not preclude her from now invoking an asserted constitutional protection against answering those other questions as intruding without sufficient warrant into the newsgathering process. See Branzburg v. Hayes, supra, 408 U.S. at 707, 92 S. Ct. at 2670 ("news gathering is not without its First Amendment protections"). However, this is an expedited appeal from a trial court ruling in the midst of trial. The possibility exists that plaintiffs will not pursue these questions or will frame them in a different manner once they have obtained the testimony from appellant identifying her confidential source, or that appellant will not further invoke the privilege once this information has been disclosed. Moreover, the trial court in its Opinion was not specifically faced with the application of the privilege to these other questions.[11] Therefore, we apply the traditional appellate approach of restraint in declining to decide that which may not be at issue when appellant resumes the stand.[12]
In sum, we affirm the trial judge's denial of the motion to quash and the subsequent order to appellant to answer in court that which she has already disclosed to two different persons on separate occasions apart from a newsgathering function and without imposing confidentiality upon them, viz., the identity of her source for the classified information detailing the confidential police operation. We also affirm the trial court's sanction for appellant's refusal to answer this question and those questions that are directly related to and closely intertwined with the question to her concerning the identity of her source.[13] With respect to any remaining questions, we vacate the order of contempt without prejudice to its renewal in light of subsequent trial developments.
So ordered.[14]
*178 APPENDIX
SUPERIOR COURT OF THE DISTRICT OF COLUMBIA
Civil Division
Civil Action No. 89-3563
Civil I
Judge Levie
WILLIAM E. GOULART, et al.
v.
MARION BARRY, et al.
MEMORANDUM OPINION AND ORDER
This matter is before the Court on a Motion to Quash a Trial Subpoena, brought by the Washington Post and Linda Wheeler, a reporter for the Post. The Court has reviewed the Motion, the additional Memorandum filed on behalf of the movants, Ms. Wheeler and the Post and the Opposition filed by the plaintiffs. The Court heard testimony from Ms. Wheeler, Captain Irwin and Lieutenant Moyer and heard several hours worth of legal argument by all counsel involved. The issue before the Court on this particular motion is whether Ms. Wheeler may be compelled to testify as to the identity of the person who provided her with information regarding an on-going police department investigation. In short, the answer is yes and the Motion to Quash will be denied.
By way of background, this suit arose after the execution of approximately 70 search warrants in connection with a drug investigation which was named Operation Caribbean Cruise. Following the execution of those warrants, a variety of officers previously assigned to the Fourth District Vice Unit were transferred out of their Vice positions and, according to the allegations here, it was only the Caucasian officers associated with Operation Caribbean Cruise who were not returned to Vice positions.
The plaintiffs have filed a complaint alleging violation of their constitutional and civil rights under 42 U.S.C. § 1983 and have further alleged negligent supervision and training and the intentional infliction of emotion distress. The plaintiffs in this case issued a trial subpoena to Ms. Wheeler to learn whether she was provided information regarding Operation Caribbean Cruise, including a copy of the Operational Handbook, prior to the execution of the warrants by then Assistant Chief Isaac Fulwood.
As the facts developed on April 17, 1991 during the hearing on the Motion to Quash, it became clear that Captain Hugh Irwin of the U.S. Park Police is now and as of December 5, 1987 was the husband of Ms. Wheeler, the reporter for the Post. In 1985 then Lieutenant Irwin was one of the U.S. Park Police's representatives involved in Operation Caribbean Cruise. On approximately January 20, 1986 Captain Irwin spoke with Ms. Wheeler and learned that she knew of the large number of warrants to be issued in connection with Operation Caribbean Cruise, that the Operation had targeted the Rastafarian community in Washington, D.C., that the investigation involved large amounts of marijuana and automatic weapons and that the planned date for the execution of the search warrants was in the early morning hours of February 20, 1986.
When he learned this information Captain Irwin was concerned that the press had access to information about Operation Caribbean Cruise and that the availability of such information might pose a danger to the officers who would be executing the warrants in connection with that Operation. At 12:05 p.m. on January 20 Captain Irwin called then Sargeant, now Lieutenant, Moyer who was the Park Police Liaison with Metropolitan Police in relation to Operation Caribbean Cruise and told Lieutenant Moyer that the press had knowledge about the on-going investigation. Although Captain Irwin testified that he did not recall whether he told Lieutenant Moyer who was the source of this information Captain Irwin said that he told Moyer that the source was highly placed and suggested that Lieutenant Moyer check with Linda Wheeler.
Although Captain Irwin did not recall the specific date that he learned from Ms. Wheeler that Assistant Chief Fulwood was *179 the source of the information given him on January 20, 1986, he did testify that prior to February 22, 1986, the day of the actual operation, he did learn from Ms. Wheeler that Assistant Chief Fulwood had been the source of the information she had related to him on January 20.
At 6:25 p.m. on that same day, January 20, 1986 Lieutenant Moyer called Ms. Wheeler at her office at the Post. According to Lieutenant Moyer, during that conversation Ms. Wheeler attempted to find out information from Lieutenant Moyer about Operation Caribbean Cruise. Lieutenant Moyer testified without contradiction that he did not tell Ms. Wheeler any information concerning Operation Caribbean Cruise.
Instead, Lieutenant Moyer sought to learn from Ms. Wheeler who was the source of her information. Lieutenant Moyer testified last week that he explained to Ms. Wheeler that it was important for him to know whether the source of her information was "on the street", as he put it, or whether it came from someone within the police department. According to Lieutenant Moyer, it was during that conversation on January 20, 1986 that Ms. Wheeler told him her source was Assistant Chief Fulwood.
Between February 16 and February 22, 1986, while in Ms. Wheeler's kitchen, Captain Irwin was shown by Ms. Wheeler a copy of the Operational Handbook for Operation Caribbean Cruise and he was asked by Ms. Wheeler to review the contents of that Handbook. According to Captain Irwin, the Handbook he saw on that day indicated the locations for the execution of the warrants and the identity of the various agents and officers who would be involved in the execution of those warrants. Captain Irwin indicated that upon seeing that Handbook he was surprised because: (1) he had not seen it before, (2) it contained information that he previously was not aware of and (3) it had not yet been given to the officers, like himself, who would be participating in Operation Caribbean Cruise. Indeed, Captain Irwin testified that he did not get his copy of the Handbook until the early morning of February 22, 1986. Upon comparison with the Handbook he had seen in Ms. Wheeler's kitchen several days earlier, Captain Irwin testified that the Handbook he got on the morning hours of February 22 was substantially the same as that he had seen in Ms. Wheeler's kitchen. There was some updated and additional information, but otherwise, in his words, the contents were substantially the same.
At the time Captain Irwin reviewed the Handbook in Ms. Wheeler's kitchen, Ms. Wheeler told him that Isaac Fulwood had given her the Handbook.
According to Captain Irwin, his relationship with Ms. Wheeler in early 1986 was one in which they confided with one another. In response to leading questions posed to Captain Irwin by Ms. Wheeler's counsel, Captain Irwin testified that he thought that Ms. Wheeler believed that he (Captain Irwin) would not divulge the substance of their conversations. Further, Captain Irwin testified that he believed his conversations with Ms. Wheeler were consistent with her attempt to investigate and corroborate information given her as a reporter.
The Court does not place much weight on these last comments by Captain Irwin in response to the questions posed to him by Ms. Wheeler's counsel for several reasons. First, it is clear that what Captain Irwin testified to in response to the questions posed by Mr. Carome, counsel for movants, was only what Captain Irwin assumed Ms. Wheeler was thinking. Captain Irwin gave no testimony in Court as to anything Ms. Wheeler said to him about any expectation she had or about any reason she had for supposedly trying to get information from him by way of investigating or further corroborating information already known to her. Moreover, there is no testimony from Ms. Wheeler that she had any such expectations of confidentiality in her conversation with Captain Irwin. But, for reasons that will be stated later, that is not dispositive one way or the other. On the record that was presented to the Court it was clear that Ms. Wheeler provided the *180 information to Captain Irwin with no expectation of confidentiality nor pursuant to any investigative activities in which she was engaged or for the purpose of corroborating information that she already had gotten from other sources. The testimony presented to the Court, which is the record upon which the Court must base its findings, indicated that Ms. Wheeler asked and sought nothing in return from Captain Irwin. Regardless of any comments to Captain Irwin, it is equally clear that she got nothing from Lieutenant Moyer but very freely gave out information to Lieutenant Moyer.
With respect to Ms. Wheeler's testimony on April 17, 1991, she testified: she had no recollection of a January 22 conversation with Captain Irwin, she had no recollection of any January 22 conversation with Lieutenant Moyer and she had no recollection of any events on or about February 16 or 17, 1986, in connection with the Handbook. Ms. Wheeler testified that, if she were ordered by the Court to testify, such questions would probe her newsgathering activities and would have, in her words, a "devastating effect" that "it would be the worst thing [she] could think of". According to Ms. Wheeler, if she were required to testify both her credibility and the trustworthiness of other reporters would be affected adversely.
On the issue of credibility, the Court had the opportunity to listen to Ms. Wheeler, Captain Irwin and Lieutenant Moyer on both direct and cross-examination by several counsel. The Court also had the opportunity to listen to what each person said and to compare that testimony with other evidence presented. The Court observed the demeanor of the various witnesses. Based upon those evaluations, the Court finds that Lieutenant Moyer's testimony was credible and that Captain Irwin's testimony was the most credible of the persons who testified. For it was Captain Irwin, who testifying under oath, had the most to lose by being candid and truthful.
The Court does not accept Ms. Wheeler's testimony that she had no recollection of the various conversations. The information that is at issue here involved advance knowledge of an on-going police investigation of far reaching dimensions, considering the number of targets and search warrants that were to be issued. Indeed, the day after the Operation and four days after that Ms. Wheeler herself wrote or co-authored two articles in the Washington Post which referred to the fact that the Post had a copy of the Operational Handbook in advance of the Operation. In effect, based on the evidence presented to the Court Ms. Wheeler put herself in the position in which she finds herself today both by the reference in the article to the advance receipt of the Handbook and by choosing to talk about her source to Captain Irwin and Lieutenant Moyer.
There are three questions which are presented to the Court as a result of this particular motion. The first is whether or not there is a reporter's privilege here in the District of Columbia in the absence of a statute. To that the Court answers probably yes. It is the Court of Appeals, however, which will make the final decision in that regard. Second, if such a qualified privilege does exist, did Ms. Wheeler waive it? That question also must be answered in the affirmative. Finally, and independent of the question of waiver, is the question of whether application of a court developed balancing test requires Ms. Wheeler to testify. That question also must be answered in the affirmative.
With respect to the existence of a reporter's privilege, many states have adopted statutes which codify such privilege. In other states and in other federal jurisdictions, there being no federal statute in this regard, courts have found a qualified privilege for reporters. See Branzburg v. Hayes, 408 U.S. 665 [92 S. Ct. 2646, 33 L. Ed. 2d 626] (1972); Zerilli v. Smith, 211 U.S.App.D.C. 116, 656 F.2d 705 (1981). That privilege is a recognition that a free press has an important role as a source of public information. See Zerilli, supra, 656 F.2d at 710-711. But that privilege involves "a balance between freedom of the press and the obligation of all citizens to given relevant testimony...." Branzburg, *181 supra, 408 U.S. at 710 [92 S.Ct. at 2671] (Powell, J. concurring).
In the District of Columbia there is no such reporter's privilege statute, often referred to as a shield statute. Upon review of the caselaw, however, the Court would anticipate that our Court of Appeals might well find some form of qualified privilege to be applicable here in the District of Columbia. If the Court is wrong about how the Court of Appeals might decide the issue, then all the other questions presented before the Court are moot. If there is no privilege, Ms. Wheeler must testify and there is no need to reach the other questions. For the sake of a full record the Court will assume that our Court of Appeals will find such a privilege.
Assuming a qualified privilege does exist, the question is whether it has been waived. There is a long line of cases which recognize that a reporter has the ability to waive a reporter's privilege. United States v. Cuthbertson, 630 F.2d 139, 147 (3rd Cir.1980); Tofani v. State, 297 Md. 165, 465 A.2d 413 (1983); Altemose Construction Company v. Building and Construction Trades Council of Philadelphia, 443 F. Supp. 489, 491 (E.D.Pa.1977); Pinkard v. Johnson, 118 F.R.D. 517, 523 (M.D. Ala.1978 [1987]) and Las Vegas Sun Incorporated v. Eighth Judicial District Court, [104 Nev. 508], 761 P.2d 849 (Nev. 1988).
In Las Vegas Sun, the Supreme Court of Nevada stated "the disclosure of a source and the attribution of remarks to that source is a clear cut waiver of the shield privilege ... [w]hen a newspaper or broadcaster names its sources and quotes statements made by that source the underlying purpose of the shield law is vitiated and the statutory privilege is waived." Id. [761 P.2d] at 852-53. The Supreme Court of Nevada also noted that, even in the absence of a statute, the privilege could be waived, referring to Tofani. Id. [761 P.2d] at 852.
Here, on the facts presented, the Court finds that Ms. Wheeler told Captain Irwin and Lieutenant Moyer the name of her source. No one forced her to tell the name of her source. It was a voluntary, conscious act for which, on this record, she got nothing in return. The record before the Court belies any characterization that Ms. Wheeler's disclosure was a part of a reporter's "give and take" in the course of gathering news. Here, Ms. Wheeler gave, but took nothing.
In arguing against waiver Ms. Wheeler's attorneys have stressed that this is not like the attorney-client privilege or other privileges designed to protect confidential information, because the reporter's privilege, according to Ms. Wheeler's counsel, protects non-confidential as well as confidential information. While this distinction between confidential and non-confidential information may have a bearing in connection with the balancing test as to whether a reporter can be ordered to disclose information, it does not have any role in determining whether or not there has been a waiver of any privilege.
In support of their argument that the reporter's privilege is unlike the attorneyclient or informant privilege the movants have relied upon the only case they foundPeople v. Silverstein [89 Ill.App.3d 1039, 45 Ill. Dec. 341] 412 N.E.2d 692 (Ill. App.Ct.1980). There the Court was relying upon a statute. Having review that case and the statute upon which it was based, this Court does not find that the distinction made by that court to be convincing.
Rather, the Court relies and follows other cases which have noted the similarity between a reporter's privilege and the attorney-client and informant privilege. See, Continental Cablevision v. Storer Broadcasting, 583 F. Supp. 427, 433 (E.D.Mo. 1984); Anderson v. Nixon, 444 F. Supp. 1195, 1200 (D.D.C.1978). Both the attorney-client and the informant privilege are inextricably tied to the free flow of information. As with the reporter's privilege, it is the ability to prevent disclosure that is the underpinning of those two privileges. In the attorney-client privilege, the client must know that the attorney will protect the information given by the client in order for the attorney to act effectively and for *182 the client to feel that the client can pass to the attorney all information necessary for the attorney to do his or her job. With respect to the informant's privilege, the importance of protecting the identity of informants is an absolute prerequisite to effective law enforcement. Indiscriminate disclosure of informants' identities would severely hamper law enforcement techniques and operations. Nevertheless, the courts have found that such privileges can be waived and disclosure can be ordered.
In Pinkard the Court did recognize a waiver in that case where the disclosure was from a reporter to a litigant. The Court does not find any conceptual distinction between that situation and here, where the information was given to another person but one who is not litigant. The point is that the information was disclosed.
With respect to cases where sources had disclosed their own identity and then courts refused to order the reporter to disclose the identity of that source, the Court has concerns that such cases carry the privilege too far because such cases appear to be inconsistent with the very rationale which courts have espoused as the underpinnings of the reporter's privilege.
Ms. Wheeler's counsel in evaluating these facts would go so far as to argue that there would be no waiver here or in any situation. For example, if Ms. Wheeler were sitting around at a dinner party and tells several of her closest friends the identity of her source, there would be no waiver. The privilege should not be read in such a broad manner. The courts have always viewed it as a qualified, as opposed to absolute, privilege which reflects a balance between the freedom of the press and the duty to reveal relevant information. In effect the reporter's privilege represents a balancing of competing societal interest.
While the privilege confers a benefit, that is the right not to be forced to disclose information, the privilege carries with it simultaneous responsibility. That responsibility is not to voluntarily disclose your sources, regardless of whether the information given to the reporter was from a confidential or non-confidential source. If a reporter wishes to avail him or herself of the non-disclosure benefits of the privilege, he or she cannot at the same time selectively breach that privilege. When Ms. Wheeler voluntarily told Captain Irwin and Lieutenant Moyer that Assistant Chief Fulwood was her source, she knowingly and intelligently waived her right to invoke any reporter's privilege. Whether Ms. Wheeler's motives in passing on that information were romantic or, as her own attorney characterized it as "pillow talk", or a concern for the safety of law enforcement officers or any other reason is not important and does not change the result. If Ms. Wheeler wanted confirmation of the information she had received, she did not have to name her source to get it. She chose to name her source to two separate people and cannot now wrap around herself the reporter's privilege to prevent being compelled to come to court and tell in a courtroom that which she so freely chose to tell others outside the courtroom.
With respect to the final issue presented to the Courtthe balancing test, Ms. Wheeler and the Washington Post assert that the privilege can be overcome only if the plaintiffs show: "(1) that the information goes to the heart of plaintiffs' legal claims and that (2) plaintiffs have exhausted alternative avenues for obtaining the information in question." (Memorandum Regarding the Hearing Concerning Motion to Quash at 6 and 7).
With respect to the first issue, the plaintiffs have argued that if Chief Fulwood leaked the information and the Handbook, that that goes directly to the plaintiffs' claim of discriminatory treatment and due process violations. Such leaks would explain Chief Fulwood's motivations and actions, which differ in great respect, according to plaintiffs, from his public explanations. Secondly, Ms. Wheeler's information would act directly to impeach Chief Fulwood's deposition testimony that he gave the Handbook to no one including Ms. Wheeler.
This case is as classic a "one-on-one match up" as any case to be presented in *183 this Courthouse. While there are multiple plaintiffs and multiple defendants, the testimony of Chief Fulwood will be a critical factor in how this case is ultimately decided on the merits. If the jury believes Chief Fulwood it will do much to enhance the strength of the defendants' arguments. On the other hand, if the jury chooses to disbelieve Chief Fulwood it will do much to enhance the plaintiffs' position in this case. In these circumstances the matters bearing on the testimony of Chief Fulwood is of prime importance to be presented to the jury in this case. See NLRB v. Mortensen, 701 F. Supp. 244 (D.D.C.1988).
In engaging in a balancing test courts have recognized that there is a lesser showing of need and materiality where disclosure of non-confidential material is sought. See Continental Cablevision v. Storer Broadcasting, 583 F. Supp. 427 (E.D.Mo. 1984); Miller v. Mecklenburg County, 602 F. Supp. 675 (W.D.N.C.1985). Here, Ms. Wheeler disclosed her source to two persons already. This presents a situation where there is a lesser standard to be met by the plaintiffs in seeking to obtain her testimony.
The second prong of the balancing test requires exhaustion of alternative sources. The facts presented to me in the context of this hearing indicate that, although multiple copies of the Handbook were prepared prior to February 22, 1986, only two of those copies were outside a locked safe. One was given to then-Chief Turner and the other to then-Assistant Chief Fulwood. As noted, Chief Fulwood has denied under oath that he gave that Operational Handbook to Ms. Wheeler or anyone else prior to February 22. There is no one else other than Ms. Wheeler who can tell where that Operational Handbook came from or who was the source for the information that was given to Lieutenant Moyer and Captain Irwin on January 20.
This is a situation more like the Mortensen case, than Maughan v. NL Industries, 524 F. Supp. 93 (D.D.C.1981). Indeed, in Maughan Judge Joyce Hens Green did note that, although her case involved an attempt to get disclosure of reporter's notes, the reporter could be called to testify. On the facts of this case with the extremely limited universe of persons involved with the operative facts, i.e., Assistant Chief Fulwood and Ms. Wheeler, it is those two people who should be called to testify. One has testified and denied it. And the Court finds on these facts that the plaintiffs have exhausted their alternative sources and further that the first prong of the balancing test tips in favor of the plaintiffs in this regard.
For all these reasons, the Motion to Quash Subpoena filed by Ms. Wheeler and the Washington Post will be denied.
Richard A. Levie
RICHARD A. LEVIE
Associate Judge
Signed in Chambers
NOTES
[1] Appellant's objections to certain aspects of the trial court's findings cannot withstand this criterion of review.
[2] Since both appellants are represented by the same counsel and their interests treated as identical, we refer for convenience in this opinion to the reporter as the single appellant. We assume without deciding that the newspaper has standing to join in the appeal. We also note that the order to quash is appealable, at least by the reporter, only in relation to the order of contempt. United States v. Harrod, 428 A.2d 30 (D.C.1981) (en banc).
[3] We are mindful at the same time that since any such privilege insofar as it flows from the First Amendment operates as an absolute limitation on legislative power to otherwise balance the conflicting interests and since the existence of the privilege lacks any common-law roots, its applicability should be applied with some caution. Close to 30 states have elected to define the privilege through statutory enactments, which can of course expand the privilege beyond any constitutionally defined limits that may otherwise exist.
[4] We note that the testimony at the hearing held by the trial court of those witnesses to whom appellant disclosed her sources has been widely publicized.
[5] United States v. Cuthbertson, 630 F.2d 139 (3d Cir.1980), cert. denied, 449 U.S. 1126, 101 S. Ct. 945, 67 L. Ed. 2d 113 (1981); Maughan v. NL Indus., 524 F. Supp. 93 (D.D.C.1981); Gulliver's Periodicals, Ltd. v. Chas. Levy Circulating Co., 455 F. Supp. 1197 (N.D.Ill.1978). Other cases cited by appellant are based on statutory interpretations which require a different result. Altemose Constr. Co. v. Building & Constr. Trades Council, 443 F. Supp. 489, 491 (E.D.Pa. 1977); People ex rel. Scott v. Silverstein, 89 Ill. App. 3d 1039, 45 Ill. Dec. 341, 344, 412 N.E.2d 692, 695 (1980).
[6] Appellant challenges the direct application to "waivers" of the First Amendment privilege of principles of law drawn from other testamentary privileges such as the attorney-client privilege. She argues that the rationales underlying each privilege "differ radically in origin, purpose, and function." However, no such identical interpretation and application of the distinct privileges is needed here. Rather, as discussed, the disclosure here has relevance within the application of the postulated Zerilli test itself.
[7] The Opinion states: "In engaging in a balancing test courts have recognized that there is a lesser showing of need and materiality where disclosure of non-confidential material is sought.... Here, Ms. Wheeler disclosed her source to two persons already. This presents a situation where there is a lesser standard to be met by the plaintiffs in seeking to obtain her testimony."
[8] We note the standard of review used by the appellate court in Zerilli in reviewing a trial court determination that a reporter's privilege prevailed in a discovery context: "[O]ur function on appeal is solely to determine whether the trial court abused its discretion in entering the challenged order." 211 U.S.App.D.C. at 121, 656 F.2d at 710.
[9] This questioning took place at a preliminary inquiry conducted outside of the presence of the jury, when appellant appeared in compliance with the subpoena. Questions were propounded by counsel for all parties.
[10] Thus, appellant was asked, among other questions, whether she was present at the execution of the police operation, whether she had ever met or talked to various members of the police force, and whether she took a copy of the operation handbook out of her employer's offices.
[11] Should this need arise, the trial court should, as in its prior Opinion, examine whether the questions relate to matters found to have been waived or are otherwise subject to disclosure after application of the two-prong balancing test. Utilization of an in camera procedure may be appropriate. See United States v. Zolin, 491 U.S. 554, 109 S. Ct. 2619, 105 L. Ed. 2d 469 (1989).
[12] Plaintiffs appear to have no fair grounds to complain about any delay or hinderance that such a course of action may play with respect to the completion of the trial. As far as the record reveals, plaintiffs made no attempt to obtain the deposition of appellant or seek a pretrial resolution of the serious legal issues that are now presented. That there is any interim appeal flows from the fact that the trial court ruled against the application of the privilege and found appellant in contempt, see United States v. Harrod, supra, so that appellant, and not the parties to the litigation, is the only participant entitled to immediate appellate review. Had the trial court ruled in favor of the application of the privilege, no review could be sought until the final completion of the trial. D.C.Code § 11-721(a)(1) (1989).
[13] Thus, appellant can be compelled to answer the following questions previously propounded by counsel out of the presence of the jury:
Was then Assistant Chief Isaac Fulwood in any way involved in the chain, if there was a chain, of information given to you regarding the raids prior to the execution?
Ms. Wheeler, did you at that time, January of '86 and February of '86, obtain a handbook for Operation Caribbean Cruise from Assistant Chief Fulwood?
Did you tell, between January of 1986 and the execution of the raids, did you tell eitherdid you tell Captain Hugh Irwin about the sourcewho the source was for your information?
In January of 1986, Ms. Wheeler, did you tell Sgt. Moyer who gave you that information?
[14] The division is prepared to entertain a motion to expedite the issuance of the mandate in this appeal if dictated by the necessities of the ongoing trial. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2369943/ | 728 S.W.2d 397 (1987)
Curtis FERGUSON, Appellant,
v.
Houston D. KELLY, et ux, Appellees.
No. 09-86-146 CV.
Court of Appeals of Texas, Beaumont.
March 5, 1987.
*398 Thomas Harmon, Douglas & Elms, Inc., San Antonio, for appellant.
Randy E. Drewett, Law Offices of Perry R. McPherson, Port Arthur, for appellees.
OPINION
DIES, Chief Justice.
This is a lawsuit in the nature of a trespass to try title suit, wherein Curtis Ferguson, as plaintiff below, sued Houston D. Kelly, et ux, and the City of Port Arthur, as defendants below, claiming title to certain realty in Port Acres, Jefferson County, and also contending the existence of an express and implied easement dedicated by a common grantor to plaintiff, the City of Port Arthur, and the public generally.
Trial was to the Court which found title to be in the Kellys, and specifically:
(a) Defendants Kelly and wife have fee simple title to the property in question.
(b) City of Port Arthur has no right, title or claim to a right-of-way or easement with regard to the property in question.
(c) Plaintiff Ferguson has no right, title or claim to ownership of the property in question.
By "property in question" in (a), (b), and (c) above we mean the East 435.6 feet of the South 25 feet of Lot 5 in Block 27 of Port Acres.
The Court's judgment also decreed plaintiff Ferguson "has no right, title or claim to a right-of-way or easement of any type" to the South 50 feet of Lot 5 in Block 27 of Port Acres. From this judgment, plaintiff has perfected appeal to this Court. The City of Port Arthur has not appealed.
Plaintiff advances four points of error. Two points concern the trial court's failure to grant plaintiff a summary judgment. The other two contend plaintiff has title and a right-of-way easement.
We first dispose of the two points of error embracing the refusal of the Court to grant plaintiff a summary judgment. When a party moves unsuccessfully for summary judgment and subsequently loses on a conventional trial on the merits, the order overruling the motion is not reviewable on appeal. 4 R. MCDONALD, TEXAS CIVIL PRACTICE IN DISTRICT AND COUNTY COURTS sec. 17.26.13, at 221 (Rev.Vol.1984); Motor 9, Inc. v. World Tire Corp., 651 S.W.2d 296, 299 (Tex.Civ. App.Amarillo 1983, writ ref'd n.r.e.), citing Ackermann v. Vordenbaum, 403 S.W.2d 362, 365 (Tex.1966), and Texas City Hotel Corp. v. Wilkenfeld, 410 S.W.2d 860, 861 (Tex.Civ.App.Waco 1966, no writ); Southwestern Materials Co. v. George Consolidated, Inc., 476 S.W.2d 454, 455 (Tex.Civ.App.Houston [14th Dist.] 1972, writ ref'd n.r.e.). These two points of error are overruled.
By date of June 3, 1948, N. Ledet and wife sold "N.L.C. Ferguson and Oma Ferguson, husband and wife, ... Lots Numbered One (1) and Two (2), in Block Number Twenty-eight (28), of Port Acres...." N.L.C. and Oma are the parents of plaintiff. N.L.C. Ferguson, "in settlement of community property belonging to the parties", on the 25th of February, 1955, conveyed a one-half (½) interest in and to this property to Oma, plaintiff's mother.
L.W. Lloyd on the 4th of October, 1957, quitclaimed to defendant Kelly Lloyd's *399 right, title and interest in "[t]he South Fifty Feet (S. 50') of Lot Number Five (5), in Block Number Twenty-seven (27), of Port Acres...."
While appellees unequivocally state: "It must be pointed out that the record title owner of the south twenty-five feet (S. 25') of the fifty foot (50') strip was Oma Ferguson, mother of Appellant",[1] and appellant does not challenge this statement, nevertheless we have in our Transcript (p. 85) a deed from Oma Ferguson, "a feme sole", to Curtis Ferguson (plaintiff) covering "Lots Numbered One (1) and Two (2) in Block Number Twenty-eight (28), of Port Acres...."
In point of fact, we have been unable to determine if either party has a record title to the land in controversy. It is axiomatic in Texas law that a plaintiff's right to recover, in a case such as ours, depends on the strength of his own title, not on the weakness of his adversary. The defendant is not required to show title in himself, nor may the plaintiff rely on the defendant's failure to do so. Although the defendant may have specially pleaded a title which he fails to establish, the plaintiff may not recover unless his own title is affirmatively disclosed. See 56 TEX. JUR.2d Trespass to Try Title sec. 7 (1964), and the many authorities cited therein.
So, while much of appellant's brief is devoted to the inadequacies of appellees' proof of adverse possession, the question is whether the trial court's findings are supported by any proof. 4 R. MCDONALD, TEXAS CIVIL PRACTICE IN DISTRICT AND COUNTY COURTS sec. 16.10(b), at 34 (Rev.Vol.1984); Southern v. Glenn, 677 S.W.2d 576 (Tex.Civ.App.San Antonio 1984, writ ref'd n.r.e.); Chapa v. Herbster, 653 S.W.2d 594 (Tex.Civ.App.Tyler 1983, no writ); Jackson v. Henninger, 482 S.W.2d 323, 326 (Tex.Civ.App.Austin 1972, no writ).
"In a non-jury trial wherein the court has filed findings of fact and a statement of facts has been filed, the court's findings will be sustained if there is any evidence to support them."
Jackson v. Henninger, supra.
In Bywaters v. Gannon, 686 S.W.2d 593 (Tex.1985) our Supreme Court stated:
"Also, the question of adverse possession normally is a question of fact, so only in rare instances is a court justified in holding that adverse possession has been established as a matter of law."
In the case at bar, the trial court heard evidence of fencing, notice, use, taxes paid, construction and granting permission for use of the property by other parties. The authorities we have cited herein make him the trier of the facts, and authorize him to decide title in defendant, and that plaintiff had no easements. All points of error are overruled.
The judgment of the trial court is affirmed.
Affirmed.
BROOKSHIRE, Justice, concurring.
Upon the record before us, I concur in the results. The Appellees, in their brief, concede this:
"The fact of the matter is that Oma Ferguson, Appellant's mother, who was not made a party to this lawsuit, is the record owner of the south twenty-five feet (S 25') of the fifty foot (50') strip."
Appellees also concede that it is Oma Ferguson who has the proper legal standing and status to contest the rights, title, and ownership of Appellees. I agree that Oma Ferguson was a necessary, if not indispensable, party to this litigation. However, no point of error is addressed to that proposition.
Nevertheless, in my opinion, it is glaringly clear that Oma Ferguson's rights, title and interest are not affected, in any degree, by the trial court's judgment or this litigation or this appeal.
BURGESS, Justice, dissenting.
I respectfully dissent. The majority is quite correct legally. Hejl v. Wirth, 161 *400 Tex. 609, 343 S.W.2d 226 (1961), still governs trespass to try title suits. It holds both that a plaintiff must recover on the strength of his own title and that the effect of a take-nothing judgment against a plaintiff is to vest title in the defendant. Our Supreme Court should address and change the latter rule.
It is archaic, in my humble opinion, to vest title in a party-defendant simply because the plaintiff has not shown title. If the defendant is to be vested with title, he should be required to plead and prove the manner in which he is asserting it.
Neither the pleadings nor evidence sustains the trial court's finding that the defendants are the record owners. Similarly, there is insufficient evidence to sustain the trial court's finding that the defendants adversely possessed the land. Nevertheless, the majority holds that the trial court properly found that the plaintiff failed to prove his title and, therefore, as a legal result, title vested in the defendant.
In Permian Oil Co. v. Smith, 129 Tex. 413, 73 S.W. 490, 496 (1934), modified on other grounds, 107 S.W.2d 564 the court reasoned that this rule was "but an application of the provision of the statute to the effect that any final judgment in an action to recover real estate shall be conclusive as to the title or right of possession established in such action upon the party against whom it is recovered, and upon all persons claiming through or under him, by title arising after the commencement of the action. Article 7391, R.S. 1925 [now TEX. PROP.CODE ANN. sec. 22.003 (Vernon 1984) ][1]." The fallacy of this rationale for the rule is that by allowing a defendant to recover solely on a not guilty plea he has been relieved of the normal burden of establishing his title or right to possess the litigated property. The statute was intended to estop losing plaintiffs or cross-claimants from pursuing further litigation, not to aid a defendant or cross-defendant in establishing good title. Houston Chronicle Pub. Co. v. Bergman, 128 S.W.2d 114 (Tex.Civ.App.Houston 1939, writ dism'd judgmt cor.).
The Supreme Court originally recognized that the title that vested in a defendant upon the plaintiff's failure to prove his claim was nothing more than that held by the plaintiff. Wilson v. Swasey, 20 S.W. 48, 49 (Tex.1892). In most cases it would be fair to assume that a plaintiff's failure results from a defect in his claim, thus rendering the defendant's title by virtue of the case less than certain as to other claimants. But see, Turner v. Land, 472 S.W.2d 853 (Tex.Civ.App.Tyler 1971, writ ref'd n.r.e.). It, therefore, makes little sense to hinge the defendant's claim to property upon another party's failure to prove his right to it since the loser's failed interest is all that passes under the rule. Unfortunately, judicial evolution of the Hejl rule has resulted in judgments that actually declare title to be in the defendant. Hancock v. Booker, 608 S.W.2d 811, 816 (Tex.Civ.App.Waco 1980, writ ref'd n.r. e.). This is a far cry from merely recognizing that the effect of a take nothing judgment is to make the defendant's claim unassailable by the plaintiff and unnecessarily clouds title to the property. Moreover, I find nothing in our Rules of Civil Procedure that supports declaring title to be in a defendant on a not guilty plea unless proof accompanies that plea.
Those rules that deal most specifically with trespass to try title cases, TEX.R. CIV.P. 783-809, support this conclusion. A not guilty plea, without qualification, is an admission that the defendant is either in possession of the premises sued for or that he claims title to the disputed property. TEX.R.CIV.P. 790. Rule 789 requires that a limitations claim be specially pleaded. Thus, if the defendant claims either by adverse possession or title he has implicitly cross claimed for relief. Rule 795 incorporates the rules of pleading, practice, and evidence for civil cases generally in the trial of a trespass to try title case. Allowing *401 recovery on the strength of a pled, but unproved claim, is foreign to our civil practice and violates due process. For that reason I would hold that even the more limited application of the rule that passes title as between the losing plaintiff and defendant abrogates the rules of procedure. Hejl v. Wirth, supra, its ancestry and progeny, should be overruled concerning the effect of a take nothing judgment in a trespass to try title case so that this area of the law is consonant with modern practice.
In departing from current law, I would reverse and render a take nothing judgment against both parties. Staying within current law, I would reverse the judgment and order a remand for the trial court's entry of a take nothing judgment against the plaintiff without affirmatively entering a judgment vesting title in the defendants based upon their strength of title.
For the reasons stated, I respectfully dissent and implore the Supreme Court of Texas to overturn and abandon Hejl v. Wirth, supra.
NOTES
[1] Of course she was never made a party to this suit.
[1] TEX.PROP.CODE ANN. sec. 22.003 provides: "A final judgment that establishes title or right to possession in an action to recover real property is conclusive against the party from whom the property is recovered and against a person claiming the property through that party by a title that arises after the action is initiated." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2369950/ | 669 F. Supp. 976 (1987)
Edward M. HALL, Plaintiff,
v.
Otis R. BOWEN, Secretary of Health and Human Services, Defendant.
No. C-84-2932-WWS.
United States District Court, N.D. California.
September 15, 1987.
Kim Malcheski, San Francisco, Cal., for plaintiff.
Sandra L. Willis, Asst. U.S. Atty., San Francisco, Cal., for defendant.
MEMORANDUM OF OPINION AND ORDER
SCHWARZER, District Judge.
On August 12, 1987, plaintiff filed this motion for summary judgment, under 42 U.S.C. § 405(g), seeking disability insurance benefits and supplemental security income under Titles II and XVI of the Social Security Act, for the period of May 1, 1982 to March 12, 1984.
BACKGROUND OF THE CLAIM
Plaintiff filed applications for disability insurance and SSI benefits on June 23, 1982, alleging disability beginning May 1, 1982. These applications were denied administratively. Plaintiff then requested a hearing before an ALJ, which was held on July 18, 1983. On December 29, 1983, the ALJ who conducted the hearing issued a *977 decision finding plaintiff did not have impairments sufficiently severe to be considered disabling under the Social Security Act and regulations. This decision was affirmed by the Social Security Appeals Council on April 5, 1984, thereby becoming the final decision of the Secretary.
Plaintiff sought judicial review pursuant to 42 U.S.C. § 405(g). On February 11, 1985, this Court upheld the Secretary's final decision in a memorandum of opinion and order. Hall v. Heckler, 602 F. Supp. 1169 (N.D.Cal.1985).
On March 1, 1985, plaintiff appealed this decision to the Court of Appeals for the Ninth Circuit. On October 24, 1985, the Ninth Circuit found the regulations under which plaintiff's claim had been denied to be invalid. Yuckert v. Bowen, 774 F.2d 1365 (9th Cir.1985).[1] On January 3, 1986, the instant case was reversed and remanded with instructions that plaintiff's claim be re-evaluated without reference to the no severe impairment regulations held to be invalid in Yuckert.
Administrative hearings on remand were held on July 23, 1986 and again on November 12, 1986, at which plaintiff, his attorney and an independent medical advisor appeared. Plaintiff offered additional testimony and evidence at these hearings. The ALJ issued a recommended decision finding plaintiff disabled as of March 12, 1984, but not prior thereto (Tr. 179-188). This December 17, 1986 decision was adopted by the Appeals Council on June 11, 1987 (Tr. 174-175) and became the final decision of the Secretary.
Plaintiff's current motion asserts that the Appeals Council erred by adopting the ALJ's finding that claimant was not disabled prior to March 12, 1984, contrary to the medical evidence of record and the medical advisor's expert opinion. Plaintiff argues there is substantial evidence to show that he did not have an RFC (residual functional capacity) for medium work prior to March, 1984. Alternatively, plaintiff contends that both the ALJ and the Appeals Council erred by ignoring the disabling effects of his alcoholism. Plaintiff argues that the medical record shows the severity, chronic nature and uncontrollability of his alcoholism which rendered him totally disabled before 1984.
Additional evidence and testimony taken at the two hearings in 1986 provide substantial evidence that plaintiff's alcoholism was more severe than originally determined. At plaintiff's original hearing on July 17, 1983, he testified to drinking only a half pint of scotch every two days (Tr. 35), although his medical records on June 2, 1982 noted that he drank a fifth of whiskey a day, a much heavier drinking pattern. His records are replete with findings of ETOH (excessive alcohol) on June 2, June 7, June 21, and June 23, 1982, and July 10, 1982 (Tr. 49). Plaintiff was diagnosed as being affected with alcoholism by Dr. Bruce C. Thompson, a treating physician, on February 5, 1983 (Tr. 144-145).
During the July, 1986 hearing on remand from this Court, plaintiff stated that he had been drinking heavily since 1975. Prior to his beginning an AA program in May, 1986, he testified that he had been unable to stop drinking since the 1960's. He claimed to have been drinking a fifth of whiskey a day for the past five years (Tr. 220).
Dr. Malley, an internist (Tr. 245), appeared as an independent medical advisor at the November 1986 hearing. Dr. Malley opined that plaintiff could not have handled a job prior to 1984 due to his heavy alcohol consumption (Tr. 253). The ALJ on several occasions advised Dr. Malley to ignore the alcoholism issue in his evaluation (Tr. 251, 253, 254). Nevertheless, Dr. Malley testified that plaintiff's problem with alcohol had been prolonged and significant enough to possibly cause "brain deterioration" (Tr. 249 and 251).
DISCUSSION
The ALJ's decision is reviewable to determine whether substantial evidence supports it. Miller v. Heckler, 770 F.2d 845 *978 (9th Cir.1985). Moreover, a decision of the Secretary is also reviewable to determine whether the appropriate legal standard was applied. Wiggins v. Schweiker, 679 F.2d 1387 (11th Cir.1982); Gray v. Califano, 448 F. Supp. 1142 (S.D.Cal.1978); Griffis v. Weinberger, 509 F.2d 837 (9th Cir.1975).
The Ninth Circuit has recently held that alcoholism by itself may constitute a disability if the claimant has lost the ability to control his drinking. Cooper v. Bowen, 815 F.2d 557 (9th Cir.1987); Johnson v. Harris, 625 F.2d 311 (9th Cir.1980); Griffis v. Weinberger, 509 F.2d 837 (9th Cir.1975). The claimant must establish that he is a chronic alcoholic. Cooper v. Bowen, 815 F.2d at 560. The Secretary then must consider whether such a diagnosed alcoholic can control his or her drinking. Id. The Secretary, or the ALJ whose decision the Secretary adopts, must make a specific finding on the claimant's ability to control his or her drinking and its disabling effect. Id.
In the case at bar, no evidence was presented to show that plaintiff could control his alcohol consumption during the period in question. Cooper v. Bowen, 815 F.2d at 561. There was no rebuttal of plaintiff's testimony as to the duration and severity of his drinking. Id. Drinking a fifth of whiskey a day for over four years is a pattern of consumption that "merits further evidentiary attention." Id. (quoting Stuart v. Califano, 443 F. Supp. 842, 845 (W.D.Mo.1978).
The ALJ's conclusion that plaintiff had not lost his ability to control his alcohol consumption is not supported by any evidence in the record. Under Cooper, the appropriate inquiry is whether plaintiff was addicted to alcohol, had lost control of its use, and whether its use precluded his obtaining and maintaining employment during the period in question.
By directing Dr. Malley, the expert witness who was testifying regarding plaintiff's RFC, to ignore the claimant's alcoholism in response to questions as to claimant's capabilities to perform light or sedentary work, the ALJ failed to take that condition into consideration as required under Cooper v. Bowen.
In his recommended decision, the ALJ cited plaintiff's contention at the hearing that his alcoholism was not a problem. Because of alcoholics' propensity for down-playing the adverse effects of their drinking, such testimony should not be given undue weight in the face of medical evidence to the contrary. Young v. Heckler, 803 F.2d 963, 966 (9th Cir.1986). The ALJ did not have on record substantial evidence to support his finding that plaintiff's use of alcohol did not disable him from performing his prior relevant work or any other gainful activity.
In light of the additional testimony and evidence of plaintiff's alcoholism presented at the 1986 hearings and the recent Ninth Circuit ruling in Cooper v. Bowen establishing the proper legal standard to apply, the Court remands to the Secretary for a new hearing at which evidence may be presented on the issue of plaintiff's ability to control his drinking during this period in question.
On remand, the Secretary should also consider the option of conditioning any retroactive benefit on plaintiff's receiving treatment for his alcoholism. Cooper v. Bowen, 815 F.2d at 561. Given the nature of alcoholism, a large award may not help plaintiff if he spends the money on alcohol. Id. The Ninth Circuit has endorsed the conditioning of benefits approach and has further endorsed the paying of disability benefits to a representative payee rather than directly to the claimant, and this payee may be an institution treating the claimant. Id; McShea v. Schweiker, 700 F.2d 117, 120 (3rd Cir.1983).
IT IS SO ORDERED.
NOTES
[1] The decision in Yuckert later was reversed and the validity of the regulations was upheld by the United States Supreme Court. Bowen v. Yuckert, ___ U.S. ___, 107 S. Ct. 2287, 96 L. Ed. 2d 119 (1987). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2369927/ | 669 F. Supp. 191 (1987)
Andrew JOHNSON, Plaintiff,
v.
JACK B. KELLEY, INC., a corporation, and Aden Safety/Airco, a corporation, Defendants.
No. 86 C 4904.
United States District Court, N.D. Illinois, E.D.
July 6, 1987.
*192 John C. Mullen, Christopher Mullen, Mary R. Minella, Noah Walker, Mullen & Minella, Chicago, Ill., for plaintiff.
Richard M. Hittle, Keevers & Hittle, Chicago, Ill., for third-party defendants.
Hilary T. Scantlebury, William F. McDermott, Law Offices of H.T. Scantlebury, Chicago, Ill., for third-party plaintiff Barry A. Robin.
Donald B. Hilliker, Mark J. McAndrew, Phelan Pope & John Ltd., Chicago, Ill., Richard H. Albert, Air Products & Chemicals, Inc. Law Dept., Allentown, Pa., for defendants.
MEMORANDUM OPINION AND ORDER
WILLIAM T. HART, District Judge.
Plaintiff Andrew Johnson brought this action seeking to recover for injuries sustained when a helium tank exploded in the course of his employment with certain divisions of the BOC Group, Inc. ("BOC"). Plaintiff seeks to recover from the owner of the helium tank, Jack B. Kelley, Inc. ("Kelley") and the tank's manufacturer, Gardner Cryogenics ("Gardner") on theories of strict liability and negligence. Plaintiff also seeks to recover against Jackson Products, Inc. ("Jackson"), the manufacturer of the safety glasses he was wearing at the time of the accident. Defendants Gardner and Jackson have brought third-party negligence claims against BOC alleging that BOC improperly altered the helium tank and failed to train and supervise plaintiff in the proper procedures for repressurizing the tank.
Settlement negotiations were had, and plaintiff made an initial demand of $450,000 from all defendants plus a waiver of worker's compensation benefits. In negotiations between the potential defendants, BOC offered to contribute $186,000, an additional worker's compensation benefit of $64,000, a subrogation waiver of the $64,000, a subrogation waiver of amounts already paid of approximately $26,000, as well as certain medical expenses. Gardner offered $10,000 toward a settlement package, Jackson offered $5,000, and Kelley offered nothing. Plaintiff rejected this offer, but agreed to accept BOC's offer.
Thus, pursuant to a settlement agreement between plaintiff and BOC, for $186,000 plus the waiver of certain liens and subrogation rights, BOC was released from any claims plaintiff may have had against it. All defendants were advised of this settlement. Defendants Kelley and Gardner agreed between themselves that Gardner would defend and indemnify Kelley, and Gardner's counsel has substituted for Kelley by order of court.
BOC has now moved to dismiss the third-party actions brought against it by Gardner and Jackson on the basis that the settlement agreement it entered into with plaintiff constitutes a good faith settlement under the Illinois Contribution Among Joint Tortfeasors Act, Ill.Rev.Stat. (1986), ch. 70, §§ 301 et seq., thus discharging it from liability for contribution. For the reasons stated below, BOC's motion is granted.
DISCUSSION
Section 2 of the Illinois Contribution Among Joint Tortfeasors Act provides, in pertinent part:
(a) Except as otherwise provided in this Act, where 2 or more persons are subject to liability in tort arising out of the same injury to person or property, or the same wrongful death, there is a right of contribution among them, even though judgment has not been entered against any or all of them.
(b) The right of contribution exists only in favor of a tortfeasor who has paid more than his pro rata share of the common liability, and his total recovery is limited to the amount paid by him in excess of his pro rata share. No tortfeasor is liable to make contribution beyond his own pro rata share of the common liability.
(c) When a release or covenant not to sue or not to enforce judgment is given in good faith to one or more persons liable in tort arising out of the same injury or the same wrongful death, it *193 does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide but it reduces the recovery on any claim against the others to the extent of any amount stated in the release or the covenant, or in the amount of the consideration actually paid for it, whichever is greater.
(d) The tortfeasor who settles with a claimant pursuant to paragraph (c) is discharged from all liability for any contribution to any other tortfeasor.
Ill.Rev.Stat. (1986), ch. 70, § 302. The Contribution Act can thus be viewed as an attempt to provide a statutory scheme for the equitable distribution of fault. BOC claims that, by reason of the settlement it entered into with plaintiff, it is discharged from liability for contribution to all joint tortfeasors, including Gardner and Jackson.
Gardner and Jackson contend that the settlement agreement was not entered into in "good faith," as the Contribution Act requires, and thus, that their claims against BOC for contribution are not barred. In support of their argument, Gardner and Jackson rely on the decision of the Illinois appellate court in LeMaster v. Amsted Industries, Inc., 110 Ill.App.3d 729, 66 Ill. Dec. 454, 442 N.E.2d 1367 (5th Dist.1982). In LeMaster, the court held that a settlement agreement entered into between a claimant and his employer did not constitute a good faith settlement under the Contribution Act because the claimant retained no cause of action outside of the Worker's Compensation statute which he could relinquish in return for the agreement. The court reasoned:
As in all contracts, consideration is the quiddity which binds the parties to a settlement agreement.... If a good faith settlement under the Contribution Act must be supported by consideration and if consideration consists of the compromise of a claim which is asserted in good faith, the question again becomes whether the plaintiff's assertion of tort claims against [the employer] could be made in good faith.
Id., 66 Ill.Dec. at 459, 442 N.E.2d at 1372. The court concluded that, as between the claimant and his employer, "an equitable bargain was simply not entered into," and thus that the settlement agreement did not bar a third-party action for contribution against the employer. Id.
Gardner and Jackson argue that this court should follow the Illinois appellate court's decision in LeMaster and find that, because BOC was immune from tortious liability to plaintiff due to the exclusivity of the Worker's Compensation statute, the settlement was not made in good faith and could not serve to discharge their third-party claims against BOC. Since the Illinois Supreme Court has not decided this issue, however, this court's duty is to predict what rule that court would adopt if faced with the question. Harris v. Karri-on Campers, Inc., 640 F.2d 65, 68 (7th Cir. 1981); UNR Industries, Inc. v. Continental Insurance Co., 607 F. Supp. 855, 863 (N.D.Ill.1984). Here, certain decisions of the Illinois Supreme Court subsequent to the appellate court's decision in LeMaster lead this court to conclude that the LeMaster approach may no longer be viable and should not be followed in this case.
In Doyle v. Rhodes, 101 Ill. 2d 1, 77 Ill. Dec. 759, 461 N.E.2d 382 (1984), the Illinois Supreme Court held that an employer could be subject to liability as a joint tortfeasor notwithstanding the Worker's Compensation statute's bar to suits initiated by an employee directly against the employer. The court stated that "[t]he intent of the Contribution statute was to reach anyone who was culpable, regardless of whether they have been immunized from a direct tort action by some special defense or privilege." Id. 77 Ill.Dec. at 763, 461 N.E.2d at 386. Thus, in this case, although BOC has not been sued by plaintiff, there is no question that it could be subject to liability as a joint tortfeasor under the Contribution Act. Given this, the consideration it gave for the settlement with plaintiff cannot be said to have been illusory. While Doyle did not specifically address the issue of what constitutes a good faith settlement between a plaintiff and an employer, its conclusion that an employer may *194 be "subject to liability in tort" within the meaning of the Contribution Act, despite the potential defense of the Worker's Compensation statute, clearly undercuts the conclusion of LeMaster.
In Ballweg v. City of Springfield, 114 Ill. 2d 107, 102 Ill. Dec. 360, 499 N.E.2d 1373 (1986), the reasoning of LeMaster was still further implicitly undercut by the Illinois Supreme Court. In Ballweg, the court rejected the argument that, because the plaintiff's cause of action against one defendant would have been barred by the statute of limitations at the time a settlement with that defendant was entered into had the defense been raised, it lacked consideration and did not thus constitute a good faith settlement as required by the Contribution Act. The court noted that, under Doyle, the potential for tort liability exists until the defense is established, and also emphasized the public policy encouraging the settlement of claims. "`If we were now to add limitations not expressed in the general language of the settlement instrument or in the provisions of the Contribution Act, we would make those who desire to end litigation wary and uncertain of what they would accomplish by settlement.'" Id. 102 Ill.Dec. at 367, 499 N.E.2d at 1380, quoting Rakowski v. Lucente, 104 Ill. 2d 317, 325, 84 Ill. Dec. 654, 658, 472 N.E.2d 791, 795 (1984).
Other decisions of the Illinos appellate courts subsequent to LeMaster, and following the Illinois Supreme Court's analyses in Doyle and Ballweg, likewise suggest that LeMaster may no longer be entirely viable. In Doellman v. Warner & Swasey Co., 147 Ill.App.3d 842, 101 Ill. Dec. 366, 498 N.E.2d 690 (1st Dist.1986), for example, the court, in upholding a good faith settlement between the plaintiff and one defendant as a bar to contribution to nonsettling defendants, stated:
LeMaster's determination that an employer is not a party `liable in tort' because of the exclusivity provisions of the workers' compensation act was rejected by the Illinois supreme court in Doyle .... There the court held that employers were parties potentially liable in tort for an employee's injuries. Plaintiff's release must therefore have had value in LeMaster, and had value herein; it thus constituted ample consideration to bind the parties to the release, and its acceptance constituted a good-faith settlement as between appellee and plaintiff.
Id. 101 Ill.Dec. at 372, 498 N.E.2d at 696. Similarly, in O'Connor v. Pinto Trucking Service, Inc., 149 Ill.App.3d 911, 103 Ill. Dec. 242, 501 N.E.2d 263 (1st Dist.1986), the court stated that while a disputed claim which is entirely without foundation cannot support a good faith settlement, "where the claim is questionable, its compromise nevertheless will support a settlement agreement asserted in good faith." Id. 103 Ill.Dec. at 246, 501 N.E.2d at 267. The court stressed that "[t]he protection from contribution of parties who settle is an essential part of the statutory scheme to foster certainty and encourage good faith settlements." Id. 103 Ill.Dec. at 245, 501 N.E.2d at 266.
Similar to the result in Doyle, the Illinois appellate courts have recently held that the parent-child and interspousal tort immunities do not suffice to bar actions for contribution against members of a plaintiff's family. This is significant because the approach taken in LeMaster would invalidate, for purposes of the Contribution Act, any settlement and release agreement entered into between a plaintiff and a family member who had been identified as a joint tortfeasor. Thus, these family members would join employers as part of a group who could be "subject to liability in tort" under the Contribution Act, but at the same time incapable of validly exercising the Contribution Act's provision for executing a settlement with the plaintiff in order to finalize and extinguish their involvement in the litigation. It seems unlikely that the Illinois Supreme Court, if faced with this question, would countenance such an incongruous result. As the court stated in O'Connor, "[p]ublic policy favors peaceful and voluntary resolutions of claims through settlement agreements; ... therefore, the greater burden of producing clear and convincing evidence to establish the invalidity of a settlement agreement is imposed." *195 O'Connor, supra 103 Ill.Dec. at 245, 501 N.E.2d at 266.
As the Illinos Supreme Court noted in Doyle, a primary purpose envisioned by the Contribution Act was to have all tortfeasors, regardless of their relationship to the plaintiff, ultimately involved in resolving all conflicts which arise as a result of injuries. However, if this were all that the legislature intended to accomplish with the Contribution Act, the Act itself would consist only of Section 2(a), which establishes a cause of action among those persons "subject to liability in tort." Ill.Rev.Stat. (1986), ch. 70, § 302(a). Instead, the legislature also included language discussing the effect of settlements between the claimant and other tortfeasors. This legislative directive reinforces the importance of enabling parties to resolve conflicts without litigation. Section 2(d), Ill.Rev.Stat. (1986), ch. 70, § 302(d), which discharges any tortfeasor who settles with the claimant from liability to any other tortfeasor, provides a significant incentive for settlement, since any party who refuses to become involved in settlement negotiations risks becoming a sole defendant at trial if all other tortfeasors settle their disputes with the claimant. The approach taken in LeMaster completely abrogates the policy of providing an incentive to settlement which underlies the language of the Contribution Act and which has been recognized as paramount in more recent Illinois decisions. See, e.g., O'Connor, supra; Ballweg, supra; Doellman, supra.
This court is, of course, mindful that the entire circumstances surrounding a settlement must be taken into account. Ballweg, supra 102 Ill.Dec. at 367, 499 N.E.2d at 1380. However, once there has been a preliminary showing that a good faith settlement has been made, the burden of proof on the issue of the good faith of the settling party shifts to the party who claims that the settlement was not made in good faith or is collusive. Barreto v. City of Waukegan, 133 Ill.App.3d 119, 88 Ill. Dec. 266, 478 N.E.2d 581 (2d Dist.1985). See also Perez v. Espinoza, 137 Ill.App.3d 762, 92 Ill. Dec. 377, 484 N.E.2d 1232 (1st Dist.1985); Wasmund v. Metropolitan Sanitary Dist., 135 Ill.App.3d 926, 90 Ill. Dec. 532, 482 N.E.2d 351 (1st Dist.1985).
Gardner and Jackson attempt to distinguish Ballweg, Doellman and O'Connor on the basis that, in those cases, joint settlements had been entered into between the plaintiffs, defendants, and third-party defendants, whereas in this case, BOC, who was not even named as a defendant, effectuated a settlement with plaintiff directly. Because plaintiff settled with BOC solely and directly, they argue, there has been no true apportionment of liability among tortfeasors as is contemplated by the Contribution Act. However, both Gardner and Jackson were indisputably aware of the settlement between plaintiff and BOC at the time it was entered into, having previously participated in settlement negotiations themselves. In view of the fact that these parties were aware of settlement conferences and were given an opportunity to settle but chose not to do so, BOC's settlement with plaintiff directly cannot be said to have collusive or other than in "good faith." See Barreto, supra 88 Ill.Dec. at 268, 478 N.E.2d at 583. In addition, the court notes that BOC also attempted to negotiate a settlement with defendant Kelley, but that Gardner agreed to hold harmless, indemnify and compensate Kelley for attorney's fees, thus apparently preventing such a settlement.
Gardner and Jackson also contend that barring their third-party claims against BOC constitutes an usurpation of their constitutional right to a remedy under Article I, § 12 of the Illinois Constitution, and subjects them to liability in excess of their fair share, but this very argument was properly rejected in O'Connor, supra 103 Ill.Dec. at 247, 501 N.E.2d at 268. The ultimate purpose of the Contribution Act is to provide a means whereby all parties bear responsibility for their pro rata culpability when an injury occurs. If the amount provided by BOC in settlement was inadequate relative to its potential pro rata culpability, the agreement would still be subject to challenge on that basis as not constituting a "good faith" settlement within the meaning of the Contribution *196 Act. As previously noted, however, Gardner and Jackson have raised no direct challenge to the amount BOC agreed to in settlement with plaintiff. Gardner and Jackson are also protected from excessive liability by Section 2(c) of the Contribution Act, which permits notsettling defendants to claim a set-off for any amounts recovered by the claimant through previous settlement with another tortfeasor. Ill.Rev. Stat. (1986), ch. 70, § 302(c). See id.
This court thus finds that there was consideration for the settlement agreement between plaintiff and BOC, that the settlement agreement was entered into in good faith, and that BOC is entitled to the protection of the discharge provision of Section 2(d) of the Contribution Act, Ill.Rev. Stat. (1986), ch. 70, § 302(d). A contrary result would "allow one litigant to hold others hostage to its own intransigence," and "would take from ... those in [BOC's] position the ability to settle their own cases, and ... rather effectively place veto power over any settlement in the hands of the hardest bargainer, permitting settlement only where all the parties had agreed as to their respective liabilities." Doellman, supra 101 Ill.Dec. at 373, 498 N.E.2d at 697.
IT IS THEREFORE ORDERED that defendant BOC's motion to dismiss the third-party claims of defendants Gardner and Jackson is granted. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2369938/ | 728 S.W.2d 889 (1987)
Kenneth Dwayne SHAW, Appellant,
v.
The STATE of Texas, Appellee.
No. 01-86-00479-CR.
Court of Appeals of Texas, Houston (1st Dist.).
April 9, 1987.
*890 Charles H. Portz, III, Houston, for appellant.
John B. Holmes, Jr. Harris County Dist. Atty., Kathlyn Giannaula, Jay Karahan, Harris County Asst. Dist. Attys., Houston, for appellee.
Before EVANS, C.J., and SAM BASS and LEVY, JJ.
OPINION
EVANS, Chief Justice.
This is an appeal from a conviction for involuntary manslaughter. After finding appellant guilty and the enhancement paragraph to be true, the jury assessed punishment at 15 years confinement and a $10,000 fine.
Appellant brings six points of error. Appellant's first point of error contends that the indictment for involuntary manslaughter was fundamentally defective because it failed to allege that appellant's intoxication was voluntary. Appellant asserts that the voluntariness of intoxication is a material element of the offense and that an indictment that fails to allege all the elements of the offense is fundamentally defective.
There is no fundamental error in indictments for cases, like this one, in which the indictment was presented after December 1, 1985. Tex.Code Crim.P.Ann. art. 1.14(b) (Vernon Supp.1987).
The first point of error is overruled.
Appellant's second point of error asserts that the trial court erred in permitting Dr. Bellas to testify from an autopsy report where the State failed to show that Dr. Bellas was a records custodian.
The record reflects that Dr. Bellas, an assistant medical examiner, testified on direct examination, as follows:
Q. Now, didlet me ask this: Do you have care, custody and control of the records of the Harris County Medical Examiner's Office?
A. Yes. I do.
Q. And are these records made in the ordinary and regular course of business of the Harris County Medical Examiner's Office?
A. Yes, they are.
Q. Are they made by someone who has personal knowledge of the acts, events of conditions depicted within those records?
A. Yes.
Q. And are those records made at or near the time of the act, event or condition *891 reflected in those records or reasonably soon thereafter?
A. Yes, they are.
On voir dire examination, appellant's counsel questioned Dr. Bellas regarding the autopsy report.
Q. Doctor, the reports that you brought with you today, who supplied those reports to you before you came to court?
A. Who signed it?
Q. Who gave them to you?
A. I brought directly from my office.
Q. Okay. Who gave them to you?
A. From the files?
Q. Was there someone that gave them to you at the office to bring here?
A. Yes. The secretary, which is for these specific organization of the files
Q. Then the secretary would be the custodian of those records?
A. What?
Q. The secretary would be the custodian of those records?
A. We are the custodian of the records. They file the records.
Q. Okay. They file the records and keep them?
A. Yes.
Q. Okay. So, you don't keep those records at all times. Someone else takes care of them?
A. No. That's in another department.
Q. So you're not the custodian of these records, then, are you, sir?
A. Directly, no.
After questioning by appellant's counsel, the prosecutor again asked the witness about the records.
Q. Dr. Bellas, do you have authorization by Joseph Jachimczyk, the medical examiner of Harris County, to take these records and use them in the course of your testimony in court?
A. All the way.
Q. And in fact, you're authorized to take records of other doctors who performed medical examinations on bodies and actually take them to court and testify from them?
A. Definitely.
Q. Have you done that on few or many occasions?
A. Many occasions.
Q. In the courts here in Harris County, Texas.
A. Yes.
Q. So, you're authorized, and in that sense you have care, custody and control and authorization of the medical examiner to bring these records to court?
A. Any case.
The trial court overruled appellant's objection that the State had not established that Dr. Bellas was the records custodian. The trial court stated that Dr. Bellas had testified that he was the custodian.
Tex.Rev.Civ.Stat.Ann. art. 3737e (1951) (repealed 1986) provides in pertinent part:
Sec. 1. A memorandum or record of an act, event or condition shall, insofar as relevant, be competent evidence of the occurrence of the act or event or the existence of the condition if the judge finds that:
(a) It was made in the regular course of business;
(b) It was the regular course of that business for an employee or representative of such business with personal knowledge of such act, event or condition to make such memorandum or record or to transmit information thereof to be included in such memorandum or record;
(c) It was made at or near the time of the act, event or condition or reasonably soon thereafter.
Sec. 2. The identity and mode of preparation of the memorandum or record in accordance with the provisions of the paragraph one (1) may be proved by the testimony of the entrant, custodian or any other qualified witness even though he may not have personal knowledge as to the various items or contents of such memorandum or record. Such lack of personal knowledge may be shown to affect the weight and credibility of the memorandum or record but shall not affect its admissibility.
It is well settled that autopsy reports prepared by county medical examiners *892 are admissible as business records or official records or both. Burleson v. State, 585 S.W.2d 711, 712 (Tex.Crim.App. 1979). Dr. Bellas testified that he was the custodian of the records and that he had "care, custody and control and authorization of the medical examiners to bring these records to court." Dr. Bellas' testimony was sufficient to satisfy the statutory predicate for the introduction of the autopsy reports.
Appellant's second point of error is overruled.
Appellant's third point of error contends that the parole charge, Tex.Code Crim.P.Ann. art. 37.07(4) (Vernon Supp. 1987), is unconstitutional because it violates separation of powers. Appellant's fourth point of error urges that the parole charge creates an irreconcilable conflict and is a misleading jury instruction.
Appellant concedes that no objection to the parole charge based on constitutional grounds was made at trial. This Court has held that the issue of the constitutionality of article 37.07(4) may not be raised on appeal unless the issue was first raised in the trial court. Casares v. State, 712 S.W.2d 818 (Tex.App.Houston [1st Dist.] 1986, pet. granted 1987). Implicit in the Casares holding is that the article 37.07(4) instruction does not constitute fundamental error. See Almanza v. State, 686 S.W.2d 157, 171 (Tex.Crim.App.1985) (op. on reh'g).
Because appellant failed to raise the constitutionality of article 37.07(4) in the trial court, he failed to preserve any error for review.
Appellant's third point of error is overruled.
Appellant's fourth point of error urges that the trial court committed fundamental error in informing the jury about the existence of parole, but also instructing the jury not to attempt to determine how much time the appellant would actually serve. This instruction, appellant asserts, is fundamentally misleading.
Appellant relies heavily on the holding of Rose v. State, 05-85-1136-CR, (Tex.App. Dallas, Aug 11, 1986), rehearing en banc, 724 S.W.2d 832 (Tex.App.Dallas, 1986). The original Rose opinion has been withdrawn and, on rehearing, the Dallas Court of Appeals, sitting en banc, reversed its earlier holding. In Rose II, the court of appeals stated that:
Appellant also contends that he was denied a fair and impartial trial because the instructions are self-contradictory and misleading in that they require the jurors to distinguish between the existence of the parole law in general terms and the manner of its application to the case of an individual defendant. There is nothing inherently contradictory or confusing about this distinction or the way it is described in the statute. We must not underestimate the ability of the average juror. The final instruction is no more complex or abstract that other portions of the charge in a criminal case, e.g., the application of the law to the facts. We hold that the required jury instructions present no irreconcilable conflictthey clearly tell the jury "not to consider the manner in which the parole law may be applied to this particular defendant."
We agree with the holding of Rose II; the jury instructions do not contain an irreconcilable conflict.
Appellant's fourth point of error is overruled.
A videotape of appellant was made shortly after his arrest; this videotape was inadvertently destroyed and was not available at trial. Appellant's fifth and sixth points of error address the effect of the destruction of the videotape. Appellant's fifth point of error contends that the trial court committed reversible error in failing to instruct the jury that they could consider the fact that the videotape was destroyed in considering the credibility of the State's witness on the issue of intoxication. Appellant's sixth point of error asserts that the trial court erred in permitting a police officer to testify concerning appellant's behavior while being videotaped because the videotape had been destroyed and was not available at trial.
*893 Appellant was originally charged with driving while intoxicated. Tex.Rev.Civ. Stat.Ann. art. 6701l-1, note, sec. 24 (Vernon Supp.1987) provides that each county with a population of 25,000 or more shall purchase and maintain videotape equipment in order to visually record a person charged with driving while intoxicated.
When appellant was charged for driving while intoxicated, he was videotaped. When the complainant died, appellant was charged with involuntary manslaughter, and the DWI charge was dismissed. The videotape was destroyed by order of the prosecutor in the county court where the DWI was filed. The prosecutor testified that the videotape had been destroyed, and that the destruction was an error. On cross-examination, the prosecutor testified that the inadvertent destruction of the videotape was not standard procedure. The custodian of the videotape records testified that a videotape of appellant was placed in a locked box and numbered and filed with "other DWI tapes." The custodian testified that after a case is disposed of, a destruction order is given so that the tape can be erased and reused. The custodian testified that she received a destruction order concerning "the videotape involving the defendant Kenneth Dwayne Shaw."
Article 6701l-1, note, sec. 24(c) specifically provides:
The fact that an arresting officer or other person acting on behalf of the state failed to visually record a person arrested for an offense listed in Subsection (a) of this section is admissible at the trial of the offense if the offense occurred in a county required to purchase and maintain electronic devices under this section.
Appellant in his fifth point of error argues that while the requested jury charge is not expressly authorized, the failure to instruct the jury on the requirements of article 6701l-1, note, sec. 24 would frustrate the purpose of the statute. Appellant asserts that the article was "meant not only to require that persons arrested for DWI and involuntary manslaughter be videotaped but, that the tape be preserved for later use at trial."
We disagree. Paragraph (c) provides the sanction to be imposed when no recording is made, i.e., presentment of that fact at trial. Weaver v. State, 700 S.W.2d 776, 777 (Tex.App.Fort Worth 1985, pet. ref'd 1986). This Court held in Maddox v. State, 705 S.W.2d 739, 741 (Tex.App.Houston [1st Dist.] 1986, pet. granted 1987), that the statute "imposes no other sanctions on the county's failure to maintain or use the video equipment." The appellant was able to provide the information of the destruction of the videotape to the jury.
Moreover, the requested instruction was improper. It is not proper for a court to single out certain testimony and comment on it. Appellant's requested instruction would have constituted an improper comment on the weight of the evidence. See Chambers v. State, 700 S.W.2d 597 (Tex.Crim.App.1985).
Appellant's fifth point of error is overruled.
Appellant argues in his sixth point of error that the trial court erred in permitting a police officer to testify concerning appellant's behavior while being videotaped where the videotape was destroyed and not available at trial.
Appellant initially objected that "for purposes of the best evidence rule, if he's going to described what took place in that video, we want to see the video and have it produced." This objection was withdrawn. Appellant again objected, this time stating that "the video would be descriptive of what he's testifying to." When the officer testified that the videotape had been destroyed, appellant removed his objection stating that "if the videotape is not available where we are not allowed proper cross-examination to determine what is contained on the videotape, to determine whether his testimony accurately reflects something that is contained in the video tape, which is a document...." Appellant finally stated that "we would object to him testifying about the contents of that videotape."
Appellant's objection at trial was based on the best evidence rule. Appellant now *894 argues on appeal that the purpose of article 6701l-1, note, sec. 24 would be frustrated in admitting the officer's testimony. Appellant now asserts that the State was under a duty to videotape and to preserve the videotape and that failing in that duty, the exclusion of the officer's testimony is an appropriate remedy. (As noted above, the remedy for the lack of the videotape was introduction of that fact at trial.)
Appellant's objection does not comport with his objection at trial. Error presented on appeal must be the same as the objection raised before the trial court. Pennington v. State, 697 S.W.2d 387, 390 (Tex.Crim.App.1985). Since the trial objection does not comport with the contention on appeal, nothing is presented for review. Id.
Appellant's sixth point of error is overruled.
The judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2369919/ | 593 A.2d 49 (1991)
INN GROUP ASSOCIATES et al.
v.
Allan BOOTH et al.
No. 90-235-APPEAL.
Supreme Court of Rhode Island.
June 18, 1991.
*50 Joseph DeAngelis, Lori Caron Silveira, Licht & Semonoff, Richard G. Winkler, Providence, for plaintiffs.
C. Russell Gengtson, Carroll, Kelly & Murphy, Providence, for defendants.
OPINION
KELLEHER, Justice.
This controversy comes before us on an appeal from a Superior Court judgment that voided tax assessments made by the city of Newport on a fifty-eight-room resort for the fiscal years 1983 through 1987.
The defendants in the original action and the appellants before us now are Allan Booth, Jr., in his capacity as tax assessor (assessor) of the city of Newport, and Joseph Crawshaw, in his capacity as collection supervisor of the city of Newport. Hereafter we shall refer to the appellants as Newport.
The plaintiffs in the original suit and the appellees before us here are the Inn Group Associates (Inn Group) and the Inn on the Harbor Inn Owners' Association (Association). The Inn Group is a limited partnership that operates both an individual room-rental business and a time-share business at the Inn on the Harbor (Inn). The Inn consists of fifty-eight rooms on the Newport waterfront and a restaurant named Astor's. The Association is an unincorporated association that represents the interests of the Inn's time-share owners.
The narrative begins in 1981 when Inn Group purchased a parcel of real estate in Newport.[1] Shortly thereafter Inn Group commissioned the Landing Development Company (Landing Development) to construct a building on the parcel. After the building was completed and named Inn on the Harbor, Landing Development transformed the Inn into two condominiums. The first condominium consisted of the fifty-eight rooms and became the legal entity "L-1." The second condominium consisted of the restaurant and legally became "LC-1."
The Landing Development then devised the Interval Ownership Plan (Plan) for the fifty-eight rooms in the Inn and recorded a document entitled "Declaration of Covenants and Restrictions of Interval Ownership" (Declaration) in the Newport Registry of Deeds.
The Plan transformed the fifty-eight rooms into time-share units. A purchaser of a time-share unit would be entitled to stay for one week in one of the Inn's fifty-eight rooms. As there are fifty-two weeks in a year and fifty-eight rooms, the Plan created 3,016 units of interval ownership.
According to the Plan, each purchaser of an interval ownership unit would receive:
"a) An undivided and fractional fee simple interest in all fifty-eight (58) rooms, together with a proportionate percentage interest in the common areas of the condominium development as tenants in common with all other buyers.
"b) The exclusive right to occupy and use a particular room during a particular week of the year for the usable life of the property (fixed estate) or any available unit during different weeks of the year for the usable life of the property (flexible estate) subject to certain restrictions.
"c) A membership in Resort Condominiums International, which entitles the buyer to exchange an interval at the Inn for an interval at any one of over one thousand resort hotels around the world and other non-real property rights, benefits, *51 and services available through the time-share structure and operation."
After recording the Declaration, the Landing Development conveyed ownership of the Inn to the Inn Group. The Inn became operational in 1982. By 1984 more than two-thirds of the 3,016 units had been sold, with the remaining weeks available for day-to-day rental purposes to the public as a hotel.
In 1982 Newport hired the firm of Systems Technology Associates (STA) to revalue all Newport real estate for assessment purposes. At that time STA appraised all condominiums in Newport, using the "market data" or "comparable sales" method.[2] When the assessor requested STA to utilize a replacement-cost analysis in its assessment of the Inn, STA valued the Inn minus the restaurant at $3,400,000 using the "replacement cost" method.[3] The assessor, however, personally appraised the Inn rather than rely on the STA assessment because of the Inn's "unique qualities," as it was the only time-share building in Newport at that time. When Newport assessed taxes upon property owners in the city for the fiscal year 1983, the Inn minus the restaurant, or the fifty-eight rooms, was assessed for $8,087,040.
The assessor's method of assessment of the Inn minus the restaurant (that is, the 3,016 units) was as follows: first, the assessor estimated the purchase price of each interval unit; second, the assessor deducted percentages for marketing costs and for the non-real-property components of the intervals; third, the assessor estimated the value of the unsold intervals; finally, the assessor arrived at the value of the entire building by totaling all the intervals, sold and unsold. The Inn Group appealed to the Newport Board of Tax Appeals and also filed a complaint in Superior Court, alleging that the assessment was illegal.
Newport assessed the Inn's fifty-eight rooms for the fiscal year 1984 at $9,726,650. For the fiscal year 1985 the valuation of the Inn minus the restaurant was $12,099,200. The fifty-eight rooms were valued at $12,087,800 for the fiscal years 1986 and 1987. The assessor's method of assessing the fifty-eight rooms for the years 1984, 1985, 1986, and 1987 was similar to the method he employed in 1983. As a result of these valuations, the Inn Group filed appeals with the Newport Board of Tax Appeals and lawsuits against Newport in Superior Court.
The Inn Group and the Association came before the Superior Court trial justice, alleging that the assessments on the Inn's fifty-eight rooms were unfair and illegal and constituted a violation of G.L. 1956 (1988 Reenactment) chapter 5 of title 44. After a lengthy trial, the trial justice determined that the taxes levied on the Inn's fifty-eight rooms were void for two reasons one, because the assessments were "not evaluated pursuant to state law" and, two, because the assessments were not made "using the identifiable and accepted methods of appraisal." Newport subsequently filed an appeal to this court.
We endorse the actions taken by the trial justice because the methods employed by the assessor did not follow the mandate of state law. This reason is dispositive of this controversy because tax assessments that are made outside the ambit of state law are illegal, regardless of whether identifiable and accepted methods of appraisal are used. Consequently the only issue we shall address is whether the trial justice committed error in voiding the assessments *52 made upon the Inn's fifty-eight rooms because the valuations were not made "pursuant to state law."
As a preliminary matter, however, we turn to the Constitution of Rhode Island, which provides that "[t]he general assembly shall, from time to time, provide for making new valuations of property, for the assessment of taxes, in such manner as it may deem best." R.I. Const. art. 6, sec. 12. We have interpreted this constitutional provision to mean that the power to tax is vested exclusively in the Legislature. Ewing v. Tax Assessors of Jamestown, 104 R.I. 630, 634, 247 A.2d 850, 853 (1968). That is, the Legislature decides what will be taxed, and the property may not be taxed unless the Legislature has passed a statute clearly subjecting it to taxation. Newport Gas Light Co. v. Norberg, 114 R.I. 696, 699, 338 A.2d 536, 538 (1975).
Given this background, the critical issue in this litigation is whether the assessor levied property taxes on the Inn's fifty-eight rooms in a manner that was inconsistent with state law. The assessments that are challenged are for the fiscal years 1983 through 1987. For the years 1983 and 1984, the Rhode Island Condominium Act (Condominium Act)[4] was applicable. In 1984, however, the General Assembly enacted the Rhode Island Real Estate Time-Share Act (Time-Share Act).[5] This legislation governs the assessments made for the years 1985, 1986, and 1987. The issue before us, therefore, can be resolved by answering the following inquiries: (1) did the assessor levy taxes on the fifty-eight rooms in a manner that was inconsistent with the Condominium Act for the fiscal years 1983 and 1984? and (2) did the assessor levy taxes in a manner that was not authorized by the Time-Share Act for the fiscal years 1985, 1986, and 1987?
In turning to the Condominium Act, we note that G.L. 1956 (1984 Reenactment) § 34-36.1-1.05 provides:
"Separate titles and taxation. (a) If there is any unit owner other than a declarant, each unit that has been created, together with its interest in the common elements, constitutes for all purposes a separate parcel of real estate.
"(b) If there is any unit owner other than a declarant, each unit must be separately taxed and assessed, and no separate tax or assessment may be rendered against any common elements for which a declarant has reserved no development rights.
"(c) Any portion of the common elements for which the declarant has reserved any development rights must be separately taxed and assessed against the declarant, and the declarant alone is liable for payment of those taxes.
"(d) If there is no unit owner other than a declarant, the real estate comprising the condominium may be taxed and assessed in any manner provided by law."
Consequently § 34-36.1-1.05 provides for the separate assessment of condominium units. The Condominium Act defines "unit" as a physical portion of the condominium designated for separate ownership or occupancy. The Commissioners' Comment, which anticipated the question of assessment of time-shares, notes that "`unit,' describes a tangible, physical part of the project, rather than a right in, or claim to, a tangible physical part of the property. Therefore, for example, a `timeshare' arrangement in which a unit is sold to 12 different persons each of whom has a right to occupy the unit for one month does not create 12 new units there are rather, 12 owners of the unit." Section 34-36.1-1.03, Commissioners' Comment, paragraph 15 at 562.
Upon examining the method employed by the assessor, we find it evident that his approach was illegal under the Condominium Act. The assessor estimated the purchase price of each interval unit and then deducted percentages for non-real-property components of each interval. Ultimately *53 the assessor arrived at the value of the condominium by adding all the interval units. The Condominium Act, however, requires the assessments to be made on each unit, as a physical portion of the project. In sum, the division of a condominium into time-shares has no effect on the condominium for tax purposes under the Condominium Act. We therefore believe that the trial justice did not err in voiding the assessments made on the Inn's fifty-eight rooms for the fiscal years 1983 and 1984.
We move now to the second question: are the assessments void under the Time-Share Act? Answering this inquiry proves a far more difficult task than answering the first inquiry, in spite of the fact that the Legislature has spoken specifically on the subject of taxation of a time-share.
Section 34-41-1.03(b) of the Time-Share Act reads as follows:
"Each time-share estate constitutes for all purposes a separate estate in real property. Assessments can only be made on the real property value of the development. Notices of assessment and bills for taxes must be furnished to the managing entity, if any, or otherwise to each time-share owner, but the managing entity is not liable for the taxes as a result thereof."
At this juncture we must assume the burden of determining what the Legislature intended when it drafted the first two sentences of § 34-41-1.03(b).
The first sentence states, "Each time-share estate constitutes for all purposes a separate estate in real property." The words "for all purposes" means, if we give these words their ordinary meaning, "always" or "under all conditions." As one "purpose" or "condition" would be the purpose of taxation, the first sentence, standing alone, must mean that each time-share estate may be separately taxed as it is a separate estate in real property.
The second sentence of § 34-41-1.03(b) provides, "Assessments can only be made on the real property value of the development." This sentence completely contradicts the first sentence. That is, the second sentence requires taxes to be assessed not on each time-share estate but by the "development." Adding to the confusion is the fact that the word "development" is not defined anywhere in the Time-Share Act.
The situation before us is analogous to one in which a person finds he has two rules to follow, the first of which states "Look before you leap" and the second of which admonishes "He who hesitates is lost." These two rules cannot be translated into action together without conflict. There is no way to know whether one must look or must not hesitate. Consequently we are lost.
Justice Reed, in United States v. American Trucking Associations, Inc., 310 U.S. 534, 543, 60 S. Ct. 1059, 1063-64, 84 L. Ed. 1345, 1350-51 (1940), has noted:
"There is, of course, no more persuasive evidence of the purpose of a statute than the words by which the legislature undertook to give expression to its wishes. Often these words are sufficient in and of themselves to determine the purpose of the legislation. In such cases we have followed their plain meaning. When that meaning had led to absurd or futile results, however, this Court has looked beyond the words to the purpose of the act."
Because the two sentences create an ambiguity, we need to seek the intended purpose of the legislation by considering all relevant sources. See Newport Gas Light Co., 114 R.I. at 699, 338 A.2d at 538.
As there is no legislative history regarding the Time-Share Act, we must turn our attention elsewhere for assistance.[6] Fortunately *54 we are able to consider three relevant sources. First, there is the Uniform Law Commissioners' Model Real Estate Time-Share Act (Uniform Time-Share Act), with its comments. Second, we are also able to examine the Massachusetts Real Estate Time-Share Act (Massachusetts Time-Share Act). Third, we shall refer to relevant rules of statutory construction.
The Uniform Time-Share Act § 1-103(b), 7B U.L.A. 360 (West 1985) provides the following:
"Each time-share estate constitutes for all purposes a separate estate in real property. Each time-share estate [other than a time-share estate for years] must [not] be separately assessed and taxed. [Notices of assessments and bills for taxes must be furnished to the managing entity, if any, or otherwise to each time-share owner, but the managing entity is not liable for the taxes as a result thereof.]" (Brackets in original.)
For an explanation of this exemplar we must turn to the following comment:
"Subsection (b) makes each time-share other than a time-share license a separate estate or interest for all purposes other than assessment and taxation. Whether or not time-share estates are also separate estates for purposes of assessment and taxation, and whether or not a distinction is made in this regard between fee simple time-share estates and time-share estates for years, depends on what choices a State makes with respect to the bracketed language in the second sentence of subsection (b). Whatever decision a State makes with respect to the first bracketed phrase in that sentence, if it is decided to remove the brackets from around the word `not' (thereby leaving that word in that sentence), the last sentence of subsection (b) should be left in (with the brackets around it deleted)." Id. at comment 4.
From the comments, then, it is clear that the General Assembly elected to tax time-share estates not as individual units but as one collective development. The Legislature chose to eliminate the brackets from around the word "not," thereby leaving that word in the sentence. So, the obvious intent of the Legislature was that time-share estates "must not be separately assessed and taxed." The fact that the last sentence of § 1-103(b) of the Uniform Time-Share Act was adopted by the Legislature also confirms this interpretation because the last sentence would otherwise be superfluous.
The second relevant source that merits our consideration is the Massachusetts Time-Share Act, chapter 183B. In particular Mass. Gen. Laws Ann. ch. 183B, § 3(b) (West 1977), which is very similar to its Rhode Island counterpart, reads:
"Each time-share estate constitutes for all purposes a separate estate in real property; provided, however, that a time-share property shall be considered one parcel of real estate for the assessment and collection of real estate taxes * * * due to a city, town or district with respect to the time-share property. Notices of assessments and bills for taxes shall be furnished to and paid by the managing entity, if any, as agent for the time-share owners, or if there is no managing entity, to each time-share owner."
Thus the first clause of the Massachusetts statute is identical to the first sentence of the Rhode Island statute. However, whereas the Rhode Island statute ends with a period, the Massachusetts statute contains a semicolon followed by the words "provided, however." Thus the Massachusetts statute clearly creates an exception to the first clause, "[e]ach time-share estate constitutes for all purposes a separate estate in real property." Id. The exception is that for the assessment and collection of property taxes, a time-share property shall be considered one parcel of real estate.
Another reason the Massachusetts statute assists us in our task is that whereas the Rhode Island statute does not define "development," the Massachusetts statute does define "time-share property." Time-share property is "one or more time-share *55 units subject to the same time-share instrument, together with any other real estate or rights therein appurtenant to those units." Id. at § 2. The Massachusetts Legislature intended that all time-share units covered under the same deed should be assessed as one parcel of real estate. As Massachusetts has also adopted the third sentence of the Uniform Time-Share Act, it is clear that the Massachusetts Legislature's intent, like the Rhode Island Legislature's, was to assess taxes on the time-share property collectively and not to tax each time-share estate separately.
A final guide we can use to resolve the situation wherein there is a conflict between two sentences of a statute comes in the form of the statutory principles of construction. One such rule is that "taxing statutes are to be strictly construed against the taxing authority." Van Alen v. Stein, 119 R.I. 347, 359, 376 A.2d 1383, 1389 (1977). From this aid to construction springs forth another principle that "`[d]oubts as to the construction of [taxing] laws of this character are to be resolved in favor of the taxpayer.'" Potowomut Golf Club, Inc. v. Norberg, 114 R.I. 589, 592, 337 A.2d 226, 227 (1975). We shall therefore construe the Time-Share Act strictly against Newport, the taxing entity.
The Uniform Time-Share Act, the Massachusetts statute, and the rules of statutory construction all converge on one reading of the statute, namely, that the assessments can only be made on the entire time-share development as a whole unit. When we apply this interpretation to the method that was employed by the assessor, we find that that method cannot be countenanced. To recapitulate, the assessor first added up the selling price of each interval unit. Then the assessor deducted a percentage for all non-real-property values of the interval units. To arrive at a figure for the entire fifty-eight rooms, the tax assessor then assessed the intervals that had not yet been sold. It is by adding these two figures, both the sold and the unsold intervals, that the assessor arrived at a value for the Inn's fifty-eight rooms. Assessments were not made on the development. We therefore believe that the trial justice did not commit error in voiding the assessments for the years 1985, 1986, and 1987 as a violation of the Time-Share Act.
The assessments made on the Inn's fifty-eight rooms are illegal under both the Condominium Act and the Time-Share Act. We believe that the trial justice's decision was not clearly wrong, nor did the trial justice misconceive or overlook material evidence. See CIC Newport Associates v. Stein, 121 R.I. 844, 403 A.2d 658 (1979).
Accordingly the Superior Court judgment is affirmed, and the appeal is denied and dismissed.
NOTES
[1] These facts are taken from the trial justice's decision.
[2] market data [or comparable sales] approach estimates the value of a property by comparing it with similar properties recently sold in the open market. Each comparable sale is analyzed, in relation to the subject property, under the general categories of time, terms of sale, location, and physical characteristics. The sale price of each comparable property is then adjusted to reflect any dissimilarities between it and the subject property." Conroy and DiChiara, Timeshare Property Assessment and Taxation, ch. 2 at 4 (1983).
[3] "The [replacement] cost approach estimates market value by computing the current cost of replacing a property, and subtracting any depreciation resulting from one or more of the following factors: physical deterioration, functional obsolescence, and economic obsolescence." Conroy and DiChiara, ch. 2 at 4.
[4] General Laws 1956 (1984 Reenactment) chapter 36.1 of title 34.
[5] General Laws 1956 (1984 Reenactment) chapter 41 of title 34, as enacted by P.L. 1984, ch. 141, § 2.
[6] Newport urges us to follow the lead of the Florida Supreme Court, which allowed an appraiser to value a time-share development by estimating the value of each individual time-share week. See Oyster Pointe Resort Condominium Associates, Inc. v. Nolte, 524 So. 2d 415, 417 (Fla. 1988). Significant, however, is the fact that the Florida statute provides that "[t]he assessed value of each time-share development shall be the value of the combined individual time-share periods or time-share estates." Fla. Stat. Ann. § 192.037(2) (West 1989). As the Rhode Island statute is markedly different, we refuse to travel the trail blazed by the Florida Supreme Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2369923/ | 669 F. Supp. 1383 (1987)
UNITED STATES of America, Plaintiff,
v.
Bruce ROTH, Defendant.
No. 85 CR 763.
United States District Court, N.D. Illinois, E.D.
August 13, 1987.
*1384 Anton R. Valukas, U.S. Atty., Sheldon T. Zenner and Stephen Crocker, Asst. U.S. Attys., Chicago, Ill., for plaintiff.
Patrick A. Tuite, Tuite, Mejia & Giacchetti, P.C., Chicago, Ill., for defendant.
MEMORANDUM OPINION AND ORDER
GETZENDANNER, District Judge:
This court's Memorandum Opinion and Order of June 5, 1987, left open two questions presented by the defendant's Motion to Suppress Title III Surveillance. Raised by Roth's adoption of pleadings filed by James Costello and Judge Wayne Olson before Judge Roszkowski in United States v. Costello, those issues involved the scope and conduct of the government's eavesdropping on Judge Olson's chambers at Branch 57 of the Circuit Court of Cook County. In an opinion issued June 10, 1985, Judge Roszkowski denied Costello's and Olson's challenge to the surveillance. See 610 F. Supp. 1450, 1472-1478 (N.D.Ill. 1985). I have reviewed the entire file and find Judge Roszkowski's decision to be well considered.[1] Accordingly, I adopt Judge Roszkowski's reasoning and conclusions here. Roth's remaining challenge to the wiretap is therefore denied.
Roth argues, first, that the conduct of the bugging "so unreasonably exceeded" the scope of Chief Judge Parsons' authorization order as to render it void under Fourth Amendment principles. Accordingly, Roth asks that all evidence flowing from the surveillance be suppressed. See United States v. Suquet, 547 F. Supp. 1034, 1039-43 (N.D.Ill.1982) ("flagrant disregard" of surveillance order's limiting provisions justifies complete suppression). The second argument, which expresses similar concerns, is based on Title III's "minimization" requirement. 18 U.S.C. § 2518(5).
That provision mandates that electronic surveillance "be conducted in such a way as to minimize the interception of communications not otherwise subject to interception" under Title III. 18 U.S.C. § 2518(5). The clear purpose of the section is to prevent the indiscriminate seizure of conversations made "without regard to their connection to the crime under investigation," a practice the Supreme Court found unconstitutional in Berger v. New York, 388 U.S. 41, 87 S. Ct. 1873, 18 L. Ed. 2d 1040 (1967). Although it is the responsibility of the government to demonstrate, as a prima facie matter, that reasonable efforts were made to minimize non-pertinent conversations, the ultimate burden of persuasion on the issue rests with the defense. Suquet, 547 F.Supp. at 1042, n. 19, quoting United States v. Quintana, 508 F.2d 867, 875 (7th Cir.1975).
The Supreme Court has cautioned that any inquiry into the government's behavior under § 2518(5) necessarily depends on the facts and circumstances of each case. Scott v. United States, 436 U.S. 128, 140, 98 S. Ct. 1717, 1724, 56 L. Ed. 2d 168 (1978). Given the realities of electronic eavesdropping, courts have afforded the government wide latitude in intercepting conversations. See United States v. Dorfman, 542 F. Supp. 345, 389 et seq. (N.D.Ill. 1982), aff'd United States v. Williams, 737 F.2d 594 (7th Cir.1984), cert. denied, 470 U.S. 1003, 105 S. Ct. 1354, 84 L. Ed. 2d 377 (1985); Suquet, 547 F.Supp. at 1036, et seq. The essential question, nevertheless, remains whether the government did "all that it could to avoid unnecessary intrusion" by the surveillance team. Suquet, 547 F.Supp. at 1046, quoting Quintana, 508 F.2d at 874. See also Lafave and Israel, Criminal Procedure § 4.5 at 237 (1985) ("it must be emphasized that the statute does not absolutely forbid ... interception [of non-pertinent conversations], but merely requires that measures be adopted to reduce the extent of such interception to a practical minimum").
*1385 Considering the evidence presented before Judge Roszkowski, I find that the monitoring agents made reasonable efforts to minimize their interception of non-pertinent conversations[2] and that they did not "flagrantly disregard" the terms of the court order. The record shows that the three agents, two of whom were attorneys, were specifically apprised of the importance of mimimization in a Title III investigation. Those concerns were accentuated in this investigation due to the ethical and legal problems posed by the bugging of a judge's chambers. To this end, the monitoring agents reviewed several minimization procedures memoranda and conferred with the assistant United States attorneys supervising the case. These memoranda discussed, inter alia, the importance of immediately terminating the interception of legally privileged conversations. The agents also studied voice familiarization tapes prior to the monitoring in order to aid them in identifying the targets of the investigation.[3] Although no specific time limit was set, the agents all understood that they were to discontinue monitoring a conversation after "a few minutes" unless the communications overheard were pertinent to the investigation. See Gov.App. D at 136, 281 (testimony of FBI Agent William C. Megary); 306-307 (testimony of FBI Agent James A. Hersley); 327, 333 (testimony of FBI Agent Larry M. Dickerson).[4]
Special minimization procedures, in addition, were ordered for the initial phase of the surveillance by top Justice Department officials including then-FBI Director William Webster. These included a prohibition on monitoring conversations determined not to include one of the named targets of the investigation. The November 29, 1980 minimization memorandum states: "Only if the monitoring agent determines that a conversation is criminal in nature before he is able to determine that the participant with Judge Olson is not one of the five named individuals may the conversation of an unnamed individual be monitored." Conversations involving more than two participants were also to be minimized. Supplemental Minimization Memo of November 13, 1980. To facilitate implementation of these special procedures, a radio signaling system was devised by which FBI mole Terry Hake could alert the monitoring agents to the presence of targets in the judge's chambers.[5]
These self-imposed special procedures, which were implemented out of concern for the sensitivity of the surveillance, were to be suspended upon interception of conversations evidencing clearly criminal behavior on the part of Judge Olson. After notice to the authorizing judge, "normal" minimization requirements were to be followed. The evidence of criminality came on December 3, 1980 three days into the bugging. On that date, FBI Agent William Megary intercepted a conversation between Judge Olson and defendant Roth which the government characterized as clearly criminal. See Def.Mem. in Support of Motion to Suppress, Exhs. 3 and 4 (interim report to Judge Parsons and accompanying affidavit of FBI Agent Randall Jordan). The relaxed minimization procedures were implemented *1386 two days later. Gov.App. C at 39-40 (testimony of Agent Megary).
There is no evidence in the record, as far as I can tell, that the monitoring agents violated these procedures on a systematic basis, if at all. It may be true, as the proceedings before Judge Roszkowski suggest, that the government improperly failed to minimize perhaps as many as 36 conversations. Gov.App. D at 267-69 (testimony of Agent Megary). Because these conversations amounted to only 1.4% of the total number of interceptions (2,535) and less than 3% of those communications lasting long enough to minimize (1,214), I cannot conclude that the monitoring agents conducted a general search which flagrantly disregarded the terms of Judge Parsons' authorization order.[6] Nor is there any real evidence of bad faith on the part of the agents in carrying out the bugging. But see Scott, 436 U.S. at 135-39, 98 S. Ct. at 1722-24 (lack of good faith on part of monitoring agents not determinative of whether a minimization violation has occurred); Suquet at 1042 (explaining role of good faith in minimization analysis after Scott).
Because Roth has not put forward evidence demonstrating the presence of a general search, his fourth amendment and statutory challenge seeking total suppression of the surveillance fails. Since the court cannot suppress individual, non-pertinent criminal conversations absent such a pattern of abuse, the request to bar from evidence the communications discussed in the defendant's adopted brief is also denied. Roth App. I at 140, et seq. See Costello at 1477; Dorfman, 542 F.Supp. at 394-95 (N.D.Ill.1982).[7]
Conclusion
For the reasons stated herein, the remainder of the defendant's Motion to Suppress Title III Surveillance is denied.
It is so ordered.
NOTES
[1] In addition to considering the papers, Judge Roszkowski held two days of evidentiary hearings and heard oral argument on the issues presently before me. The parties here have agreed to adopt the record of those hearings; no additional evidence or argument has been presented to this court.
[2] The duty to minimize only applies to "communications not otherwise subject to interception" under Title III. 18 U.S.C. § 2518(5). "This suggests that a communication is pertinent and thus not subject to the minimization limitation if it in some respect provides information helpful to the investigation, without regard to whether it includes an incriminating remark directly implicating the speaker in criminal activity." Lafave and Israel, Criminal Procedure § 4.5 at 237 (1985).
[3] The government did not have a voice sample for one or two of the targets listed in the wiretap application. Compare Gov.App. C at 168 (testimony of FBI Agent William C. Megary) with the Government's Supplemental Minimization Memorandum of November 13, 1980, at ¶ 2.
[4] The agents testified that they considered pertinent ex parte communications between a lawyer and the judge and conversations including whispering or muffled voices, discussions of cases and money. Because the agents were concerned with the possible concealment of assets for income tax purposes (although tax evasion was not a crime enumerated in Judge Parsons' order), they monitored discussions of Judge Olson's property and finances. See Gov.App. D at 336 (testimony of Agent Dickerson).
[5] The signaling system proved cumbersome and confusing. Its use was soon abandoned.
[6] These numbers are based on the government's assumption that 180 seconds constitute a reasonable period of time in which to determine the nature of a conversation. It is important to realize that the 180 second standard is used for classification purposes only and was not the basis for the minimization decisions at the time of the actual surveillance. As explained above in text, the monitoring agents followed the more informal standard of "a few minutes."
The defendant urges through his adopted pleadings that this court use times of 30, 60, and 90 seconds as benchmarks for classifying the conversations. Because I agree with Judge Roszkowski's reasoning in adopting the government's larger time period, I reject the defendant's suggestion. See Costello at 1476. For the same reason, I accept the government's calculation as to the total number of conversations intercepted. Id. at 1475-76.
The 3% figure cited above, it should be noted, is equivalent to 10.6% of the total intercepts that were long enough to minimize and that were not minimized. This is the figure that Judge Roszkowski relied on in his opinion to dismiss the Costello defendants' motion to suppress the entire Title III surveillance on a flagrant failure to minimize theory. Costello at 1476.
[7] Because I agree entirely with Judge Roszkowski's comments regarding the monitoring agents' failure to record and minimize listening to Judge Olson's empty chambers, I do not address the issue here. See Costello at 1477-78. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2369961/ | 669 F. Supp. 348 (1987)
Trygve Bredo BAUGE, Plaintiff,
v.
Officers Paul JERNIGAN and Hugh Walker, Sergeant Harold Oaks, individually and in their official capacities, John Does, Lance Bell, United Airlines, and the City and County of Denver, Defendants.
Civ. A. No. 87-K-764.
United States District Court, D. Colorado.
September 3, 1987.
*349 *350 Darold W. Killmer, Cohan, Greene & Killmer, Denver, Colo., for plaintiff.
Jonathan A. Cross, Halaby & McCrea, Denver, Colo., for Jernigan Walker, Oaks and City and County of Denver.
John Grund, Tilly & Graves, Denver, Colo., for United and Bell.
MEMORANDUM OPINION AND ORDER
KANE, District Judge.
Background
The facts of this case will intrigue those who fondly remember John Charles Nesbitt's Passing Parade as well as Alexis De Tocqueville, Jacques Barzun and other observers of the American scene. The story narrated by plaintiff's amended complaint lends a new dimension to the troubles of airline passengers in this age of deregulated, serendipitous departures. On May 23, 1986, Trygve Bauge arrived at Stapleton International Airport in Denver "to see his mother off on a flight to Norway." Amended Complaint, ¶ 13. He and his mother stepped up to the United Airlines ticket counter to tender his mother's ticket to the agent for check in. Faced with two people but only one ticket, the agent asked how many persons were travelling on the flight. Bauge replied that only his mother was departing. He, on the other hand, was "`only here to hijack the plane.'" Id., ¶ 16.
The agent, who either did not discern that plaintiff was joking or if so, found it not amusing, called her supervisor, defendant Lance Bell. "Bell told Bauge that it is dangerous to make such `jokes' in an airport. Bell implied that such jokes were impermissible." Id., ¶ 17. In response, Bauge acclaimed "that this is a free country, and as a member of the Libertarian political party, he believed in his freedom of speech." Id., ¶ 18. Bell, now "infuriated," id., called the authorities.[1]
Plaintiff waited for the police to arrive. When they did so, he declined to answer their initial inquiries, asserting he was first entitled to a lawyer. Bauge demanded to be advised of his Miranda rights, even though at that time he could hardly be said to have been in custody. Plaintiff's intransigence "only aggravated the arresting officer, who finally angrily said to Bauge that he was going to detain and search him." Id., ¶ 22.
Eventually, Bauge was arrested and handcuffed. As the procession wended through the concourse, the police "forcibly pushed him through the crowded terminal while loudly explaining to the crowd that Bauge was a hijacker." Id., ¶ 24. Bauge's mother apparently stood by as these boisterous events unfolded, for at this point the amended complaint notes she asked Bell what was happening to her son. "Bell told her that he would only be asked a few questions and then released." Id., ¶ 25. Quite sensibly she boarded her plane for Norway, "without calling a lawyer for her son," Id. Lacking her audience, the plaintiff remained behind to exercise his rights.
Following the arrest, Bauge was placed in a holding cell at the airport, "where he stayed, abandoned, for at least an hour." Id., ¶ 26. During this time, he penned a list of grievances against the police. When the police removed Bauge from the cell, he presented them with "a legal notification he wanted to read to them." Id., ¶ 27. After hearing this notification, the police allegedly confiscated Bauge's pencil and *351 paper and did not return them for three days.
Bauge avers he was held in the Denver city and county jails for ten days. During this time, he claims he was physically threatened, medically deprived, intimidated, made the subject of a fabricated arrest report, and reported to the FBI and the Immigration and Naturalization Service. The amended complaint further recites the INS subsequently held Bauge for four days in a holding facility.
Bauge claims he was not advised of his Miranda rights until three hours after his initial arrest. He further claims that while imprisoned by the city defendants, he was not allowed "to call an attorney for a long period of time." Amended Complaint, ¶ 34. The INS, not a defendant in this case, also purportedly did not allow him to call an attorney. Finally, Bauge states the city defendants "confiscated his paper and pencil, even though they required that any request for medical attention be in writing." Id., ¶ 34.
Predictably, this lawsuit ensued. Plaintiff's original pro se complaint was dismissed without prejudice because it was impossible to understand. Eventually, plaintiff retained an attorney, and an amended complaint was filed. This complaint was not much more understandable, but for different reasons. It purported to allege fourteen claims for relief: (1) unreasonable searches and seizures under the Fourth and Fourteenth Amendments and under Article II, section 7 of the Colorado Constitution; (2) deprivation of liberty and property without due process under the Fourth, Fifth, and Fourteenth Amendments and under Article II, section 25 of the Colorado Constitution; (3) deprivation of right to privacy under the First, Fourth, Fifth, Ninth, and Fourteenth Amendments and under the common law and Constitution of Colorado; (4) deprivation of the right to free speech under the First and Fourteenth Amendments and under Article II, section 1 of the Colorado Constitution; (5) denial of counsel under the Sixth Amendment and under Article II, section 16 of the Colorado Constitution; (6) violation of 42 U.S.C. § 1985; (7) violation of 42 U.S.C. § 1986; (8) cruel and unusual punishment in violation of 42 U.S.C. § 1983, the Eighth Amendment, and Article II, section 20 of the Colorado Constitution; (9) assault; (10) battery; (11) false imprisonment and false arrest; (12) negligence; (13) malicious prosecution; and, of course, (14) outrageous conduct.
Lawyers call the production of such hyperbole "pleading." Leave has been granted for plaintiff to file a second amended complaint.
Motions to Dismiss
By memorandum opinion and order of August 7, 1987, I granted in part and denied in part the motion of defendants Bell and United Airlines for a Rule 12(b)(6) dismissal of the complaint. Specifically, I dismissed the pendent state law claims without prejudice and struck those portions of plaintiff's first through five claims, inclusive, and eighth claim which alleged deprivation of rights created by state law. Otherwise, the motion was denied.
The case is before me again on the Rule 12(b)(6) motion of defendants Jernigan, Walker, Oaks, and City and County of Denver. The motion rests on several grounds. According to the headings of city defendants' brief, those grounds are as follows: (1) plaintiff's arrest comported with fourth amendment requirements, (2) plaintiff's fourteenth amendment due process rights were not denied, (3) plaintiff has failed to state a claim that his right to privacy was violated, (4) plaintiff did not have a first amendment right to speak words which in and of themselves violate the law, (5) plaintiff's sixth amendment rights were not denied by failing to provide him with an attorney, (6) the claims under 42 U.S.C. §§ 1985 and 1986 fail for lack of racially discriminatory animus, and (7) plaintiff's eighth amendment claim fails because he was never convicted of a crime.
First, Second, and Fourth Claims
Proof of city defendants' contentions regarding plaintiff's first, second, and fourth claims must await factual development *352 of the record. Dismissal of those claims at this stage of the litigation would violate the directive of Conley v. Gibson, 355 U.S. 41, 45-6, 78 S. Ct. 99; 101-2, 2 L. Ed. 2d 80 (1957) (claims are not subject to dismissal under Rule 12(b)(6) unless it appears beyond doubt plaintiff can prove no set of facts in favor of those claims). Plaintiff's third, fifth, sixth and seventh, and eighth claims are, however, fatally deficient. Those claims are considered below.
Eighth Claim
I begin with the eighth amendment claim, which coincidentally constitutes plaintiff's eighth claim for relief. This claim alleges that defendants' deliberate inattention to plaintiff's medical needs during his post-arrest incarceration "constituted unnecessary and wanton infliction of pain prohibited by the Eighth Amendment." Amended Complaint, ¶ 59. In advocating dismissal of this claim, city defendants argue:
The protection of the "Eighth Amendment does not apply until after an adjudication of guilt." Garcia v. Salt Lake County, 768 F.2d 303, 307 (10th Cir. 1985). Because the criminal charges against Bauge were dismissed, Complaint ¶ 36, the invocation of the Eighth Amendment, in plaintiff's eighth claim for relief, does not apply.
Brief of City Defendants, at 8.
In response, plaintiff asserts the eighth claim for relief "is a violation of the fourteenth amendment's due process clause, not a violation of the eighth amendment." Response Brief at 3, citing Garcia. Plaintiff continues: "The second amended complaint will reflect this principle. The facts alleged in the complaint are sufficient to state a claim for this due process violation." Response Brief at 3.
In Garcia, the Tenth Circuit noted deliberate indifference to the serious medical needs of a pretrial detainee is prohibited by the due process clause of the fourteenth amendment, but not by the eighth amendment. Id. at 307. Despite plaintiff's characterization of how the eighth claim should be pleaded, that claim as currently drafted is brought solely under the eighth amendment. Therefore, it is dismissed.
Third Claim
Plaintiff's third claim for relief seeks damages for the alleged deprivation of plaintiff's "right to privacy in violation of the first, fourth, fifth, ninth, and fourteenth amendments." There is no explicit guarantee of a right to privacy in the Constitution. The Supreme Court has therefore evinced restraint in demarcating the limited nature of this right. In describing the privacy right, the Court has stated:
The cases sometimes characterized as protecting "privacy" have in fact involved at least two different kinds of interests. One is the individual interest in avoiding disclosure of personal matters, and another is the interest in independence in making certain kinds of important decisions.
Whalen v. Roe, 429 U.S. 589, 599-600, 97 S. Ct. 869, 876-77, 51 L. Ed. 2d 64 (1977).
Neither type of interest is present here. The "decisional" privacy right attaches only to the small, select group of those rights adjudged to be fundamental or implicit in the concept of ordered liberty. Paul v. Davis, 424 U.S. 693, 713, 96 S. Ct. 1155, 1166, 47 L. Ed. 2d 405 (1976). This distinct category of rights includes marriage, procreation, contraception, abortion, family relationships, and child rearing and education. Carey v. Population Services International, 431 U.S. 678, 685, 97 S. Ct. 2010, 2016, 52 L. Ed. 2d 675 (1977). It stops short of embracing, for example, any fundamental right to engage in sodomy. Bowers v. Hardwick, ___ U.S. ___, 106 S. Ct. 2841, 92 L. Ed. 2d 140, 92 L. Ed. 2d 140 (1986). In Bowers, the Court called for "great resistance" to expansion of the limited category of rights deemed to be fundamental. Id., ___ U.S. at ___, 106 S.Ct. at 2846, 92 L. Ed. 2d at 148.
Even under the Conley v. Gibson standard, plaintiff's complaint does not invoke any of the fundamental decisional privacy rights identified by the Supreme Court. According to the complaint, plaintiff was illegally arrested at the airport for joking *353 that he was a hijacker. The complaint avers, inter alia, he was then jailed for ten days, physically mistreated, threatened, deprived of his right to an attorney, and assertedly not properly advised of his Miranda rights. Nothing in the allegations even remotely bears on the select category of decisional privacy rights carefully and cautiously enumerated by the Supreme Court.
Similarly, nothing in plaintiff's complaint relates to the disclosure of personal matters falling within his legitimate expectation of confidentiality. Paragraph 44 of the amended complaint merely states defendants' conduct "constituted an unwarranted intrusion into affairs which Trygve Bauge was entitled to keep private, in violation of his right to be free from invasion of his privacy." The complaint does not even hint at the nature of those private affairs. Compare, e.g., Slayton v. Willingham, 726 F.2d 631, 635 (10th Cir.1984) (allegation that defendants exhibited highly sensitive, personal, and private photographs of plaintiff sufficed to state a claim for violation of plaintiff's constitutional right to privacy, since that right encompasses avoidance of disclosure of personal matters). It is one thing to say goodbye to one's mother, a matter in which privacy is implicit. It is quite another to advise an airline employee that one intends to hijack a plane. The third claim for relief is nothing more than a vague repetition of claims stated elsewhere in the complaint. It, too, is dismissed.
Sixth and Seventh Claims
This brings me to a consideration of that part of the motion which requests dismissal of the sixth and seventh claims for relief. These claims are brought under 42 U.S.C. §§ 1985 and 1986, respectively. As stated in the order of August 7, 1987, and as conceded by plaintiff, Response Brief at 7, the existence of the § 1986 claim is dependent on the survival of the § 1985 claim. See Brown v. Reardon, 770 F.2d 896, 905 (10th Cir.1985). The § 1986 claim will rise and fall with the § 1985 claim.
The § 1985 claim does not specify the particular subsection of that statute which supports its allegations. Paragraph 54 of the amended complaint, however, describes a conspiracy to deprive plaintiff "of equal protection of the laws and equal privileges and immunities under the laws." This phrase tracks the statutory language of § 1985(3). Based on this factor, as well as the general inapplicability of subsections (1) and (2) on their face, I am forced to assume that plaintiff's sixth claim for relief is raised under § 1985(3).
In opposing that part of the airline defendants' motion which sought dismissal of the sixth and seventh claims, plaintiff alleged the requisite discriminatory animus in averring that he is a Norwegian alien and a libertarian. I observed these allegations "may not survive a directed verdict, or even a motion for summary judgment," Order of August 7, 1987 at 3, but found dismissal to be premature under the standard espoused by Conley v. Gibson, 355 U.S. 41, 45-6, 78 S. Ct. 99, 101-2, 2 L. Ed. 2d 80 (1957).
Further consideration of this portion of the August 7, 1987 order reveals the sixth and seventh claims should have been dismissed. In Wilhelm v. Continental Title Co., 720 F.2d 1173, 1176 (10th Cir.1983), cert. denied, 465 U.S. 1103, 104 S. Ct. 1601, 80 L. Ed. 2d 131 (1984), the Tenth Circuit construed United Brotherhood of Carpenters v. Scott, 463 U.S. 825, 103 S. Ct. 3352, 77 L. Ed. 2d 1049 (1983) to "signal that the classes covered by § 1985 should not be extended beyond those already expressly provided by the Court." The Wilhelm court therefore concluded "that a class of `handicapped persons' was not in the contemplation of Congress in 1871, and was not included as a class in what is now § 1985(3)." Id. at 1177. Following Wilhelm as I must, I cannot and will not expand the number of groups protected by § 1985(3) to include Norwegians.[2]See *354 United Brotherhood, 463 U.S. at 836, 103 S. Ct. at 3360 ("it is a close question whether § 1985(3) was intended to reach any class-based animus other than animus against Negroes and those who championed their cause, most notably Republicans").
Similarly, in Brown, the Tenth Circuit declined to recognize a group of employees suffering political discrimination as valid subjects of § 1985(3). Id., 770 F.2d at 905. Plaintiff's alleged status as a member of the Libertarian Party therefore avails him naught in stating a claim under § 1985(3). The sixth and seventh claims are dismissed as to all defendants.
Fifth Claim
Plaintiff's fifth claim for relief alleges denial of counsel in violation of the sixth amendment. Paragraph 50, the operative paragraph of the fifth claim, merely states: "defendants' conduct described above deprived plaintiff of his right to have counsel on his behalf present at appropriate stages of the criminal process."
The only "conduct deprived above" which even arguably invokes the issue of denial of counsel against these defendants is alleged in paragraph 34 of the amended complaint. There, plaintiff avers defendants "did not allow him to call an attorney for a long period of time. No attorney was provided for Bauge."
In pressing for dismissal of the fifth claim, city defendants argue as follows:
There is no constitutional right of which these defendants are aware that requires these defendants to provide an attorney for Bauge. The only right that plaintiff would have would be a right to call an attorney. Although plaintiff is in a position to allege the number of hours, days or weeks he was not allowed to call an attorney, plaintiff merely alleged that he was not allowed to call an attorney "for a long period of time." Such an allegation does not give defendants fair notice of plaintiff's claim; if a "long period of time" is merely a few hours, then defendants can in good faith move to dismiss this claim. Therefore, defendants respectfully request that this court dismiss this claim or, in the alternative, order plaintiff to plead this claim with more specificity.
City Defendants' Brief at 7.
Plaintiff's complete response to this argument consists of the following:
Despite numerous requests for an attorney at the site of the arrest and initial interrogation, and renewed requests during transportation to the jail, and renewed requests while at jail, Bauge was not allowed access to his attorney. Due to the fact that the events transpired on the Friday preceding the long Memorial Day weekend, by the time Bauge was allowed a phone call, it was late afternoon and his attorney was not in the office, and would not return until the following Tuesday. The deliberate denial of counsel, absent an intelligent an [sic] voluntary waiver is a deprivation of rights guaranteed by the Sixth and Fourteenth Amendments, and is actionable under the Civil Rights Act. Wounded Knee Legal Defense/Offense Committee v. FBI, 507 F.2d 1281 (8th Cir.1974); Maclin v. [Paulson], 627 F.2d 83 (7th Cir. 1980); Williams v. Liberty, 461 F.2d 325 (7th Cir.1972). Bauge's prejudice from the denial of counsel is illustrated in part by his extended incarceration on what is *355 otherwise a routine charge in county court. Such incarceration, if caused by the denial of counsel, also is a deprivation of liberty without due process.
Response Brief at 6.
Plaintiff's argument is without merit. In Nees v. Bishop, 730 F.2d 606, 613 (10th Cir.1984), the Tenth Circuit held "[t]he right to counsel is not triggered by arrest alone." Thus, the mere fact that plaintiff had been arrested did not entitle him to appointment of counsel.
The Nees court also determined the sixth amendment right to counsel is violated only where a two-part test has been met: (1) adversary proceedings were initiated against plaintiff, and (2) after those proceedings had been initiated, plaintiff was denied the presence of counsel at a "critical stage" of the proceedings. Id. at 611.
In the instant case, plaintiff claims he was held in Denver city and county jails for ten days. Amended Complaint, ¶ 33. He further asserts that during this time "the Denver police searched their files in a vain effort to discover a crime with which to charge Bauge." Id. The obvious inference to be drawn from these statements is that adversary proceedings were not commenced against Bauge during the period in which he alleges he was denied access to counsel. Thus, neither prong of the Nees test can possibly be met.[3] Consequently, no cognizable claim can be raised for denial of the right to counsel.
Next, as a factual matter, it can scarcely be said that the absence of plaintiff's attorney from his office because of a holiday weekend states a claim that defendants deliberately denied plaintiff of his chosen counsel. Even assuming plaintiff's attorney was not reachable at the time of the telephone call, plaintiff was conceivably capable of leaving a message.
Finally, the last two sentences of the quotation from plaintiff's response brief, supra, demonstrates plaintiff's fifth claim is another ill-defined restatement of other claims. For example, any illegality in plaintiff's "extended incarceration," Response brief at 6, is readily redressed by at least plaintiff's first claim for relief. Similarly, the possibility that plaintiff's incarceration period was caused or extended by the absence of counsel, resulting in "a deprivation of liberty without due process," id. at 6, does not lead to the ineluctable conclusion that a separate and independent claim for denial of counsel may be stated. Rather, any such fact constitutes one more thread in plaintiff's alleged web of due process deprivation, under the amended complaint's second claim for relief.
Rule 11?
Some further comments about this case are warranted. To date, this action has already occasioned two complaints, the first pro se. A third complaint now hovers in the "pleading" stage. Neither of the first two complaints was drafted with serious attention to whether the multifarious allegations of each claim had any basis under established legal doctrine. Such overabundance is often counterproductive. It necessitates the excessive attention of already strained court resources. See Zukowski v. Howard, Needles, Tammen & Bergendoff, Inc., 115 F.R.D. 53 (D.Colo. 1987). Further,
the practice is inimical to the interests of plaintiff for at least two reasons. First, it delays prosecution of the case and increases costs because of the time spent in addressing motions such as those filed in this case. Second, it creates an expanded possibility for reversible error in the event the pleader is persistent or the trial judge is diffident. *356 Zukowski v. Howard, Needles, Tammen & Bergendoff, Inc., 657 F. Supp. 926, 929 (D.Colo.1987) (separate Zukowski opinion).
Perhaps more significant, however, is the looming importance of Rule 11. Since the motion to file a second amended complaint has already been granted, no Rule 11 sanctions are appropriate at this time. I do caution plaintiff, however, against filing a second amended complaint replete with reformulations of claims dismissed in this order or in the order of August 7, 1987. Moreover, any second amended complaint should refrain from pleading a multitude of claims. Such pleading is invariably redundant and leads to the problems explained in the two Zukowski opinions. If the second amended complaint fails to meet the standards enunciated here and in the August 7, 1987 order, Rule 11 sanctions will be imposed. Guidance should be sought from my recent opinion in Rose v. Kinevan, 115 F.R.D. 250 (D.Colo.1987).
Accordingly, IT IS ORDERED:
1. The city defendants' motion to dismiss is granted in part and denied in part. Specifically:
a. Plaintiff's third, fifth, sixth, seventh, and eighth claims for relief are dismissed as to all defendants;
b. Plaintiff's ninth, tenth, eleventh, twelfth, thirteenth, and fourteenth claims are dismissed without prejudice as to all defendants;
c. Those portions of plaintiff's first, second, and fourth claims which allege deprivation of rights created by state law are stricken as to all defendants;
d. The order of August 7, 1987 is modified to incorporate dismissal of plaintiff's sixth and seventh claims;
e. Otherwise, the motion is denied. This case shall proceed solely on the non-stricken portions of the first, second, and fourth claims in the amended complaint.
2. Plaintiff shall file his second amended complaint on or before September 21, 1987. The second amended complaint shall not reallege any of the previously dismissed claims, or any portions of those claims, against any defendant. The second amended complaint will be scrutinized for compliance with the terms of this order and paragraph 2 of the order portion of the memorandum opinion and order of August 7, 1987.
NOTES
[1] At this point, one is reminded of Mark Twain's comment that civil rights consisted of "free speech, free press, and the good sense not to use either."
[2] In so stating, I am aware of the recent cases of Saint Francis College v. Al-Khazraji, ___ U.S. ___, 107 S. Ct. 2022, 95 L. Ed. 2d 582 (1987) and Shaare Tefila Congregation v. Cobb, ___ U.S. ___, 107 S. Ct. 2019, 95 L. Ed. 2d 594 (1987). Neither party has discussed the potential impact of these two cases on the issue of class-based animus. In those two cases, Mr. Justice White instructs us that a determination of which groups are protected under 42 U.S.C. §§ 1981 and 1982 is made not by reference to today's understanding of the term "race," whatever anthropological significance that term may now convey. Rather, we must apply those statutes only to groups which the post-Civil War Congress intended to protect. This last determination is to be made by perusing the congressional debates of 1866 and 1870, which are replete with references to the Scandanavian races, the Chinese, Latin, Spanish, Anglo-Saxon, Blacks, Mongolians, Gypsies, Irish, etc. Since Congress so stated at least 117 years ago, there is no reason for us to consider events occurring or developments in scientific knowledge between now and then. It is Congressnot the courts that should remain abreast of change.
In any event, putting Saint Francis and Shaare Tefila aside, I will not diverge from Wilhelm and Brown in the absence of instructive authority to the contrary.
[3] Indeed, the last paragraph of the amended complaint's factual recitation trumpets that "[a]ll criminal charges against Bauge arising out of the events at the airport have been dismissed." Id., ¶ 36. Reading this paragraph by itself, it is unclear whether adversary proceedings, as defined in Nees, were ever initiated against plaintiff. On the other hand, though, a common sense reading of this assertion in concert with the statements made in paragraph 33 of the amended complaint leads me to conclude that even if adversary proceedings were initiated, arguendo, any such proceedings were commenced some time after the expiration of that period of time in which Bauge contends he was denied access to counsel. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2370031/ | 246 P.3d 642 (2010)
The PEOPLE of the State of Colorado, Petitioner
v.
Arnold WEHMAS, Respondent.
No. 09SC1002.
Supreme Court of Colorado, En Banc.
November 22, 2010.
As Modified on Denial of Rehearing January 18, 2011.
*644 Carol Chambers, District Attorney, Eighteenth Judicial District, Andrew Cooper, Chief Deputy District Attorney, Centennial, Colorado, Attorneys for Petitioner.
Brien & Martinez Law, LLC, Katherine Brien, Boulder, Colorado, Attorneys for Respondent.
Chief Justice MULLARKEY delivered the Opinion of the Court.
I. Introduction
We granted certiorari to review the district court's order affirming the county court's suppression of evidence on the grounds that warrantless home entry was not justified because (1) driving under the influence ("DUI"), a misdemeanor, is not a sufficiently grave offense, and (2) dissipating blood alcohol levels in a DUI suspect do not constitute the exigent circumstance of immediate risk of destruction of evidence. We affirm in part and reverse in part the district court's judgment. We hold that DUI is a grave offense that may support a warrantless entry into a person's home. However, under the facts presented here, the potential dissipation of the defendant's blood alcohol content ("BAC") is not a sufficiently exigent circumstance to justify warrantless home entry. We therefore affirm the suppression ruling on the ground that the officers acted unreasonably under these circumstances in entering the defendant's home without first obtaining a warrant.
II. Facts and Procedural History
Arnold Wehmas was charged in county court with multiple offenses arising out of allegedly driving drunk, hitting a parked car in the parking lot of his apartment complex, *645 and going to his apartment without exchanging information with the owner of the car he hit. The charges included the misdemeanor offenses of DUI and leaving the scene after striking an unattended motor vehicle ("hit and run"). Because the arresting officers entered Wehmas's apartment without obtaining a warrant, he moved to suppress all evidence that was obtained as a result of the warrantless entry.
At the suppression hearing, the primary arresting officer was the only person to testify. He testified to the following facts:
At around 2:45 a.m., two witnesses observed Wehmas drive his van into a parked vehicle in the parking lot of his apartment complex. One of the witnesses, the owner of the damaged vehicle, came outside in response to the car alarm. After the collision, Wehmas parked his van nearby, spoke with the owner of the damaged vehicle, said he would "settle it," and left, going to his apartment.
Four officers arrived at the scene, interviewed the two witnesses, and investigated the damage. Both witnesses described Wehmas as being drunk. The owner of the damaged vehicle was able to identify the apartment Wehmas entered after leaving the parking lot.
Three of the officers knocked on Wehmas's door. Receiving no answer, the police contacted the property owner, who was able to identify Wehmas by name and by a photo from a previous arrest. After unlocking the apartment with the property owner's key, the officers entered Wehmas's apartment to arrest him. Finding Wehmas in bed asleep, they shook him awake. The arresting officer asked Wehmas how much he had to drink, and Wehmas responded "not much." The officer then advised Wehmas he was under arrest. In the process of helping Wehmas out of the apartment, the arresting officer observed several signs of intoxication, including bloodshot and watery eyes; slow, thick-tongued speech; poor balance; and a strong smell of an alcoholic beverage on Wehmas's breath.
During cross-examination, the officer agreed that the officers had not offered Wehmas an opportunity to take roadside field tests. And, the prosecution presented no evidence that the defendant was verbally offeredwhether at the time of arrest or within the statutory two-hour time framea blood or breath test, or that he refused those tests.
The prosecution offered little evidence regarding the time frame within which the investigation and arrest took place. During cross-examination, the officer's responses were not expressed with certainty, but the officer estimated that the dispatch call occurred at 2:48 a.m., that he called the property owner around 3:00 a.m., and that it took the property owner approximately five minutes to arrive at the apartment. The police report justifying the warrantless arrest notes the dispatch call occurred at 2:48 a.m. and the time of arrest was 4:10 a.m. Thus, the time that elapsed from dispatch to arrest was one hour and twenty-two minutes.
Following the testimony, the prosecution argued that the evidence should not be suppressed because exigent circumstances justified the officers' warrantless entry into the apartment. The prosecution contended that the officers had acted reasonably because otherwise too much time would have lapsed and caused loss of evidence regarding whether Wehmas was drunk, and because Wehmas was a flight risk because he did not own the apartment.
Defense counsel contended that the officers did not act reasonably in entering Wehmas's home without first securing a warrant. Counsel argued that only the most serious felony offenses justify a warrantless home entry, and that potential dissipation of blood alcohol content did not constitute an exigent circumstance.
Ruling from the bench, the county court initially denied the motion to suppress. It concluded that the officers had probable cause to believe that Wehmas was driving under the influence. Assessing whether exigent circumstances existed, the court ruled that destruction of evidence in the form of dissipation of Wehmas's BAC was a sufficiently exigent circumstance because of the concern that the passage of time would reduce BAC and because DUI is a grave offense. *646 Accordingly, the county court denied Wehmas's motion to suppress evidence.
One year later on the morning of trial, the county court revisited and reversed its suppression ruling. In now granting the motion to suppress, the county court explained that DUI was not a sufficiently grave offense to justify the officers' warrantless entry into Wehmas's home because it was not a felony or a violent crime. In examining the factors of the case, the court rejected the notion that exigent circumstances justified warrantless entry because the case involved a minor accident in a parking lot, the officers knew Wehmas's location, and they could have secured his home while they obtained a warrant. Moreover, the court reasoned that, under the circumstances, the officers had sufficient time to obtain a warrant and could have secured the area to prevent Wehmas from driving again while intoxicated. The court, however, did not specifically revisit whether dissipating BAC alone constituted a sufficiently exigent circumstance. The county court suppressed all evidence obtained from the moment the police officers entered the apartment, including their observations.
On appeal, the district court affirmed the county court's revised ruling. Addressing the exigency determination, the district court concluded that the gravity of the offense was the first factor to consider. Because DUI is a misdemeanor offense, the court agreed with the county court and rejected the notion that it was a grave offense. In addition, it concluded that the gradual dissipation of BAC did not constitute an exigent circumstance because Wehmas could not take any action to hasten that dissipation. It reasoned that any delay in obtaining a warrant would have been minor and would not have compromised the BAC evidence such that the prosecution could not scientifically extrapolate Wehmas's BAC at the time of the collision. The district court therefore upheld the county court's suppression of evidence.
We granted the People's petition for certiorari to review the district court's affirmance.[1]
III. Analysis
In this case, we must determine whether the prosecution met its burden to establish that the risk of immediate destruction of evidencein the form of dissipated BAC justified warrantless entry into Wehmas's home.
We review the district court's legal conclusions de novo in determining whether the legal prerequisites of probable cause and exigent circumstances existed prior to the officers' entry into Wehmas's home. Mendez v. People, 986 P.2d 275, 280 (Colo.1999). We leave undisturbed the county court's findings of fact which are supported by competent record evidence. Id.
"The Fourth Amendment of the United States Constitution and article II, section 7 of the Colorado Constitution proscribe all unreasonable searches and seizures." Id. at 279; Welsh v. Wisconsin, 466 U.S. 740, 749, 104 S. Ct. 2091, 80 L. Ed. 2d 732 (1984) ("It is axiomatic that the physical entry of the home is the chief evil against which the wording of the Fourth Amendment is directed." (internal citation and quotation marks omitted)). Entry of a home without a warrant is invalid unless it is supported by both probable cause and "one of the narrowly defined exceptions to the warrant requirement," such as exigent circumstances. Mendez, 986 P.2d at 279 (citing People v. Garcia, 752 P.2d 570, 581 (Colo. 1988)); Payton v. New York, 445 U.S. 573, 586-90, 100 S. Ct. 1371, 63 L. Ed. 2d 639 (1980).
Given the posture of this case, the question of probable cause is not before us. Solely at issue is whether exigent circumstances were present.
The relevant facts for our inquiry are those "known at the time of the warrantless entry and search." People v. Miller, 773 P.2d 1053, 1057 (Colo.1989). We view the officers' actions objectively and do not focus on the officers' subjective motivation. Brigham City v. Stuart, 547 U.S. 398, 404, 126 S. Ct. 1943, 164 L. Ed. 2d 650 (2006) (in evaluating whether an officer's actions were "reasonable," *647 the officer's "subjective motivation is irrelevant"; the inquiry is whether the circumstances, viewed objectively, justify the action).
Any doubt whether officers reasonably concluded that a warrantless search was justified "must be resolved in favor of the defendant whose property was searched." People v. Jansen, 713 P.2d 907, 912 (Colo. 1986).
Before we consider whether, on the facts of this case and under Colorado law, risk of destruction of evidence created an exigent circumstance justifying the officers' warrantless entry, we review a core U.S. Supreme Court decision addressing the role gravity of an offense plays in the analysis.
A. Gravity of the Offense
The People contend that because the county court erroneously concluded that DUI is not a serious offense, the county court's suppression ruling should be reversed. Although we agree with the People that a DUI in Colorado is a sufficiently serious offense, we conclude that under the facts of this case, dissipation of the defendant's BAC is not a sufficiently exigent circumstance to justify warrantless home entry based on the immediate risk of destruction of evidence.
In Welsh v. Wisconsin, 466 U.S. 740, 750, 104 S. Ct. 2091, 80 L. Ed. 2d 732 (1984), a DUI defendant was arrested in his home after an eyewitness observed him driving erratically before he swerved off the road, abandoned his car in a field, and walked home on foot. Id. at 742-43, 104 S. Ct. 2091. In Wisconsin, however, a first-time DUI offense was classified as a noncriminal, traffic offense for which no imprisonment was available, indicating the state's view at the time that the offense was a relatively minor one. Id. at 754, 104 S. Ct. 2091. Addressing the relevance of the gravity-of-the-offense factor in the exigent-circumstances analysis, the Court opined:
We ... conclude that the common-sense [multi-factor] approach utilized by most lower courts is required by the Fourth Amendment prohibition on "unreasonable searches and seizures," and hold that an important factor to be considered when determining whether any exigency exists is the gravity of the underlying offense for which the arrest is being made.
Id. at 753, 104 S. Ct. 2091. The Court cited with approval lower court holdings that recognized gravity of the offense as a "principal factor to be weighed," id. at 752-53, 104 S. Ct. 2091 (citing Dorman v. United States, 435 F.2d 385, 392 (D.C.Cir.1970)), and noted that "the penalty that may attach to any particular offense seems to provide the clearest and most consistent indication of the State's interest in arresting individuals suspected of committing that offense." Id. at 754, n. 14, 104 S. Ct. 2091.
Accordingly, under the facts in Welsh, the warrantless arrest was invalid. Id. at 754, 104 S. Ct. 2091. The Court explained that even if evidence of the defendant's blood alcohol level might have dissipated in the time taken to obtain a warrant, a warrantless home arrest cannot be upheld where Wisconsin's expressed interest in the offenseas portrayed by the potential penaltiesis minor. Id.
In sum, although recognizing and generally supporting the multi-factor approach employed to determine the existence of exigent circumstances, Welsh elevated the importance of the gravity of the offense to the calculus.
The Supreme Court later applied Welsh in a way that characterizes the case as drawing a bright-line rule between jailable and nonjailable offenses. See Illinois v. McArthur, 531 U.S. 326, 336, 121 S. Ct. 946, 148 L. Ed. 2d 838 (2001). Reviewing facts in which police officers prevented the defendant from entering his home while they obtained a search warrant, the McArthur Court distinguished its facts from those in Welsh in large part on the basis that the offenses in McArthur were jailable. Id.
We applied Welsh's gravity-of-the-offense analysis in Mendez v. People, 986 P.2d 275 (Colo.1999), a case in which we concluded that the police had reasonably entered a motel room without a warrant after smelling the odor of burning marijuana coming from the room. There, we acknowledged the *648 gravity of the underlying offense as a critical consideration in determining whether a warrantless entry was reasonable. Id. at 283. However, we concluded that, in contrast to the nonjailable, minor offense in Welsh, the officers in Mendez "could not infer from the smell of burning marijuana whether the amount of marijuana in the room was enough to lead to a misdemeanor or felony possession charge." Id. at 283. Accordingly, "the potential gravity of the offense at issue ... was much greater than that in Welsh." Id.
In giving great importance to the gravity of the offense, Welsh, McArthur, and Mendez establish that the jailable-nonjailable distinction serves as an indicator of the legislature's intent and its judgment regarding the seriousness of an offense.
Looking to the DUI offense in this case, we conclude that a first-time DUI offense is a sufficiently grave offense such that warrantless home entry may be valid. In Colorado, DUI is a misdemeanor and a jailable offense, and the minimum term of imprisonment increases with repeat offenses and with the severity of the offense. See § 42-4-1301(7), C.R.S. (2009) (repealed 2010) (replaced by § 42-4-1307, C.R.S. (2010)). The penalty for a first offense is imprisonment in a county jail for between five days to one year. § 42-4-1301(7)(a)(I)(A), C.R.S. (2009). Although the sentencing court may under certain circumstances suspend the mandatory minimum imprisonment, § 42-4-1301.3(2)(b), C.R.S. (2010), this sentencing option does not alter the fact that a person convicted of DUI as a first time offender may be jailed.
Consistent with Welsh, McArthur, and Mendez, we conclude that DUI is a sufficiently grave offense to potentially justify a warrantless home entry. In light of Illinois v. McArthur, it was legal error for the county court and district court to conclude otherwise.
As those cases suggest, however, this is not the end of the inquiry. Simply concluding that an underlying offense is grave does not create sufficiently exigent circumstances to justify warrantless entry. See Commonwealth v. Williams, 483 Pa. 293, 396 A.2d 1177 (1978) (finding warrantless home arrest for murder invalid after balancing the relevant factors and finding insufficient exigent circumstances, cited in Welsh, 466 U.S. at 752, 104 S. Ct. 2091). We must proceed to review the circumstances surrounding the warrantless entry into Wehmas's apartment.
B. Exigent Circumstances
The legal analysis we employ to ascertain whether exigent circumstances justify a warrantless entry is a review of the totality of the circumstances, although the precise evaluation of factors is often tailored to the particular emergency at issue. Cf. People v. Aarness, 150 P.3d 1271, 1277-80 (Colo.2006) (after ruling out application of the three established categories of exigent circumstances, employing a multi-factor test to determine whether exigent circumstances were otherwise present).
In general, to determine whether there was a need "that could not brook the delay incident to obtaining a warrant," Miller, 773 P.2d at 1057 (quoting Dorman v. United States, 435 F.2d 385 (D.C.Cir.1970)), we employ the following set of factors:
(1) a grave offense is involved, particularly a crime of violence; (2) the suspect is reasonably believed to be armed; (3) there exists a clear showing of probable cause to believe that the suspect committed the crime; (4) there is a strong reason to believe that the suspect is in the premises being entered; (5) the likelihood exists that the suspect will escape if not swiftly apprehended; and (6) the entry is made peaceably. One additional factor is whether the warrantless entry is made at night.
Id.
We have previously recognized certain common factual scenarios that often present exigent circumstances, and we have incorporated and tailored this general totality-of-the-circumstances analysis accordingly. For example, when we are presented with a claim of a risk of immediate destruction of evidence, our cases consistently explain that the prosecution must show "an articulable basis on the part of the police to justify a reasonable belief that evidence is about to be removed *649 or destroyed." People v. Turner, 660 P.2d 1284, 1287-88 (Colo.1983), disapproved on other grounds by People v. Schoondermark, 759 P.2d 715, 719 (Colo.1988), cited in Garcia, 752 P.2d at 581, People v. Crawford, 891 P.2d 255, 258-59 (Colo.1995), and Mendez, 986 P.2d at 282; see also Aarness, 150 P.3d at 1278 (citing Mendez); Miller, 773 P.2d at 1058 (citing Garcia).
These cases also have explained that the likelihood of destruction must be real and immediate such that a warrant could not be obtained in time, and the "mere fact that the evidence is of a type that is easily destroyed, does not, in and of itself, constitute an exigent circumstance." Turner, 660 P.2d at 1288, cited in Crawford, 891 P.2d at 259; Mendez, 986 P.2d at 282 (citing Crawford); Aarness, 150 P.3d at 1278 (citing Mendez). And, "[i]f it is possible for police in such a circumstance to secure the premises and wait for a warrant without risking the loss of evidence, such action is required." Mendez, 986 P.2d at 282 (emphasis added).
Risk of evidence destruction commonly arises in the context of contraband, such as marijuana or other illicit drugs. In these circumstances, we have crafted additional factors to considernot unlike those in Millersuch as:
(1) the degree of urgency and the time required to obtain a warrant; (2) reasonable belief that evidence or contraband would be removed or destroyed[;] (3) information that those in possession of the evidence or contraband are aware that the police are closing in[;] and (4) the ease of destroying the evidence or contraband and the awareness that narcotics dealers often try to dispose of narcotics and escape under the circumstances.
Crawford, 891 P.2d at 258 (quoting People v. Bustam, 641 P.2d 968, 972-73 (Colo.1982)).
In sum, our analysis is founded on the reasonableness of the officers' actions. Each factor focuses our inquiry on the degree to which the circumstances require immediate action. Given the strong constitutional protections against warrantless home entry, there must be a significant showing of urgency before concluding that it was reasonable for officers to make a home entry without first obtaining a warrant. This high burden properly protects the sanctity of the home in accord with the federal and state constitutions.
In this case, even before we reach the factors unique to the destruction of evidence, the circumstances suggest that the prosecution has failed to show sufficiently exigent circumstances to justify a warrantless entry.[2] Although there was probable cause that a grave offense had been committed and it was likely that Wehmas was in the apartment, there was no evidence or objectively reasonable belief that he was armed or that he would escape if he was not quickly apprehended. There was also no evidence that obtaining a warrant was problematic because it was late at night; instead, the night-time entry weighs against considering the officers' actions to be reasonable under the circumstances because of the highly intrusive nature of making the entry. The alleged offense had ended, no weapons were involved, and the defendant had not reemerged from his apartment.
Turning to the destruction of evidence, this case presents a slight twist on this common form of exigency. In contrast to contraband or other physical evidence of a crime which can quickly be flushed or burned, evidence of blood alcohol contentan ever-changing characteristic that is wholly internal to a defendantcannot be actively "destroyed" as that term is typically understood. Moreover, it is evidence that may or may not be available even if law enforcement did gain entry into a home because there is no guarantee that the suspect will assent to a chemical test. Such a test, though mandatory in Colorado, *650 cannot be physically compelled for driving offenses not involving violence or harm to a victim. See § 42-4-1301.1(3), C.R.S. (2010) (an officer cannot physically require submission to a chemical test unless there is probable cause to believe that the person has committed criminally negligent homicide, vehicular homicide, assault in the third degree, or vehicular assault); § 42-4-1301(2)(d), C.R.S. (2010) (if a person refuses chemical testing and is subsequently tried for DUI or DWAI, the refusal is admissible at trial); cf., State v. Lovig, 675 N.W.2d 557, 566 (Iowa 2004) ("[A] defendant is permitted to refuse a chemical test ... [and therefore] the claim of destruction of evidence in the context of blood alcohol content testing may be illusory."); Commonwealth v. DiGeronimo, 38 Mass.App.Ct. 714, 652 N.E.2d 148, 158 (1995) (holding that under state law, police may not constitutionally compel a suspect to take a field sobriety, breathalyzer, or blood test, and therefore "police can have no reasonable expectation that a warrantless entry will enable them to obtain or preserve such evidence").
With these characteristics in mind, we must conclude that although BAC certainly dissipates gradually with time, Schmerber v. California, 384 U.S. 757, 770-71, 86 S. Ct. 1826, 16 L. Ed. 2d 908 (1966), this dissipation, as a general matter, does not create the urgency and imminence of loss contemplated by our governing precedent.[3] Because of the nature of BAC, there was no immediate danger that all or critical evidence would be removed or destroyed. Delays in obtaining BAC are characteristic of DUI offenses and are even contemplated in the DUI laws creating incentives to timely comply with chemical testing. See § 42-4-1301.1(2)(a)(III), C.R.S. (2010) ("the person must cooperate with the request [for a blood or breath test] such that the sample of blood or breath can be obtained within two hours of the person's driving"); § 42-2-126(2)(a)(II), C.R.S. (2007) (repealed and reenacted 2008) (refusal to take tests requires administrative revocation of drivers license). See also Augustino v. Colo. Dept. of Rev., 193 Colo. 273, 276, 565 P.2d 933, 935 (1977) (explaining that the purpose of mandatory drivers license revocation procedures is to encourage suspected drunk drivers to voluntarily undergo blood alcohol testing and assist in the prosecution of such crimes).
A delay in obtaining a BAC will lead to a gradual loss of perhaps the strongest evidence of a defendant's BAC at the time of the offense because of the ongoing metabolism of alcohol. See § 42-4-1301(6)(a), C.R.S. (2010) (setting forth certain presumptions or inferences based on a defendant's BAC if it is taken "at the time of the commission of the alleged offense or within a reasonable time thereafter"). But this does not translate into a complete loss of admissible evidence because expert testimony can be used to otherwise analyze and extrapolate a person's BAC to provide an opinion as to the BAC at the time of the offense. Issues underlying extrapolation go to the weight of the evidence and not its admissibility. See People v. Emery, 812 P.2d 665, 667 (Colo. App.1990); cf. Charnes v. Boom, 766 P.2d 665, 669 (Colo.1988) ("[T]he relevance of the results of a chemical test in a criminal trial... is not limited to tests conducted within one hour of the alleged offense. Instead, such test results may be admissible and provide significant evidence if obtained within a reasonable time after the alleged offense, even if that time exceeds one hour.").
It is possible that a defendant could interfere with the accuracy of a BAC test by consuming additional alcohol while officers are in the process of obtaining a warrant. See, e.g., State v. Paul, 548 N.W.2d 260, 267 (Minn.1996) (concluding that exigent circumstances justified warrantless entry in part because the defendant "might have drunk more alcohol, making a chemical test unreliable"); City of Orem v. Henrie, 868 P.2d 1384, 1393 (Utah Ct.App.1994) (noting concerns that a defendant could tamper with blood alcohol evidence by consuming additional alcohol in the home, "inviting the assertion that a blood or breath alcohol level above the statutory threshold was caused by post-offense alcohol consumption"). However, *651 concerns about post-offense BAC tampering go the weight of the evidence, and hinge upon specific facts and assertions that may or may not be made by a defendant in a given case. Speculation that a defendant may consume more alcohol while officers obtain a warrant does not, in and of itself, create an exigency. Whether a defendant did consume more alcohol and therefore affected a BAC test are issues of fact to be determined by the factfinder.
As is noted above, in Colorado the officers could not have compelled a chemical test against Wehmas because the underlying offenses were not of the type for which testing may be physically compelled. Accordingly, the need to obtain BAC evidence will not, as a general rule, create the level of imminency required to override the constitutional protection against warrantless entry.
Nor can we conclude on the specific facts of this case that the need for Wehmas's BAC compelled the officers to make a warrantless entry without delay. The prosecution has failed to demonstrate that the officers had insufficient time to get a warrant under the circumstances. Four officers were on the scene; one hour and twenty-two minutes elapsed between the dispatch call and the time of arrest; no evidence was presented of any attempt to obtain a warrant within that time despite the apparent intent to enter the apartment; and no evidence was presented showing an inability to secure the premises while waiting for a warrant. We therefore conclude that the prosecution has not met its burden to show that exigent circumstances justified a warrantless entry into Wehmas's home.
IV. Conclusion
We reverse the district court's ruling that DUI was not a sufficiently grave crime to support a warrantless home entry by the police. DUI is a jailable offense that meets the test required by the Supreme Court. On the facts, however, we affirm the district court's ruling affirming the county court's suppression of the evidence obtained after the warrantless entry into Wehmas's apartment.
Justice EID concurs in part and dissents in part, and Justice COATS joins in the concurrence in part and dissent in part.
Justice EID, concurring in part and dissenting in part.
I agree with the majority that both the county court and the district court erred in holding that a DUI is not a sufficiently grave offense to justify a warrantless entry into a home under exigent circumstances, and therefore join Part III.A. of its opinion. Because the gravity of the offense is a significant factor in determining whether exigent circumstances exist, however, I would find that the lower courts' error impacted the entirety of their exigency analysis. The case should therefore be remanded for determination of whether, using the proper analysis that considers a DUI a sufficiently grave offense, exigent circumstances existed. Accordingly, I dissent from Part III.B. of the majority's opinion determining that exigent circumstances did not justify entry into the home in this case.
I am authorized to say that Justice COATS joins in this opinion concurring in part and dissenting in part.
NOTES
[1] We granted certiorari on the following question: "Whether a DUI in Colorado is a sufficiently grave offense to justify warrantless entry into a home, when exigent circumstances are present."
[2] The degree of gravity and its influence on our analysis will vary with the severity of the DUI charged. In this case, Wehmas was not charged with the more severe DUI crimes, which, under Colorado law, would have given the officers a basis for physically compelling the defendant to undergo chemical testing. See § 42-4-1301.1(3), C.R.S. (2010) (an officer cannot physically require submission to a chemical test unless there is probable cause to believe that the person has committed criminally negligent homicide, vehicular homicide, assault in the third degree, or vehicular assault).
[3] As we have previously noted, Wehmas was not charged with one of the more serious DUI crimes, which would affect the totality-of-the-circumstances analysis. Supra note 2. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2369926/ | 76 F. Supp. 2d 862 (1999)
Guillermo RIVERA, Plaintiff,
v.
Madeleine ALBRIGHT, Secretary of the Department of State, Defendant.
No. 99 C 328.
United States District Court, N.D. Illinois, Eastern Division.
October 13, 1999.
David Rubman, Rubman and Compernolle, Chicago, IL, for Plaintiff.
United States Attorney's Office, Chicago, IL, for Defendant.
*863 MEMORANDUM AND ORDER
MORAN, Senior District Judge.
Plaintiff, who is within the United States, seeks a declaration of United States nationality pursuant to 8 U.S.C. § 1503(a). The Secretary of State moves to dismiss or for summary judgment. Plaintiff now also seeks an order in the nature of mandamus ordering the issuance of a passport, although he concedes that certain factual determinations must be made before such an order can be issued. We deny the motion to dismiss or for summary judgment and we dismiss the purported mandamus petition.
The procedural facts are not in dispute. Plaintiff filed a passport application in 1993, giving his place of birth as Laredo, Texas. The State Department responded by requesting that he submit supporting documentation, with the advice that if it did not hear from plaintiff within 30 days the application would be filed without further action and any fee would be refunded. Plaintiff did not respond. Accordingly, the State Department, on June 9, 1993, sent him a form with two boxes checked:
1. It is assumed that you have abandoned your plans to travel abroad since a reply to our correspondence has not been received. Therefore, your request for passport services is being filed without further action.
* * * * * *
4. The United States Treasury will be requested to refund directly to your [sic] any passport fee submitted. according to law, the fee for the execution of the application cannot be refunded. (Please allow from six to eight weeks for the processing of your refund.)
A State Department stamp was placed on plaintiff's 1993 passport application as follows:
ABANDONED
PT/SF
AUG 02, 1993
Plaintiff filed a second application on July 1, 1994, with some documentation, and that was denied due to the inadequacy and insufficiency of the documentation. In connection with that application, plaintiff's attorney referred in a letter to the first application being "rejected." On April 11, 1998, plaintiff filed a third application. He was sent an undated and unsigned notice on Chicago Passport Agency letterhead, which bore the stamp "Approved," and stated "Your United States Passport Is Enclosed." However, no passport was enclosed. The defendant asserts that the third application was not approved but was still under consideration, an assertion for which plaintiff claims there is no evidentiary support. Defendant claims, and plaintiff's counsel acknowledges being told, that the document was sent out as a stratagem to prompt plaintiff's appearance at the Passport Agency. The application was denied in a March 30, 1999 letter, which contained a similar explanation for the earlier mailing. The letter of denial was well after this lawsuit was filed. The application does not indicate that it was approved.
Section 1503(a) provides that an action must be instituted within five years "after the final administrative denial." Defendant argues that the filing of the request in 1993 without further action was a final administrative denial, more than five years before suit was filed. We disagree.
Defendant relies on cases where the final administrative determination that a person was not a United States citizen was unmistakable. In Vance v. Terrazas, 444 U.S. 252, 256, 100 S. Ct. 540, 62 L. Ed. 2d 461 (1980), Heuer v. United States Secretary of State, 20 F.3d 424, 425 (11th Cir. 1994), cert. denied, 513 U.S. 1014, 115 S. Ct. 573, 130 L. Ed. 2d 490 (1994) and Whitehead v. Haig, 794 F.2d 115-116 (3d Cir.1986), Certificates of Loss of Nationality had been issued (although Heuer and Whitehead make clear that whether or not the issuance of a Certificate is a final administrative denial of a claim of citizenship for the purposes of § 1503(a) remains in dispute). In Lee Wing Hong v. Dulles, 214 F.2d 753, 755 (7th Cir.1954) passports *864 were denied on the ground that the applicants were not who they claimed to be. Ironically, in the latter two cases the determination of jurisdiction was in response to the Secretary's claim that denial of a passport was not a final administrative denial for the purposes of § 1503(a).
Could plaintiff have sued on the basis of his 1993 application? Yung Jin Teung v. Dulles, 229 F.2d 244, 246 (2d Cir.1956) (relied on by the Secretary) suggests not a request for documents which the applicant does not produce and does not say he cannot produce, unless it is clear that the applicant cannot produce them, is not a final administrative denial. Nor do we have an issue of unreasonable delay, as in Chin Chuck Ming v. Dulles, 225 F.2d 849, 852-53 (9th Cir.1955). Whether plaintiff could have sued, however, we need not decide. By the Secretary's logic, if someone who unquestionably is a citizen applies for a passport but fails to submit substantiating documentation (let us say he forgot to bring them), he abandons the application because his travel plans change, and then, six years later, he applies for a passport, his status as a citizen is solely a matter of administrative determination. We do not believe the status of citizenship is so fragile. See Afroyim v. Rusk, 387 U.S. 253, 87 S. Ct. 1660, 18 L. Ed. 2d 757 (1967) and Trop v. Dulles, 356 U.S. 86, 78 S. Ct. 590, 2 L. Ed. 2d 630 (1958). When, as here, the Secretary notes that the failure to follow up may be due to changes in travel plans, files the application without further action (i.e. approval or denial), and stamps the application "ABANDONED," we cannot, and the applicant need not, construe that as a final administrative denial based upon a denial that the applicant has a right to be recognized as a United States citizen. Plaintiff's counsel's less than artful reference to "rejected" in correspondence cannot change that.
We see no basis for this court having the authority to order the Secretary to issue a passport because of an unsigned, undated letter marked "Approved," when it is clear that the application was not marked approved by an appropriate official and no passport issued. The plaintiff's suggestion that we should do so is denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2909564/ | William A. McIntosh v. State
IN THE
TENTH COURT OF APPEALS
No. 10-01-409-CR
No. 10-01-410-CR
No. 10-01-411-CR
No. 10-01-412-CR
No. 10-01-413-CR
No. 10-01-414-CR
No. 10-01-415-CR
No. 10-01-416-CR
No. 10-01-417-CR
No. 10-01-418-CR
     WILLIAM A. McINTOSH,
                                                                              Appellant
     v.
     THE STATE OF TEXAS,
                                                                              Appellee
From the 40th District Court
Ellis County, Texas
Trial Court Nos. 20084CR, 20085CR, 20086CR, 20087CR
20379CR, 20380CR, 20381CR, 20382CR, 20383CR and 20384CR
                                                                                                               Â
MEMORANDUM OPINION
                                                                                                               Â
      William A. McIntosh appeals from the trial courtâs denial of his motions for appointment of
trial counsel in a series of DNA proceedings under chapter 64 of the Code of Criminal Procedure.
We notified McIntosh in a published order dated December 11, 2002 that these are not appealable
orders and that these appeals would be dismissed for want of jurisdiction if supplemental clerkâs
records containing orders adjudicating the merits of his motions for DNA testing were ânot filed
with the Clerk of this Court on or before 5:00 p.m. on December 27, 2002.â McIntosh v. State,
No. 01-409-CR, slip op. at 3-4, 2002 Tex. App. LEXIS 8879, at *4 (Tex. App.âWaco Dec. 11,
2002, order).
      We have not received a supplemental record containing an order on the merits in any of these
appeals. Accordingly, we dismiss these appeals for want of jurisdiction.
                                                                   PER CURIAM
Before Chief Justice Davis,
      Justice Vance, and
      Justice Gray
Appeals dismissed for want of jurisdiction
Opinion delivered and filed March 5, 2003
Do not publish
[CR25]
rs,
administrators, successors or assigns, an undivided one-half (½) interest of
the oil, gas and other minerals produced with the oil and gas now owned
by Charlsie Northcutt Morrison that are in and under the property and that may
be produced from it[.]
Â
Under the RobinsonsÂ
interpretation, the express wording of the reservation operated to reserve unto
Morrison an undivided one-quarter interest in the mineral estate. The reservation,
as quoted above, states that Morrison reserved an undivided one-half of the
minerals produced with the oil and gas now owned by her. The words Ânow ownedÂ
are underlined in the deed. We find that it is reasonable to read the
reservation with an emphasis on the words Ânow owned and conclude that
Morrison intended to convey one-half of her mineral interest (i.e.
one-quarter of the total mineral interest).
     Morrison argues, however, that
her reservation must be harmonized with the Evans Reservation which contains
the following language:
SAVE AND EXCEPT and there is hereby
reserved for Grantor, Barbara Morrison Evans and her heirs, administrators,
successors or assigns, for a period until June 11, 2000, an undivided one-half
(½) interest of the oil and gas and other minerals produced with the oil and
gas now owned by Barbara Morrison Evans, that are in and under the
property and that may be produced from it[.]
Â
On June 11, 2000, an undivided one-fourth
(¼) interest of the total mineral estate shall pass to and be owned by
Grantees, their heirs and assigns. It is the intent of the Grantor Barbara
Morrison Evans and the Grantee [sic] James E. Robinson and Charles Owen
Robinson, that as of June 11, 2000 that Barbara Morrison Evans, her heirs and
assigns shall own an undivided one-fourth (¼) of the oil, gas and other
minerals and James E. Robinson and Charles Owen Robinson and their heirs and
assigns shall own an undivided one-fourth (¼) of the total oil, gas and mineral
estate.
Â
Morrison claims that the
meaning of the Ânow owned by language in her reservation is revealed in the
additional language. She argues that the last sentence of the Evans Reservation
indicates that both reservations intended for the grantors to initially retain their
undivided one-half interests in the minerals. She argues that because the
language in the Evans Reservation makes clear that the parties intended for
Evans to retain her undivided one-half interest in the mineral estate until
June 11, 2000, the only reasonable construction for the language in the
Morrison Reservation is that she would likewise retain her undivided one-half
interest in the mineral estate.
     Whether an instrument is
ambiguous is a question of law that must be decided by examining it as a whole
in light of the circumstances present when it was executed. See Enter.
Leasing Co. of Houston v. Barrios, 156 S.W.3d 547, 549 (Tex. 2004). We
must examine and consider the entire writing in an effort to harmonize and give
effect to all provisions so that none will be rendered meaningless. See
Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994). No single
provision will control; rather, all provisions must be considered with
reference to the whole instrument. Id.
Finding that the wording of
the Morrison Reservation is substantially identical to the Evans Reservation,
and considering the additional language, we find that both interpretations are
reasonable. Because the deed is reasonably susceptible to more than one
meaning, it is ambiguous. This ambiguity creates a fact issue as to the
parties intent and, therefore, summary judgment was not proper.
Conclusion
     Having
sustained MorrisonÂs first issue, we reverse the summary judgment and remand
the cause to the trial court for further proceedings.
Â
Â
BILL VANCE
Justice
Â
Before
Chief Justice Gray,
Justice Vance, and
Justice Reyna
           (Chief
Justice Gray dissenting)
Reversed
and remanded
Opinion
delivered and filed August 30, 2006
[CV06]
   [1]  Barbara
Evans is not a party. | 01-03-2023 | 09-10-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2369993/ | 728 S.W.2d 921 (1987)
George Franklin BONNER, Appellant,
v.
The STATE of Texas, Appellee.
Nos. 01-85-0530-CR to 01-85-0532-CR.
Court of Appeals of Texas, Houston (1st Dist.).
April 16, 1987.
*922 George Franklin Bonner, pro se.
Jim Mapel, Brazoria County Dist. Atty., Jim Turner, Brazoria County Asst. Dist. Atty., Angelton, for appellee.
Before JACK SMITH, DUGGAN and COHEN, JJ.
OPINION
COHEN, Justice.
Appellant was tried simultaneously on two indictments for aggravated kidnapping and one for aggravated sexual assault. After testimony began, appellant withdrew his not-guilty plea, and pled guilty to the jury. He also pled true to the enhancement paragraph of each indictment, and the jury assessed punishment at 94 years confinement in each case. Court-appointed counsel on appeal filed an Anders brief, and appellant then filed a brief, pro se.
In his second point of error, appellant contends that it was error to allow the same prior conviction to be used to enhance each of the three indictments in the same trial. Appellant relies on cases that preceded the enactment of Tex.Pen.Code Ann. section 12.46 (Vernon 1987), which provides that:
The use of a conviction for enhancement purposes shall not preclude the subsequent use of such conviction for enhancement purposes.
Section 12.46 was intended to overrule the judicial bar to the repeated use of prior convictions to enhance punishment. Haines v. State, 623 S.W.2d 367, 369 (Tex. Crim.App.1981).
These offenses could have been prosecuted separately, and the same prior conviction could have been used for enhancement in each prosecution, under the express language of section 12.46. Moreover, if any of the three cases were to be retried, the retrial would be a "subsequent use," and the same prior conviction could be used again for enhancement.
The Penal Code's general objectives, see Tex.Pen.Code Ann. section 1.02 (Vernon 1974), would not be served by limiting the applicability of section 12.46 to separate trials, and any such limit would undermine the purpose of section 12.46. See Walker v. State, 661 S.W.2d 224, 225 (Tex.App. Houston [1st Dist.] 1983, no pet.); Davis v. State, 652 S.W.2d 520 (Tex.App.Houston [1st Dist.] 1983, no pet.); see also Cervantes v. State, 706 S.W.2d 685, 688 (Tex. App.Houston [14th Dist.] 1986, no pet.); Blackshear v. State, 660 S.W.2d 139 (Tex. App.Waco 1983, no pet.). Consequently, we hold that the same prior conviction can be used to enhance each of the three indictments tried simultaneously. The second point of error is overruled.
*923 Appellant contends in his first point of error that the enhancement paragraphs of the indictments were fundamentally defective. The enhancement paragraphs alleged that:
[B]efore the commission of the offense alleged above, on the 30th day of June, A.D. 1983 in Cause Number 14, 768 in the 23rd Judicial District Court of Brazoria County, Texas, the defendant ... was convicted of the felony offense of Burglary of a Vehicle....
First, appellant contends that it was necessary to plead that the prior conviction was final. There is no such requirement. An allegation that appellant has been convicted is sufficient. Williams v. State, 596 S.W.2d 862, 865 (Tex.Crim.App.1980).
Next, appellant contends that the State did not prove that the prior conviction was final. No such proof was required because appellant pled "true." Harvey v. State, 611 S.W.2d 108, 111 (Tex.Crim.App.), cert. denied, 454 U.S. 840, 102 S. Ct. 149, 70 L. Ed. 2d 123 (1981). The first point of error is overruled.
In his third point of error, appellant contends that the evidence is insufficient to prove that he restrained the complainant by "moving her from one place to another, to wit, from a parking place on Gulf Boulevard in Freeport, Texas, to a road outside said city," because the evidence established that the complainants were parked "off of Gulf Boulevard" in "a parking lot off over to the side" of a business located on Gulf Boulevard.
The evidence, viewed in a light most favorable to the verdict, indicates that the victims were abducted from their parking place in front of a store on Gulf Boulevard. There is no variance between the proof and the indictment. The third point of error is overruled.
Appellant's fourth point of error contends that the jury charge was fundamentally defective because "it improperly failed to apply the facts to the law on the allegations contained within the indictments... on the lesser included offense...." Appellant asserts that each kidnapping indictment also alleged false imprisonment because the indictments described how the complainants were restrained.
The kidnapping indictments alleged that appellant did:
[I]ntentionally and knowingly abduct [the complainant], with intent to inflict bodily injury on her, and to violate and abuse her sexually by using and threatening to use deadly force, namely, a firearm, and said defendant did intentionally and knowingly restrain [the complainant] by moving her from one place to another, to wit, from a parking place on Gulf Boulevard in Freeport, Texas, to a road outside said city without her consent by force and intimidation.
Tex.Pen.Code Ann. section 20.03 (Vernon 1974) defines kidnapping as "intentionally or knowingly abduct[ing] another person." Tex.Pen.Code Ann. section 20.01(2) (Vernon 1974) defines abduct as "to restrain a person...."
The indictments merely describe the kind of restraint that was used to abduct the complainants. They do not allege false imprisonment. The fourth point of error is overruled.
Appellant contends in his fifth point of error that the trial court erred in admitting certain photographs; in his sixth point of error that the trial court erred in admitting evidence concerning the rape kit; and in his seventh and eighth points of error that the trial court erred in allowing the admission of two extraneous offenses.
Appellant's guilty plea waived all non-jurisdictional defects. Helms v. State, 484 S.W.2d 925, 927 (Tex.Crim.App.1972). These complaints are not jurisdictional. Accordingly, points of error five through eight are overruled.
Appellant finally contends that he was denied the effective assistance of counsel. However, he does not contend that he was prejudiced, as required by Strickland v. Washington, 466 U.S. 668, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984). Additionally, the point of error cites no authority and *924 contains only one citation to the record. Nothing is presented for review. Tex.R. App.P. 74(f). The ninth point of error is overruled.
Although not raised, the judgment recites that "the Court finds the defendant used a deadly weapon, to wit: a firearm...." The record reflects that the jury, not the court, found that a deadly weapon was used. Accordingly, the judgment is ordered reformed to indicate that "the jury found that the defendant used a deadly weapon, to wit: a firearm...." Polk v. State, 693 S.W.2d 391 (Tex.Crim. App.1985); Tex.R.App.P. 80(b).
The judgment, as reformed, is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2370673/ | 382 S.W.2d 198 (1964)
Edgar C. WALKER et al., Appellants,
v.
Clarence M. KEITH, Appellee.
Court of Appeals of Kentucky.
June 26, 1964.
Rehearing Denied October 16, 1964.
*199 G. D. Milliken, Jr., Marshall Funk, Bowling Green, for appellants.
Joe B. Orr, Bell, Orr & Reynolds, Bowling Green, for appellee.
CLAY, Commissioner.
In this declaratory judgment proceeding the plaintiff appellee sought an adjudication that he had effectively exercised an option to extend a lease, and a further determination of the amount of rent to be paid. The relief prayed was granted by the Chancellor. The principal issue is whether the option provision in the lease fixed the rent with sufficient certainty to constitute an enforceable contract between the parties.
In July 1951 appellants, the lessors, leased a small lot to appellee, the lessee, for a 10-year term at a rent of $100 per month. The lessee was given an option to extend the lease for an additional 10-year term, under the same terms and conditions except as to rental. The renewal option provided:
"rental will be fixed in such amount as shall actually be agreed upon by the lessors and the lessee with the monthly rental fixed on the comparative basis of rental values as of the date of the renewal with rental values at this time reflected by the comparative business conditions of the two periods."
The lessee gave the proper notice to renew but the parties were unable to agree upon the rent. Preliminary court proceedings finally culminated in this lawsuit. Based upon the verdict of an advisory jury, the Chancellor fixed the new rent at $125 per month.
The question before us is whether the quoted provision is so indefinite and uncertain that the parties cannot be held to have agreed upon this essential rental term of the lease. There have been many cases from other jurisdictions passing on somewhat similar lease provisions and the decisions are in hopeless conflict. We have no authoritative Kentucky decision.
At the outset two observations may be made. One is that rental in the ordinary lease is a very uncomplicated item. It involves the number of dollars the lessee will pay. It, or a method of ascertaining it, can be so easily fixed with certainty. From the standpoint of stability in business transactions, it should be so fixed.
Secondly, as an original proposition, uncomplicated by subtle rules of law, the provision we have quoted, on its face, is ambiguous and indefinite. The language used is equivocal. It neither fixes the rent nor furnishes a positive key to its establishment. The terminology is not only confusing but inherently unworkable as a formula.
The above observations should resolve the issue. Unfortunately it is not that simple. Many courts have become intrigued with the possible import of similar *200 language and have interpolated into it a binding obligation. The lease renewal option has been treated as something different from an ordinary contract. The law has become woefully complicated. For this reason we consider it necessary and proper to examine this question in depth.
The following basic principles of law are generally accepted:
"It is a necessary requirement in the nature of things that an agreement in order to be binding must be sufficiently definite to enable a court to give it an exact meaning." Williston on Contracts (3rd Ed.) Vol. 1, section 37 (page 107).
"Like other contracts or agreements for a lease, the provision for a renewal must be certain in order to render it binding and enforceable. Indefiniteness, vagueness, and uncertainty in the terms of such a provision will render it void unless the parties, by their subsequent conduct or acts supplement the covenant and thus remove an alleged uncertainty. The certainty that is required is such as will enable a court to determine what has been agreed upon." 32 Am.Jur., Landlord and Tenant, section 958 (page 806).
"The terms of an extension or renewal, under an option therefor in a lease, may be left for future determination by a prescribed method, as by future arbitration or appraisal; but merely leaving the terms for future ascertainment, without providing a method for their determination, renders the agreement unenforceable for uncertainty." 51 C.J.S. Landlord and Tenant 56b (2), page 597.
"A renewal covenant in a lease which leaves the renewal rental to be fixed by future agreement between the parties has generally been held unenforceable and void for uncertainty and indefiniteness. Also, as a general rule, provisions for renewal rental dependent upon future valuation of premises without indicating when or how such valuation should be made have been held void for uncertainty and indefiniteness." 32 Am. Jur., Landlord and Tenant, section 965 (page 810).
Many decisions supporting these principles may be found in 30 A.L.R. 572; 68 A.L.R. 157; 166 A.L.R. 1237.
The degree of certainty is the controlling consideration. An example of an appropriate method by which a non-fixed rental could be determined appears in Jackson v. Pepper Gasoline Co., 280 Ky. 226, 133 S.W.2d 91, 126 A.L.R. 1370. The lessee, who operated an automobile service station, agreed to pay "an amount equal to one cent per gallon of gasoline delivered to said station". Observing that the parties had created a definite objective standard by which the rent could with certainty be computed, the court upheld the lease as against the contention that it was lacking in mutuality. (The Chancellor cited this case as authoritative on the issue before us, but we do not believe it is. Appellee apparently agrees because he does not even cite the case in his brief.)
On the face of the rent provision, the parties had not agreed upon a rent figure. They left the amount to future determination. If they had agreed upon a specific method of making the determination, such as by computation, the application of a formula, or the decision of an arbitrator, they could be said to have agreed upon whatever rent figure emerged from utilization of the method. This was not done.
It will be observed the rent provision expresses two ideas. The first is that the parties agree to agree. The second is that the future agreement will be based on a comparative adjustment in the light of "business conditions". We will examine separately these two concepts and then consider them as a whole.
*201 The lease purports to fix the rent at such an amount as shall "actually be agreed upon". It should be obvious that an agreement to agree cannot constitute a binding contract. Williston on Contracts (3rd Ed.) Vol. 1, section 45 (page 149); Johnson v. Lowery, Ky., 270 S.W.2d 943; National Bank of Kentucky v. Louisville Trust Co., 6 Cir., 67 F.2d 97.
Slade v. City of Lexington, 141 Ky. 214, 132 S.W. 404, 32 L.R.A.,N.S., 201, has been cited as adopting a contrary view. Certain language in that opinion would seem to justify such contention. However, that case involved very unusual features and some of the broad language used was unnecessary to the decision. The parties (being a legislatively created public service corporation and a municipality) had agreed to renew a contract "upon terms as mutually agreed upon". When the time came for renewal, both parties agreed upon new terms. Thus the contract in this respect was executed. Since the parties had actually complied with all of its provisions, it was properly held valid and binding as of its inception. No question was raised with respect to the enforceability of the contract as between the parties thereto, which is the issue before us. If this case may be construed to hold that an agreement to agree, standing alone, constitutes a binding contract, we believe it unsound.
As said in Williston on Contracts (3rd Ed.) Vol. 1, section 45 (page 149):
"Although a promise may be sufficiently definite when it contains an option given to the promisor, yet if an essential element is reserved for the future agreement of both parties, the promise gives rise to no legal obligation until such future agreement. Since either party, by the very terms of the agreement, may refuse to agree to anything the other party will agree to, it is impossible for the law to fix any obligation to such a promise."
We accept this because it is both sensible and basic to the enforcement of a written contract. We applied it in Johnson v. Lowery, Ky., 270 S.W.2d 943, page 946, wherein we said:
"To be enforceable and valid, a contract to enter into a future covenant must specify all material and essential terms and leave nothing to be agreed upon as a result of future negotiations."
This proposition is not universally accepted as it pertains to renewal options in a lease. Hall v. Weatherford, 32 Ariz. 370, 259 P. 282, 56 A.L.R. 903; Rainwater v. Hobeika, 208 S.C. 433, 38 S.E.2d 495, 166 A.L.R. 1228. We have examined the reasons set forth in those opinions and do not find them convincing. The view is taken that the renewal option is for the benefit of the lessee; that the parties intended something; and that the lessee should not be deprived of his right to enforce his contract. This reasoning seems to overlook the fact that a party must have an enforceable contract before he has a right to enforce it. We wonder if these courts would enforce an original lease in which the rent was not fixed, but agreed to be agreed upon.
Surely there are some limits to to what equity can or should undertake to compel parties in their private affairs to do what the court thinks they should have done. See Slayter v. Pasley, Or., 199 Or. 616, 264 P.2d 444, 449; and dissenting opinion of Judge Weygandt in Moss v. Olson, 148 Ohio 625, 76 N.E.2d 875. In any event, we are not persuaded that renewal options in leases are of such an exceptional character as to justify emasculation of one of the basic rules of contract law. An agreement to agree simply does not fix an enforceable obligation.
As noted, however, the language of the renewal option incorporated a secondary stipulation. Reference was made to "comparative business conditions" which were to play some part in adjusting the new rental. It is contended this provides the *202 necessary certainty, and we will examine a leading case which lends support to the argument.
In Edwards v. Tobin, 132 Or. 38, 284 P. 562, 68 A.L.R. 152, the court upheld and enforced a lease agreement which provided that the rent should be "determined" at the time of renewal, "said rental to be a reasonable rental under the then existing conditions". (Our emphasis) Significance was attached to the last quoted language, the court reasoning that since the parties had agreed upon a reasonable rent, the court would hold the parties to the agreement by fixing it.
All rents tend to be reasonable. When parties are trying to reach an agreement, however, their ideas or claims of reasonableness may widely differ. In addition, they have a right to bargain. They cannot be said to be in agreement about what is a reasonable rent until they specify a figure or an exact method of determining it. The term "reasonable rent" is itself indefinite and uncertain. Would an original lease for a "reasonable rent" be enforceable by either party? The very purpose of a rental stipulation is to remove this item from an abstract area.
It is true courts often must imply such terms in a contract as "reasonable time" or "reasonable price". This is done when the parties fail to deal with such matters in an otherwise enforceable contract. Here the parties were undertaking to fix the terms rather than leave them to implication. Our problem is not what the law would imply if the contract did not purport to cover the subject matter, but whether the parties, in removing this material term from the field of implication, have fixed their mutual obligations.
We are seeking what the agreement actually was. When dealing with such a specific item as rent, to be payable in dollars, the area of possible agreement is quite limited. If the parties did not agree upon such an unequivocal item or upon a definite method of ascertaining it, then there is a clear case of nonagreement. The court, in fixing an obligation under a non-agreement, is not enforcing the contract but is binding the parties to something they were patently unable to agree to when writing the contract.
The opinion in the Tobin case, which purportedly was justifying the enforcement of a contractual obligation between the lessor and lessee, shows on its face the court was doing something entirely different. This question was posed in the opinion: "What logical reason is there for equity to refuse to act when the parties themselves fail to agree on the rental?" (Our emphasis) The obvious logical answer is that even equity cannot enforce as a contract a nonagreement. No distortion of words can hide the fact that when the court admits the parties "fail to agree," then the contract it enforces is one it makes for the parties.
It has been suggested that rent is not a material term of a lease. It is said in the Tobin case: "The method of determining the rent pertains more to form than to substance. It was not the essence of the contract, but was merely incidental and ancillary thereto." This seems rather startling. Nothing could be more vital in a lease than the amount of rent. It is the price the lessee agrees to pay and the lessor agrees to accept for the use of the premises. Would a contract to buy a building at a "reasonable price" be enforceable? Would the method of determining the price be a matter of "form" and "incidental and ancillary" to the transaction? In truth it lies at the heart of it. This seems to us as no more than a grammatical means of sweeping the problem under the rug. It will not do to say that the establishment of the rent agreed upon is not of the essence of a lease contract.
We have examined the Tobin case at length because it exemplifies lines of reasoning adopted by some courts to dredge certainty from uncertainty. Other courts *203 balk at the process. The majority of cases, passing upon the question of whether a renewal option providing that the future rent shall be dependent upon or proportionate to the valuation of the property at the time of renewal, hold that such provision is not sufficiently certain to constitute an enforceable agreement. See cases cited in 30 A.L.R. 579 and 68 A.L.R. 159. The valuation of property and the ascertainment of "comparative business conditions," which we have under consideration, involve similar uncertainties.
A case construing language closely approximating that in the lease before us is Beal v. Dill, 173 Kan. 879, 252 P.2d 931. The option to extend the lease provided: "said rental shall be subject to reasonable adjustment, up or down, depending upon general business conditions then existing." The Kansas Supreme Court, purporting to follow what it deemed the "majority rule" (and citing numerous authorities), held this language was too indefinite to be enforceable.
The opposite conclusion on similar language was reached in Greene v. Leeper, 193 Tenn. 153, 245 S.W.2d 181. The option provided for: "a rental to be agreed on according to business conditions at that time." The court, declaring that "rental can be determined with reasonable certainty by disinterested parties," adjudged this was an enforceable provision. The court indicated in the opinion that real estate experts would have no difficulty in fixing the rental agreed upon. The trouble is the parties did not agree to leave the matter to disinterested parties or real estate experts, and it is a false assumption that there will be no differences of opinion.
A similar renewal option was enforced in Fuller v. Michigan National Bank, 342 Mich. 92, 68 N.W.2d 771. In that case the language was "at a rent to be agreed upon, dependent on then existing conditions, * * *". The court treated the problem as one involving an ambiguity. Synonyms for the word "ambiguous" are: indeterminate, indefinite, unsettled. This dubiosity is of course what makes it clear the parties had failed to reach an agreement.
We do not think our problem can be solved by determining which is the "majority" rule and which is the "minority" rule. We are inclined, however, to adhere to a sound basic principle of contract law unless there are impelling reasons to depart from it, particularly so when the practical problems involved in such departure are so manifest. Let us briefly examine those practical problems.
What the law requires is an adequate key to a mutual agreement. If "comparative business conditions" afforded sufficient certainty, we might possibly surmount the obstacle of the unenforceable agreement to agree. This term, however is very broad indeed. Did the parties have in mind local conditions, national conditions, or conditions affecting the lessee's particular business?
That a controversy, rather than a mutual agreement, exists on this very question is established in this case. One of the substantial issues on appeal is whether the Chancellor properly admitted in evidence the consumer price index of the United States Labor Department. At the trial the lessor was attempting to prove the change in local conditions and the lessee sought to prove changes in national conditions. Their minds to this day have never met on a criterion to determine the rent. It is pure fiction to say the court, in deciding upon some figure, is enforcing something the parties agreed to.
One aspect of this problem seems to have been overlooked by courts which have extended themselves to fix the rent and enforce the contract. This is the Statute of Frauds. The purpose of requiring a writing to evidence an agreement is to assure certainty of the essential terms thereof and to avoid controversy and litigation. See 49 Am.Jur., Statute of Frauds, section 313 (page 629); section 353 (page *204 663); section 354 (page 664). This very case is living proof of the difficulties encountered when a court undertakes to supply a missing essential term of a contract.
In the first place, when the parties failed to enter into a new agreement as the renewal option provided, their rights were no longer fixed by the contract. The determination of what they were was automatically shifted to the courtroom. There the court must determine the scope of relevant evidence to establish that certainty which obviously cannot be culled from the contract. Thereupon extensive proof must be taken concerning business conditions, valuations of property, and reasonable rentals. Serious controversies develop concerning the admissibility of evidence on the issue of whether "business conditions" referred to in the lease are those on the local or national level, or are those particularly affecting the lessee's business. An advisory jury is impanelled to express its opinion as to the proper rental figure. The judge then must decide whether the jury verdict conforms to the proof and to his concept of equity. On appeal the appellate court must examine alleged errors in the trial. Assuming some error in the trial (which appears likely on this record), the case may be reversed and the whole process begun anew. All of this time we are piously clinging to a concept that the contract itself fixed the rent with some degree of certainty.
We realize that litigation is oft times inevitable and courts should not shrink from the solution of difficult problems. On the other hand, courts should not expend their powers to establish contract rights which the parties, with an opportunity to do so, have failed to define. As said in Morrison v. Rossingnol, 5 Cal. 64, quoted in 30 A.L.R. at page 579:
"A court of equity is always chary of its power to decree specific performance, and will withhold the exercise of its jurisdiction in that respect, unless there is such a degree of certainty in the terms of the contract as will enable it at one view to do complete equity."
That cannot be done in this case.
Stipulations such as the one before us have been the source of interminable litigation. Courts are called upon not to enforce an agreement or to determine what the agreement was, but to write their own concept of what would constitute a proper one. Why this paternalistic task should be undertaken is difficult to understand when the parties could so easily provide any number of workable methods by which rents could be adjusted. As a practical matter, courts sometimes must assert their right not to be imposed upon. This thought was thus summed up in Slayter v. Pasley, Or., 264 P.2d 444, page 449:
"We should be hesitant about completing an apparently legally incomplete agreement made between persons sui juris enjoying freedom of contract and dealing at arms' length by arbitrarily interpolating into it our concept of the parties' intent merely to validate what would otherwise be an invalid instrument, lest we inadvertently commit them to an ostensible agreement which, in fact, is contrary to the deliberate design of all of them. It is a dangerous doctrine when examined in the light of reason. Judicial paternalism of this character should be as obnoxious to courts as is legislation by judicial fiat. Both import a quality of jural ego and superiority not consonant with long-accepted ideas of legistic propriety under a democratic form of government. If, however, we follow the urgings of the lessee in the instant matter, we will thereby establish a precedent which will open the door to repeated opportunities to do that which, in principle, courts should not do and, in any event, are not adequately equipped to do."
We think the basic principle of contract law that requires substantial certainty *205 as to the material terms upon which the minds of the parties have met is a sound one and should be adhered to. A renewal option stands on the same footing as any other contract right. Rent is a material term of a lease. If the parties do not fix it with reasonable certainty, it is not the business of courts to do so.
The renewal provision before us was fatally defective in failing to specify either an agreed rental or an agreed method by which it could be fixed with certainty. Because of the lack of agreement, the lessee's option right was illusory. The Chancellor erred in undertaking to enforce it.
The judgment is reversed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2370595/ | 382 S.W.2d 870 (1964)
Charles Robert LEGEL, Appellant,
v.
Neva Lois LEGEL, Appellee.
Court of Appeals of Kentucky.
October 2, 1964.
Hargadon, Hargadon, Lenihan & Harbolt, Louisville, for appellant.
Raymond L. Suell, Louisville, for appellee.
CULLEN, Commissioner.
Charles Robert Legel was granted a divorce from his wife on the ground of lewd and lascivious conduct on her part. The judgment awarded the wife $10,000, purportedly as restoration of property which the husband had obtained from her during and by reason of the marriage. Charles has appealed from that part of the judgment making the award to the wife.
The parties had been married a little over 16 years, and had four children. Mrs. Legel worked for a distillery for 10 years during the marriage and earned some $17,000 in wages and other benefits which was used, along with the husband's income, for living expenses of the family. A small portion *871 of her earnings was used to make improvements on the family dwelling.
When the divorce suit was filed the assets of the family consisted of a modest dwelling, appraised at $6,500, some furniture, and two old automobiles. The wife was awarded the furniture and one of the automobiles. The dwelling was in the joint names of the parties, but since the lot had been given to them by Mr. Legel's mother and since the main cost of constructing the dwelling had been paid out of his earnings before Mrs. Legel became a wage earner, the court gave Mr. Legel full title to the dwelling. However, the $10,000 award in favor of the wife was made a lien on the dwelling.
It appears that the trial court was of the opinion that the wife could not be awarded alimony because the divorce was granted on the ground of moral delinquency on her part, but that for the money she had contributed to the family living expenses she should have some recompense, which the court chose to make under the designation of restoration of property. The appellant husband maintains that the law of restoration does not authorize the award that was made. In this contention he is correct.
Under our decisions, if the wife's earnings have gone for living expenses and have not been converted into the form of property, she has no restorable interest in property of the husband. See Heustis v. Heustis, Ky., 346 S.W.2d 778; Pearson v. Pearson, Ky., 350 S.W.2d 141. And under the restoration statute, KRS 403.065, restoration may be had only of property "not disposed of at the commencement of the action." Here, aside from the dwelling in which the trial court found the wife had no restorable interest, there was no property in existence capable of being restored. The actual effect of the purported order of restoration was to require the husband to pay the wife a sum of money out of his future earnings.
The award cannot be justified as a form of alimony because our cases authorizing alimony without regard for the wife's fault apply only to the allowance of alimony out of the estate accumulated from the income of the husband during the marriage. Heustis v. Heustis, Ky., 346 S.W.2d 778; Carter v. Carter, Ky., 381 S.W.2d 533 (decided September 25, 1964). Here there was no accumulated estate.
We think the wife was entitled, by way of restoration, to the money that she contributed to the making of improvements on the family dwelling. Upon remand of the case the trial court will determine how much money was so contributed and award the wife judgment for that amount, which may be made a lien on the dwelling.
The judgment is reversed for further proceedings in conformity with this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2464447/ | 257 S.W.2d 167 (1953)
LONG
v.
MISSISSIPPI LIME CO. OF MO. et al.
No. 28484.
St. Louis Court of Appeals. Missouri.
April 21, 1953.
*168 Luke, Cunliff & Wilson, Charles F. Luke and Earl B. Simpson, St. Louis, for appellants.
Melvin Englehart, Fredericktown, for respondent.
HOUSER, Commissioner.
In a proceeding filed under the Workmen's Compensation Law a referee of the Division of Workmen's Compensation denied the claim of Densel L. Long, employee, and found in favor of Mississippi Lime Company of Missouri, employer. On review the industrial commission affirmed the award of the referee and found that the employee "failed to prove that the condition of which he complains was either caused or aggravated by an accident arising out of and in the course of his employment with the Mississippi Lime Company of Missouri, as alleged." On appeal the circuit court reversed and set aside the final award of the industrial commission denying compensation and remanded the cause to the industrial commission. From the judgment of the circuit court the employer and insurer have appealed to this court.
In his claim Densel Long recited that on January 29, 1949 while he was cleaning a concrete pit near the mill of the lime company he fell from an auger running lengthwise through the pit, striking his chest and right side against the wall of the pit and wetting his feet in ice water and snow, thereby injuring his chest and right side and causing dizziness, which injury later developed into chronic bronchitis and chronic pleurisy. The employer and insurer filed an answer containing a general denial and a plea that the employee had not filed his claim within the time prescribed by law.
As to the facts surrounding the accident, claimant offered his own uncorroborated testimony as follows: On Saturday, January 29, 1949, between the hours of 8 and 8:30 A.M., pursuant to the instructions of his foreman Estel Smith, claimant started to clean a concrete pit in which waste material, ice and snow had collected. About 9 A.M., while shoveling material out of the pit, standing with his left foot on the auger, his foot slipped down in the hole, his arm caught on the concrete wall, his arm went over, and that part of his body under his right arm struck against the wall. He fell and got his feet "all wet." He continued to work in the pit. About 11 A.M. the maintenance crew came and dug a pipe out of the pit. At about 3 P.M. "a fellow" built a fire and claimant tried to dry his feet. He quit work at 3:30 P.M. A coworker, one Al Reisinger, came to work with him on January 29, 1949 about an hour *169 after he went to work. Claimant was positive that Reisinger worked with him on that particular day and that the day was January 29, 1949. He was positive as to the place where they worked, namely, the pit near the rotary lime kiln. At home that evening claimant took chills, had fever and went to bed, where he stayed the next day. He developed an "awful soreness" in his right arm, chest and in the back between the shoulders. This continued and he was up and down, in and out of bed, for eight or ten days, during which period he did not work. On February 14 he returned to work, took a dizzy spell and was placed on lighter work. He was then coughing and spitting up a grayish jelly-like substance. He worked the 14th and 15th of February and then, according to claimant, he was obliged to quit and has been unable to do any appreciable amount of work since that time. On February 15 he developed chills and fever.
In March, 1949 claimant was treated twice by Dr. O. J. Miller who found his chest congested. He thought he had traumatic pneumonia. Thereafter claimant was examined by Dr. Staunton, who advised an X ray and suggested that claimant report his illness to Mississippi Lime Company. Claimant followed his advice and told Mr. Adams, personnel manager of the lime company, that he was "just going to have to have some treatment" and that he wanted to know what was wrong with him. He informed Mr. Adams of his recent illness but did not report any accident occurring on January 29. Mr. Adams sent claimant to the company doctor, Dr. Sexauer, who examined him and gave him some medicine. Thereafter claimant started to spit up pure blood. His chest condition got worse. He was having chills and fever three or four times a week. In the latter part of April, 1949 claimant went to Dr. William H. Bailey, his family doctor since 1931. Dr. Bailey advised him not to go back to work but to rest and prescribed medicine for him to take when he felt this "filling up" in his lungs.
On October 20, 1949 claimant consulted Dr. J. J. Bredall who took X rays and blood tests and gave him a physical examination. His diagnosis was chronic pleurisy, chronic emphysema, chronic bronchitis and hypertrophic arthritis. He examined him on twelve occasions between October, 1949 and July, 1950. It was his opinion that claimant had been suffering from bronchitis "for a number of years. Maybe 2-3-4 years;" that the fall did not cause the bronchitis and that the effect of the fall was temporary, but that the physical trauma would aggravate the condition and he would suffer from increased trouble because of both the trauma and the exposure of his feet to wet and cold.
Claimant further testified positively that after the accident in January, 1949 he did not tell any of the doctors about what had happened to him at the lime company, i. e. did not relate the facts concerning his fall, although he consulted Drs. Miller, Staunton, Sexauer and Bailey. On October 20, 1949 he did relate the facts to Dr. Bredall. He further testified that the first time he ever told anyone connected with Mississippi Lime Company about the accident was on November 15, 1949 when in the company of his attorney he went to the Mississippi Lime Company plant to inspect his work record.
In answer to the question whether he had experienced soreness in his chest, coughing and spitting prior to the date of the accident, claimant testified that he had a spell like that and was sick for a month or six weeks, under the treatment of Dr. Bailey, in the year 1946. Dr. Bailey had treated claimant for the same condition on several occasions prior to January, 1949. On May 27, 1945 Dr. Bailey treated claimant for laryngeal tracheobronchitis. At that time he spit up blood. An X ray in October, 1945 revealed calcified tubercle in the right bronchieclosis and the doctor testified that "from that time on whenever the boy would be exposed to dampness, cold or snow, he would frequently take an acute attack of bronchitis and be laid up for a week;" that he treated him "very frequently for this same trouble * * * every time he would get exposed;" that his working in the snow and water with his limited resistance could throw him into another bronchitis attack; that the bronchitis and *170 pleurisy "would be brought on" by exposure. Claimant went to work for the lime company in April, 1948. On October 20, 1948 Dr. Bailey treated claimant for a very serious attack of bronchitis and pleurisy in the right side of his lung.
The evidence introduced on behalf of the employer and insurer consisted of the testimony of Dr. Charles W. Miller of St. Louis, who examined claimant on March 21, 1950 for the purpose of testifying, Estel Smith, claimant's foreman, and certain documentary evidence. Dr. Miller testified that claimant did not have chronic pleurisy; that there was no evidence of lung disease; that while he "might" have a mild degree of bronchitis he could find no very marked variations from the normal in physical or laboratory studies conducted, and that claimant was able to work at his previous occupation. Estel Smith testified that he kept a daily foreman's time report, identified and introduced as Exhibit 1, which showed that Densel Long worked on January 29, 1949; that the work he did on that day was to "pour concrete, mine change house walls" and that Albert Reisinger was absent from work on that day. The lime change walls are located underground in the mine. The pit near the south rotary mill, where claimant testified the accident happened, is aboveground and at least a mile distant from the place where the record showed that claimant was working. The work records on previous days in January showed that at no time did claimant work in the pit where he claimed to have sustained the accident.
The question on this appeal is whether the circuit court erred in reversing and setting aside the award of the industrial commission. An appellate court, in reviewing the evidence upon the basis of which the industrial commission made its award, must view the evidence in the light most favorable to the successful party below. Harper v. Home Imp. Co., Mo.Sup., 235 S.W.2d 558. Neither the circuit court nor the appellate court may substitute its judgment on the evidence for that of the commission. Both courts are authorized and bound to decide whether the commission reasonably could have made its findings and reached its result upon consideration of all of the evidence before it, i. e. whether the award made by the commission is supported by competent and substantial evidence upon the whole record, Constitution of 1945, Art. V, § 22, V.A.M.S., Frazier v. National Bearing Division, Mo.Sup., 250 S.W.2d 1008, loc. cit. 1011 and cases cited; Brown v. Griesedieck Western Brewing Co., Mo.App., 250 S.W.2d 803; Veal v. Leimkuehler, Mo.App., 249 S.W.2d 491, loc. cit. 496, and cases cited, and to set aside decisions clearly contrary to the overwhelming weight of the evidence. Veal v. Leimkuehler, supra.
Tested by this standard we are impelled to sustain the award of the commission denying the claim. The commission's finding that the condition complained of was not the result of an accident arising out of the employment is adequately supported. The condition complained of was chronic bronchitis and chronic pleurisy. A finding that the accident caused these chronic conditions would have been against the overwhelming weight of the evidence, because claimant himself, as well as his doctors, testified that he had suffered from chronic bronchitis and pleurisy for a number of years prior to the date of the accident. A finding that claimant's chronic conditions had been aggravated by an accident such as that described by claimant would have been supported by the testimony of claimant and Drs. Miller, Bredall and Bailey, if the commission had accepted the testimony of claimant that the trauma and exposure actually occurred. It is obvious, however, that the commission rejected claimant's evidence in this regard. There was a reasonable basis for the action of the commission in so doing. Charged with the duty of finding and determining the facts and empowered to weigh the evidence presented, the referee and commission had the right and duty to pass upon the credibility of claimant as a witness and could disregard and disbelieve evidence which in their judgment was not credible, even though there was no countervailing evidence to contradict or impeach it. Smith v. Smith, Mo.Sup., 237 S.W.2d 84, loc. cit. 89 and cases cited; Veal v. Leimkuehler, *171 supra, 249 S.W.2d loc. cit. 496 and case cited. The referee and commission might well have disbelieved that the accident occurred upon a consideration of claimant's actions after January 29, 1949. Upon returning to his employment on February 14 and experiencing dizzy spells he did not report to his foreman that an accident had occurred on January 29. When obliged, for physical reasons, to quit work on February 15 he made no such report. When in the early months of 1949, after conferring with a doctor, he went to see Mr. Adams (the employer's personnel manager) in connection with the condition of his health, claimant did not inform Mr. Adams that he had experienced a fall or had suffered from exposure to the elements. Although he conferred with four doctors over a period of several months in his efforts to effect the restoration of his health, claimant testified positively and unequivocally that he did not relate the occurrence of such an accident or exposure to any one of them until October, 1949 when he finally told Dr. Bredall about an accident. Even then he said nothing about the occurrence of an accident until the occasion of his second visit to Dr. Bredall. Claimant failed to report the accident to anyone connected with the employer until November 15, 1949, which was nine and one-half months after the alleged accident. Such a course of conduct is inconsistent with the occurrence of the accident and may well have led the fact-finding body to discount claimant's testimony that it happened. Diebold v. Great Atlantic & Pacific Tea Co., Mo.App., 241 S.W.2d 31.
Further doubt was cast upon claimant's story by reason of the fact that it conflicts with impressive documentary evidence. Michler v. Krey Packing Co., Mo.Sup., 253 S.W.2d 136, loc. cit. 141. Claimant insisted that the accident occurred on a particular date and at a particular place, in the face of documentary evidence in the form of a work sheet signed by the foreman which definitely showed that on the date in question claimant was working underground in the mine pouring concrete at the mine change house and not aboveground near the rotary lime kiln, as claimant testified. Although he testified positively that Al Reisinger worked with him that day at that place, and that a maintenance crew was there on that morning within an hour or two after he claims to have been injured, the employer's records showed that Reisinger was absent from work on that day. Claimant's testimony was the only evidence as to the occurrence of the accident. None of the maintenance crew was called to substantiate claimant's story that he was working then and there in snow and water. The "fellow" who built the fire at 3 P.M. did not testify. Claimant relied solely upon his own credit as a witness and testified to facts which revealed a course of conduct inconsistent with the occurrence of the accident and of such a nature that any fact-finding body might well conclude that there was no causal relation between such an accident and the condition of which he complained.
The award of the referee and of the full commission denying compensation was not against the overwhelming weight of the evidence. We cannot say that their findings are not supported by substantial evidence on the whole record. The circuit court erred in reversing the award of the commission. The judgment of the circuit court should be reversed, and the Commissioner so recommends.
PER CURIAM.
The foregoing opinion of HOUSER, C., is adopted as the opinion of the court.
The judgment of the circuit court is, accordingly, reversed.
BENNICK, P. J., and ANDERSON and HOLMAN, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2464449/ | 543 F. Supp. 2d 1272 (2008)
Saeed ALI, Plaintiff,
v.
Michael MUKASEY, et al., Defendants.
No. C07-595MJP.
United States District Court, W.D. Washington, at Seattle.
February 25, 2008.
Amy Kratz, Seattle, WI, for Plaintiff.
Priscilla To-Yin Chan, U.S. Attorney's Office, Seattle, WA, for Defendants.
*1273 ORDER GRANTING PLAINTIFF'S MOTION FOR ATTORNEYS' FEES AND COSTS
MARSHA J. PECHMAN, District Judge.
This matter comes before the Court on Plaintiffs motion for attorneys' fees and costs pursuant to the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d). (Dkt. No. 11.) After reviewing the motion, Defendants' response (Dkt. No. 12), Plaintiffs reply (Dkt. No. 13), and all papers submitted in support thereof, the Court GRANTS Plaintiffs motion.
Background
Plaintiff Saeed Ali was born in Somalia and has been a Legal Permanent Resident since August 25, 2000. On September 23, 2005, Mr. Ali filed an application for naturalization. (Dkt. No. 5-2, Ex. B.) On January 9, 2006, the United States Citizen and Immigration Services (USCIS) interviewed Mr. Ali and Mr. Ali passed the English language, U.S. history, and government tests. (Id., Ex. C.) As of March 2, 2007, when he filed his complaint, USCIS had not issued a decision on his naturalization application.
Mr. Ali's claims were presented with fourteen other plaintiffs in an amended Complaint for Naturalization, Declaratory Relief and Mandamus filed by Hassan Shamdeen, Case No. C07-164MJP, pursuant to 8 U.S.C. § 1447(b). The Amended Complaint requested the following relief:
Plaintiffs request that the Court grant their naturalization applications, give them their oaths of citizenship and order Defendant CIS to prepare and provide certificates of naturalization. In the alternative, Plaintiffs request that the Court remand the cases to CIS with instructions that the applications be adjudicated within 30 days of the order.
(Dkt. No. 1 at 3.) In a later section of the complaint entitled "Request for Relief," Plaintiffs ask the Court to, among other things:
Grant the applications of plaintiffs, and give the plaintiffs their oath of citizenship, or, in the alternative, order Defendant CIS to administer oaths of citizenship to plaintiffs within 10 days of the order.
(Dkt. No. 1 at 15.) On Defendants' motion, the Court severed plaintiffs' claims and created fifteen discrete cases.
Mr. Ali was assigned Case No. C07-595MJP. On April 25, 2007, the Court ordered Defendants to show cause why the Court should not grant Mr. Ali's application for naturalization. (Dkt. No. 2.) Defendants responded to the order with a motion to remand. (Dkt. No. 4.) In that motion, the Government argued that the Court should remand the matter to USCIS for adjudication of the application within thirty days because the FBI recently completed its "name check" of Mr. Ali. On July 24, the Court issued an order in which it concluded that it has jurisdiction over this matter, and over Plaintiffs objection, granted the Government's motion to remand with instructions to adjudicate Mr. Ali's application within thirty days. (Dkt. No. 8.) On August 2, USCIS issued the oath and certificate of citizenship to Mr. Ali. (See Dkt. No. 10.)
Plaintiff now brings this motion for attorneys' fees and costs pursuant to the EAJA.
Analysis
Under the EAJA, a litigant who has brought a civil suit against the United States is entitled to attorney's fees and costs if: (1) he is the prevailing party in the matter; (2) the government fails to show that its position was substantially justified or that special circumstances make an award unjust; and (3) the requested fees and costs are reasonable. 28 U.S.C. § 2412(d)(1)(A). Additionally, the *1274 application for fees must be filed within 30 days of a final judgment. Defendants do not challenge Plaintiffs motion as untimely.
I. Prevailing Party
Two factors define "prevailing party" under the EAJA. Carbonell v. INS, 429 F.3d 894, 898 (9th Cir.2005). Plaintiffs action must have resulted in a "material alteration" in the parties' legal relationship and that alteration must have been "judicially sanctioned." Id. A "material alteration" means "the defendants were required to do something directly benefitting the plaintiff that they otherwise would not have had to do." Id. at 900. "A party need not succeed on every claim in order to prevail. Rather, a plaintiff prevails if he has succeeded on any significant issue in litigation which achieved some of the benefit [he] sought in bringing suit." Id. at 901 n. 5 (internal citations and quotation marks omitted). Mr. Ali sought the following relief in his complaint: (1) that the Court grant his naturalization application; or (2) that the Court order USCIS to adjudicate his application and administer an oath of citizenship. The Court did not award either of those forms of relief. But alternatively, Mr. Ali requested that the Court "remand the case[] to [US]CIS with instructions that the applications be adjudicated within 30 days of the Order." (Am. Compl. at 3.) The Court did remand with instructions to adjudicate within thirty days and Mr. Ali was quickly naturalized. Mr. Ali thus achieved a material alteration in his legal relationship with Defendants when his application was finally adjudicated.[1]See Alr-Ghanem v. Gonzales, 2:06-CV-320TS, 2007 WL 446047, at *2-3, 2007 U.S. Dist. LEXIS 8900, at *6-7 (D.Utah Feb. 7, 2007).
The material alteration in the relationship between the parties must also be stamped with some "judicial imprimatur." Carbonell, 429 F.3d at 901. Relief achieved through a voluntary change that was simply prompted by the lawsuit does not convey prevailing party status on the plaintiff. See Buckhannon Bd. & Care Home v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 605, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001) (rejecting the "catalyst theory" on the ground that it lacks the critical factor of "judicial sanction"). Here, USCIS did not voluntarily adjudicate Mr. Ali's application, but was compelled to do so by the Court. When Mr. Ali brought this action under § 1447(b), the Court assumed exclusive jurisdiction and had two options for disposition of the matter: (1) to determine the matter on the merits; or (2) to remand the matter, with appropriate instructions, to USCIS to determine the matter. 8 U.S.C. § 1447(b); United States v. Hovsepian, 359 F.3d 1144, 1161 (9th Cir.2004). On July 24, 2007, the Court remanded Mr. Ali's case to USCIS with explicit instructions to adjudicate the application and reserved the right to reestablish jurisdiction if Defendants failed to comply with its order. (Dkt. No. 9.) Compare Chebli v. Chertoff, 07-CV-10750, 2008 WL 302317, 2008 U.S. Dist. LEXIS 7839 (E.D. Mich. Feb. 4, 2008) (denying *1275 EAJA fees in § 1447(b) case where parties privately settled matter before Court held naturalization hearing). USCIS acted on Mr. Ali's application at the direction of the Court and would have violated a court order if it had not done so.
Mr. Ali's success on the merits does not rely solely on the fact that USCIS ultimately granted his application for naturalization; instead, his success stems from the fact that USCIS adjudicated his naturalization application at all. Section 1447(b) is "a statutory check on what could otherwise amount to an infinite amount of time available to the government in which to render a decision on the application." Alghamdi v. Ridge, No. 3:05cv344-RS, 2006 WL 5670940, *5, 2006 U.S. Dist. LEXIS 68498, *16 (N.D.Fla. Sept. 25, 2006). The Ninth Circuit has found that "[a] central purpose of [§ 1447(b)] was to reduce the waiting time for naturalization applicants." Hovsepian, 359 F.3d at 1163 (citing H.R.Rep. No. 101-187, at 8 (1989); 135 Cong. Rec. H4539-02, H4542 (1989) (statement of Rep. Morrison)). At the time he filed his complaint, Mr. Ali had been waiting for over a year for the Government to issue a decision on his naturalization application. Mr. Ali's action put an end to the delay in processing his application and forced USCIS to make a determination on his immigration status. UCIS's discretion in deciding whether to grant or deny Mr. Ali's application does not transform the adjudication of that application into a voluntary act. See Alghamdi, 2006 WL 5670940, at *6, 2006 U.S. Dist. LEXIS 68498, at *17 ("Whether USCIS ultimately grants or denies the application are [sic] irrelevant for determining whether a plaintiff has succeeded on the merits of an action based on § 1447(b). The sole purpose of § 1447(b) is to provide the applicant with a decision on the application where a decision has been withheld for an unreasonable amount of time."). Mr. Ali is the prevailing party in this action. See id. at 2006 WL 5670940, at 13-14, 2006 U.S. Dist. LEXIS 68498, at, *39 (finding plaintiff prevailing party where court determined that application had been wrongfully delayed, scheduled hearing, issued remand order while retaining jurisdiction, and where agency then naturalized plaintiff).
II. Substantially Justified
A litigant may not recover fees under the EAJA if the government shows that its litigating position and "the action or failure to act by the agency upon which the civil action is based" were substantially justified or that special circumstances make an award unjust. 28 U.S.C. § 2412(d); see also United States v. Real Prop, at 2659 Roundhill Drive, 283 F.3d 1146, 1151 n. 7 (9th Cir.2002) ("The EAJA defines the `position of the United States' as not only its litigation position in the civil action, but also the government's action upon which the civil suit is based."). "Congress enacted the EAJA to ensure that individuals and organizations would not be deterred by the expense of unjustified governmental opposition from vindicating their fundamental rights in civil actions and in administrative proceedings." Abela v. Gustafson, 888 F.2d 1258, 1262 (9th Cir.1989) (emphasis added). "[W]hen analyzing whether the Government was substantially justified in a particular case, courts should consider the Government's litigating position as a whole." Comm'r v. Jean, 496 U.S. 154, 161-62, 110 S. Ct. 2316, 110 L. Ed. 2d 134 (1990). The Government bears the burden of showing that its position was substantially justified. Real Prop., 283 F.3d at 1151 n. 7.
The government's litigation position rested on a single argument that remand was appropriate because USCIS is better equipped to adjudicate a naturalization petition. To find that the government's litigation *1276 position was substantially justified, the Court must determine that the arguments had "a reasonable basis in law and fact." Abela, 888 F.2d at 1264. Defendants' argument that USCIS is better equipped to assess the merits of a naturalization application is reasonable.
In its briefing, the Government does not even attempt to argue that its pre-litigation conduct was substantially justified. The Government's failure to timely act on Mr. Ali's underlying application was not reasonable. Mr. Ali brought this action because USCIS had failed to adjudicate his naturalization petition even though he had completed his citizenship interview a year earlier. Although no statutory time limit governs the adjudication of naturalization applications, agencies are required to conclude matters presented to them within a "reasonable time." See 5 U.S.C. § 555(b). Further, the applicable regulations state that "[a] decision to grant or deny the application shall be made at the time of the initial examination or within 120-days after the date of the initial examination of the applicant for naturalization[.]" 8 C.F.R. 335.3(a). More that one year is not a reasonable amount of time to wait for the agency to adjudicate the application. Compare Smirnov v. Chertoff, No. 06-10563-RWZ, 2007 U.S. Dist. LEXIS 9598 (D.Mass. Jan. 18, 2007) (two year delay unreasonable) with Simonovskaya v. Chertoff, 06-11745-RWZ, 2007 WL 210391, at *2, 2007 U.S. Dist. LEXIS 5446, at *6 (D.Mass. Jan. 26, 2007) (one day delay not unreasonable).
In other similar cases before this Court, the Government has argued that it could not adjudicate the naturalization application until the FBI completed all background checks. The Northern District of Florida found that the explanation "that background checks were necessary and had to be completed before the plaintiff could be naturalized ... merely restates, in a conclusory manner, the necessity of completing the background check; it does not justify the delay." Alghamdi 2006 WL 5670940 at *14-15, 2006 U.S. Dist. LEXIS 68498 at *43 (emphasis in original). The Alghamdi court reasoned:
[W]hile a reasonable person would not dispute the necessity of conducting a background check on an applicant for naturalization, a reasonable person would require a satisfactory justification for a substantial delay in completing the background check. Indeed, government agencies are required to conclude matters presented to them within a "reasonable time." See 5 U.S.C. § 555(b). Otherwise, an applicant for naturalization remains in perpetual limbo and is by de facto, denied his citizenship, a right that has been afforded by Congress to deserving individuals since the rise of the American democracy. This is particularly true when Congress has enacted legislation permitting the applicant to apply to federal district court if a decision is not rendered on the application with 120 days of the completion of the examination under 8 U.S.C. § 1447(b).
Alghamdi, 2006 WL 5670940 at *13-15, 2006 U.S. Dist. LEXIS 68498 at *42-43 (emphasis in original). The Government has suggested in the other cases severed from this one that the underlying delay in processing the applications is justified because the FBI does not have sufficient resources to complete the millions of name check requests it has received since the events of 9/11 and in the interest of national security, USCIS's only recourse was to wait for the results of the name checks before adjudicating the applications. Insufficient resources to do the job that Congress has charged the agency with doing does not substantially justify the delay. See Berishev v. Chertoff, 486 F. Supp. 2d 202, 207 (D.Mass.2007) (noting that the Government's burden to show substantial *1277 justification "cannot be borne by a general appeal to delays attributable to the FBI background check process" because otherwise, "the 120-day statutory window framed by 8 U.S.C. § 1447(b) would be of no effect"); Shalan v. Chertoff, No. 05-10980-RWZ, 2006 WL 3307512, at *2, 2006 U.S. Dist. LEXIS 82795, at *6-7 (D.Mass. Nov. 14, 2006); but see Deng v. Chertoff, No. C 06-7697 SI, 2007 WL 2600732, *1 (N.D.Cal. Sept. 10, 2007) (finding delay justified because of volume of security checks conducted by agency). The Court does not find that USCIS's delay in processing Mr. Ali's naturalization application was substantially justified. And the Court does not find that any special circumstances make the awarding of fees unjust.
III. Reasonable Fees and Costs
Plaintiff is entitled to a "reasonable" amount of fees. 28 U.S.C. § 2412(b). The EAJA includes a statutory cap for attorneys' fees, unless a special factor justifies a higher rate. 28 U.S.C. § 2412(d)(2)(A). Because Mr. Ali's primary attorney needed specialized immigration law skills to file the original complaint of fifteen plaintiffs, her efforts in originating the action justify a higher market rate. See Pints v. Bowen, 869 F.2d 536, 540-42 (9th Cir.1989). However, Defendants greatly multiplied the work on these cases by moving to sever the action into fifteen distinct cases. Because much of the work required in this matter was duplicated for the multiple plaintiffs, the Court finds it reasonable to award the statutory rate of fees to any hours spent modifying work product for related cases. Hours billed by other members of Plaintiffs legal team are to be compensated at the statutory rate. Further, Plaintiff is entitled to reasonable costs. Because the Court acknowledges Plaintiffs primary attorney's immigration law expertise, the Court disallows any consultation fee by an outside immigration expert.
Conclusion
The Court GRANTS the motion for attorneys' fees. Plaintiff is entitled to attorneys' fees at the market rate for time spent on any original work in preparing this action, and attorneys' fees at the statutory rate for time spent modifying original work for this action once the fifteen plaintiffs in the original complaint were severed into discrete cases. Plaintiff is also awarded reasonable costs. The parties are directed to submit a joint proposed order regarding costs and fees that accords with the Court's instructions and contains documentation of costs and time billed. The proposed order shall be submitted to the Court within twenty (20) days of this order.
The Clerk is directed to send a copy of this order to all counsel of record.
NOTES
[1] The Government suggests that Mr. Ali is not a prevailing party because he opposed the Government's efforts to remand this matter back to USCIS. But the Court's decision to remand over Plaintiffs objection does not strip his of prevailing party status. See Al-Ghanem v. Gonzales, 2:06-CV-320TS, 2007 WL 446047, at *2-3, 2007 U.S. Dist. LEXIS 8900, at *6-7 (D.Utah Feb. 7, 2007) ("The Court looks to the substance of the litigation to determine whether an applicant has substantially prevailed in its position, and not merely the technical disposition of the case or motion.") (quoting Kopunec v. Nelson, 801 F.2d 1226, 1229 (10th Cir.1986)). Mr. Ali is still a prevailing party, even though the Government adopted his litigation position during the litigation. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408495/ | 59 F. Supp. 2d 139 (1999)
UNITED STATES of America,
v.
Frank Anthony IACONETTI, Defendant.
No. 1:98CR10089-NG.
United States District Court, D. Massachusetts.
July 7, 1999.
*140 Michael D. Ricciuti, Robert L. Peabody, U.S. Attorney's Office, Boston, MA, for U.S.
Roger A. Cox, Ashland, MA, Ivan E. Mercado, Jamaica Plan, MA, for Juan Carlos Pena-Roa, defendant.
John C. Doherty, Andover, MA, Benjamin D. Entine, Boston, MA, for John Jairo Pena-Pineda, aka, Primo, defendant.
James H. Budreau, Oteri Weinberg & Lawson, Boston, MA, Joseph S. Oteri, Boston, MA, for Frank Anthony Iaconetti, defendant.
SENTENCING MEMORANDUM
GERTNER, District Judge.
This memorandum concerns the sentencing of Frank Anthony Iaconetti ("Iaconetti"). Iaconetti has pled guilty to the charge of conspiracy to possess with intent to distribute cocaine, in violation of 21 U.S.C. § 846. The plea agreement stipulated to a certain quantity of drugs, namely between 50 kilograms and 150 kilograms of cocaine. Both sides reserved their rights to argue the appropriateness of a departure based on "single acts of aberrant behavior." U.S.S.G. Ch. 1, Pt. A, intro comment 4(d).
The presentence report raised additional concerns not addressed by the plea agreement, namely: (1) the quantity of drugs for which Iaconetti may be held responsible at sentencing; (2) Iaconetti's mental status, noting that he apparently suffered from a compulsive gambling disorder; and (3) whether Iaconetti can be supervised in Canada, where he resides, after his release from prison.
I directed the government to produce additional information on the subject of the quantity of drugs. I directed Probation to clarify the question of whether post-imprisonment supervision may be conducted in Canada, and I directed Iaconetti to explore and provide materials on the nature of his compulsive gambling disorder.
After holding hearings over two days, reviewing the memoranda, letters from family and friends, additional information requested from doctors and supervisors, I have concluded that a departure is appropriate. Accordingly, I sentenced Iaconetti to 15 months on Count I, with credit for time served. Given the length of Iaconetti's *141 pretrial detention, the net effect of the sentence is release on supervised release. As a condition of supervised release, Iaconetti was to participate in a gambling abuse program, among other conditions, supervised by authorities in Quebec, Canada.
I. FRAMEWORK
In order to apply the Guidelines to the case at bar, (i.e., to interpret facts and law with respect to the quantity of drugs under U.S.S.G. § 2D1.1), the Court is obliged to look carefully at the facts that the Guidelines have made relevant, chiefly facts pertaining to the offense. But in order to determine the appropriateness of a Guideline sentence in this case (i.e., whether to depart from the Guidelines) the Court is obliged to conduct a broader review, not merely facts made relevant by the Guidelines, but all relevant sentencing facts.[1]
I will begin by outlining the general facts with respect to Iaconetti and this offense, and then address specific guideline and departure issues.
II. FACTS
A. Background
Frank Iaconetti is a 31 year old Canadian citizen whose immediate family, extended family and over forty friends, appeared in court for both days of the sentencing, in many cases traveling from Canada to do so. Iaconetti has been consistently employed in the car business. He has no criminal record whatsoever.
The latter fact is more significant than appears at first glance. Iaconetti has had a gambling compulsion for over ten years, which resulted in his falling deeper and deeper into debt. But notwithstanding the financial pressures the gambling engendered and they were considerable he was law abiding. He struggled to meet the demands of his compulsion through lawful means his own income, the resources of family. Finally, the amounts were too high. In over his head, Iaconetti succumbed to a "loanshark" who offered him a quick way out.
At first, Iaconetti's gambling involved traveling to Atlantic City once or twice a year. Then the frequency of the trips *142 increased. When a casino opened near his home in Montreal, he began to gamble regularly. By this time the defendant was winning or losing from $5,000 to $10,000 per day.
By 1993, his debts had accumulated to $42,000, and he was unable to meet them. He asked his parents for assistance and, although of limited means, they agreed. Iaconetti stopped gambling for almost a year, but without seeking treatment. In short order, he resumed. In 1996, in an extraordinary move, he asked to be banned from the Montreal casino and they did so. Again, he failed to control his compulsion; he snuck in to the casino to continue gambling until he was discovered.
Finally, Iaconetti fell into an even deeper hole. He owed his parents and older brother $20,000, and an onsite loanshark at the casino $30,000. He had no means of his own to repay the debt; his business was failing because of his gambling. His parents' resources had been depleted. The loanshark made him an offer that he apparently could not refuse: Take this money to Boston and the debt will be wiped out. It seemed simple. He seized the opportunity and violated the law for the first time in his life. He was immediately apprehended.
B. Offense: Question of Quantity
The presentence report covers the offense in ten pages. Iaconetti is mentioned only in two. There is no doubt whatsoever that he had no role in shaping the offense, negotiating for it, or implementing it. And even after he arrived on the scene of the offense, there are serious questions concerning what he understood its scope was whether he knew that he had come to Boston from Montreal, Canada, with $250,000 in cash to pick up 100 kilograms of cocaine from local drug suppliers, and not some different amount.
Because this was a plea, the information with respect to quantity was sketchy. Accordingly, I urged the parties to provide additional facts. The following details are gleaned from the presentence report, as modified by the government's submission to me.
The negotiations for drugs in this case began on January 23, 1998, when the cooperating witness, "CW," received a message on his electronic pager from Montreal, Canada. Thereafter negotiations continued between the CW, the putative cocaine supplier, and individuals from Montreal, a woman named La Monita (a/k/a Cecilia Pena-Roa), Juan Carlos Pena-Roa, her son, and Juan Jairo Pena Pineda, the putative buyers. The amount was to be 100 kilograms of cocaine. At the outset, the price was to be between $17,000 and $18,000 per kilogram. The CW was to receive a deposit, with the balance to be paid later. Further negotiations took place in Massachusetts with Juan Carlos or Juan Jairo. From time to time, La Monita called directly. The negotiations dragged on until March, 1998.
During these protracted negotiations, Iaconetti's name is not mentioned; nor is he referred to even indirectly. Given the amount of information that the government has, this omission is telling: They have reports from the CW, as well as multiple consensually monitored telephone calls. It is clear that Iaconetti was solely the courier, brought in at the eleventh hour to deliver the deposit.
On March 15, 1998, the undercover agents met the CW and Juan Jairo in the parking lot of a hotel, at which point the CW received $250,000 in cash. But there was a snag. FBI agents posing as cocaine suppliers spoke with La Monita on a cell phone about delaying delivery of the cocaine. While these arrangements were negotiated, other agents had what appears to be casual conversation with Iaconetti. The presentence report, describing this conversation, suggests that Iaconetti confirmed that he brought the case to pay for "the drugs." When the agents indicated that because of problems with the warehouse, the drugs could not be delivered until *143 Monday, Iaconetti reported that he was on a tight schedule. He was to collect the cocaine, drive it to Albany, New York, and arrive at a fixed time so he could deliver it to a trucker traveling north to Canada. Nothing in that conversation, however, at least in the version reported in the presentence report, suggested whether Iaconetti understood that the money he was carrying was only the down payment for a much larger quantity of drugs or represented the entire payment. If it were the latter, then there was no basis for holding Iaconetti responsible for 100 kilograms.
In response to this Court's inquiry, the government provided the following additional information: The government represented to the Court that an undercover agent told Iaconetti that the money that Iaconetti brought from Canada was part of the payment for the 100 "things" that Iaconetti had come to get. Iaconetti responded, "Yeah, I understand that." No witness testified to this effect, or put the conversation in context.
The government pointed to a discussion about the size of the containers which Iaconetti was using to receive the drugs to suggest that Iaconetti knew he would be carrying a very large quantity. When the undercover agent suggested using large hockey (equipment) bags to store the drugs, Iaconetti stated that he wanted the drugs packed in suitcases since he was traveling by car. Moreover, he stated that he would prefer that three rather than four suitcases be used for the drugs because four suitcases would take up too much room in his car. The inferences the government would draw from this colloquy are simply too attenuated, especially where a man's liberty is involved.
III. GUIDELINE CALCULATIONS
Base Offense Level:
The government maintains that the base offense level under U.S.S.G. § 2D1.1 is between 50 kilograms and less than 150 kilograms for a score of 36.
If the defendant is held responsible only for the amount suggested by the money he was carrying, i.e. the amount of drugs suggested by $150,000 at $16,500 per kilogram, the quantity is slightly over 15 kilograms and the base offense level is 34.
Specific Offense Characteristics:
Under U.S.S.G. § 2D1.1(b)(6) if the defendant meets the criteria set forth in (1)-(5) of U.S.S.G. § 5C1.2 and the offense level is 26 or greater, a decrease of two levels is required. All agree that this reduction is warranted.
Minus 2
Role in the Offense:
Under U.S.S.G. § 3B1.2(a) the defendant is granted a 4 level reduction for his minimal role.
Minus 4
Acceptance of Responsibility:
Minus 3
The total offense level is 27 (according to the government) or 25 (if a lesser quantity is found).
IV. QUANTITY OF DRUGS
The base offense level is determined by the quantity of drugs for which the defendant is held responsible on sentencing. It is a pivotal issue. It is to be determined by the acts of the defendant himself, under U.S.S.G. § 1B1.3(a)(1)(A) and, "in the case of a jointly undertaken criminal activity ... all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken activity ..." U.S.S.G. § 1B1.3(a)(1)(B).
Since Iaconetti was not only a novice at drugs in general and he was completely peripheral to this operation, I cannot infer that he knew its real scope, absent some factual data what others said to him, what admissions he made, what was reasonable for him to conclude under the *144 circumstances. He was carrying $250,000. While it may be reasonable for him to conclude that that amount would cover an amount over 15 kilograms (assuming a purchase price of between $16,500 up to $18,000), it was not reasonable for him to believe based only on the money that it was to be a down payment for 100 kilograms. The data that the government offers in addition the agents' account of a conversation about "100 things," which was offered not through an affidavit or even an FBI 302, but in a letter from the government, together with the size of the containers Iaconetti had with him, are not sufficient to establish by a fair preponderance of the evidence that he understood the full scope of the operation.
Accordingly, I will hold Iaconetti responsible only for between 15 kilograms and 50 kilograms of cocaine, for a level 34.
V. ABERRANT CONDUCT/GAMBLING
The Sentencing Commission recognized the limitations of a rigid approach to the Guidelines. It acknowledged that there was a "vast range of human conduct potentially relevant to a sentencing decision," U.S.S.G. Ch. 1, Pt. A. intro comment 4(b), and as such, no single set of Guidelines could accommodate every case. Likewise, the Commission recognized the importance of judicial departures, even in a Guideline system, as the means by which the Guidelines would be refined, and the system would evolve. Id. Indeed, the Commission specifically acknowledged one area, "single acts of `aberrant behavior,' which may still justify probation at higher offense levels through departures." U.S.S.G. Ch. 1, Pt. A, intro. comment 4(d).
The First Circuit's definition of aberrant behavior, which it adopted from the Ninth and Tenth Circuits, and which has since been followed by the Second Circuit, seeks to examine the "totality of the circumstances" in deciding whether to grant a departure for aberrant behavior. See United States v. Grandmaison, 77 F.3d 555, 563 (1st Cir.1996); Zecevic v. United States Parole Commission, 163 F.3d 731, 733 (2nd Cir.1998); United States v. Jones, 158 F.3d 492, 500 (10th Cir.1998); United States v. Pena, 930 F.2d 1486, 1495 (10th Cir.1991); United States v. Takai, 941 F.2d 738, 741 (9th Cir.1991). Factors that may be considered in making this determination include "pecuniary gain to the defendant, charitable activities, prior good deed, and efforts to mitigate the effects of the crime[.]" Grandmaison, 77 F.3d at 563. "Spontaneity and thoughtlessness may also be among the factors considered, though they are not prerequisites for departure." Id. Such departures are available even though a "course of criminal conduct involves more than one criminal act[.]" Id. Finally, I am to evaluate all the data in order to determine whether this offense is a "marked departure from the past and is unlikely to recur." United States v. Bradstreet, 135 F.3d 46, 56 (1st Cir.1998).[2]
The objective data from Iaconetti's life suggests that this offense is a "marked departure." This is a young man, an automobile salesman who was a good worker, a loyal friend, son, and relative. He has had no other encounters with law enforcement. While first-offender status, standing alone, is insufficient to justify a departure, it may be considered as part of the mix of factors. See Grandmaison, 77 F.3d at 564.
*145 In order to evaluate the "likely to recur" issue, I may look at the defendant's motivation and the presence or absence of "any psychological disorders that the defendant was suffering from, whether the defendant was operating under extreme pressures." United States v. Colace, 126 F.3d 1229, 1231 n. 2 (9th Cir. 1997). Iaconetti's gambling compulsion is plainly relevant here. Indeed, the overall picture suggests something like an opportunistic crime,[3] brought on by gambling debts to a loanshark and the loanshark's not so bright idea as to how to extinguish them: Deliver the money and your debt is reduced. Whether this gambling compulsion stands on its own or as a basis for a departure under U.S.S.G. § 5K2.13,[4] it is *146 plainly an important part of an aberrant conduct analysis.
Dr. Lance Dodes[5] provided this Court with a diagnosis of Iaconetti as suffering from pathological (compulsive) gambling based on the presence of at least eight of the ten criteria defined by the Diagnostic and Statistical Manual of the American Psychiatric Association. In addition, Dr. Dodes puts the disorder in context: While illegal acts are characteristic of pathological gambling, he reports, Iaconetti's case presents a different pattern. He strove to pay the debts first from his personal resources, then the business, and finally his family.[6] He reports that "Mr. Iaconetti's conscience would have inhibited him from performing illegal actions, or even seeking them out. It was not until the combination of his desperation arising from his compulsive gambling was coupled with the unexpected opportunity to reduce his debt that he committed the present crime an action that is out of keeping with both his character and his previous behavior." (Italics supplied).[7]
Letters from family and friends reflect their shock at the defendant's actions. The presentence report confirms no prior criminal activity, no drug involvement whatsoever. A departure on the ground that this offense comprised aberrant behavior in an otherwise exemplary life is appropriate.
VI. CONCLUSION
I will depart from a level 25 to a level 14. Given the amount of time that Iaconetti has served, that departure will permit his immediate release to address the profound problems he faces. The "aberrant" behavior standard permits departures to permit a sentence of probation for qualifying defendants. Iaconetti has already served time. He has been in prison since March 15, 1998, serving 15 months far from his home in Canada. A departure to level 14, and a sentence of 15 months, permits him to return to Canada and, as a condition of supervised release, to participate in therapy for his gambling addiction. Authorities in Canada have agreed to supervise the defendant upon his release from prison.
SO ORDERED.
NOTES
[1] Recognizing the limitations of a Guideline approach to all of the vagaries of a sentencing decision, departures were explicitly authorized by the Sentencing Reform Act if "the court finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission." 18 U.S.C. § 3553(b). As the Supreme Court noted in Koon v. United States, while the Guidelines provide uniformity, predictability and detachment, "[i]t has been uniform and constant in the federal judicial tradition for the sentencing judge to consider every convicted person as an individual and every case as a unique study in human failings that sometimes mitigate, sometimes magnify, the crime and the punishment to ensure." 518 U.S. 81, 113, 116 S. Ct. 2035, 135 L. Ed. 2d 392 (1996). The Supreme Court in Koon directed the district court to "make a refined assessment of the many facts bearing on the outcome, informed by its vantage point and day-to-day experience in criminal sentencing." Id. at 98, 116 S. Ct. 2035.
Plainly, in order to make a departure determination, the Court must have a perspective independent of the Guidelines all the facts the case involves, and not just those facts made relevant by the Guidelines. Thus, 18 U.S.C. § 3553(a)(1) directs that the Court, "in determining the particular sentence to be imposed, shall consider (1) the nature and circumstances of the offense and the history and characteristics of the defendant." Likewise, 18 U.S.C. § 3661, which was codified along with the Sentencing Reform Act, encourages a broader review. It states: "No limitation shall be placed on the information concerning the background, character, and conduct of a person convicted of an offense which a court of the United States may receive and consider for the purpose of imposing an appropriate sentence." 18 U.S.C. § 3661. And the Commission itself directed that, when considering a departure from a Guidelines prescribed sentence, "the court may consider, without limitation, any information concerning the background, character, and conduct of the defendant." U.S.S.G. § 1B1.4. See United States v. Ribot, 1999 WL 165919, *1 n. 2 (D.Mass.1999).
[2] In fact, there are two perspectives from which to judge whether particular conduct by an offender is "aberrant." One compares the offense and offender with other offenders who have committed the same offense. This approach is a different formulation of the "heartland" concept. See e.g., United States v. Delvalle, 967 F. Supp. 781, 784 (E.D.N.Y. 1997). Alternatively, one can compare the offense, and the conduct it entailed, with the rest of the offender's life. This approach focuses entirely on the offender's life his or her character, record in the community, and all the factors considered by the Grandmaison court in the "totality of circumstances." See 77 F.3d at 563. The latter is the appropriate approach in this case.
[3] In those circuits that have rejected the First Circuit's "totality of the evidence approach" the focus is on the offense itself, whether it involves "a spontaneous and seemingly thoughtless act rather than one which was the result of substantial planning." United States v. Carey, 895 F.2d 318, 325 (7th Cir.1990). United States v. Russell, 870 F.2d 18 (1st Cir.1989) was the paradigm. In Russell, the defendant was a Wells Fargo armored truck driver and his partner was the truck's messenger. A bank mistakenly gave the pair an extra bag of money containing $80,000, which both men, yielding to temptation, decided to keep for themselves. A week later, however, Russell confessed the crime, returned the money that he had kept, and cooperated with authorities. 870 F.2d at 19.
I do not suggest that Iaconetti's offense totally fits the "spontaneous" and "thoughtless act" test. As noted above, it does not have to do so in order to qualify for the First Circuit's definition of aberrant behavior. Nevertheless, it does appear that this offense was opportunistic in the sense that Iaconetti did not seek out a drug deal to satisfy his obligations to the loanshark, or seek out other illegal activities. The opportunity was presented to him, and in a moment of extraordinarily bad judgment, he accepted it.
[4] The Commission promulgated U.S.S.G. § 5H1.3, a policy statement, not a Guideline, indicating that "mental and emotional conditions are not ordinarily relevant in determining whether a sentence should be outside the guideline range." See U.S.S.G. § 5H1.3 (emphasis added). The only other reference to mental condition is in U.S.S.G. § 5K2.13, another policy statement, which provides that for defendants who have committed non violent offenses, "while suffering from significantly reduced mental capacity not resulting from voluntary use of drugs or other intoxicants, a lower sentence may be warranted to reflect the extent to which reduced mental capacity contributed to the commission of the offense, provided that the defendant's criminal history does not indicate a need for incarceration to protect the public." Broader than U.S.S.G. § 5H1.3, U.S.S.G. § 5K2.13 explicitly "encourages" a departure for a mental condition that reduces the mental capacity of a non violent offender.
For a claim of diminished capacity, attributable to compulsive gambling, to succeed, the defendant must show: 1) that he suffered from a pathological gambling disorder which 2) resulted in a significantly reduced mental capacity 3) causally connected to the commission of the charged offenses. See U.S. v. Harris, 1994 WL 683429, *1 (S.D.N.Y.), aff'd, 79 F.3d 223 (2nd Cir.1996). The record in this case, the reports of Dr. Dodes, and the presentence report, suggest that the defendant has met this test. The First Circuit has not decided whether compulsive gambling may rise to the level of diminished capacity as a question of law. See United States v. Harotunian, 920 F.2d 1040 (1st Cir.1990).
To be sure, other courts have dismissed compulsive gambling because it is "only" an "impulse control disorder," as distinguished from disorders affecting the ability to reason. See Venezia v. United States, 884 F. Supp. 919, 925 (D.N.J.1995). The case law, however, suggests that a diminished capacity departure is not limited to a defendant who is unable to reason, or process information in the usual way. It includes a defendant who is unable to control his conduct, even if his cognitive abilities are unimpaired. See United States v. McBroom, 124 F.3d 533, 548 (3rd Cir.1997) (concluded that there is a two prong approach to defining "reduced mental capacity" under U.S.S.G. § SK2.13 includes a person who is unable to absorb information in the usual way or the person who knows what he is doing and that it is wrong, but cannot control his behavior or conform it to the law) (emphasis added); United States v. Cantu, 12 F.3d 1506, 1512 (9th Cir.1993) ("reduced mental capacity" refers not only to a lack of full intellectual functioning, but also emotional conditions as well, including mood disorders); United States v. Poff, 926 F.2d 588, 595 (7th Cir.) cert. denied, 502 U.S. 827, 112 S. Ct. 96, 116 L. Ed. 2d 67 (1991) (Easterbrook, J., dissenting) ("We have treated U.S.S.G. § 5K2.13 as applying to emotional conditions as well [as lack of full intellectual functioning] ... Treating emotional illness in the same way that we do mental abnormalities furthers the purpose of U.S.S.G. § 5K2.13. The role of the guideline is lenity toward defendants whose ability to make reasoned decisions is impaired. Emotional conditions, like mental impairments may distort or suppress the formation of reasoned decisions.").
Nor am I persuaded that compulsive gambling disorder is excluded because it may be analogized to drug or alcohol dependence, which the Guidelines make clear "is not a reason for imposing a sentence below the guidelines." See U.S.S.G. § 5H1.4; United States v. Harotunian, 920 F.2d 1040, 1047 (1st Cir.1990); United States v. Katzenstein, 1991 WL 24386 (S.D.N.Y.). In some instances the Guidelines are explicit; in others the language is more general, less "code like." If I find it to be relevant under these circumstances because it explains otherwise uncharacteristic behavior, because it appeared so severe as to compromise the defendant's ability to control his behavior, then nothing in the Guidelines forecloses my consideration under U.S.S.G. § 5K2.13.
[5] Dr. Dodes is the Director, Center for Problem Gambling at the Mount Auburn Hospital, Cambridge, Massachusetts, Assistant Clinical Professor of Psychiatry, Harvard Medical School.
[6] After his parents loaned him money in 1993, Iaconetti asked to have his name removed from a deed of a jointly owned property because he felt uncomfortable, in the light of his debts to his family.
[7] I did not depart on this basis in United States v. Buchanan, 987 F. Supp. 56, 57 (D.Mass.1997). Buchanan involved a bank president who believed throughout the trial that he was entirely correct in diverting bank money to his family and his personal use. Far from aberrational, the illegal activities stemmed from his view of his entitlements as the 99.9% shareholder of the bank. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408504/ | 59 F. Supp. 2d 597 (1999)
Joseph SILVA, et al., Plaintiffs,
v.
KAISER PERMANENTE, et al, Defendants.
No. Civ.A. 3-98-CV-0767-L.
United States District Court, N.D. Texas, Dallas Division.
May 25, 1999.
*598 Shirley Sutherland, Dallas, TX, for Plaintiffs.
John A. Scully, Paige A. Lueking, Lanette L. Lutich, Cooper & Scully, P.C., C. Michael Moore, Stacy Jordan Rodriguez, Locke Liddell & Sapp, LLP, Dallas, TX, for Defendants.
MEMORANDUM OPINION AND ORDER
LINDSAY, District Judge.
Before the court is Plaintiffs' Motion to Remand, filed December 10, 1998. After careful consideration of the motion, response, the pleadings on file in this case, and the applicable law, Plaintiffs' Motion to Remand is hereby denied.
I. Factual and Procedural Background
Elva Silva's family ("Plaintiffs") has sued Kaiser Permanente ("Kaiser") and several doctors alleging claims for medical malpractice and negligence. They allege that in January 1995 she was misdiagnosed by the doctors at Kaiser as having hepatitis C when in fact she had non-Hodgkins lymphoma. By the time the correct diagnosis was made about a year later, the cancer had progressed and chemotherapy was not successful. Eventually Silva died of lymphoma.
This case was originally filed in state court on January 20, 1998. On March 6, 1998. Plaintiffs filed their First Amended Original Petition. Defendants determined that the First Amended Petition contained causes of action that were removable to federal court, and they filed then, Notice of Removal on March 24, 1998. The notice of removal alleges that Plaintiffs' First Amended Petition states federal questions under ERISA. On August 11, 1998 Plaintiffs moved for leave to amend their pleadings. Leave was granted on October 6, 1998, and Plaintiffs' Second Amended Complaint was filed the same day. On December 10, 1998, Plaintiffs filed their Motion to Remand.
II. Plaintiffs' Motion to Remand
Plaintiffs contend that removal was improper because their claims arise solely under agency and negligence theories and are not claims for benefits under an ERISA plan, which would be preempted.
On Plaintiffs' Motion to Remand, Defendants bear the burden of showing that removal was proper and establishing the federal court's jurisdiction over the case. Winters v. Diamond Shamrock Chemical Co., 149 F.3d 387, 397 (5th Cir. 1998), cert. dented. ___ U.S. ___, 119 S. Ct. 1286, 143 L. Ed. 2d 378 (1999); Frank v. Bear Stearns & Co. 128 F.3d 919, 921-22 (5th Cir.1997). Whether removal was proper is determined by the complaint at *599 the time of removal. Metro Ford Truck Sales, Inc. v. Ford Motor Co., 145 F.3d 320, 326 (5th Cir.1998), cert. denied. ___ U.S. ___, 119 S. Ct. 798, 142 L. Ed. 2d 660 (1999); Brown v. Southwestern Bell Telephone Co., 901 F.2d 1250, 1254 (5th Cir. 1990). Amendment of pleadings following removal will not divest the court of its subject matter jurisdiction. Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1336 (5th Cir.1995); Cavallini v. State Farm Mutual Auto Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995). Thus, the propriety of removing this case to federal court will turn on the allegations in Plaintiffs' First Amended Original Petition.
Federal question jurisdiction exists when a federal question appears on the face of the plaintiff's properly pleaded complaint. Sam L. Majors Jewelers v. ABX, Inc., 117 F.3d 922, 924 (5th Cir. 1997). Defendants contend that the following allegations found in Plaintiffs' First Amended Petition give rise to a federal question:
Kaiser Permaneme engaged in a practice of negligent cost containment through the use of its programs of utilization review and the payment of incentives to its named co-defendants (the physicians). The use of cost containment programs denied Plaintiff adequate treatment and limited the use of diagnostic procedures Specifically, the cost containment programs limited the care, treatment and testing available to Mrs. Silva.
Kaiser Permanente negligently formed financial incentive agreements with Mrs. Silva's health care providers. These agreements resulted in poor care to Plaintiff.
Kaiser Permanente tortiously interfered with the patient-doctor relationship.
Plaintiffs' First Amended Original Petition at p. 6. In support of removal, Defendants rely on case law stating that allegations challenging the manner in which an HMO or other entity administers benefits in conjunction with an ERISA plan.
One case cited by Defendants is Corcoran v. United HealthCare, Inc., 965 F.2d 1321 (5th Cir.), cert. denied, 506 U.S. 1033, 113 S. Ct. 812, 121 L. Ed. 2d 684 (1992). In Corcoran, the plaintiff's obstetrician recommended complete bed rest during the final months of plaintiff's pregnancy, and as she neared her delivery date admitted her to the hospital for round the clock fetal monitoring. 965 F.2d at 1321-23. A utilization review program employed by the plaintiff's health insurer determined that hospitalization was not necessary and only agreed to cover in-home nursing care for 10 hours a day. Id. at 1324 Because the insurance company refused to cover her hospital stay, the plaintiff returned home, and while she was at home with no nurse on duty, her baby went into distress and died. Id.
The plaintiffs initiated their case in state court, and the HMO removed it to federal court, claiming ERISA preemption and complete diversity between the parties. Eventually the district court granted summary judgment for the defendants. On appeal, the plaintiffs argued that their case was only a case of medical malpractice brought under state law, and that the district court erred by applying ERISA. Id. at 1330. The Fifth Circuit disagreed and held that ERISA was implicated because the suit involved a dispute over a benefit determination made under the plan. Id. at 1332. The court emphasized that the HMO was making medical decisions due to a cost containment feature of the plan and thus "implicated the management of plan assets." Id. at 1333 n. 16. In at least one other recent case regarding the denial of certain medical treatments under a health insurance plan, the Fifth Circuit has similarly held, and other circuits have also held that claims regarding plan guidelines and utilization review procedures are preempted. See Hubbard v. Blue Cross & Blue Shield Assn., 42 F.3d 942 (5th Cir.), cert. denied, 515 U.S. 1122, 115 S. Ct. 2276, 132 L. Ed. 2d 280 (1995) *600 (claim regarding denial of cancer treatments deemed "experimental" by plan guidelines was preempted by ERISA). Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482 (7th Cir.1996) (negligence claim arising out of utilization review program's denial of physical therapy was preempted as a "denial of benefit" claim under ERISA).
In response, Plaintiffs rely on several cases wherein federal courts found that ERISA did not preempt the plaintiffs' state law negligence claims. See Dukes v. U.S. Healthcare. Inc., 57 F.3d 350 (3d Cir.), cert. denied, 516 U.S. 1009, 116 S. Ct. 564, 133 L. Ed. 2d 489 (1995); Rice v. Panchal, 65 F.3d 637 (7th Cir.1995); and Pickett v. Cigna Healthplan of Texas, Inc., 742 F. Supp. 946 (S.D.Tex.1990). See also Gabner v. Metropolitan Life Ins. Co., 938 F. Supp. 1295 (E.D.Tex.1996) (plaintiff's claim that carrier misrepresented cost of policy not preempted). In all of these cases, the reviewing courts held that the plaintiffs' malpractice and other state law claims were not preempted by ERISA; however, these cases are inapposite to the instant case and decisions such as Corcoran and Hubbard. In the cases cited by Plaintiffs, the plaintiffs sued the health plans under responder superior or similar theories, alleging that they should be held responsible for the negligence of the doctors they employed. Therefore, these claims did not implicate the administration of plan benefits the way the Plaintiffs' claims do here.
In the instant case, Plaintiffs allege that Silva's death resulted from Kaiser's decisions and restrictions concerning plan benefits. Specifically, Plaintiffs have alleged that Kaiser's cost containment and utilization review procedures limited Silva's diagnostic testing and treatment options, which caused the misdiagnosis of her illness and failure to treat her lymphoma in its early stages. These assertions amount to a claim for denial of ERISA plan benefits; therefore, Plaintiffs' claims against Kaiser are preempted by ERISA. The court has subject matter jurisdiction over this case under 28 U.S.C. § 1331. Plaintiffs' Motion to Remand is denied.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408515/ | 952 S.W.2d 564 (1997)
Katherine T. HUNT, Appellant,
v.
Ernest W. HUNT, Jr., Appellee.
No. 11-96-117-CV.
Court of Appeals of Texas, Eastland.
August 7, 1997.
*566 Donald L. Sweatt, Donald L. Sweatt P.C., Graham, for appellant.
Chad Williams, Seymour, for appellee.
Before ARNOT, C.J., and DICKENSON and WRIGHT, JJ.
OPINION
ARNOT, Chief Justice.
Katherine T. Hunt and Ernest W. Hunt, Jr. were married on December 26, 1992, and divorced on December 4, 1995. They had no children together. Katherine appeals, challenging several of the trial court's findings regarding property awarded to Ernest as separate property, regarding reimbursement of the community estate for funds expended to benefit Ernest's separate estate, and regarding offsets allowed against her claim for reimbursement. We affirm.
In her first six points of error, Katherine contends that the trial court erred in finding that various property belonged to Ernest as his separate property because Ernest failed to meet his burden of proof. Since it is not clear whether Katherine is challenging the legal or factual insufficiency, we will address both. In order to review a no evidence point, we must consider only the evidence and inferences that tend to support the finding, disregarding any evidence or inferences to the contrary. State v. $11,014.00, 820 S.W.2d 783 (Tex.1991). If there is any evidence of probative force to support the finding, the no evidence point must be overruled. Juliette Fowler Homes, Inc. v. Welch Associates, Inc., 793 S.W.2d 660 (Tex.1990); In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (Tex. 1951). In order to review an insufficient evidence point, we must review all of the evidence and determine whether the finding is so contrary to the overwhelming weight of the evidence as to be clearly wrong and *567 unjust. Cain v. Bain, 709 S.W.2d 175 (Tex. 1986); In re King's Estate, supra.
All property possessed by a husband and wife during their marriage or at the time of dissolution of their marriage is presumed to be community property. TEX.FAM. CODE ANN. § 5.02 (Vernon 1993). However, all property owned or claimed by a spouse before marriage or acquired after marriage by gift, devise, or descent is the separate property of that spouse. TEX. CONST. art. XVI, § 15; TEX.FAM.CODE ANN. § 5.01 (Vernon 1993); Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 140 (Tex.1977). A spouse asserting that certain property is his separate property bears the burden of rebutting the community property presumption by clear and convincing evidence. Section 5.02. To rebut the presumption, the spouse must generally trace and clearly identify property claimed as separate property. McKinley v. McKinley, 496 S.W.2d 540, 543 (Tex.1973); Tarver v. Tarver, 394 S.W.2d 780, 783 (Tex. 1965).
In the first point, Katherine complains of the trial court's finding that Ernest's interest in Hunt's Hashknife Helicopter, Inc. was his separate property and that the corporation was capitalized entirely with the helicopters. The record shows that the corporation was formed during the marriage on August 19, 1993. However, Ernest testified that the corporation owned two helicopters. Prior to the marriage and the formation of the corporation, these helicopters were owned by a partnership consisting of Ernest and his father. Upon his father's death, Ernest was awarded the helicopters and "created a corporation with the helicopters." The helicopters were Ernest's separate property. There is nothing in the record to indicate that community assets were used or that community debts were incurred in the formation of the corporation. When a corporation is funded with separate property, the corporation is separate property. Allen v. Allen, 704 S.W.2d 600 (Tex.App.Fort Worth 1986, no writ). We hold that the trial court's finding is supported by sufficient evidence. The first point of error is overruled.
In the second point, Katherine contends that the trial court erred in finding that Ernest's interest in Hashknife Ranch, Inc. was his separate property. Ernest testified that he and his sister formed Hashknife Ranch prior to his marriage to Katherine. Pages from Ernest's ledgers, which were introduced by Katherine, show that Ernest received a salary from Hashknife Ranch prior to his marriage. Since Ernest acquired his interest in Hashknife Ranch prior to the marriage, it is his separate property. The second point of error is overruled.
In the third point, Katherine argues that the trial court erred in finding that the 1985 Chevrolet Windjammer motor home was Ernest's separate property. Ernest testified that he received $23,880.69 in life insurance proceeds upon his father's death and that he spent $13,658.72 of that money on a travel trailer/1985 Chevrolet motor home. Ernest's ledger sheets indicate that he deposited insurance proceeds of $20,505.20 and $3,375.49 into his checking account in February and March of 1994 and that he issued checks for more than $13,000.00 in March 1994 for the Windjammer and its tags, license, and insurance. Prior to depositing the life insurance proceeds, Ernest had less than $6,000.00 in his checking account. We hold that the evidence is sufficient to show that the motor home was purchased with the separate property proceeds from Ernest's father's life insurance. The third point of error is overruled.
In her fourth point, Katherine contends that the trial court erred in finding that the lake cabin at Lake Kemp in Baylor County, Texas (described as Block 1, Section B, on East Moonshine) was Ernest's separate property. Ernest testified that he purchased a lake cabin at Lake Kemp prior to his marriage to Katherine. The divorce decree from Ernest's previous marriage awarded the lake cabin to Ernest as his separate property on October 2, 1990. Thus, the evidence shows that the lake cabin was owned by Ernest prior to his marriage to Katherine. The fourth point of error is overruled.
In the fifth point, Katherine argues that the trial court erred in finding that a *568 royalty interest in Young County was Ernest's separate property. Ernest testified that he owned an oil royalty and that he acquired it before he married Katherine. Ernest's father had given the oil royalty to Ernest. On rebuttal, Ernest testified regarding a document that was marked as an exhibit but was not offered into evidence. Ernest testified that the document "is where my father signed a royalty interest to myself." We hold that the evidence is sufficient to show that the royalty is Ernest's separate property, either because it was a gift from his father or because it was owned prior to marriage. The fifth point of error is overruled.
In the sixth point, Katherine contends that the trial court erred in finding that an individual retirement account at Modern Woodmen of America was Ernest's separate property. Ernest testified that he opened the account prior to his marriage. Petitioner's Exhibit No. 5, a document from Modern Woodmen of America, indicates that the account was opened on March 1, 1987. In December 1992, the balance in the account was over $16,000.00. The record shows that Ernest deposited $3,500.00 into the account during his marriage to Katherine and that the account accrued interest during that time. Retirement benefits that accrue during marriage are community property. Cearley v. Cearley, 544 S.W.2d 661 (Tex. 1976); Hopf v. Hopf, 841 S.W.2d 898 (Tex. App.Houston [14th Dist.] 1992, no writ).
Although a portion of Ernest's retirement account accrued during marriage, we find no reversible error in the trial court's finding because the value of the property mischaracterized as separate property did not affect the trial court's just and right division of the community estate. McElwee v. McElwee, 911 S.W.2d 182 (Tex.App.Houston [1st Dist.] 1995, writ den'd). We note also that the trial court found that Katherine's individual retirement account and her other investment accounts, which were opened prior to marriage but accrued interest during marriage, were Katherine's separate property. The trial court also awarded the community interest in Katherine's teacher's retirement account to Katherine. The sixth point of error is overruled.
In her next three points, Katherine contends that the trial court abused its discretion in failing to reimburse the community estate for various funds expended by Ernest during their marriage. Claims for reimbursement lie within the discretion of the trial court and are not available as a matter of law. Vallone v. Vallone, 644 S.W.2d 455 (Tex.1982). The equitable right of reimbursement arises when funds or assets of one estate are used to benefit another estate without receiving a benefit in return. Vallone v. Vallone, supra at 459. In determining such a claim, a trial court should consider "all the facts and circumstances and determine what is fair, just, and equitable." Penick v. Penick, 783 S.W.2d 194, 197 (Tex. 1988).
In the seventh point, Katherine argues that the trial court abused its discretion in refusing to reimburse the community estate for child support payments made by Ernest during his marriage to Katherine. The record shows that Ernest had a child from a previous marriage and that, as required by the divorce decree from that marriage, Ernest paid $700.00 a month in child support for the child. During his marriage to Katherine, Ernest spent $21,000.00 of community funds to make the child support payments. The record also shows that Katherine had a child from a previous marriage who lived with Ernest and Katherine during their marriage and that community funds were used to support Katherine's child. We find no abuse of discretion in the trial court's failure to reimburse the community estate for child support payments made to Ernest's child. See Pelzig v. Berkebile, 931 S.W.2d 398 (Tex.App.Corpus Christi 1996, no writ); Zieba v. Martin, 928 S.W.2d 782 (Tex. App.Houston [14th Dist.] 1996, no writ). The seventh point of error is overruled.
In her eighth point, Katherine contends that the trial court abused its discretion in failing to reimburse the community estate for community funds expended to make "contractual alimony payments" to Ernest's ex-wife. The divorce decree awarded *569 Ernest's ex-wife $17,000.00, payable in monthly installments of $472.23. The trial court found that, during his marriage to Katherine, Ernest paid $4,248.00 in "contractual alimony payments" to his ex-wife. We find no abuse of discretion in the trial court's refusal to reimburse the community estate for these court-ordered expenditures. Pelzig v. Berkebile, supra; Zieba v. Martin, supra. The eighth point of error is overruled.
In her ninth point, Katherine argues that the trial court abused its discretion in failing to reimburse the community estate for community funds expended to pay ad valorem taxes on Ernest's separate property. The trial court found that $2,483.26 in community funds were spent during the marriage to pay taxes on Ernest's real property. The trial court did not abuse its discretion by failing to reimburse the community estate for such tax payments because it was free to find that the community received offsetting benefits from the rents, royalties, and tax benefits received from Ernest's separate property. See Penick v. Penick, supra. The record shows that the community received $600.00 per month from a lease on Ernest's real property. The ninth point of error is overruled.
In her next two points, Katherine contends that the trial court erred in finding that Ernest was entitled to an offset against the community estate's reimbursement claim. The trial court reimbursed the community estate in the amount of $47,765.73 for community funds and time spent on Ernest's separate estate. However, the trial court allowed an offset of $16,213.16 against the reimbursement for separate funds that Ernest had deposited into community bank accounts. In determining the community's equitable claim for reimbursement, the trial court was required to consider "all the facts and circumstances and determine what is fair, just, and equitable." Penick v. Penick, supra; see also TEX.FAM.CODE ANN. § 3.63 (Vernon 1993). We presume that the trial court properly exercised its discretion. Vallone v. Vallone, supra. Katherine has not shown a clear abuse of discretion. The tenth and eleventh points of error are overruled.
In her final point, Katherine argues that the trial court abused its discretion by failing to make a just and right division of the community estate due to the erroneous findings of fact characterizing items of community property as separate property. We addressed the arguments made by Katherine in this point of error in our discussions of the first six points of error. Therefore, we also overrule the twelfth point of error.
The judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408517/ | 952 S.W.2d 153 (1997)
330 Ark. 121
Melvin David MURRELL As Successor Administrator of the Estate of Bonnie Marie Murrell, Deceased; Melvin David Murrell, as Special Administrator of the Estate of Melvin Dale Murrell, Deceased; as Surviving Spouse of Bonnie Marie Murrell, Deceased; and Melvin David Murrell, Belinda Gail Burke and Marie Sue Murrell, Surviving Children of Bonnie Marie Murrell, Deceased, and Melvin Dale Murrell, Deceased, Appellants,
v.
SPRINGDALE MEMORIAL HOSPITAL, John Power, M.D., and Teryl Ortego, M.D., Appellees.
No. 97-00091.
Supreme Court of Arkansas.
October 9, 1997.
*154 Bob Estes, Raymond C. Smith, Fayetteville, for Appellants.
Constance G. Clark, Dale Garrett, James M. Graves, Fayetteville, Charles Ledbetter, Virginia C. Trammell, Fort Smith, for Appellee.
NEWBERN, Justice.
This is an appeal of a dismissal of one wrongful-death action and a summary judgment in a second wrongful-death and survival action. The dismissal and summary judgment favored Springdale Memorial Hospital and Doctors John Power and Teryl Ortego. The claims arose from the death of Bonnie Marie Murrell who died November 26, 1990, while at Springdale Memorial Hospital for treatment of a bleeding gastrointestinal tract. We hold that a claim brought by Ms. Murrell's widower, Melvin Dale Murrell, prior to proceedings in probate, did not survive his death and that a subsequent claim brought by Melvin Dale Murrell as Ms. Murrell's personal representative and the claims of her children were barred by the statute of limitations.
On November 23, 1992, Melvin Dale Murrell, as surviving spouse of Ms. Murrell, filed an action pursuant to Ark.Code Ann. § 16-62-102 (Supp.1995) alleging malpractice on the part of Dr. Power, Dr. Ortego, and the Hospital resulting in Ms. Murrell's death. The lawsuit was styled Melvin Murrell, as Surviving Spouse of Bonnie Marie Murrell, Deceased v. Springdale Memorial Hospital; John Power, M.D., and Teryl Ortego, M.D. Mr. Murrell sought damages for medical expenses, funeral expenses, conscious pain and suffering of the decedent prior to her death, loss of services and companionship of the decedent, loss of earnings of the decedent, and mental anguish of the surviving spouse and children of the decedent. Mr. Murrell also sought punitive damages. The complaint listed as statutory beneficiaries Melvin Murrell, Melvin David Murrell, Belinda Gail Burke, and Marie Sue Murrell. When the complaint was filed, there was no estate opened for the decedent; consequently, there was no administrator. On December 28, 1993, the Hospital moved to strike the part of the complaint alleging damages on behalf of the decedent and the children of the decedent who were not named as plaintiffs. On February 17, 1994, Melvin Dale Murrell opened an estate for his deceased wife and was appointed administrator. He moved to be substituted in his new status as administrator in the original suit he had filed personally. Pursuant to Ark. R. Civ. P. 41, Mr. Murrell took a voluntary nonsuit of that claim on March 4, 1994, without any ruling *155 having been entered on the motion to substitute.
On February 28, 1995, a second complaint was filed by Melvin Murrell as administrator of the estate of Bonnie Marie Murrell, deceased, and as surviving spouse of Bonnie Marie Murrell, deceased, and David Murrell, Belinda Gail Burke, and Marie Sue Murrell as the surviving children of Bonnie Marie Murrell, deceased. It repeated the allegations of the earlier complaint.
In September, 1995, the Hospital and the doctors moved for partial summary judgment. They argued that, although the statute of limitations was tolled for Melvin Dale Murrell's claim when he nonsuited, the claims of the estate and the other heirs at law were time barred. The Trial Court denied the motions on the basis that the body of the first complaint sought damages on behalf of the surviving children, the surviving spouse, and the damages that could be recovered by the estate of the deceased, and thus the defendants were put on notice that these damages were sought and the action was filed by an heir of the deceased.
On August 22, 1996, Melvin Dale Murrell died. His son, Melvin David Murrell, was appointed successor administrator for the estate of Bonnie Marie Murrell. He was also appointed special administrator of the estate of Melvin Dale Murrell to perform all acts as necessary to pursue the claim of Melvin Dale Murrell in the action.
The Hospital and the doctors then moved to dismiss the complaint, arguing that the claim of Melvin Dale Murrell, as the surviving spouse of Bonnie Murrell, did not survive his death. They also moved the Trial Court to reconsider their summary judgment motions. In response, the Trial Court dismissed Melvin Dale Murrell's complaint and granted the summary judgment motions.
Melvin David Murrell and the other surviving children of Bonnie Marie Murrell contend that the Trial Court erred in granting summary judgment and dismissal as to the claims of (1) Melvin Dale Murrell, (2) the children of Bonnie Murrell, and (3) the estate of Bonnie Murrell. They argue that the 1992 complaint alleged two separate causes of action: (1) an action on behalf of the heirs, including the surviving spouse of Bonnie Murrell and the children of Bonnie Murrell, pursuant to the Wrongful Death Act, Ark. Code Ann. § 16-62-102 (1987 and Supp. 1995), and (2) an action on behalf of the estate pursuant to Ark.Code Ann. § 16-62-101 (Repl.1994).
1. Melvin Dale Murrell's claim
Melvin Dale Murrell's initial complaint, filed prior to the opening of Bonnie Marie Murrell's estate, was appropriately brought according to § 16-62-102(b) and it was within the applicable two-year statute of limitations. See Ark.Code Ann. § 16-114-203(a) (Supp.1995); Pastchol v. St. Paul Fire & Marine Ins., 326 Ark. 140, 929 S.W.2d 713 (1996); Hertlein v. St. Paul Fire & Marine Ins. Co., 323 Ark. 283, 914 S.W.2d 303 (1996). When he took a voluntary nonsuit on March 4, 1994, pursuant to Ark. R. Civ. Pro. 41, he had one year from that date to refile. Ark. Code Ann. § 16-56-126 (1987). Melvin Dale Murrell filed the second action on February 28, 1995, which was within the one-year period. When Melvin Dale Murrell died on August 22, 1996, the issue arose as to whether his wrongful-death claim survived his death.
The statutory provision for the survival of actions beyond the death of a claimant is § 16-62-101 which provides:
For wrongs done to the person or property of another, an action may be maintained against the wrongdoers, and the action may be brought by the person injured or, after his death, by his executor or administrator against the wrongdoer or, after his death, against his executor or administrator, in the same manner and with like effect in all respects as actions founded on contracts.
Melvin Dale Murrell's action for the wrongful death of his wife did not survive his death. We have consistently held that a wrongful-death claimant does not suffer an "injury to his person or property" as those terms are used in the survival statute. White v. Maddux, Special Admr., 227 Ark. 163, 296 S.W.2d 679 (1956); Jenkins, Admr. v. Midland Valley Rd. Co., 134 Ark. 1, 203 S.W. 1 (1918).
*156 2. The children and estate of Bonnie Marie Murrell
The wrongful-death claims of the children of Bonnie Murrell and the survival claim of the estate of Bonnie Murrell are barred because the parties did not file suit prior to 1995. The savings statute, § 16-56-126, cannot save their claims because the children were not parties to the first action. It provides that if "the plaintiff therein suffers a nonsuit" then "the plaintiff may commence a new action within one (1) year ...." (Emphasis supplied.) See Rogers v. Williams, Larson, Voss, et al., 245 Kan. 290, 777 P.2d 836, 839 (1989).
The second action brought by Melvin Dale Murrell as administrator of the estate of Bonnie Marie Murrell was simply filed too late. The fact that Mr. Murrell's first claim might have been the beneficiary of the savings statute, at least until his death, is not relevant to the timeliness or untimeliness of the second action. A wrongful-death action brought by a plaintiff in his individual capacity pursuant to § 16-62-102 involves neither the same action nor the same plaintiff as a survival action brought by the plaintiff in his representative capacity on behalf of the decedent's estate pursuant to § 16-62-101. See Smith v. Tang, 926 S.W.2d 716, 719 (Mo.App. E.D.1996).
It is argued that, because a personal representative bringing a wrongful-death action is no more than a trustee for the beneficiaries, Reed v. Blevins, 222 Ark. 202, 258 S.W.2d 564 (1953) (George Rose Smith, J., dissenting), the beneficiaries of Bonnie Marie Murrell were the "real parties in interest" in the first action in accordance with Ark. R. Civ. P. 17(a). While that rule requires that actions be brought in the name or names of the real parties in interest, we have been cited to no authority in which it has been held that a complaint brought in the name of one party is automatically converted into a complaint on behalf of others as a result of the rule.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408519/ | 952 S.W.2d 36 (1997)
Pearl Stivers LANUM, II, Appellant,
v.
The STATE of Texas, Appellee.
Nos. 04-96-00944-CR, 04-96-00962-CR.
Court of Appeals of Texas, San Antonio.
July 16, 1997.
*38 Albert D. Pattillo, III, Kerrville, for appellant.
E. Bruce Curry, District Attorney, Kerrville, for appellee.
Before HARDBERGER, C.J., and RICKHOFF and DUNCAN, JJ.
DUNCAN, Justice.
Pearl S. Lanum, II appeals the trial court's orders revoking his probation. Lanum contends he is entitled to a new trial because the trial court erred in sentencing him to two terms of years that are less than his original sentences but contravene his probation officer's recommendationa recommendation Lanum attributes to the Statewithout first affording him an opportunity to withdraw his pleas of "true." Lanum also argues his counsel at the revocation hearing was ineffective. We reject both complaints and affirm the trial court's orders.
PROCEDURAL BACKGROUND
In 1993, Lanum was charged with and convicted of aggravated assault and unlawfully carrying a weapon on a licensed premises in Cause Nos. 2703-92 and 2704-92, respectively. The trial court accepted Lanum's guilty pleas and sentenced him to ten years confinement, probated, and a $500 fine. Subsequently, in 1996, the State filed motions to revoke in both cases, alleging Lanum had violated most of the terms of his probation.
At the hearing on the State's motion in Cause No. 2703-92, after Lanum pled "true" to each of the alleged violations, the State called David Havis, Lanum's probation officer, to testify. Havis recommended Lanum be continued on probation and sent to the Substance Abuse Felony Punishment Facility for one year. Obviously "curious" about Havis' recommendation, the visiting trial judge began questioning Havis and the State:
The Court: Just a minute, I assume what you're saying is the agreement is that he will not revoke, that we will change the terms
District Attorney: No, sir.
The Court: to include it?
District Attorney: State is not agreeing to that. I'm simply putting on
The Court: Okay. That's his recommendation, but not the State's?
District Attorney: In fact, the State, Your Honor, as a policy, as I mentioned earlier, on second revocation, we do not make agreements to continue.
The Court: But the probation department does recommend that. Is that what you're saying?
Havis: Yes, that's what I'm recommending at this time.
. . . .
The Court: Do the attorneys have an agreement on what they're going to do in this case?
Defense Counsel: No. May I make a statement to the Court, Your Honor?
The Court: Yes, sir.
Defense Counsel: If I understand correctly, it's the District Attorney's position on a second motion to revoke that they will not make a recommendation, that they let the Court decide. The probation officer's recommendation is that he do nine months to a year in the felony substance abuse program. I understand that that time doesn't even countis that right, Mr. Havison
*39 . . . .
The Court: What's the State's recommendation?
District Attorney: Counsel pretty well stated [it]. We, on the second revocation case do not recommend continuance, but leave it to the Court. In this particular case, in return for a plea of true, we are not making a recommendation, per se. I did want the Court to hear the probation officer. We are not specifically recommending a continuance by agreement because it is a second revocation.
The Court: All right. I'll take that case under advisement.
Lanum then pled "true" to the State's allegations in Cause No. 2704-92, and the trial court and both attorneys agreed Havis' testimony was admitted for both cases.
At no point during the revocation hearing did the trial judge state he would reject Havis' recommendation or indicate Lanum could withdraw his pleas of "true." But at the conclusion of the hearing, the trial judge revoked Lanum's probation and sentenced him to seven years in each casesubstantially less than Lanum's original sentences but substantially greater than Havis' recommendation. In response, Lanum simply said "Okay." Shortly thereafter, following the appointment of new appellate counsel, Lanum filed motions for new trial alleging that, "although [the visiting trial judge's] ruling was legal it was unexpected, unfair, and unjust given the surrounding circumstances."
VOLUNTARINESS
In his first point of error, Lanum asks that we reverse the trial court's revocation orders, permit him to withdraw his pleas of "true," and remand the cases for new trials because the trial court rejected the punishment recommended by Havis without affording Lanum an opportunity to withdraw his pleas of "true." We decline to do so for several reasons.
Standard of Review
An order revoking probation is subject to an abuse of discretion standard of review. Lloyd v. State, 574 S.W.2d 159, 160 (Tex.Crim.App. [Panel Op.] 1978). The trial court does not abuse its discretion unless it "applie[s] an erroneous legal standard, or when no reasonable view of the record could support [its] conclusion under the correct law and the facts viewed in the light most favorable to its legal conclusion." DuBose v. State, 915 S.W.2d 493, 497-98 (Tex.Crim.App. 1996).
Applicability of Article 26.13(a)(2)
In the context of pleas of guilty and nolo contendere, article 26.13(a)(2) of the Texas Code of Criminal Procedure requires a trial court to "inform the defendant whether it will follow or reject [the plea agreement] in open court" and, if the trial court rejects the agreement, to permit the defendant to withdraw his plea. Tex.Code Crim. Proc. Ann. art. 26.13(a)(2) (Vernon 1989). If a defendant is able to demonstrate the trial court failed to admonish him in substantial compliance with article 26.13 and the error was harmful, the judgment must be reversed and the case remanded to the trial court for a new trial. Cain v. State, 947 S.W.2d 262, 264 (Tex.Crim.App.1997). However, Lanum does not challenge an act or omission by the trial court in accepting his 1993 guilty pleas. He instead argues the trial court erred at the revocation hearing in 1996. But Lanum has not cited, and we have not found, a single case applying the rule upon which he relies in the context of a plea of "true" to a motion to revoke probation following conviction. Indeed, the Texas Court of Criminal Appeals has expressly held article 26.13 does not apply in this context. Harris v. State, 505 S.W.2d 576, 578 (Tex.Crim.App.1974).
Waiver
As a general rule, "to preserve a complaint for appellate review, a party must ... present[] to the trial court a timely request, objection or motion, stating the specific grounds for the ruling he desire[s] the court to make if the specific grounds [are] not apparent from the context" and obtain a ruling. TEX.R.APP. P. 52(a). In this case, Lanum failed to voice the complaint he now makes at the revocation hearing, in his motion for new trial, or at any other point in the *40 trial court proceedings. Cf. State v. Evans, 843 S.W.2d 576, 577 (Tex.Crim.App.1992) (motion to withdraw "should more aptly have been called a motion for new trial"); Nunez v. State, 565 S.W.2d 536, 537 (Tex.Crim.App. 1978) (defendant urged motion to withdraw guilty plea at revocation hearing and later in motion for new trial); Papillion v. State, 908 S.W.2d 621, 623 (Tex.App.Beaumont 1995, no pet.) (request to withdraw plea of "true" timely when first urged in motion for new trial). It thus appears Lanum waived his first point of error by failing to request an opportunity to withdraw his pleas either during the revocation hearing or in his motion for new trial.
Rejection of Plea Agreement
Even if Lanum has preserved his complaint, however, we disagree with his contention that the trial court rejected a plea bargain agreement between Lanum and the State. As the colloquy quoted above makes clear, the State made no recommendation as to punishment; the only punishment recommendation made was by Havis, Lanum's probation officer, and he had no authority to bind the State. See Nunez v. State, 565 S.W.2d at 537 (probation officer's recommendation that defendant receive maximum sentence did not violate State's agreement to make no punishment recommendation); Mendoza v. State, 649 S.W.2d 126, 127 (Tex. App.El Paso 1983, no pet.) (same). Accordingly, there was no plea bargain for the trial court to reject. Lanum's first point of error is therefore overruled.
INEFFECTIVE ASSISTANCE OF COUNSEL
In his second point of error, Lanum contends his attorney at the revocation hearing was ineffective because he advised Lanum to proceed to a hearing with a visiting judge, he failed to call witnesses to testify on Lanum's behalf, and he "consented and agreed with the State's scheme to proceed to the revocation hearing with this `no agreement, per se.'" We reject each of Lanum's contentions.
Standard of Review
When a defendant claims error during the punishment phase of a trial on a non-capital offense, he bears the burden of establishing ineffective assistance of counsel by a preponderance of the evidence. Ybarra v. State, 890 S.W.2d 98, 112 (Tex.App.San Antonio 1994, pet. ref'd). The test is whether the defendant's trial attorney was reasonably likely to render, and rendered, effective assistance. Id. In applying this standard, we do not scrutinize "isolated acts or omissions" or "trial strategy" with the benefit of hindsight; nor do we measure the defendant's trial attorney against a standard of perfection. Id. Rather, we look at the "totality of the representation" at the time of trial. Id. In short, allegations of ineffective assistance "will be sustained only if they are firmly founded." Id.
Discussion
There is no evidence in this record indicating Lanum's trial attorney rendered ineffective assistance. Whether to object to a visiting judge is plainly a matter of trial strategy, and the failure to call witnesses is irrelevant when the defendant fails to show there are witnesses who will testify on his behalf, and these witnesses are available. King v. State, 649 S.W.2d 42, 44 (Tex. Crim.App.1983). Likewise without merit is Lanum's allegation that his trial attorney was ineffective because he proceeded with the revocation hearing even though the State made no recommendation "per se" regarding punishment. Undoubtedly, Lanum was better off with the State making no recommendation than he would have been if the State had recommended punishment in excess of Havis' recommendation or if it had affirmatively opposed Havis' recommendation. See Carter v. State, 608 S.W.2d 691, 692 (Tex. Crim.App. [Panel Op.] 1980) (prosecutor's agreement to make no punishment recommendation did not preclude his opposing probation); Bass v. State, 576 S.W.2d 400, 402 n. 1 (Tex.Crim.App. [Panel Op.] 1979) (same). Lanum's second point of error is therefore overruled.
*41 CONCLUSION
If Lanum preserved his first point of error, he nonetheless fails to demonstrate the trial court abused its discretion by sentencing him to two terms of years that are less than his original sentencesrather than continuing his probation in line with Havis' recommendationwithout affording Lanum an opportunity to withdraw his pleas of "true." The State made no recommendation on punishment, and Havis was not authorized to enter a plea agreement on its behalf. Nor has Lanum made out a "firmly grounded" claim of ineffective assistance of counsel. Accordingly, Lanum's points of error are overruled, and the trial court's orders revoking his probation are affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408714/ | 59 F.Supp.2d 280 (1999)
Francisco Luis RIVERA, et al., Plaintiffs,
v.
CLARK MELVIN SECURITIES CORP., et. al., Defendants.
No. Civ. 98-2122(JP).
United States District Court, D. Puerto Rico.
May 14, 1999.
*281 *282 *283 *284 *285 Maria S. Kortright-Soler, San Juan, P.R., for plaintiff.
Guillermo J. Bobonis, San Juan, P.R., Rachel Brill, Hato Rey, P.R., Jeffrey M. Williams, Hato Rey, P.R., for defendant.
OPINION AND ORDER
PIERAS, District Judge.
I. Introduction and Background
The Court has before it Defendants' Joint Defense Motion to Dismiss Due to Plaintiffs' Failure to Plead With Particularity (docket No. 38) and Plaintiffs' Opposition to "Joint Defense Motion to Dismiss" (docket No. 42). Plaintiffs Francisco Luis Rivera, Gloria Alcocer de Rivera and their conjugal partnership ("Plaintiffs") filed their Complaint on October 7, 1998, alleging violations of Section 10(b) of the Securities and Exchange Act of 1934. Defendants are Clark Melvin Securities Corporation ("Clark Melvin"), Pershing Division of Donaldson Lufkin & Jenrette Securities Corporation ("Pershing"), and Samuel Ramirez & Company Inc. ("Samuel Ramirez"). On February 5, 1999, Plaintiffs moved to amend their Complaint to account for the voluntary dismissal of Defendant Securities Investors Protection Corporation ("SIPC"), as well as to "set forth a specific and particular pleading as to the fraudulent conduct of Clark Melvin." (Pls.' Mot. For Leave of Ct. to Amend Compl. as Tendered at ¶ 3). The Court granted Plaintiffs' Motion to Amend their Complaint on February 9, 1999.
Plaintiffs allege that they were defrauded by Clark Melvin, through its employees Hernan Pérez and Richard Prann, out of $145,196.00 of their $188,115.00 investment portfolio. Plaintiffs also allege that Defendant Pershing had a duty to detect the forgeries through which Pérez misappropriated their funds, and further, that Defendant Samuel Ramirez is a successor in interest of Clark Melvin and its "alter ego" for the purposes of liability.
The Court met with the parties for an Initial Scheduling Conference on March 17, 1999, and at this Conference, Defendants indicated that they believed Plaintiffs have failed to plead with sufficient particularity to sustain a claim under the Private Securities Litigation Reform Act ("PLSRA"). Defendants also stated that they would pursue a motion to dismiss Plaintiffs' Complaint on this basis, and that *286 under the PLSRA, any discovery would necessarily be stayed. The Court, nevertheless, went forward with the ISC and scheduled all discovery to be conducted in the instant case, which was subsequently entered in the ISC Order (docket No. 34).
On April 5, 1999, Defendants moved to dismiss Plaintiffs' Amended Complaint for a failure to plead with sufficient particularity pursuant to Rule 9(b) of the Federal Rules of Civil Procedure and the PLSRA. Defendants also sought a stay off all discovery until the Court ruled on their Motion to Dismiss, and Codefendant Samuel Ramirez subsequently filed an Urgent Motion to stay discovery or for temporary relief of the discovery scheduled in the ISC Order (docket No. 40). After receiving Plaintiffs' motions opposing the motion to dismiss and stay of discovery, on April 16, 1999, the Court orally informed the parties that discovery would be stayed until May 7, 1999, in order to give the Court an opportunity to examine Defendants' Motion to Dismiss.
II. DISCUSSION
Section 10(b) of the Securities Exchange Act of 1934 prohibits any person, in connection with the purchase or sale of a security, to use or employ any manipulative or deceptive device in contravention of the rules and regulations proscribed by the Securities and Exchange Commission. 15 U.S.C. § 78j(b); See O'Connor v. R.F. Lafferty & Co., Inc., 965 F.2d 893, 897 (10th Cir.1992). Rule 10b-5, promulgated as a result of Section 10(b), provides:
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange,
(1) To employ any device, scheme or artifice to defraud;
(2) To make any untrue statement of material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
(3) To engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
17 C.F.R. § 240.10b-5.
A plaintiff can bring a claim under Section 10(b) and Rule 10b-5 against a broker or broker-dealer for engaging in trades that are unsuitable to the plaintiff's needs in either the quality and quantity of securities purchased, see O'Connor 965 F.2d at 897-98 (differentiating churning or excessive trading claims from claims that the quality of securities purchased was unsuitable); Lefkowitz v. Smith Barney, Harris Upham & Co., 804 F.2d 154, 155 (1st Cir.1986) (discussing elements of unsuitability claim); Xaphes v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 632 F.Supp. 471, 483 (D.Me.1986) (discussing factors of churning claim), or for unauthorized transactions if accompanied by deception, misrepresentation, or non-disclosure, see Sec. Investor Protection Corp., v. Vigman, 803 F.2d 1513, 1519-20 (9th Cir. 1986) (plaintiff alleging unauthorized transactions can state a claim under the Exchange Act); Arioli v. Prudential-Bache Sec., Inc., 792 F.Supp. 1050, 1062 (E.D.Mi.1992) (plaintiff must plead that unauthorized trades constitute a deceptive practice within the meaning of section 10(b) and Rule 10b-5 to state a Rule 10b-5 violation); Pross v. Baird, Patrick & Co., Inc., 585 F.Supp. 1456, 1460-61 (S.D.N.Y. 1984) (collecting cases holding that unauthorized trades alone are not sufficient to state a claim under section 10(b) or Rule 10b-5).
Plaintiffs state claims pursuant to section 10(b) and Rule 10b-5, alleging unauthorized trades and inappropriate trading on their account by employees of Clark Melvin, as well as various misrepresentations related to their account and broker, Pérez. Defendants' Motion to Dismiss examines each paragraph of Plaintiffs' Complaint *287 and asserts that Plaintiffs have failed to plead the requisite fraud and scienter under Federal Rule 9(b) and the PSLRA. The Court will examine Defendants' arguments in turn.
A. Pleading Pursuant to Rule 9(b) and the PSLRA
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a defendant may, in response to an initial pleading, file a motion to dismiss the complaint for failure to state a claim upon which relief can be granted. It is well-settled, however, that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Miranda v. Ponce Fed. Bank, 948 F.2d 41 (1st Cir. 1991). The Court must accept as true "all well-pleaded factual averments and indulg[e] all reasonable inferences in the plaintiff's favor." Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996) (citations omitted). Nevertheless, a Complaint must set forth "factual allegations, either direct or inferential, regarding each material element necessary to sustain recovery under some actionable theory." Gooley v. Mobil Oil Corp., 851 F.2d 513, 514 (1st Cir.1988).
When assessing a 12(b)(6) Motion to Dismiss for a securities fraud claim, "two additional considerations bear upon the motion to dismiss: Federal Rule of Civil Procedure 9(b) and the PSLRA." Lirette v. Shiva Corp., 27 F.Supp.2d 268, 274 (D.Mass.1998). Rule 9(b) provides that for complaints alleging "fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed.R.Civ.P. 9(b). The purposes behind Rule 9(b) are to provide a defendant with notice of a claim, to prevent damage to a defendant's reputation, and to protect defendants from a "strike suit." See Suna v. Bailey Corp., 107 F.3d 64, 68 (1st Cir. 1997) (citing Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir.1994); Lirette, 27 F.Supp.2d at 274.) A strike suit is a largely groundless claim brought by a plaintiff who later engages in extensive discovery to induce the defendant to settle rather than to discover relevant evidence of fraud. See id.; Romani v. Shearson Lehman Hutton, 929 F.2d 875, 878 (1st Cir.1991).
Under Rule 9(b), a plaintiff bringing a securities claim must "allege `specific facts that make it reasonable to believe that defendant[s] knew that a statement was materially false of misleading.'" Suna, 107 F.3d at 68 (quoting Serabian v. Amoskeag Bank Shares, Inc., 24 F.3d 357, 361 (1st Cir.1994)). "It is well settled that Rule 9(b) requires the plaintiff in a securities fraud case to specify the time, place and content of an alleged false representation." Romani, 929 F.2d at 878 (citing Wayne Investment v. Gulf Oil Corp., 739 F.2d 11, 13 (1st Cir.1984)); see also Suna, 107 F.3d at 68 (quoting Serabian, 24 F.3d at 361) ("the rule requires that the particular `times, dates, places or other details of [the] alleged fraudulent involvement of the actors be allege.'") Further, this heightened pleading applies even when information regarding the fraud is within the knowledge of the defendant. Id.
The PSLRA also imposes heightened pleading requirements on a plaintiff claiming a securities fraud violation. Like Rule 9(b), one of the main goals behind the PSLRA is to prevent "strike suits." See Lirette, 27 F.Supp.2d at 274 (The PSLRA "seeks to `do away with the kind of lawsuit that happens because a companies' [sic] stock drops, a suit is filed, they press discovery, and they move and collect a large settlement from the company, when the suit may be baseless.'") (quoting 104 Cong.Rec. § 19,063 (daily ed. Dec. 21, 1995) (statement of Sen. Feinstein)). Based on the language of the PSLRA, a complaint must set forth "each statement alleged to have been misleading, the reason or reasons why the statement is misleading, *288 and if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed." 15 U.S.C. § 78u-4(b)(1). Thus, the PSLRA further support's this Circuit's "strict .... adherence to Rule 9(b) in the securities context." Gross v. Summa Four, Inc., 93 F.3d 987, 991 (1st Cir.1996); see also Romani, 929 F.2d at 878.
In addition to pleading fraud with particularity, a plaintiff is also required to sufficiently plead scienter, the defendant's "mental state embracing intent to deceive, manipulate or defraud." Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 n. 12, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976). Under the PSLRA, a complaint must "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind." 15 U.S.C. § 78u-4(b)(2). As discussed by the district court in Lirette v. Shiva Corporation, since the PSLRA's passage, "courts have debated whether Congress intended to codify the Second Circuit's definition of `strong inference,' or impose a stronger requirement" for scienter. Lirette, 27 F.Supp.2d at 281.[1] The Lirette Court held that based on the legislative history of the PSLRA and the First Circuit's decision in Maldonado v. Dominguez, 137 F.3d 1, 10 (1st Cir.1998), scienter cannot be plead by merely alleging facts that establish a motive to commit fraud and opportunity to do so; rather Congress intended to impose a stricter standard. Id. The Lirette Court further found that a plaintiff may plead scienter with circumstantial evidence of conscious or reckless behavior. See id. This Court agrees with the rationale and conclusion of the Lirette Court, and holds that in order to sufficiently plead scienter under PSLRA, a plaintiff must allege more than a motive and opportunity to commit fraud; however, a plaintiff can accomplish this through circumstantial evidence of conscious or reckless behavior.
Defendants argue that Plaintiffs' Amended Complaint has omitted pertinent facts which require the Court to dismiss the Amended Complaint in its entirety. Specifically, Defendants analyze Plaintiffs Amended Complaint paragraph by paragraph, and point out what they perceive as vague allegations. In opposing Defendants' Motion, Plaintiffs also engage in a paragraph by paragraph analysis of their Amended Complaint, and assert that it has specified both the fraud committed by Clark Melvin through its employees Pérez and Prann, Clark Melvin's liability under respondeat superior and the controlling person doctrine, as well as the requisite scienter.
Defendants further point out that in several allegations, Plaintiffs' Complaint does not indicate the speaker or defendant involved in the omission or misstatement. According to Plaintiffs, Defendants' arguments concerning the lack of an identifiable Defendant are without merit because by looking at the context of the allegations, it is clear that the Defendant in each case is Clark Melvin. The Court agrees. Although a claim regarding misrepresentations *289 of material fact must "`(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.'" Suna, 107 F.3d at 68 (citing Shields, 25 F.3d at 1127-28), in examining the disputed paragraphs of the Amended Complaint in context the Court finds that it is clear when "defendant" is used, it refers to Defendant Clark Melvin or Clark Melvin through its employees Pérez and/or Prann.
Regarding Defendants' arguments that the speaker in many instances is not identified, Plaintiffs point out that either the speaker is, in fact, identified in the disputed paragraphs, or the allegation described an omission rather than a misstatement. The Court will examine the alleged misrepresentations and omissions below, examining Defendants' contentions in the context of Plaintiffs' substantive claims of unauthorized trading, unsuitability, and churning.
B. Churning
"`Churning' is a shorthand expression for a type of fraudulent conduct in a broker-customer relationship where the broker `overtrades' a relying customer's account to generate inflated sales commissions." Craighead v. E.F. Hutton & Company, Inc., 899 F.2d 485, 489 (6th Cir.1990) (citing Armstrong v. McAlpin, 699 F.2d 79, 90 (2d Cir.1983)). A claim for churning is a claim for fraud, and thus, it must be plead with particularity. See id. To state a claim for churning or excessive trading on an account, a plaintiff must allege and ultimately prove that defendants exercised control over the account, traded excessively in light of plaintiff's stated objectives and the nature of the account, and further, that defendants acted with an intent to defraud or willful and reckless disregard for plaintiff's interests. See Xaphes, 632 F.Supp. at 483 (citing Tiernan v. Blyth, Eastman, Dillon & Co., 719 F.2d 1 (1st Cir.1983); Follansbee v. Davis, Skaggs & Co., Inc., 681 F.2d 673, 676 (9th Cir.1982)); see also O'Connor, 965 F.2d at 898.
Although the First Circuit has not addressed the pleading requirements for a churning claim, other courts have held that:
[t]o satisfy the requirements of Rule 9(b) in a claim for churning in violation of Rule 10b-5, the complaint .... should identify the securities involved and should contain a statement of facts which is sufficient to, at the very least, permit a rough ascertainment of either the turnover ratio or the percentage of the account value paid in commissions.
Craighead, 899 F.2d at 489 (quoting Polera v. Altorfer, Podesta, Woolard & Co., 503 F.Supp. 116, 118 (N.D.Ill.1980)); see also Rhoades v. Powell, 644 F.Supp. 645, 665-66 (E.D.Cal.1986). In addition, pleading facts such as whether the broker engaged in "in and out" trading and the number and frequency of trades on an account can be a sufficient basis for a churning claim. Craighead, 899 F.2d at 489 (quoting Costello v. Oppenheimer & Co., 711 F.2d 1361, 1369 (7th Cir.1983)).
The turnover ratio "`is the ratio of the total cost of purchases made for [an] account during a given period of time to the amount invested....'" Id. (quoting Costello, 711 F.2d at 1369 n. 11). Plaintiffs allege that the annual turnover ratio in December 1995 was 8.76, 5.9 in January 1996, and 6.49 in February 1996. (Am. Compl. ¶ 27). Plaintiffs have made further allegations in support of excessive trading on their account, specifically that 91.3% of the securities were maintained in the portfolio for 6 months or less, 71.4% for 4 months or less, and 41.9% for 1 month or less (Am.Compl. ¶ 25).
Defendants argue that Plaintiffs have provided no facts to support their claims of gross mismanagement of their accounts or to support their annual turnover ratio. Plaintiffs, however, provide a detailed list of the securities purchased by *290 Clark Melvin on their account, as well as the amount paid for each transaction during the relevant time period. See Cruse v. Equitable Sec. of New York, 678 F.Supp. 1023, 1031 (S.D.N.Y.1987) (churning complaint must set out each disputed transaction because at issue is the overall amount of trading over a period of time). Thus, Defendants can utilize this information to assess Plaintiffs' calculation of the turnover ratio. See McMahon v. Hibbard Brown & Co., Inc., No. 91-6568 1992 WL 70399 at *4 (E.D.Pa. March 31, 1992) ("In pleading the identity of the accounts along with the time frame of trading, plaintiff has provided defendants with information from which they can compute the turnover ratio.") Therefore, the Court rejects Defendant's assertion that Plaintiffs have not sufficiently alleged facts in support of their turnover ratio.
A plaintiff stating a claim for churning must also allege that this trading was excessive in light of the plaintiff's stated objectives and the nature of the account. See O'Connor, 965 F.2d at 894; Xaphes, 632 F.Supp. at 483 (citations omitted). The Amended Complaint states several claims that satisfy this pleading requirement. Plaintiffs allege that Francisco Rivera and Gloria Alcorcer, 78 and 79 years of age respectively, clearly informed Pérez in December 1994, prior to the transfer of their account from Paine Weber to Clark Melvin, that their investment objectives were to produce income and security. (Am.Compl. ¶¶ 1, 11). In addition, Pérez knew from his prior experience with Plaintiffs that their only expertise in the area of securities investments was related to their experience with Paine Weber in purchasing secure investments bonds and GNMA's and prior to that, certificates of deposit. (Am. Compl. ¶ 14). Further, Plaintiffs assert that Plaintiff Rivera suffered a stroke in 1994, and that his health and ability to defend his assets was significantly diminished, and additionally, that Plaintiff Alcocer had never administered the assets nor undertaken any role in the decision making process of the assets deposited. (Am. Compl. ¶¶ 14, 15). Defendants knew of these facts, and immediately after Plaintiff Rivera's stroke and subsequent hospitalization and disability, began to trade excessively on Plaintiffs' account. (Am. Compl. ¶ 17). The Court finds that contrary to Defendants' assertion, these claims sufficiently allege the time, speaker, and context of Plaintiffs' allegations, demonstrating that the allegedly excessive trades made on the account were not in line with Plaintiffs' stated objectives.
Plaintiffs must also plead that their broker exercised control over their account to satisfy the elements of a churning claim. See O'Connor, 965 F.2d at 898; Xaphes, 632 F.Supp. at 483 (citations omitted). To account for this factor, a plaintiff must allege that the investor's account was discretionary or set out "other facts which would establish the broker's control." Bogardt v. Shearson Lehman Brothers, Inc., No. 91 Civ. 1036(LBS)(NG) 1993 WL 33643 at *4 (S.D.N.Y. Feb. 3, 1993). Even if an account is non-discretionary, a broker may exercise "de facto control" when a customer "places his trust and faith in a broker and routinely follows his broker's advice." Cruse, 678 F.Supp. at 1031. Factors considered when assessing control include the broker-dealer's discretion, age, education, intelligence, and business investing experience of the investor, as well as the investor/broker relationship including the investor's reliance on the broker. Id. (quoting Zaretsky v. E.F. Hutton & Co., Inc., 509 F.Supp. 68, 74 (S.D.N.Y. 1981)). The Court finds that Plaintiffs' allegations regarding their age and inexperience, reliance on their broker, as well as the fact that Pérez engaged in all of the allegedly excessive trades without informing Plaintiffs or seeking their approval, demonstrates his control over their account.
Finally, Plaintiffs must plead scienter in order to avoid dismissal of their churning claims. In order to sufficiently *291 allege scienter, a plaintiff must show that the broker "purchased the securities with and intent to defraud or with reckless disregard for the investor's interests." O'Connor 965 F.2d at 899. As discussed above, because of the PLSRA, a plaintiff must plead more than a motive and opportunity to commit fraud, but can so plead through circumstantial evidence of conscious or reckless behavior. See Lirette, 27 F.Supp.2d at 281. Recklessness is defined as "conduct that is an extreme departure from the standards of ordinary care, and which presents a danger of misleading buyers of sellers that is either known to the defendant or is so obvious that the actor must have been aware." O'Connor, 965 F.2d at 899 (citations and internal quotations omitted).
Some Courts have held that churning itself is a deceptive and manipulative device under section 10(b), and thus "the scienter required by section 10(b) .... is implicit in the nature of the conduct." Armstrong v. McAlpin, 699 F.2d 79, 91 (2d Cir.1983). Other courts, however, have required a plaintiff to show scienter through the "the amount of commissions charged or from an annual turnover rate in excess of six." Sheldon Co. Profit Sharing Plan and Trust v. Smith, 828 F.Supp. 1262, 1273 (W.D.Mi.1993) (citing Craighead, 899 F.2d at 489-91). The Court finds that Plaintiffs have provided allegations of Pérez and Clark Melvin's intent to deceive them or, at a minimum, recklessness, through claims of material omissions related to Plaintiff' account. Specifically, Plaintiffs were never informed of nor consented to the allegedly excessive trading, and further, this trading had an annual turnover ratio in excess of 6 and as high as 8.48.
F. Unsuitability
Plaintiffs' Complaint also alleges that Pérez and Clark Melvin engaged in trading that was unsuitable to their investment needs and expressed desires. Specifically, Plaintiffs assert that their highly secure portfolio was converted to a highly speculative one, and that this was accomplished through purchasing securities on margin accounts. (Am.Compl. ¶¶ 17, 19). A broker's failure to explain the risks of trading on the margin is actionable under Rule 10b-5. See Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 943 (3d Cir.1985) (discussing cases).
The necessary elements in a claim for unsuitability are similar to those required to plead a churning claim. A plaintiff must plead that the broker recommended or purchased securities unsuitable in light of the investor's objectives, had an intent to defraud or a reckless disregard for the investor's interests, and exercised control over the investor's account. See O'Connor, 965 F.2d at 898; Lefkowitz, 804 F.2d at 155-56; McQuesten v. Advest, Inc., Civ.A. No. 83-1302-MC-A 1988 WL 125783 at *3 (D.Mass. August 4, 1988).
The Court's discussion of Pérez and Clark Melvin's control over Plaintiffs' accounts and Plaintiffs' investment goals in its analysis of the churning claims is relevant to the unsuitability analysis and need not be repeated. The Court, however, notes that Plaintiffs specifically allege that at no time during their relationship with Clark Melvin did they receive information that would explain the nature of margin account or the risk and unsuitability of the transactions made on their account, nor did defendants ever attempt to ascertain their financial condition or ability to sustain losses in margin trading. (Am. Compl. ¶¶ 18, 19) Rather, Clark Melvin unilaterally converted a highly secure portfolio into a highly speculative one. (Am. Compl. ¶ 17)
Plaintiffs have provided a detailed list of all the trades made on the margin in their Amended Complaint, and have further indicated the changes in their portfolio during the relevant time frame regarding asset backed securities and debt on the margin. (Am.Compl. ¶¶ 26, 28, 29, 30). The Court finds that based on its previous *292 analysis in the churning context and Plaintiffs' additional allegations of unsuitable trades, Plaintiffs have sufficiently pled that Pérez and Clark Melvin controlled their account and disregarded their investment objectives by trading in securities unsuitable to their investment needs. See Wyman v. Prime Discount Sec., 819 F.Supp. 79, 83 (D.Me.1993) (discussing Rule 9(b) in the context of unsuitability claim, stating that fraud was sufficiently alleged when Plaintiffs indicated the challenged stock purchases and complaint stated that "Defendants repeatedly, from 1988-1991, knowingly encouraged Plaintiffs to buy securities that were very high risk, in direct contrast to the conservative investments Plaintiffs allegedly requested."); Pits, Ltd. v. American Express Bank Int'l., 911 F.Supp. 710, 718 (S.D.N.Y.1996) (specific examples of itemized options trading, incompatible with investor's objective, is sufficient to sustain an unsuitability claim under Rules 9(b) and 12(b)(6)).
Plaintiffs have also sufficiently plead scienter in relation to their unsuitability claims. Scienter in this context "may be inferred by finding that the defendant knew or reasonably believed that the securities were unsuited to the investor's needs, misrepresented or failed to disclose the unsuitability of the securities, and proceeded to recommend or purchase the securities anyway." Brown v. E.F. Hutton Group, Inc., 991 F.2d 1020, 1031 (2d Cir. 1993); Gaudette v. Panos, 644 F.Supp. 826 (D.Mass.1986), rev'd on other grounds, Gaudette v. Panos, 852 F.2d 30 (1st Cir. 1988) (scienter sufficiently pled when complaint alleged that defendants made representations with recklessness, and that margin account was administered without disclosing to investors that broker knew the unsuitability of transactions and effect on interest level of margin account). As discussed above, Plaintiffs have pled that Pérez and Clark Melvin knew of their investment needs, failed to inform them of the risk and nature of a margin account, while nevertheless purchasing a large amount of securities on the margin. These allegations of material omissions are sufficient to satisfy Plaintiffs' scienter requirement.
G. Unauthorized trading
Plaintiffs contend that in addition to being unsuitable and excessive, the trades made on their account were also unauthorized. To state a claim for unauthorized trading under Rule 9(b), a plaintiff must provide specific information regarding the alleged unauthorized trades made on the account. See Cruse v. Equitable Sec. of New York, 678 F.Supp. 1023, 1029-30 (S.D.N.Y.1987). Plaintiffs have listed all the disputed trades in their Complaint, and further, allege that all such trades were made without their authorization. (Am.Compl. ¶¶ 23, 26, 28). These allegations are sufficiently particularized to satisfy Rule 9(b), as they include all the specific trades Plaintiffs claim to be unauthorized.
Unauthorized trading is not actionable without an accompanying misrepresentation, omission, or non-disclosure. See Arioli, 792 F.Supp. at 1062; Pross, 585 F.Supp. at 1460-61. The basis of Plaintiffs' claims of unauthorized trading involve omissions on the part of Pérez and Clark Melvin regarding the allegedly excessive trades made on the margin. A broker's failure to inform an investor of transactions made on his or her account is itself a material omission, and, in fact, "no omission could be more material than that" Village of Arlington Heights v. Poder, 712 F.Supp. 680, 683 (N.D.Ill.1989) (quoting Hometown Sav. & Loan Ass'n v. Moseley Sec. Corp., 703 F.Supp. 723, 724 (N.D.Ill. 1988); Arioli v. Prudential-Bache Sec. Inc., 792 F.Supp. 1050, 1062 (E.D.Mi.1992) (quoting same)). Thus, Plaintiffs' allegations regarding the unauthorized transactions satisfy the misrepresentation or omission requirement of Rule 10b-5.
In addition to specifying the disputed transactions and relevant omissions, *293 a plaintiff must further plead that the trades were "accompanied by an intent to defraud or a willful and reckless disregard of the client's best interests." Messer v. E.F. Hutton & Co., 847 F.2d 673, 679 (11th Cir.1988) (citing Brophy v. Redivo, 725 F.2d 1218, 1221 (9th Cir.1984)). The fact that a broker acted "intentionally" or "consciously," however, is not sufficient to show scienter. See Brophy, 725 F.2d at 1221. Rather, a plaintiff must allege facts showing an intent to defraud. See id. Courts that have addressed the issue of scienter in an unauthorized trading claim have found no scienter when a broker made unauthorized trades in order to protect an account from extreme losses, see Messer, 847 F.2d at 679 (broker's acts involved a "reasonable decision well within the bounds of accepted industry practice"), and when the investor did not specifically prohibit a trade, there were no misrepresentations by the broker, and the trades resulted in a profit to the investor, see Brophy, 725 F.2d at 1221.
The facts in Plaintiffs' case, however, are drastically different than those in the above-described examples. Plaintiffs claim that Pérez and Clark Melvin engaged in unauthorized trades that were both excessive and unsuitable to their investment needs. These trades resulted in a loss of $145,196.00 out of Plaintiffs' $188,115.00 investment. (Am.Compl. ¶ 22). Further, Plaintiffs claim that Pérez and Clark Melvin took advantage of their age and Rivera's declining health condition by commencing in the unauthorized trades immediately after learning of his stroke and declining mental condition. (Am. Compl. ¶¶ 17, 23). Thus, the Court finds that Plaintiffs have plead sufficient facts to show that Pérez and Clark Melvin had an intent to defraud Plaintiffs, or at a minimum, acted recklessly in engaging in unauthorized trades.
D. Misrepresentations
The Court must also address the allegations of material misrepresentations and omissions not discussed above and identified by Defendants as the basis for dismissal of Plaintiffs' Amended Complaint. For a misrepresentation or omission to be actionable under section 10(b) or Rule 10b-5, it must be made "in connection with the purchase or sale of a security." Rule 10b-5; Estate of Soler v. Rodriguez, 63 F.3d 45, 53 (1st Cir.1995) ("To prevail under Rule 10b-5, a plaintiff must prove, in connection with the purchase or sale of a security, that the defendant, with scienter, falsely represented or omitted to disclose a material fact upon which the plaintiff justifiably relied.") (internal citations and quotations omitted). This requirement has been interpreted "flexibly in order to effect the securities' laws' remedial purposes." In re American Continental Corp./Lincoln v. Keating, 49 F.3d 541, 543 (9th Cir.1995): (quoting Madison Consultants v. FDIC, 710 F.2d 57, 61 (2d Cir.1983).)
To satisfy the "in connection with" element, a plaintiff must show that a defendant "has committed a proscribed act in a transaction of which the pledge of a security is a part." Azrielli v. Cohen Law Offices, 21 F.3d 512, 518 (2d Cir.1994) (citing Chemical Bank v. Arthur Andersen & Co., 726 F.2d 930, 943 (2d Cir.1984).) This can be accomplished by pleading that the alleged fraud concerned "characteristics and attributes that would induce .... investors to buy or sell the particular [securities]." Bacon v. Smith Barney Shearson, Inc., 938 F.Supp. 98, 102 (D.N.H.1996) (quoting Ernst & Co. v. Marine Midland Bank, N.A., 920 F.Supp. 58, 61 (S.D.N.Y. 1996))
Defendants' contend that various misstatements and omissions were not plead with particularity, but do not attack them as not "in connection with" the sale or purchase of a security. Nevertheless, the Court has discovered such deficient allegations in the Amended Complaint, and must find that such misrepresentations and omissions cannot sustain claims under Rule 10b-5. See id. at 101. ("misrepresentations *294 or omissions involved in securities transactions, but not pertaining to the securities themselves, cannot form the basis of a Section 10b or Rule 10b-5 claim.")
Plaintiffs' Amended Complaint alleges that Pérez made a misrepresentation to Plaintiffs regarding Rivera's 1996 income tax return. (Am.Compl. ¶ 37). Plaintiffs claim that Pérez told them that their portfolio was worth $350,000.00 when it was not. Id. While this allegation does relate to Plaintiffs' investments, it was not made in connection with the purchase or sale of any securities. Rather, it was made in connection with the filing of Plaintiffs' tax returns, and thus, cannot form the basis of a Rule 10b-5 claim. See Bacon, 938 F.Supp. at 102 (allowing damages under Section 10(b) or Rule 10b-5 for improper tax advice would "expand the meaning of `in connection with' beyond that intended by Congress").
The Complaint also alleges various omissions that were not in connection with the sale or purchase of a security. Specifically, Plaintiffs allege that Prann, as Vice President of Clark Melvin, concealed information regarding the fraud committed by Pérez on other Clark Melvin accounts. In a letter dated October 1, 1997, already knowing that Pérez had been decertified as a registered representative of Clark Melvin, Plaintiffs received a letter signed by Prann which misled them into believing that Pérez's departure was a routine matter and implying that he was retiring from the industry. (Am.Compl. ¶ 41). Clark Melvin also allegedly omitted Plaintiffs' names from the list of investors who suffered losses at the hands of Pérez and failed to timely report their standing as protected customers under the law. Id. Further, Clark Melvin did not give Plaintiffs all the information to which they were entitled, and intentionally failed to timely and adequately respond to their requests for information on their account and for copies of the checks totaling $79,000.00 which were presumably stolen by Pérez. Id. Finally, Clark Melvin misled Plaintiffs and SIPC regarding the agreement with SIPC. Id. The Court finds none of these alleged omissions were made in connection with the sale or purchase of a security. Again, all Plaintiffs' allegations relate to their account with Clark Melvin, and in these instances, with the alleged theft perpetuated by Pérez on their account. Nevertheless, there is nothing in the Amended Complaint that would permit these instances to satisfy the "in connection with" requirement of Rule 10b-5.
Plaintiffs, however allege that Pérez made misrepresentations prior to the transfer of their account from Paine Weber to Clark Melvin. These claims can be considered "in connection with" the purchase or sale of securities. See Cruse, 678 F.Supp. at 1027 (statements made to persuade a potential customer to open up an account satisfy "in connection with" requirement if statements precede the establishment of an "investment contract." Specifically, Plaintiffs' Amended Complaint states that beginning in December of 1994, Pérez convinced Plaintiffs to transfer their account to Defendant Clark Melvin from Paine Weber because he and Richard Prann were leaving Paine Weber for Clark Melvin. (Am.Compl. ¶¶ 9, 10)). In December 1994, Pérez further represented to Plaintiffs that they should sign documents purporting to authorize Clark Melvin to receive in transfer the assets in Plaintiffs' Paine Weber portfolio. (Am.Compl. ¶ 12) Plaintiffs assert that Clark Melvin opened this account to allow it to engage in trades that were excessive in size and frequency in light of Plaintiffs' financial needs and investment objectives which would generate income for Clark Melvin. (Am. Compl. ¶¶ 12, 13, 14). While these alleged representations did not involve the purchase of a specific security, they related to the transfer of Plaintiffs' portfolio for the purpose of purchasing securities through Clark Melvin. Thus, these alleged misrepresentations sufficiently state a cause of action under Rule 10b-5.
*295 D. Control Liability and Respondeat Superior
The Court must also address Defendants' contention that Plaintiffs have not sufficiently alleged facts that would permit Clark Melvin to be held liable under traditional agency principles or control liability pursuant to Section 20(a) of the Securities Act. Specifically, Defendants argue that there are no allegations that Clark Melvin failed to implement controls that would have avoided the theft of Plaintiffs' funds, not any facts that show potential irregularities related to their account. Further, Defendants state that there are no detailed allegations of Clark Melvin's failure to supervise in the Amended Complaint.[2] Plaintiffs rebut these claims by pointing out that their Amended Complaint alleges that Clark Melvin was reckless in the supervision its employee and of Plaintiffs' account, and further, that Pérez was acting within the scope of his employment when he engaged in the unauthorized, excessive, and unsuitable trades.
Section 20(a) of the Securities Act, Control Person Liability, provides that:
Every person who, directly or indirectly, controls any person liable under any provision of this chapter or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.
15 U.S.C. § 78t. The First Circuit has held that liability under Section 20(a) does not preclude the imposition of vicarious liability under common law. See In re Atlantic Financial Management, Inc., 784 F.2d 29, 32-33 (1st Cir.1986) (discussing circuit split over preclusion issue). Thus, a defendant can be held liable under either Section 20(a) or traditional agency principles. Id.; see also Dougherty v. Mieczkowski, 661 F.Supp. 267, 279 (D.Del.1987) (citing Sharp v. Coopers & Lybrand, 649 F.2d 175, 181-82 (3d Cir.1981) ("In the context of broker-dealers a stringent duty to supervise employees is imposed, and a broker's employer is liable for violations under traditional agency principles."))
In the instant case, Plaintiffs allege that Clark Melvin is liable for the acts of its employees, Pérez and Prann, under a respondeat superior theory. Under respondeat superior or "status based" liability, "a principal .... is liable for tortious misrepresentations of an agent .... even if the agent `acts entirely for his own purposes, unless the [injured person] .... has notice of this.'" In re Atlantic Financial Management, Inc., 784 F.2d at 32 (citing RESTATEMENT (SECOND) OF AGENCY § 235). The policy behind this rule, requiring a business to bear the losses caused by its employees, is to "stimulate [] the watchfulness of the employer in selecting and supervising the agents." Id. (quoting with approval W. SEAVDY, HANDBOOK OF THE LAW OF AGENCY § 58 (1964)). The scope of respondeat superior liability "depends on the relationship between the agent, principal, and acts at issue." Adams v. Hyannis Harborview, Inc., 838 F.Supp. 676, 691 (D.Mass.1993). A principal is only liable if the agent is acting within the scope of their authority; however, "it is enough that the agent intended his acts to produce some benefit to himself and to the principal second." Id. (quoting Federal Savings and Loan Ins. Corp. v. *296 Shearson-American Express, 658 F.Supp. 1331, 1338 (D.Puerto Rico 1987)). The Court finds that Plaintiffs have pled sufficient facts alleging respondeat superior liability in their Amended Complaint so as to hold Clark Melvin liable for the acts of its agents. Plaintiffs claim that Pérez and Prann were employees of Clark Melvin that were acting on behalf of Clark Melvin while engaging in trades on their account. (Am.Compl. ¶¶ 32, 33, 34). These facts are enough to survive Defendants' Motion to Dismiss.
Plaintiffs have also satisfied their pleading requirements under Section 20(a) for control liability. A broker-dealer "is a controlling person under Section 20(a) with respect to its registered representatives." Hollinger v. Titan Capital Corp., 914 F.2d 1564, 1574 (9th Cir.1990) (discussing the SEC position and purpose behind § 20(a) to protect the investing public from representative who are inadequately supervised or controlled). Thus, in order to state a claim under Section 20(a), a plaintiff must show that the representative himself was not a registered broker-dealer, but that he was a representative employed by a registered broker-dealer. Id. Plaintiffs have made such allegations, stating that Pérez, a representative of the broker-dealer Clark Melvin, and further as discussed fully above, that he engaged in fraud related to transactions made on Plaintiffs' account. See Simon v. American Power Conversion Corp., 945 F.Supp. 416, 435 (D.R.I.1996) (plaintiff must show a primary violation of the securities laws and that defendant exercised control) (citing Sheinkopf v. Stone, 927 F.2d 1259, 1270-71 (1st Cir.1991).) The Court will not dismiss the Amended Complaint, as requested by Defendants, for failure to allege further specifics regarding the relationship between Pérez and Clark Melvin or any internal procedures at Clark Melvin. See id. (issue of whether the alleged controlling persons alleged sufficient control is an "inherently factual question improper for resolution on a motion to dismiss.") At this stage, it is sufficient for Plaintiffs to have alleged the fraud committed by Pérez and that Clark Melvin exercised control over Pérez as a broker-dealer. See id.; Hollinger, 914 F.2d at 1574.
III. Conclusion
The Court finds that under Rule 9(b) and the PSLRA, Plaintiffs have pled with sufficient particularity to sustain claims for churning, unsuitability, and unauthorized trading on their account. Further, the Court notes that the purposes behind both Rule 9(b) and the PSLRA-to prevent "strike suits" are clearly not applicable to the case at bar. See Lirette, 27 F.Supp.2d at 274. Plaintiffs have not brought a complaint rife with conclusory allegations of fraud in order to convince Defendants to agree to an early settlement so as to avoid costly discovery. On the contrary, Plaintiffs have provided Defendants with specific allegations regarding the disputed transactions in support of their claim, giving Defendants ample notice of the exact claims against them. Any information solely in the possession of Defendants at this point in the litigation would certainly assist Plaintiffs in supporting their claims of fraud, and not, as feared by Congress, to induce early settlement through the threat of prolonged litigation. See Romani, 929 F.2d at 878.
The Court, however, cannot entertain Plaintiffs claims regarding alleged misrepresentations that were not made in connection with the sale or purchase of a security. Thus, Plaintiffs allegations regarding the misrepresentations and omissions related to their 1996 income tax statements, the letter from Prann about Pérez's departure from Clark Melvin, the documents and information later sought by Plaintiffs, and Clark Melvin's interactions with the relevant authorities and SIPC cannot state a claim under Section 10(b) or Rule 10b-5. The Court, however, finds Plaintiffs' claims of churning, unsuitability, and unauthorized trading to specifically plead fraud and scienter, and that Clark Melvin can be *297 held liable under a respondeat superior theory or as a control person under Section 20(a). Therefore, Defendants' Motion to Dismiss Plaintiffs' Amended Complaint is hereby DENIED. The temporary stay of discovery is lifted, and the parties' SHALL continue with the discovery scheduled in the ISC Order (docket No.34). Clark Melvin SHALL answer all Plaintiffs' interrogatories and document requests on or before May 24, 1999, and the following depositions are hereby RESCHEDULED for the dates stated herein: Plaintiffs Rivera and Alcocer on May 24, 1999 at 9:30 a.m.; Cesar Montilla on May 25 and 26, 1999 at 9:30 a.m., Richard Prann on May 27 and 28, 1999 at 9:30 a.m.
IT IS SO ORDERED.
NOTES
[1] The Lirette Court points out that since the passage for the PSLRA, some courts have ruled that Congress intended to codify the standard utilized by the Second Circuit, which permits a plaintiff to plead scienter by either alleging facts establishing a motive to commit fraud and an opportunity to do so or alleging facts of circumstantial evidence of either reckless or conscious behavior from which scienter could be inferred. See Lirette, 27 F.Supp.2d at 281 (citing City of Painesville v. First Montauk Fin. Corp., 178 F.R.D. 180, 187 (N.D.Oh.1998); Rehm v. Eagle Fin. Corp., 954 F.Supp. 1246, 1252 (N.D.Ill.1997); Marksman Partners v. Chantal Pharmaceutical Corp., 927 F.Supp. 1297, 1309-10 (C.D.Cal. 1996)). Other courts, however, have ruled that Congress intended to impose a stricter standard than that utilized by the Second Circuit, holding that "motive and opportunity" does not fulfill the scienter requirement under the PSLRA, and disputing whether a plaintiff can utilize circumstantial evidence to infer scienter. See id. (citing Novak v. Kasaks, 997 F.Supp. 425, 430 (S.D.N.Y.1998); Norwood Venture Corp. v. Converse Inc., 959 F.Supp. 205, 208 (S.D.N.Y.1997)).
[2] Plaintiffs' Amended Complaint states "Defendant," rather that specifically Clark Melvin, in various allegations regarding the failure to supervise or implement sufficient controls over its employees. The Court, however, as discussed above, finds that it is clear from the context of these allegations and preceding paragraphs that "Defendant" refers to Clark Melvin or Pérez. See Gaudette v. Panos, 644 F.Supp. 826 (D.Mass. 1986), rev'd on other grounds, Gaudette v. Panos, 852 F.2d 30 (1st Cir.1988) (complaint sufficient even though it did not differentiate defendants because brokerage house would be secondarily liable; broker was employee at relevant times). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408731/ | 59 F.Supp.2d 366 (1999)
UNITED STATES of America, Plaintiff,
v.
Angel MORA-CABRERA, Alberto Ramon, Edgardo Velez-Saldaña, Jose A. Cedeño-Castillo, Defendants.
No. CRIM. 98-088(SEC).
United States District Court, D. Puerto Rico.
July 30, 1999.
*367 *368 *369 Guillermo Gil, U.S. Atty., San Juan, PR, Mark Irish, Asst. U.S. Atty., San Juan, PR, for U.S.
Francisco M. Dolz-Sanchez, San Juan, PR, for Defendant Edgardo Velez-Saldana.
Ramon N. Gonzalez-Santiago, San Juan, PR, for Defendant Alberto Ramon.
Ricardo Izurieta-Ortega, San Juan, PR, for Defendant Angel Mora-Cabrera.
Joseph C. Laws, AFPD, San Juan, PR, for Defendant Cedeno-Castillo.
OPINION AND ORDER
CASELLAS, District Judge.
Defendants Angel Mora-Cabrera, a/k/a "Ramón De La Cruz,"[1] Alberto Ramón, Edgardo Vélez-Saldaña, and José A. Cedeño-Castillo[2] were arrested without a warrant on March 29, 1998, in connection with the seizure of approximately 953.9 kilograms of cocaine in Guayama, Puerto Rico. On April 21, 1998, they were indicted with aiding and abetting each other in the possession with intent to distribute cocaine (Docket # 16).
Challenging that there was no probable cause to support their arrests, defendants moved to suppress all evidence subsequently obtained from them (Dockets # 51, # 53, and # 57).[3] A three-day hearing on defendants' motions was held. Post-hearing briefs were filed (Dockets # 78, # 80, and # 85), and the matter was properly submitted to the Court.[4] In their briefs, defendants argue that law enforcement officials lacked both the reasonable suspicion needed to stop them, as well as the required probable cause for their arrests. Accordingly, they seek to suppress all the evidence subsequently obtained from them as "fruit of the poisonous tree." For the reasons set forth below, the Court now DENIES defendants Angel Mora-Cabrera, Edgardo Vélez-Saldaña, and José A. Cedeño-Castillo's motions (Dockets # 51 and # 57), and GRANTS IN PART and DENIES IN PART defendant Alberto Ramón's (Docket # 53).
Factual Background
At about 12:20 a.m., on Sunday, March 29, 1998, Puerto Rico Police Department (PRPD) Officers José M. Vélez and Miguel A. Rivera began their preventive patrol at the Maritime Unit in Guayama, Puerto Rico. They were riding in a PRPD official vehicle driven by Officer Vélez. The Guayama Maritime Unit is a police headquarters located in Punta Pozuelo, or Pozuelo Ward, a peninsula encompassing various sectors, among which is Los Limones. At the suppression hearing, Officer Vélez described Los Limones as an "isolated," and "swampish" area with "little alleyways and paths into the mangrove[s]" (Docket # 72, at 9). It was also established at the suppression hearing that Los Limones is a "well-known drug smuggling area" (Docket # 74, at 464).[5]
At about 12:45 a.m., Officers Vélez and Rivera spotted a "green colored mini van type vehicle," (Docket # 72, at 11), coming *370 out of an alleyway into the main road. Id. at 9. The van had only the parking lights on, and was proceeding slowly. Id. Apparently at the sight of police, the van turned the headlights on, and started to flee. Id. at 10. A chase immediately ensued. Id. at 11.
During the chase, Officer Vélez saw a person jump out of the van and run into the mangroves. Id. Officer Vélez, however, decided not to stop to apprehend this person, and instead continued to pursue the van. Id. at 12, 29. The van apparently lost control and went over some rocks. Id. At that point, Officer Vélez was able to see the driver also jump out. Id. The van hit some trees and the officers finally caught up with it. Id. at 11, 81. Officer Vélez searched the van, ultimately finding "a bunch of bales placed in the back," id. at 12, which were later known to contain cocaine. Several officers arrived at the scene thereafter. In all, the chase allegedly did not last more than a minute. Id. at 27, 97.
Regarding the fleeing suspects, Officer Vélez simply described them as "two silhouettes." Id. 12. Officer Rivera more precisely described the first person who jumped out of the van as wearing dark pants and a "sweater [which] had some white on it," id. at 82, a "stripe" which "[s]eemed to be white." Id. at 91. Officer Rivera, however, did not see any other person come out of the van (Docket # 72, at 81-82). Within approximately ten hours following this incident defendants were apprehended.
Intervention with Defendant Angel Mora-Cabrera
Sergeant Miguel Rodríguez De Jesús and Agent Octavio R. LaKing, both from the PRPD, were among the officers who arrived at the site of the seizure. They came in response to a radio call which relayed the intervention with the van. Id. at 41. There, Sergeant Rodríguez met with Officers Vélez and Rivera. The latter informed that "an individual had come out of th[e] van who was dressed in dark pants." Id. at 41, 59.
Upon leaving the scene, Sergeant Rodríguez and Agent LaKing drove around Los Limones, sometimes going over to the Maritime Unit. Id. at 41. They were riding in a police vehicle driven by Agent LaKing. Id. at 71-72. According to Sergeant Rodríguez, at about 3:15 a.m., while taking a curve on the main road, they saw a "person ... dressed in black pants and a sweater," who, apparently upon noticing their presence, started to run, id. at 74, crossed in front of their vehicle and "went into the mangrove[s]." Id. at 42. Sergeant Rodríguez and Agent LaKing stepped out to chase after him. Id. At that point, PRPD Officers Angel Morales Amato and Pedro Robles arrived, "based on a call ... [that they] received from ... the federal U.S. Customs Service ... [that they] should come to the area of Guayama." Id. at 100.
Sergeant Rodríguez and Officer Morales went into the mangroves to search for the individual, and found him lying under some roots. Id. at 106, 112. They pulled him out grabbing him by the arms, and walked him ten to fifteen feet away from his hiding place back to the main road. Id. at 111-12. Defendant did not resist. Id. at 70, 111. As he was being brought out, the man volunteered, id. at 52, "that he was hungry, that he had been lost for 11 days, and that he had come from Santo Domingo with several others."[6] Id. at 42. Immediately after these statements, Sergeant Rodríguez placed the man under arrest. Id. at 42.
Sergeant Rodríguez testified that he did not believe the man's story because "he was well dressed;" had a "very well trimmed," "goatee type of beard;" was wearing expensive "Nike sneakers;" and he "looked very well." Id. at 43. According to him, if that person "had been lost *371 for 11 days, he would have [had] beard growths and things ..." Id. Moreover, based on the man's statements and on his lack of identification, Sergeant Rodríguez determined that he was illegally in the United States. Id. at 44.
Although the intervening law enforcement officials were armed, they did not display their weapons at any time during the intervention with defendant. Id. at 107, 110. At some point, the man identified himself as Ramón De La Cruz Castro, id. at 45, herein defendant Angel Mora-Cabrera.
After being arrested, Mora-Cabrera was taken to the Maritime Unit. Id. at 42. He was later transported to the U.S. Customs Service facility in San Juan, where he was interviewed by Agent Joe Ruiz (Docket # 74, at 417, 480). Defendant generally told Agent Ruiz that he had recently arrived in Puerto Rico by sea as an illegal alien, along with seventy other nationals from the Dominican Republic. Id. at 480-82, 484-85, 488, 492.
Intervention with Defendant Edgardo Vélez-Saldaña
At about 8:00 a.m. that day, PRPD Officers Jorge L. Guzmán and José R. Meléndez reported for service at the Guayama Maritime Unit (Docket # 73, at 208). Upon arriving they were informed that a shipment of forty-two bales of cocaine had been seized in Los Limones, and that some people were under arrest. Id. at 209-10, 250. They were instructed to go to Los Limones "to provide support to the units that were cooperating in the investigation." Id. at 250. They were not given any information about the suspects' general description, nationality or number. Id. at 251.
About half an hour later, as Officers Guzmán and Meléndez were heading to Los Limones driving down State Road 7710, they spotted defendant Vélez-Saldaña coming out of the mangroves. Id. at 210. The area where defendant was seen is an "isolated" area with "no residences." Id. at 235. According to Officer Guzmán, they decided to intervene with defendant, because they "didn't know him and ... [they] had reason to believe that he was not from around there." Id.; see also id. at 211, 281. As officer Guzmán explained: "The ... [Pozuelo] area is a very small area regarding population, and the opportunity that I have had of working two years in that area, and I had never seen him around there. And the area where we saw him for the first time did not lead us to believe that he was a person who used to be around there a lot." Id. at 251. Acting on this belief, the officers stopped their vehicle next to defendant, and stepped out to interview him. Id. at 211, 241, 281. Their belief that defendant was not from around that area did not initially lead them to connect him to the drug load. Id. at 251. It was what transpired during the interview what led them to conclude so.
Officer Meléndez, who was dressed in uniform and carrying his service weapon, id. at 281, told defendant to stop. Defendant complied, and the officer immediately began to question him. Id. at 242. Officer Meléndez first asked defendant where he was from, and he responded that he was from Puerto Nuevo. Id. at 278, 281. Officer Meléndez then asked him what he was doing in that area, id., and he said that he was there to eat. Id. at 281. There was some inconsistency at the hearing as to what exactly did defendant tell the officers. At one point Officer Guzmán testified that defendant said that "he was going to have breakfast," but then he stated that defendant said that "he had had breakfast." Id. at 211, 215. Officer Meléndez testified that defendant said that he had come to the Pozuelo Ward to eat. He did not mention, however, whether defendant had already done so when he was apprehended. Id. at 281-82, 292.
Defendant claimed, moreover, that one Danny had dropped him off at the entrance of the Pozuelo Ward, and that this person would later return to pick him up. *372 Id. at 211, 281, 283, 291-92. Officer Guzmán remembered defendant saying that he was heading to the Salinas motordrome. Id. at 211, 252. He allegedly stated that "his friend, Danny, was at the Salinas ... [motordrome] and that he was going ... [there] to pick up his motorcycle, that an individual had his motorcycle over there, some guy named Luis Bejuco." Id. at 217. Officer Guzmán allegedly remembered inquiring from defendant that "if he was heading to the Salinas ... [motordrome] and [that] if his friend [had gone there], why ... [had he not gone] with him[?]" Id. at 217. However, Officer Guzmán later clarified that the only facts which transpired while questioning defendant on State Road 7710, were those relating to where he was from, whether he had any identification, what he was doing there, where was he headed to, and who had brought him there. Id. 246. Officer Meléndez's testimony indeed confirmed that all the information about the motordrome, the motorcycle, etc., was obtained from defendant at the Maritime Unit to where he was later transported. Id. at 283, 291-92. According to Officer Meléndez, at the scene of the intervention, defendant did not even "indicate where Danny had gone" to. Id. at 292.
While on State Road 7710, Officer Meléndez also asked defendant his name, but he did not say. Id. at 282. Defendant was further asked for identification, and he said he did not have any. Id. Officer Meléndez testified, nevertheless, that he "knew" that defendant was Puerto Rican. Id. at 243. Defendant later identified himself as Edgardo Javier Vélez-Saldaña. Id. at 220.
Officer Meléndez further testified that during the intervention, defendant was "sweaty" and "agitated." Id. at 281. He also noticed that defendant had mangrove root residue on his chest, and that "the lower portion of his blue jeans was wet." Id. To this effect, Officer Guzmán testified that defendant was "dirty, that he had some leaves on him, and that his feet were wet." Id. at 215. According to Officer Guzmán, defendant said that he was dirty because "he had fallen." Id. He also mentioned that defendant "was a little like excited." Id. at 216.
At that point, Officer Meléndez told defendant to stand against the patrol car while he searched and handcuffed him. Id. at 278. Some cash and a ticket to the Salinas motordrome were obtained. Id. at 218. Defendant was read his constitutional rights and then transported to the Maritime Unit.[7] Id. at 217-28, 247, 292. According to Officer Meléndez, defendant was further questioned inside the patrol car. Id. at 279. However, neither the voluntariness nor the content of this questioning were addressed at the suppression hearing. Defendant's initial questioning on State Road 7710 lasted about fifteen minutes. Id. at 244.
According to Officer Meléndez, his suspicion about defendant's involvement in the drug shipment was heightened by the following facts:
He [defendant] tells me that he had come there to eat; however, the place that he came out of and where we saw him, where we had the intervention with him, is rather far from any establishment. So all of these elements, him being sweaty, having the mangrove residue, having his pants wet, and being far away from a supposed store where he was going to buy some food, gave me a motive for me to determine that he might have been involved and that he could be one of the individuals that had escaped during the early morning hours when the drug shipment was seized.
Id. at 282.
Officer Guzmán's reasons to connect defendant with the drug shipment were *373 somehow different. He testified that what led him to suspect defendant's involvement "was the fact that everything he said was contradictory."[8] Id. at 216, 246-47. First, defendant stated that he had come to Guayama from Barrio Obrero, and that he had left Barrio Obrero at about 8:00 a.m. Id. at 212. He was detained at about 8:30 a.m. As Officer Guzmán explained, if defendant had left Barrio Obrero at 8:00 a.m., it would have been impossible for him to reach Guayama by 8:30 a.m. Id. at 211-16.
Second, according to Officer Guzmán, defendant explained that he was there to eat, yet the nearest establishment where he could have done so was closed at that time. Id. at 212, 216. Officer Meléndez's testimony, however, was to the effect that defendant stated that he was going to eat, and that he was in fact walking towards a nearby restaurant when he was stopped. Id. at 292-93. Nevertheless, Officer Meléndez also confirmed that the restaurant was closed at that time. Id. at 293. If defendant was indeed not from around that area, he had no reason to know that the restaurant was closed at that time. Therefore, we shall not take this fact into account in our analysis.
Finally, defendant's statements about his friend Danny and the Salinas motordrome allegedly bolstered Officer Guzmán's suspicion. Id. However, since this information was obtained only after defendant's arrest, it "may not form the basis of probable cause for that arrest." United States v. Bizier, 111 F.3d 214, 217 (1st Cir.1997). Therefore, we shall also refrain from factoring it in our analysis.
Intervention with Defendant Alberto Ramón
At about 8:00 a.m., PRPD Officers César Rivera-Báez and Gabriel Pérez began their shift at the Maritime Unit (Docket # 72, at 116). There, Officer Rivera-Báez was informed that a drug shipment had been seized in the Pozuelo area. Id. at 117. While patrolling the area, the officers met a fellow agent from the canine unit, id. at 130, who also informed them about the drug seizure (Docket # 74, at 374). He further informed that several suspects were at large, although he did not mention their number or give their description. Id. at 375, 399; Docket # 72, at 151.
Shortly thereafter, Officers Pérez and Rivera-Báez "received information over the radio that a person had been found in the area of Puente Jobos in Guayama; that ... [this] person ... [was] wearing blue jeans, and that there was another person with him who was a Dominican national, no description given." Id. at 117. The individual wearing blue jeans was described as also wearing either a blue shirt, id. at 123, or a blue sweater (Docket # 74, at 375). Officer Rivera-Báez testified that the individuals were referred to as suspects linked to the seized drugs (Docket # 72, at 125).[9]
At about 8:50 a.m., while driving around Puente Jobos,[10] the officers saw defendant Ramón dressed in a blue shirt and blue pants quickly cross the road and walk inside a bakery (Docket # 72, at 118). The fact that defendant fitted the description given over the radio made Officer Rivera-Báez suspicious. Id. at 121-22, 146-47. Therefore, he drove up to the bakery and parked the patrol car almost in *374 front of it. Id. at 136. He stepped out and proceeded to go into the bakery, while his partner, Officer Pérez, who was carrying a long-barreled weapon, id. at 128, remained outside providing cover. Id. at 136. As he was walking into the bakery, Officer Rivera-Báez confirmed that defendant, who was standing in front of the counter looking at the menu with his back to the bakery's entrance, was indeed wearing a blue shirt and blue pants. Id. at 118, 137-38. Officer Rivera-Báez was also able to notice that defendant was "wet and muddy." Id. at 118. This observation prompted Officer Rivera-Báez to arrest him without first conducting a pat-down or asking any questions. Id. at 118, 154, 166. Defendant did not resist. Id. at 139. As Officer Rivera-Báez explained: "I decided to handcuff him ... because the place where the drugs were off-loaded was a mangrove [area]. In order to get away from there, he would have gotten muddy. So that is why I proceeded for my safety and for the safety of the other people there to handcuff him and bring him ... outside."[11] Id. at 166.
Officer Rivera-Báez walked defendant out of the bakery and stood next to the driver side of the patrol car. He asked defendant what was he doing there, and the latter responded that he was going to order breakfast. Id. at 118, 166. The officer then asked him where he was from, and he indicated that he was from San Juan. Id. at 118, 166. Defendant was then asked what was he doing in Guayama, to which he allegedly answered: "I came to look for some relatives who died. They were coming from Santo Domingo and they drowned in a yawl."[12] Id. at 167. During this questioning, defendant remained handcuffed, and he was not searched or patted down. As Officer Rivera-Báez conceded at the suppression hearing, it was until after reading defendant his rights that he "checked him preliminarily to make sure that he didn't have anything on him ... [with which he] could harm" him. Id.; Docket # 74, at 412.
Officer Rivera-Báez did not believe defendant's statement that he had come to Guayama looking for his relatives, "[b]ecause if ... [defendant] was there to pick up any bodies, it's at the Forensic Sciences Institute in Río Piedras where you can pick up the bod[ies]."[13] Id. at 120. At that time, Officer Rivera-Báez "called the guys from [U.S.] Customs so they would come and observe ... [defendant] and interview him." Id. at 119. Whomever it was from the U.S. Customs Service that Officer Rivera-Báez talked to allegedly informed him to take defendant to the Maritime Unit. Officer Rivera then read defendant his constitutional rights and searched him. Id. This search produced a cellular phone and wallet containing some identification, but no money. Id. at 119-20, 124-25. During the search, Officer Rivera-Báez was also able to confirm that defendant's pants were wet. Id. at 119.
Officer Rivera-Báez testified that while standing next to the patrol car, he had asked defendant whether he carried any identification, to which he responded affirmatively. Id. at 141. However, according to Officer Rivera-Báez's own account, defendant never had a chance to show him his identification, first, because he was handcuffed; and second, because at that point in time, the U.S. Customs Service agents arrived, and, upon noticing that *375 defendant was wet and muddy, instructed Officers Rivera-Báez and Pérez to transport him to the Maritime Unit. Id. at 141-42, 167; Docket # 74, at 414. Thus, while Officer Rivera-Báez "saw" defendant's identification at the Pozuelo area, it was not until after they arrived at the Maritime Unit, that he actually examined and "read" the identification (Docket # 74, at 407, 415). Defendant's detention did not last more than fifteen minutes. Id. at 412.
At the suppression hearing, Officer Rivera-Báez testified twice. The first time he did so, he was examined and cross-examined at length about what had transpired at the Pozuelo area next to the patrol car. During his testimony, Officer Rivera-Báez never mentioned having asked defendant his name (Docket # 72, at 116-49, 165-68). The Court later allowed the government to reopen Officer Rivera's direct examination (Docket # 74, at 401-06). This time, Officer Rivera-Báez testified that the "first question ... [that he] asked ... [defendant] as soon as ... [he] stood ... him up beside the patrol car," was his name, to which defendant responded: "Alberto Ramón." Id. at 406-07. Whatever the explanation for Officer Rivera-Báez's failure to initially mention that he had asked for defendant's name, it was clearly established at the hearing (1) that defendant told his real name, id. at 416; and (2) that Officer Rivera-Báez never had a chance to corroborate this information at the Pozuelo area. Id. at 414-15.
After his arrest, defendant was transported to the Maritime Unit. He was subsequently taken to the U.S. Customs Service facility in San Juan, where he was interviewed by a U.S. Customs Service agent. During this interview, defendant made certain incriminatory statements (Docket # 74, at 484, 489-91).
It should be noted that once at the Maritime Unit in Guayama, defendants Mora-Cabrera, Vélez-Saldaña, and Ramón voluntarily allowed their clothes to be subjected to a sniff test by James Patrick, a PRPD narcotics-detecting dog. James Patrick alerted to defendants' clothes, positively indicating the presence of drugs (Docket # 73, 181-208). However, this information having been obtained after defendants were already under arrest, it "may not form the basis of probable cause for that arrest." See Bizier, 111 F.3d at 217.
Intervention with Defendant José A. Cedeño-Castillo
Early in the morning of March 29, PRPD Officer Héctor M. Díaz and Sergeant Francisco Solis were patrolling the Guayama area when they heard a radio broadcast that forty-two bales of controlled substances had been seized in Los Limones, and that some suspects were at large (Docket # 73, at 296-97). They drove to the area where they met a U.S. Customs Service agent who provided a description of "an individual who had gone into ... the brush somewhere around the Santa Ana ... sector," id. at 298. The agent described this individual as brown-skinned, bearded, and wearing a long-sleeved checkered shirt and dark pants. Id. The agent did not indicate whether this individual was connected or not to the drug seizure. Id. at 312. An almost identical description of an individual seen around Santa Ana was subsequently received over the radio by Officer Díaz and Sergeant Solis. The individual was now additionally described as being wet; and his shirt was further described as a long-sleeved, gold-colored, checkered shirt. Id. at 310. More importantly, however, it was informed that this individual was "related to the arrest that had been done earlier."[14] Id. at 311.
Pursuant to this information, Officer Díaz and Sergeant Solis went over to Santa Ana. Id. at 298. Santa Ana is a residential area with some abandoned uninhabited houses located in Puente Jobos, near the *376 Pozuelo area. Id. at 298, 313. According to Officer Díaz, once there,[15] they noted that the gate of one of the abandoned houses was ajar. They decided to go inside, at which time they noticed that door leading into the house was also open. Id. at 298. They entered with their weapons drawn since, according to Officer Díaz, this particular house was considered a "high risk area," because it was "used ... [by] people who are users of controlled substances." Id. Officer Díaz testified that although he and Sergeant Solis were the only law enforcement officials who entered the house, the "guys from Customs" were outside to assist them. Id. at 314. A police helicopter was also outside. Id.
In one of the rooms, Officer Díaz and Sergeant Solis found defendant Cedeño-Castillo "lying face down on [a mattress] on the floor." Id. at 299; Docket # 74, at 336. Officer Díaz asked him to identify himself, but he remained silent (Docket # 73, at 299). Sergeant Solis then asked defendant what he was doing there, and he said that he lived there with his brother. Id. On the floor, next to where defendant lay, Officer Díaz was able to see a gold-colored checkered shirt, a razor blade, and some hair. Id.[16] At that time, defendant stood up, and allegedly stated: "Listen, cops, don't search anymore because I'm the one that you are looking for." Id. Upon hearing this, Officer Díaz, who until then had been pointing at defendant with his gun, immediately placed him under arrest; read him his rights; and patted him down. Id. Only a black wallet was obtained from him. Id. When asked whether he understood the rights read to him, defendant remained silent. Id. at 300, 316. He was then transported to the Maritime Unit. Id. at 301. At the Unit, Officer Díaz transferred custody over defendant to Agent José A. Pérez. Id. at 301; Docket # 74, at 331. Defendant, however, remained inside the car in which he was transported, with Officer Díaz outside guarding him (Docket # 73, at 331).
At about 11:15 a.m., U.S. Customs Service Agent Ramón E. Salgado, who was on duty at the Maritime Unit, was approached by Agent Pérez. Agent Pérez informed him that defendant had been apprehended, and that he wanted to "volunteer some information" (Docket # 74, at 363). Agent Salgado went over to where defendant was being held, and after Officer Díaz relayed what had occurred during the intervention, he stepped inside the car, leaving the door open. Id. at 332, 364. Officer Díaz remained to take notes while Agent Salgado asked defendant his biographical information, i.e., his name, his age, where he was from, where did he live, etc., id. at 347; Docket # 73, at 302, and then he left.[17] Docket # 74, at 333.
Once Officer Díaz had left, Agent Salgado closed the car's door and read defendant his constitutional rights in Spanish, which defendant now said he understood. Id. at 364-66. Agent Salgado asked defendant if he wanted to waive these rights, and he said yes. Id. at 366. He then pulled a piece of paper from his notepad and drafted a brief statement which defendant signed. This statement reads: "I, José Altagracia Cedeño understand my rights that were read to me on March 29th, 1998, at 11:47 a.m., today in the headquarters of the Maritime Unit, Puerto Rico Police. I waive my right to an attorney and I wish or agree to make statements." Id. at 367; Government's Exhibit No. 16. Agent Salgado then interviewed defendant for about 40 minutes. Id. at *377 449. During the interview, defendant made some incriminating statements. He was later placed inside another vehicle and transported to the U.S. Customs Service facility in San Juan, where he was further interviewed by other agents. Id. at 450-53.
Applicable Law
Interaction between law enforcement officials and citizens generally falls within three tiers of Fourth Amendment analysis, depending on the level of intrusion into an individual's privacy. See United States v. Young, 105 F.3d 1, 5 (1st Cir.1997). Falling within the first or lowest tier are minimally intrusive police engagements, such as approaching an individual in a public place to generally ask questions, or to ascertain the individual's identity. These engagements do not constitute a seizure for Fourth Amendment purposes, "so long as the officers do not convey a message that compliance with their request is required." Florida v. Bostick, 501 U.S. 429, 435, 111 S.Ct. 2382, 115 L.Ed.2d 389 (1991). That is, "[s]o long as a reasonable person would feel free `to disregard the police and go about his business,' the encounter is consensual and no reasonable suspicion is required. The encounter will not trigger Fourth Amendment scrutiny unless it loses its consensual nature." Id. at 2386 (citation omitted); see also California v. Hodari D., 499 U.S. 621, 111 S.Ct. 1547, 1551, 113 L.Ed.2d 690 (1991) ("A person has been `seized' within the meaning of the Fourth Amendment only if, in view of all the circumstances surrounding the incident, a reasonable person would have believed that he was not free to leave.").
The second tier encompasses what is commonly know as an investigative or Terry stop.[18] An investigative or Terry stop "occurs when a police officer, acting on reasonable and articulable suspicion of criminal activity, briefly detains an individual to confirm or dispel his suspicion." Young, 105 F.3d at 6 (citations omitted). This type of seizure will be found constitutionally permissible if the "officer's action was justified at its inception, and[] if ... the action taken was reasonably related in scope to the circumstances which justified the interference." Id. (citations omitted). It is irrelevant for this analysis whether the officer's action was grounded on probable cause. See id.
To meet the first prong of the investigative stop analysis that is, whether the intrusion was justified at its inception "`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.'" Young, 105 F.3d at 7 (quoting United States v. Kimball, 25 F.3d 1, 6 (1st Cir.1994)). In assessing whether the second prong is satisfied, the court must consider the totality of the circumstances surrounding the interference, including all the information gleaned by the intervening law enforcement official during the stop. See id.; United States v. Owens, 167 F.3d 739, 748 (1st Cir.1999).
The remaining tier of the Fourth Amendment analysis comprises de facto arrests, requiring probable cause. See Young, 105 F.3d at 6. "[P]robable cause is a fluid concept turning on the assessment of probabilities in particular factual contexts, and as such must be evaluated in light of the totality of circumstances." United States v. Martinez-Molina, 64 F.3d 719, 726 (1st Cir.1995) (internal quotation marks omitted) (quoting Illinois v. Gates, 462 U.S. 213, 232, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983) and United States v. Torres-Maldonado, 14 F.3d 95, 105 (1st Cir.1994)). In order to establish probable cause the government "need not present the quantity of proof necessary to convict. Rather, it need only show that at the time of the arrest, the facts and circumstances known to the arresting officers were sufficient to warrant a prudent person in believing *378 that the defendant had committed or was committing a crime." Id. (citations omitted); see also United States v. Bizier, 111 F.3d at 217. "The inquiry into probable cause to arrest focuses," therefore, "on what the officer knew at the time of the arrest." United States v. Brown, 169 F.3d 89, 91 (1st Cir.1999).
While there is no "scientifically precise formula" to determine whether any particular mode of detention amounts to a de facto arrest, United States v. Taylor, 162 F.3d 12, 21 (1st Cir.1998) (citation omitted); see also United States v. Acosta-Colon, 157 F.3d 9, 14 (1st Cir.1998) (no "litmus-paper test") (citation omitted), an investigative stop is ordinarily deemed a de facto arrest "when a reasonable man in the suspect's position would have understood his situation, in the circumstances then obtaining, to be tantamount to being under arrest." Young, 105 F.3d at 7 (citations and internal quotation marks omitted). "A court making this assessment should take care to consider whether the police are acting in a swiftly developing situation, and in such cases the court should not indulge in unrealistic second-guessing." United States v. Owens, 167 F.3d 739, 749 (1st Cir.1999) (quoting United States v. Sharpe, 470 U.S. 675, 686, 105 S.Ct. 1568, 84 L.Ed.2d 605 (1985)).
Yet some cases require a more fact-specific inquiry. As the First Circuit has explained:
[I]n a typical borderline case, e.g., one in which the detention at issue has one or two arrest-like features but otherwise is arguably consistent with a Terry stop, it will not be obvious just how the detention at issue ought reasonably to have been perceived; indeed, this will be the central point of contention. Thus, in such a case that is, where the detention is distinguishable from, yet has some features normally associated with, an arrest the analysis must revert to an examination of whether the particular arrest-like measures implemented can nevertheless be reconciled with the limited nature of a Terry-type stop. This assessment requires a fact-specific inquiry into whether the measures used were reasonable in light of the circumstances that prompted the stop or the developed during its course.
Acosta-Colon, 157 F.3d at 15. Against this doctrinal background, we analyze the intervention to which each of the defendants was subjected.
Analysis
Intervention with Defendant Mora-Cabrera
At the time when he first encountered defendant Mora-Cabrera, Sergeant Rodríguez knew (1) that a large amount of drugs found inside a van had been seized earlier that morning in the Pozuelo area, and (2) that an individual dressed in dark pants had come out of that van.[19] When spotted by Sergeant Rodríguez, defendant Mora-Cabrera was wearing dark pants. He was walking at 3:15 a.m., on a Sunday, through an isolated mangrove area near the site of the seizure, and only a few hours after it had taken place (Docket # 72, at 40, 65). Apparently at the sight *379 of police, he started to run and went hiding into the mangroves.
While in a different setting the fact that defendant was wearing dark pants may have been meaningless, in this case, time and place combining, it was enough to lead Sergeant Rodríguez to reasonably suspect that defendant was the individual who had escaped the van and, therefore, connected to the drug shipment. Defendant's flight took this suspicion to a higher level. Thus, by the time Sergeant Rodríguez and Agent Morales found and apprehended defendant, Sergeant Rodríguez already had probable cause to arrest him, believing that he had committed a drug-trafficking offense. See 2 Wayne R. LaFave, Search and Seizure § 3.6(e), at 324 (3d ed. 1996) ("[I]f there already exists a significant degree of suspicion concerning a particular person, the flight of that individual upon the approach of the police may be taken into account and may well elevate the preexisting suspicion up to the requisite Fourth Amendment level of probable cause."); cf. Martinez-Molina, 64 F.3d at 729 n. 8 ("[F]light at the approach of law enforcement officers, when coupled with specific knowledge relating to evidence of a crime, is a proper factor to be considered in the decision to make an arrest.") (citations omitted); United States v. Sealey, 30 F.3d 7, 10 n. 2 (1st Cir.1994) (probable cause to arrest for violation of firearms law found where suspect fled from police for no apparent reason and was observed discarding a gun during the ensuing chase); United States v. Miller, 589 F.2d 1117, 1129 (1st Cir.1978) ("The importance of flight or other behavior signifying guilt as a final link in a chain of probable cause is underscored in a number of cases."), cert. denied, 440 U.S. 958, 99 S.Ct. 1499, 59 L.Ed.2d 771 (1979).
Since the requisite probable cause existed, defendant's subsequent arrest was lawful, and his contemporary and voluntarily uttered statements to the effect "that he was hungry, that he had been lost for 11 days, and that he had come from Santo Domingo with several others,"[20] (Docket # 72, at 42), cannot be considered "poisonous fruit."[21]New York v. Class, 475 U.S. 106, 116, 106 S.Ct. 960, 89 L.Ed.2d 81 (1986) ("The Fourth Amendment by its terms prohibits `unreasonable' searches and seizures."). Defendant's statements, moreover, cannot be considered obtained in violation of Miranda, because they were not prompted by official interrogation, or any functional equivalent. See, e.g., United States v. Shea, 150 F.3d 44, 48 (1st Cir.1998); United States v. Ventura, 85 F.3d 708, 711 (1st Cir.1996); United States v. Rogers, 41 F.3d 25, 31 (1st Cir.1994).
Intervention with Defendant Vélez-Saldaña
Approximately eight hours after the drug load was seized, Officers Guzmán and Meléndez spotted defendant Vélez-Saldaña coming out of the mangrove in Los Limones. Officers Guzmán and Meléndez decided to engage defendant because they thought him a stranger. Both officers stepped out of their vehicle, and Officer Meléndez directed defendant to stop, which he did. Thereupon, Officer Meléndez began questioning him. Defendant argues that the officers lacked the requisite level of suspicion to stop him. Alternatively, he argues that even assuming that such level of suspicion existed, his detention, under the circumstances, constituted a de facto arrest unsupported by probable cause. The government counters that the officers' intervention with defendant fell within the contours of a permissible Terry stop.
*380 The government concedes that initial encounter between the police and defendant Vélez-Saldaña was a Terry stop (Docket # 87, at 18). Therefore, we proceed under the assumption that defendant's initial detention constituted a seizure for Fourth Amendment purposes. Our analysis hinges, therefore, on whether this seizure was valid that is, whether the officers action "was justified at its inception, and, if so, whether the action taken was reasonably related in scope to the circumstances which justified the interference." Young, 105 F.3d at 6 (citations omitted).
The Supreme Court has recognized that "[a]rticulating precisely what `reasonable suspicion' ... mean[s] is not possible." Ornelas v. United States, 517 U.S. 690, 696, 116 S.Ct. 1657, 134 L.Ed.2d 911 (1996). Reasonable suspicion is "a commonsense, non-technical conception[] that deal[s] with the factual and practical considerations of everyday life on which reasonable and prudent men, not legal technicians, act." Id. (citations and internal quotations omitted). See also United States v. Sowers, 136 F.3d 24, 27 (1st Cir.1998) (applying a "down-to-earth" approach, in assessing reasonable suspicion). Under this practical, commonsense approach, we find that Officers Guzmán and Meléndez's intervention with defendant was justified at its inception. First, defendant was seen alone coming out of an isolated, non-residential, mangrove area in Los Limones. Second, at that time, the officers knew that a load of forty-two bales of cocaine had been recently seized in Los Limones. Third, defendant did not look familiar. Particularly, Officer Guzmán's unchallenged testimony at the suppression hearing was that Pozuelo is an area with a very small population, and that in the two years that he had been working there, he had never seen defendant before. It would not be unreasonable to infer that a person unfamiliar to such an area isolated and encompassing mostly mangroves , who had participated in a criminal activity involving a considerably large amount of drugs, would have been still lurking around a few hours after the police had nearly caught him.[22]
The second prong of the investigative-stop test was also met in this case. The actions subsequently taken by Officers Guzmán and Meléndez were reasonably related in scope to the circumstances which justified their interference with defendant. The officers parked their vehicle next to defendant, and stepped out to interview him. Neither officer drew out his gun.[23] Officer Guzmán told defendant to stop and asked him some questions. These questions were brief and not framed as to elicit any incriminatory answers.[24]*381 Defendant was not handcuffed and was never told he was under arrest.[25] Moreover, the entire encounter with defendant, including the time it took to place him under arrest, did not last more than fifteen minutes.[26] A reasonable person in defendant's position would not have understood his situation, viewed from the totality of the circumstances, "to be tantamount to being under arrest."[27]See Young, 105 F.3d at 7.
The information gleaned by Officers Guzmán and Meléndez, including their first-hand observations while conducting defendant's interview, gave them probable cause to believe that he was connected to the seized drugs. First, defendant initially refused to give his name. Second, he could not satisfactorily explain his presence in the area. Third, he provided implausible information regarding the time it took him to get to where he was when he was detained.[28] Fourth, he appeared to be agitated and excited.[29] Fifth, his clothes were dirty; he had mangrove root residue on his shirt, and the lower portion of his pants was wet. Under these circumstances, a reasonably prudent person in Officers Guzmán and Meléndez's position would have been entitled to believe that defendant was one of the individuals who had been involved in the incident with the van that morning.[30]
Intervention with Defendant Ramón
Defendant Ramón was spotted near the area where the drug seizure took place while he was crossing the street and walking inside a bakery, his clothes matching the description which Officers Rivera-Báez and Pérez had of one of the suspects involved in the drug incident. This was enough to give rise to the reasonable suspicion necessary to detain him for investigation. Moreover, as Officer Rivera-Báez *382 was entering the bakery to engage defendant, he noticed that he was muddy and wet. It would have been reasonable to infer, as Officer Rivera-Báez did, that since "the place where the drugs were off-loaded was a mangrove [area,] ... [defendant] would have gotten muddy" trying to get away (Docket # 72, at 166). The facts known to Officer Rivera-Báez at the time he handcuffed defendant, together with the rational inferences from those facts, were enough to lead a prudent person to believe that defendant was connected to the drug load. Thus, regardless of whether defendant's detention inside the bakery constituted a de facto arrest, it was supported by probable cause.[31] The existence of probable cause to arrest notwithstanding, we must inquire whether defendant's un-Mirandized statements should be suppressed. See Ventura, 85 F.3d at 712 (holding that the existence of probable cause is not relevant to a Miranda inquiry).
"Miranda warnings must be given before a suspect is subjected to custodial interrogation. The custodial interrogation inquiry necessarily demands determination of its two subsidiary components: 1) custody and 2) interrogation." Id. A person is said to be under "custody" when he or she is under formal arrest, or restrained "to the degree associated with a formal arrest." Id. (citations omitted). This is an objective test requiring only to determine how a reasonable person in the defendant's shoes would have understood his situation. Id. at 711. On the other hand, a person is said to be under interrogation when he or she is subjected to "express questioning," or to "any words or actions on the part of the police (other than those normally attendant to arrest and custody) that the police should know are reasonably likely to elicit an incriminating response." Id. This test is also an objective one: "how would the officer's statements and conduct be perceived by a reasonable person in the same circumstances?" Id.
In this case, defendant Ramón was handcuffed while Officer Rivera-Báez required him to explain his presence in the area and his purpose for being there. The use of handcuffs is undoubtedly "one of the most recognizable indicia of a traditional arrest." Acosta-Colon, 157 F.3d at 18. While handcuffs may be permissibly used for safety and security reasons under certain rare situations within the context of a Terry stop, without transforming it into a de facto arrest, cf. Acosta-Colon, 157 F.3d at 17, for purposes of Miranda, however, we feel that, in this case, a reasonable person in defendant Ramón's shoes would have understood his situation as being comparable to an arrest. Moreover, Officer Rivera-Báez's express questions clearly constituted interrogation. We find, therefore, that defendant was subjected to custodial interrogation necessitating Miranda warnings. Accordingly, defendant's statements in response to Officer Rivera-Báez's questions should be, and are hereby, suppressed.
Intervention with Defendant Cedeño-Castillo
Defendant Cedeño-Castillo was arrested in an abandoned house after voluntarily telling Officer Díaz and Sergeant Solis: "Listen, cops, don't search anymore because I'm the one that you are looking for" (Docket # 73, at 299). At that time, the officers had a detailed description of defendant, who, as they knew, was sought both by the police and the U.S. Customs Service, in connection with a certain arrest which had taken place earlier that day. The description was of a brown-skinned, bearded man, wearing a long-sleeved, gold-colored, checkered shirt, and black pants. Officers Díaz and Sergeant Solis went over to the area were defendant was seen. They entered with their weapons drawn into an abandoned house which they considered a dangerous place because of its frequent use by drug addicts, and found defendant laying on the floor in a room.
*383 At that time, Officer Díaz was able to see a gold-colored checkered shirt on the floor next to defendant. He also noticed a razor blade and some hair. From defendant's facial appearance, Officer Díaz concluded that he had shaved recently. Defendant did not identify himself at the request of Sergeant Solis, although he answered, in response to Sergeant Solis's questioning, that he lived there with his brother. Notwithstanding, defendant immediately told the agents not to look any further because he was the person that they were looking for. Following this statement, defendant was placed under arrest and read his Miranda rights, which he did not acknowledge to understand.
Defendant claims that there was no probable cause for his arrest. He challenges that he "was arrested at once without being interrogated[; that] [h]is statement was unintelligible and could not serve as a basis for his arrest[; that] [t]here was no evidence linking ... [him] to the drug seizure, or that ... [he] had weapons or was using drugs" (Docket 78, at 22). He contends, moreover, that he did not "attempt to flee or struggle when the officers approached and arrested him." Id.
At the outset, we note that defendant does not challenge the officers' right to be in the house where he was arrested, nor does he claim to have had any reasonable expectation of privacy in it. Therefore, we shall proceed under the assumption that the officers' search of the abandoned premises was reasonable, and thus not did not violate the Fourth Amendment.[32] Furthermore, we find that, under the circumstances, there was ample probable cause to arrest him. Officer Díaz and Sergeant Solis, acting pursuant to information that a suspect sought by the police was in the area, went into the abandoned house to investigate. There they found defendant fitting the suspect's description. They asked him a few general questions, and he voluntarily stated that he was the person that they were looking for.
In his brief, defendant notes that the officers lacked information about defendant's relation to the drug seizure. This is of no consequence under the circumstances. Regardless of what defendant was being sought for, Officer Díaz and Sergeant Solis knew that the police and the U.S. Customs Service were looking for him in relation to a certain arrest. Any reasonable person in this situation would have inferred that defendant was being sought for his involvement in some kind of criminal activity, insufficient description of such activity notwithstanding.
Moreover, defendant argues that his detention exceeded the parameters of a permissible Terry stop. We fail to see how could the encounter between the police and defendant may be construed as an investigative stop. He was simply not detained. He was found inside an abandoned house and asked his name and his purpose for being there. After refusing to identify himself and failingly attempting to convince the officers that he lived there with his brother, he voluntarily stated that he was the individual that the officers were looking for. Defendant was not coerced into admitting to this. The officers' use of their weapons at that time was justified since they knew that that particular house was frequented by drug addicts, and was thus considered a dangerous place. Therefore, he was lawfully placed under arrest.
Furthermore, defendant's incriminatory statements given at the Guayama Maritime Unit should not be suppressed. While defendant did not appear to understand his constitutional rights when these were first read to him at the time of his arrest, he was Mirandized a second time *384 before being questioned.[33] This time, defendant positively acknowledged to understand his rights and voluntarily agreed to make a statement.
A suspect may waive his Miranda rights, "provided the waiver is made voluntarily, knowingly and intelligently." Moran v. Burbine, 475 U.S. 412, 421, 106 S.Ct. 1135, 89 L.Ed.2d 410 (1986) (citation omitted).
The inquiry has two distinct dimensions. First, the relinquishment of the right must have been voluntary in the sense that it was the product of a free and deliberate choice rather than intimidation, coercion, or deception. Second, the waiver must have been made with a full awareness of both the nature of the right being abandoned and the consequences of the decision to abandon it. Only if the totality of the circumstances surrounding the interrogation reveal both an uncoerced choice and the requisite level of comprehension may a court properly conclude that the Miranda rights have been waived.
Id. (citations and internal quotations omitted). The government "need prove waiver only by a preponderance of the evidence." Colorado v. Connelly, 479 U.S. 157, 168, 107 S.Ct. 515, 93 L.Ed.2d 473 (1986) (citations omitted).
We find that, in this case, the government carried this burden. It was established at the suppression hearing that before being questioned, defendant was read his constitutional rights in Spanish, which defendant said he understood. Moreover, defendant was expressly asked whether he wanted to waive these rights, and he said yes. Finally, the interrogating officer secured a written waiver from defendant. This evidence was not challenged at the hearing.[34]
Conclusion
For the foregoing reasons, defendants' Angel Mora-Cabrera, Edgardo Vélez-Saldaña and José A. Cedeño-Castillo's motions to suppress (Dockets # 51 and # 57) are hereby DENIED. Defendant Alberto Ramón's motion to suppress is granted as to his un-Mirandized statements, and denied as to the remaining contentions. Accordingly, his motion (Docket # 53) is GRANTED IN PART and DENIED IN PART.
SO ORDERED.
NOTES
[1] Defendant's real name is Ramón De La Cruz Castro (Docket # 73, at 174-76). However, we shall refer to him by the name appearing in the indictment: Angel Mora-Cabrera.
[2] Although defendant's last name is not Cedeño-Castillo but Cedano-Castillo (Docket # 78, at 1), we shall refer to him by the former, as it is how it appears in indictment.
[3] Defendant Mora-Cabrera did not individually move to suppress, but was allowed to adopt defendants Vélez-Saldaña and Cedeño-Castillo's motions (Dockets # 58 and # 64).
[4] Defendants Mora-Cabrera and Ramón did not file separate briefs, but were allowed to join co-defendants' (Docket # 81 and # 87).
[5] During the hearing, counsel for defendant Mora-Cabrera unavailingly tried to establish that Los Limones was know for alien smuggling (Dockets # 72, at 24-25, 49; Docket # 74, at 464).
[6] While Sergeant Rodríguez did not include in his official report of the incident any information concerning the suspect's statements, id. at 52, he did so in his notes. Id. at 78.
[7] At the Unit, Officer Guzmán again read defendant his Miranda rights (Docket # 73, at 218).
[8] Defendant's dirty appearance also raised Officer Guzmán's suspicions (Docket # 72, at 216).
[9] While Officer Pérez testified that these individuals were never referred to as suspects (Docket # 74, at 393), he acknowledged that there was a general state of alert at that time, because of the drug seizure. Id.
[10] It should be noted that Puente Jobos is less than a ten-minute drive, and less than a forty-minute walk, from Los Limones, which is where the drug load was seized (Docket # 73, at 262-64).
[11] Officer Rivera-Báez had not been informed that the suspects at large were armed (Docket # 72, at 152, 155-56). He claimed, however, that "whenever you conduct an intervention, you have to assume that ... [the people you intervene with] could be armed." Id. at 156.
[12] "Yawl" was the English translation used at the hearing for the Spanish word "yola," meaning a small boat commonly used by immigrants sailing from the Dominican Republic into Puerto Rico.
[13] Responding to a question posed by the Court, Officer Rivera-Báez testified that no such drowning had occurred in the Guayama coast around that time (Docket # 72, at 167).
[14] By this time, defendants Mora-Cabrera and Vélez-Saldaña had been arrested. Defendant Ramón was almost simultaneously being detained.
[15] This was at about 10:00 a.m. (Docket # 74, at 330).
[16] Officer Díaz also testified that he concluded that defendant had recently shaved, because "he had a lot of misses, you know, like when you shave in a hurry and you miss a lot of spots, like that." Id. at 299.
[17] Between his arrival at the Maritime Unit and the moment when Agent Salgado approached him, defendant was not questioned (Docket # 73, at 301).
[18] After Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968).
[19] "Under the `fellow-officer' rule, law enforcement officials cooperating in an investigation are entitled to rely upon each other's knowledge of facts when forming the conclusion that a suspect has committed or is committing a crime." United States v. Meade, 110 F.3d 190, 193 (1st Cir.1997). While Sergeant Rodríguez testified to having been informed about the intervention with the van in the Pozuelo area, he did not mention having been told that a large amount of cocaine was found inside it. At the hearing, however, the prosecutor did not specifically examine Sergeant Rodríguez's knowledge of this particular fact, nor did defense counsel challenged it. Notwithstanding, "where law enforcement authorities are cooperating in an investigation," as it happened in this case, "the knowledge of one is presumed shared by all." Illinois v. Andreas, 463 U.S. 765, 771 n. 5, 103 S.Ct. 3319, 77 L.Ed.2d 1003 (1983). Therefore, we shall assume that PRPD Officer Rivera in fact told Sergeant Rodríguez that the van seized was found to contain a large amount of drugs.
[20] Based on these statements and lack of identification, Officer Rodríguez further obtained probable cause to arrest defendant also for being illegally in the United States.
[21] Defendant Mora-Cabrera does not challenge the admissibility of the statements given at the U.S. Customs facility in San Juan. Therefore, we refrain from addressing this issue.
[22] This inference can be drawn from all the facts confronting the officers at the time they stopped defendant Vélez-Saldaña, notwithstanding the officers' failure to particularly articulate it at the suppression hearing. "[T]he fact that [an] officer does not have the state of mind which is hypothecated by the reasons which provide the legal justification for the officer's action does not invalidate the action taken as long as the circumstances, viewed objectively, justify that action." Ohio v. Robinette, 519 U.S. 33, 117 S.Ct. 417, 420-21, 136 L.Ed.2d 347 (1996) (quoting Whren v. United States, 517 U.S. 806, 116 S.Ct. 1769, 1774, 135 L.Ed.2d 89 (1996).) See also 4 Wayne R. LaFave, Search and Seizure § 9.4(a), at 139 (3d ed.1996) (reason able-and-articulable-suspicion test "is purely objective and thus there is no requirement that an actual suspicion by the officer be shown") (footnote omitted); State v. Hawley, 540 N.W.2d 390, 392 (N.D.1995) (reasonable suspicion found even though officer admitted that "he did not form any suspicions of criminal activity").
[23] The First Circuit has noted that "[t]he use of guns and the presence of more than one police officer ... do not necessarily convert an investigative stop into an arrest." See, e.g. Young, 105 F.3d at 8. In the present case, neither officer used his gun. The only evidence presented at the hearing was that Officer Meléndez was merely carrying his.
[24] See United States v. Quinn, 815 F.2d 153, 157 (1st Cir.1987) (question relating to defendant's presence in a certain area determined not to transform investigatory stop into a de facto arrest); United States v. Fernandez Santana, 975 F.Supp. 135, 142 (D.P.R.1997) (same).
[25] See United States v. Taylor, 162 F.3d 12, 22 (1st Cir.1998) (noting, in assessing whether detention was a permissible Terry stop, that defendant was not handcuffed); United States v. McCarthy, 77 F.3d 522, 532 (1st Cir.) (same), cert. denied, 519 U.S. 991, 117 S.Ct. 479, 136 L.Ed.2d 374 (1996); Young, 105 F.3d at 8 (noting, in making de facto arrest inquiry, that law enforcement officers never told defendant he was under arrest or that they wanted to arrest him).
[26] See Young, 105 F.3d at 7 (one factor to consider in determining whether an investigatory stop has transformed into a de facto arrest, if whether the stop extended "beyond the time necessary to confirm or dispel reasonable suspicion").
[27] While defendant was not told hat he was free to leave (Docket # 73, at 247-48), this fact has no bearing on our assessment, since, by the same token, he was never told that he was not free to do so. See Taylor, 162 F.3d at 22 (noting, in assessing whether defendant was de facto under arrest, that he was never told that he was not free to leave). Similarly, the fact that Officer Guzmán testified at the suppression hearing that had defendant attempted to flee, they "would have told him to halt[,] ... [they] would have detained him," (Docket # 73, at 248), should not be factored in our analysis. "`[T]he subjective intent of the officers is relevant to an assessment of the Fourth Amendment implications of police conduct only to the extent that that intent has been conveyed to the person confronted.'" Cardoza, 129 F.3d at 16 n. 6 (quoting Michigan v. Chesternut, 486 U.S. 567, 575 n. 7, 108 S.Ct. 1975, 100 L.Ed.2d 565 (1988)). There was no evidence presented at the hearing to establish that Officer Guzmán conveyed his subjective intention to defendant.
[28] See 2 Wayne R. LaFave, Search and Seizure § 3.6(f), at 327-28 (1996) ("[R]esponses by the suspect which the officer knows to be false, or which are implausible, conflicting, evasive or unresponsive may well constitute probable cause when considered together with the prior suspicions.").
[29] See United States v. Brown, 457 F.2d 731, 733 (1st Cir.) (noting, in assessing whether probable cause existed, that defendant "appeared nervous"), cert. denied, 409 U.S. 843, 93 S.Ct. 42, 34 L.Ed.2d 82 (1972).
[30] Defendant Vélez-Saldaña seeks also to suppress the seized cocaine (Docket # 51, at ¶ 16). However, he lacks the requisite standing. He has failed to establish that he harbored any reasonable expectation of privacy over the cocaine by failing to "demonstrate a sufficiently close connection" to it. United States v. Lewis, 40 F.3d 1325, 1333 (1st Cir. 1994).
[31] The fact that defendant was later placed formally under arrest is of no importance, since by then he was, for Fourth Amendment purposes, already lawfully under arrest.
[32] Cf. United States v. Garcilazo-Martinez, 881 F.Supp. 265 (S.D.Texas 1994) (upholding arrest of defendant in an abandoned house where police had entered without a warrant).
[33] The questions asked him at the Maritime Unit before he was read again his rights fall within the booking exception established in Pennsylvania v. Muniz, 496 U.S. 582, 110 S.Ct. 2638, 110 L.Ed.2d 528 (1990), and did not constitute interrogation for purposes of Miranda. See also Shea, 150 F.3d at 48.
[34] For the same reasons, defendant Alberto Ramón's statements at the U.S. Customs Service facility in San Juan should not be suppressed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408771/ | 59 F.Supp.2d 199 (1999)
MacNEILL ENGINEERING COMPANY, INC., Plaintiff,
v.
TRISPORT, LTD., Defendant.
Trisport, Ltd. Counterclaim Plaintiff,
v.
MacNeill Engineering Company, Inc., Counterclaim Defendant.
No. CIV. A. 98-12019-WGY.
United States District Court, D. Massachusetts.
July 28, 1999.
*200 Robert M. Asher, Kerry L. Timbers, Julia Huston, Bromberg & Sunstein, Boston, MA, for MacNeill Engineering Company, Inc., Plaintiffs.
John H. Henn, Philip C. Swain, Foley, Hoag & Eliot, Boston, MA, Shiva A. Sooudi, Kirkland & Ellis, Jonathan Putnam, Clifford E. Wilkins, Jr., Kirkland & Ellis, New York, NY, for Trisport, Ltd., Defendants.
Kerry L. Timbers, Bromberg & Sunstein, Boston, MA, for MacNeill Engineering Company, Inc., Counter-Defendants.
MEMORANDUM AND ORDER
YOUNG, Chief Judge.
"Golf does strange things to people. It makes liars out of honest men, cheats out of altruists, cowards out of brave men and fools out of everybody."
Milton Gross[1]
I. INTRODUCTION
This case arises out of a dispute over golf cleats. According to the Complaint, MacNeill Engineering Company ("MacNeill"), a Massachusetts corporation, owns all rights to United States Letter Patent No. 5,036,606 (the "'606 patent"), entitled "Locking Cleat and Receptacle System." The '606 patent concerns traction cleats and receptacles, such as those used on golf shoes. Trisport, Ltd. ("Trisport"), an English company, manufactures and markets a golf cleat and receptacle system called "FAST TWIST." In 1998, MacNeill filed suit against Trisport alleging that Trisport is knowingly infringing and inducing infringement of the '606 patent. Trisport has answered the Complaint and counterclaimed for (i) declaratory judgment of non-infringement, (ii) declaratory judgment of invalidity, (iii) violation of Mass. Gen. L. ch. 93A, and (iv) interference with contractual relations.
II. MACNEILL'S MOTION FOR LEAVE TO AMEND
MacNeill now seeks leave to amend its original complaint in two respects. First, MacNeill seeks leave to add a claim of contributory infringement against Trisport in light of recent pre-trial discovery. Second, MacNeill seeks leave to join as a plaintiff the President of MacNeill Engineering, Harris MacNeill ("Mr.MacNeill"), in order to assert his civil claim for damages under the Massachusetts wiretapping statute, Mass. Gen. L. ch. 272, § 99Q. As grounds for this proposed claim, MacNeill contends that Trisport surreptitiously recorded a telephone conversation between Mr. MacNeill and a Trisport representative on October 2, 1998 concerning the present litigation.
III. MOTION FOR LEAVE TO AMEND STANDARD
Litigants, like golfers, often miss the mark on their first attempt. Akin to golf's mulligan, Rule 15(a) of the Federal Rules of Civil Procedure offers litigants the opportunity to improve their first "shot" by way of an amended complaint. Amendments (and mulligans), however, are not always permitted.[2] Once a responsive pleading has been filed, "a party may *201 amend ... only by leave of court ... [which] shall be freely given when justice so requires." Fed.R.Civ.P. 15(a) (emphasis added). Despite this rather forgiving standard, "[i]n considering a motion for leave to amend [] the trial court must first consider whether the proposed new claims are futile, that is, whether they would be subject to dismissal for failure to state a claim." Smith v. Mitre Corp., 949 F.Supp. 943, 945 (D.Mass.1997) (Lindsay, J.). Absent a showing of futility, leave should only be denied if the amendment would be overly prejudicial. See id.
IV. PROPOSED AMENDMENT OF CONTRIBUTORY INFRINGEMENT CLAIM
According to 35 U.S.C. § 271(c),
[w]hoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.
Despite the fairly demanding language of section 271(c), the only allegations supporting a claim of contributory infringement contained in MacNeill's proposed amended complaint state that "Trisport is ... knowingly contributing to the infringement of one or more claims of the '606 patent," and "[u]pon information and belief, said infringing activity has taken place in Massachusetts." Prop. Am. Compl. ¶¶ 9, 10. Trisport argues that this Court should deny MacNeill's motion for leave to amend its claim of contributory infringement as futile because such scanty pleading "fails to allege facts which, if proven, would establish that Trisport has contributorily infringed the '606 patent." Def. Opp. Mem. at 6.
Despite the liberal notice pleading standards embodied in the Federal Rules of Civil Procedure, a plaintiff "is nonetheless required to set forth factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.1988) (emphasis added). The material elements of contributory infringement under section 271(c) are "(1) knowledge that an article is being used as a material element in an infringing product and (2) a showing that the article being used is not a staple item of commerce with no substantial noninfringing uses." Marsh-McBirney, Inc. v. Jennings, No. CV 90-6370-WDK, 1991 WL 365045, at *5 (C.D.Cal. Nov. 8, 1991); accord Lummus Ind., Inc. v. D.M. & E. Corp., 862 F.2d 267, 272 (Fed.Cir.1988) (same). At the very least, MacNeill's allegations of contributory infringement should roughly describe the "component" or "material part" that Trisport knowingly is offering, selling, or importing into the United States and which is enabling direct infringement. Here, however, the only factual support MacNeill provides to support its claim of contributory infringement is that, upon information and belief, some type of contributory infringement activity took place in Massachusetts. See Prop. Am. Compl. at ¶ 10. Without more, such allegations are deficient.[3] As MacNeill's *202 claim would thus not survive a motion to dismiss for failure to state a claim, it is futile and this Court therefore DENIES without prejudice to its renewal the motion for leave to amend the complaint to include a claim of contributory infringement.
V. PROPOSED ADDITION OF WIRETAPPING CLAIM
Under Mass. Gen. L. ch. 272, § 99Q,
[a]ny aggrieved person whose oral or wire communications were intercepted, disclosed or used ... or whose personal or property interests or privacy were violated by means of an interception ... shall have a civil cause of action against any person who so intercepts, discloses or uses such communications or who so violates his personal, property or privacy interest ....
An "interception" includes a secret recording. See Mass. Gen. L. ch. 272, § 99(B)(4). According to MacNeill's proposed amended complaint, Trisport "secretly recorded" and subsequently disclosed the contents of an October 2, 1998 telephone conversation between Mr. MacNeill in Massachusetts and an agent of Trisport in England.[4]See Prop. Am. Compl. ¶¶ 11-13. Having discovered a transcript of this recording during pre-trial discovery, MacNeill seeks leave to add Mr. MacNeill as a plaintiff and amend the complaint to include a claim under section 99Q.
A. Section 99Q Liability for Extraterritorial Secret Recording
In Pendell v. AMS/Oil, Inc., No. 84-4108-N, 1986 WL 5286, at *3-5 (D.Mass. Apr. 30, 1986) (Collings, M.J.), under closely analogous circumstances,[5] Magistrate Collings held that secretly recording a phone conversation in a jurisdiction outside Massachusetts (even though the call is placed to a party within the Commonwealth) does not give rise to liability under Section 99Q. MacNeill argues that the Pendell court's choice-of-law analysis is inapplicable to the present facts and that the court "relied heavily on an outdated lex loci approach" in determining whether section 99Q had extraterritorial effect. Pl. Reply Mem. at 8. This Court, however, considers Pendell's choice-of-law analysis applicable to the facts of this case without need for significant discussion. Moreover, while Magistrate Collings discussed the lex loci approach, he clearly held that section 99Q had no extraterritorial effect even under the more modern choice-of-law approach espoused in Bushkin Assocs., Inc. v. Raytheon Co., 393 Mass. 622, 473 N.E.2d 662 (1985). See Pendell, 1986 WL 5286, at *3-4. Consequently, following the lead of Magistrate Collings, this Court holds that secretly recording a conversation outside Massachusetts does not give rise to liability under Section 99Q even if the call originated within Massachusetts. To the extent that MacNeill's proposed wiretapping claim is premised on Trisport's secret recording, the claim is futile and leave to amend is DENIED with prejudice.
B. Section 99Q Liability for Disclosure within Massachusetts
In its proposed amended complaint, MacNeill states that "Trisport has disclosed and used the contents of the October 2, 1998 telephone conversation." Prop. Am. Compl. ¶ 13. Apparently, this disclosure occurred in at least two instances:
First, Trisport revealed the contents of the subject conversation in detail (and *203 even went so far as to quote Mr. MacNeill) in paragraph 27 of ... [its Answer and Counterclaim], which it filed as a public document with this Court on October 13, 1998. Second, Trisport disclosed and used the contents of the conversation by providing a transcript to MacNeill Engineering of Trisport's recorded conversation with Mr. MacNeill.
Pl. Reply Mem. at 2-3 (internal citations omitted). If this factual background was at all conveyed in the proposed amended complaint, rather than in supporting memoranda, MacNeill's motion for leave to amend would raise some very interesting and complex issues.[6] Unfortunately for MacNeill, the disclosure element of its proposed wiretapping claim suffers from the same lack of factual support that makes its contributory infringement claim futile. There is no mention of where or to whom the disclosures were made. As filed, to the extent that MacNeill's proposed wiretapping claim is premised on Trisport's disclosure, the claim would not survive a motion to dismiss. Thus, the claim is futile and leave to amend must be DENIED without prejudice to its renewal.
VI. CONCLUSION
For the aforementioned reasons, MacNeill's motion for leave to amend is DENIED in its entirety. (Docket No. 28)
NOTES
[1] Bruce Nash and Allan Zullo, Golf's Most Outrageous Quotes 30 (1997).
[2] Under the United States Golf Association's Rules of Golf, mulligans are actually never permitted. See USGA R. 15-1, 27-2. Many amateur golfers, however, disregard this prohibition as they see fit.
[3] MacNeill argues that its memorandum in support of its motion for leave to amend "clearly indicates that its claim for contributory infringement arises from Trisport's sale of components that are neither staple articles nor commodities of commerce suitable for substantial noninfringing use (i.e., cleats and receptacles), with knowledge that such components were made for a use that will infringe MacNeill Engineering's '606 patent (i.e., shoes that enter the United States)." Pl. Reply Mem. at 9. While this may be true, such factual support must be included in MacNeill's proposed amended complaint not merely in its memorandum. Cf. Nieves v. University of Puerto Rico, 7 F.3d 270, 280 (1st Cir.1993) ("Factual assertions by counsel in motion papers, memoranda, or briefs are generally not sufficient to generate a trialworthy issue.").
[4] Although the proposed amended complaint does not explicitly state that the phone call was made from Massachusetts and recorded in England, neither party contests this fact. See Def. Opp. Mem. at 2; Pl. Reply Mem. at 6.
[5] In Pendell, the defendant secretly recorded a phone call in Rhode Island that he made to the plaintiff in Massachusetts. See Pendell, 1986 WL 5286, at *1.
[6] For instance, the Court would have to determine whether disclosing a secretly recorded conversation within Massachusetts can give rise to liability under section 99Q even though the recording occurred outside of Massachusetts. Additionally, the Court would have to consider whether Trisport's alleged disclosure, apparently made solely in the context of litigation, is immunized from section 99Q liability under some form of litigation privilege. Perhaps this Court will have the opportunity to visit these issues as well as the viability of MacNeill's contributory infringement claim upon a renewed motion for leave to amend that relies upon more comprehensive pleadings. Sometimes litigants, like golfers, need a second practice swing. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408585/ | 405 S.W.2d 184 (1966)
Ernest KOELLA, Jr., In his official capacity as Chairman of the Republican Primary Election Commission, and as Chairman of the Tennessee Republican Executive Committee, Appellant,
v.
STATE of Tennessee on relation of Dr. Charles R. MOFFETT, Appellee.
Supreme Court of Tennessee.
July 8, 1966.
Rehearing Denied July 22, 1966.
*185 E. Bruce Foster, Jerome G. Taylor, Knoxville, M. H. Gamble, Jr., Maryville, *186 and Ray H. Jenkins, Knoxville, for appellant.
Paul T. Gillenwater, and Norman L. Griffin, Knoxville, for appellee.
OPINION
CRESON, Justice.
This appeal comes from the First Circuit Court of Davidson County, Tennessee. On June 21, 1966, appellee here, petitioner below, Dr. Charles R. Moffett, filed in the First Circuit Court of Davidson County, Tennessee, a petition for alternative writ of mandamus. Named as defendant in this petition was appellant here, Ernest Koella, Jr., in his official capacity as Chairman of the Republican Executive Committee. The petitioner below, appellee here, sought, by means of the petition for alternative writ of mandamus, to have his name placed on the official ballot in the August 4, 1966 Republican Primary Election, as a candidate for the office of Governor of the State of Tennessee. The petition alleged that Dr. Charles R. Moffett was of proper age and duly qualified under the laws of the State of Tennessee to seek the office of Governor. It further alleged that the petitioner had, on June 6, 1966, filed his petition with the defendant to have his name placed upon the official ballot in the Republican Primary, as a candidate for the office of Governor of the State of Tennessee. It is also alleged in the petition that the defendant below, Ernest Koella, Jr., in his official capacity, returned said petition, giving as a basis for doing so, that the petition was not acceptable because it was not postmarked or in his hands before 12:00 Midnight, June 6, 1966.
On June 24, 1966, Ernest Koella, Jr. filed his answer, which admitted that he was the duly elected Chairman of the Republican Executive Committee and the Republican Primary Election Commission, as alleged. His answer denied that he had received the petition prior to Midnight, June 6, 1966; denied that it was a lawful petition, and denied that a filing on June 6, 1966 complied with the statutory mandate that a nominating petition be filed "at least sixty (60) days prior to the date of the election."
After a hearing on June 24, 1966, an order was entered June 27, 1966, nunc pro tunc, as of June 24, 1966, granting a peremptory writ of mandamus, and ordering that the name of appellee, Dr. Charles R. Moffett, as a nominee of the Republican party, as a candidate for the office of Governor of Tennessee, be placed on the ballot for the August 4, 1966 Republican Primary Election. Appeal was thereafter timely perfected by appellant to this Court, which heard argument at a Special Session, on June 29, 1966.
While the brief filed by the appellant contains three assignments of error, there is really only one question before this Court; that is Where a statute requiring that a qualifying petition for a gubernatorial candidate in a party primary be filed "at least sixty (60) days" before the election date and the sixtieth day before the election falls on Sunday, may the petition be filed the following day though only fifty-nine days before the election?
No Bill of Exceptions has been filed in this case and it is before this Court on the original petition, the answer thereto, the judgment of the court below awarding the peremptory writ, and the briefs of the respective parties. No question is made in this Court but that the qualifying petition was filed on June 6, 1966. Neither is any question made as to the sufficiency of the form of the petition. The sole and only question here presented and to be decided is as heretofore stated.
T.C.A. § 2-811, which sets out the requirements for the filing of petitions of the sort here involved, reads as follows:
"2-811. Nominating petitions of candidates for state wide elections Form Certification of names to county commissions. The name of no candidate for office elected by the electors of the entire *187 state shall be printed upon any official ballot used in any primary under this chapter unless, at least sixty (60) days before such primary, a nominating petition personally signed by the candidate shall be filed in his behalf with the authorities herein designated, signed by twenty-five (25) or more qualified voters of the party whose nomination he seeks. Such nominating petitions shall be in substance as follows: `We the undersigned qualified voters of the county of ____, State of Tennessee, and members of the ____ party, hereby nominate ____ of ____ County as a candidate for the office of ____ to be voted in the primary election to be held by said party on the ____ day of ____. We request that his name be printed upon the official ballot to be used in such primary.' Where only one (1) candidate for any office for which a candidate is to be nominated under this chapter shall so qualify, he shall be declared the nominee for that office and his name shall be placed on the official ballot.
The nominating petitions shall be filed with the respective chairmen or secretaries of the state primary election commissions for the respective parties.
It shall be the duty of the chairmen of the respective state primary election commissions to certify to the chairmen of the various county primary election commissions the names of all candidates in whose behalf nominating petitions have been filed not less than forty (40) days before the date of the primary, and it shall be the duty of the county primary election commissioners to have printed upon the official primary ballots herein provided for the names of all candidates so certified to them. [Acts 1937 (2nd E.S.), ch. 2, §§ 18, 19; C.Supp. 1950, §§ 2227.9, 2227.10 (Williams §§ 2227.18, 2227.19); Acts 1961, ch. 164, § 2; 1963, ch. 382, § 2.]"
Also to be considered in this case is T.C.A. § 1-302, which sets out the method for computation of time, and reads as follows:
"1-302. Computation of time. The time within which any act provided by law is to be done, shall be computed by excluding the first day and including the last, unless the last day is a Saturday, a Sunday, or a legal holiday, and then it shall also be excluded. [Code 1858, § 48; Shan., § 60; Code 1932, § 11; Acts 1965, ch. 203, § 1.]"
There is no doubt that if one counts, as one must, from August 4, 1966, backward, excluding the first day but including the last, or, for that matter, if one counts forward, there are only fifty-nine (59) days between August 4, 1966 and June 6, 1966, the sixtieth day being Sunday, June 5. Thus, the question is squarely presented, whether or not the fact that the sixtieth day falls upon a Sunday, allows a potential candidate to file on the following Monday, fifty-nine days prior to the date of the election.
In 25 Am.Jur.2d 831, (Elections Sec. 140), it is said:
"As a general rule, statutory provisions requiring a petition, certificate, or application of nomination to be filed with a specified officer within a stipulated period of time are mandatory. The officer may refuse to accept such a document for filing if it is not presented in time, and the time may not be extended by custom or practice adopted by the officer. However, a late filing has been excused in a few cases where a governmental official having authority over the filing of nominating petitions rendered an erroneous opinion as to the proper final filing date, and the prospective candidate relied upon such opinion."
It is further said in 29 C.J.S. Elections § 137, p. 401:
"If the last day for filing a certificate falls on a Sunday or a legal holiday, it *188 must be filed the day before in order to be in time."
In conformity with this is the annotation in 98 A.L.R. 2d 1357 (Time Computation First and Last Days, Sec. 6), where the following appears:
"(a) Nominating petitions. Generally, the view has been taken that under statutes providing for the filing of nomination petitions `at least' or `not less than' a certain number of days before an election, the fact that the last filing day falls on a Sunday or holiday does not postpone the time for performance to the next business day, but rather, in order to be timely, the petition must be presented on the first day before the Sunday or holiday."
These text authorities accurately reflect the rule of the vast majority of the case law.
North Dakota enacted statutes, both with respect to qualifying petitions and computations of time, quite similar to those in effect in Tennessee. The Supreme Court of North Dakota had before it a case practically identical to the case at bar. In State ex rel. Anderson v. Falley (1900) 9 N.D. 464, 83 N.W. 913, it was reasoned and held:
"When the amended certificate was presented, granting that it was, in law, presented when placed in the registered mail at Grand Forks, it was too late. Section 503, Rev.Codes, declares: `Certificates of nomination to be filed with the secretary of state shall be filed not less than thirty days before the day fixed by law for the election of the persons in nomination.' This time limit has been held mandatory by every court that has ever passed upon a similar statute, so far as we can ascertain. See Lucas v. Ringsrud, [3 S.D. 355, 53 N.W. 426], supra; State [ex rel. Casper] v. Piper [50 Neb. 40] 69 N.W. 383; Hallon v. Center [102 Ky. 119] 43 S.W. 174; In re Cuddeback (Sup.) [3 A.D. 103] 39 N.Y.Supp. 388.
The date of the election was November 6, 1900. The amended certificate was placed in the mail October 8, 1900. Excluding the latter date, and including the day of election, the certificate was mailed 29 days before election. Under a mandatory statute, a default of 1 day is as fatal as a default of 20 days. True, the thirtieth day preceding the day of election was Sunday, and a legal holiday, under section 5124, Rev. Codes; and section 5127, Id., reads: `Whenever an act of a secular nature, other than a work of necessity or mercy, is appointed by law or contract to be performed upon a particular day, which falls upon a holiday, such act may be performed upon the next business day with the same effect as if it had been performed upon the day appointed.' But this section has no application to the performance of the act under consideration. As the general election always falls on Tuesday, it follows that the thirtieth preceding day is always the fifth preceding Sunday. It is not a case where the date may or may not fall upon Sunday. The date must fall on Sunday every time. If we say the holiday provision must apply to this time limitation, then the legislature fixed a limit of 30 days, well knowing that it must be 29 days in every instance. That would seem absurd. But the terms of section 5127 exclude this limitation. That section says that when an act is appointed `to be performed upon a particular day,' etc. But this act is not appointed for a particular day. It must be done not less than 30 days before election. But there is no limit to the extension of this time. The certificate may be filed any number of days exceeding 30 before the election. If the limitation declared that the certificate must be filed on the thirtieth day before election, then the statute would apply. But the distinction seems very clear. The supreme court of California has placed the same construction upon an identical statute under practically the same facts. Griffin v. Dingley [114 Cal. 481], 46 P. 457. When the amended certificate was presented, *189 the secretary was without authority to file it, and hence he cannot be required to certify the nomination therein contained. The alternative writ of mandamus heretofore issued in this case is quashed. All concur."
Like reasoning and result are found in the following well-reasoned decisions:
Griffin v. Dingley (1896) 114 Cal. 481, 46 P. 457; Steele v. Bartlett (1941) 18 Cal. 2d 573, 116 P.2d 780; Hutchins v. County Clerk of Merced County (1934) 140 Cal. App. 348, 35 P.2d 563; State ex rel. Thatcher v. Brodigan (1914) 37 Nev. 458, 142 P. 520; Cross v. Cohen (1944) 183 Misc. 611, 50 N.Y.S.2d 42; State ex rel. Miller v. Burnham (1910) 20 N.D. 405, 127 N.W. 504; State ex rel. Earley v. Batchelor (1942) 15 Wash.2d 149, 130 P.2d 72; Donohoe v. Shearer (1958) 53 Wash.2d 27, 330 P.2d 316, and Seawell v. Gifford (1912) 22 Idaho 295, 125 P. 182.
The only case which the research of counsel, and our own, has revealed, in which a Court has differently construed a statute similar to ours is Manning v. Young (1933), 210 Wis. 588, 247 N.W. 61. In that case, the requirement was that the petition be filed "not more than forty nor less than twenty days before the primary therein provided for." Thus, unlike this case, there was a limited period of time during which a petition could be filed. Clearly, the Wisconsin statute fixed a starting point on which petitions for qualification could be filed, and before which they could not be filed. The statute also fixed a cutoff point for the filing of such petitions. If this period ended upon a Sunday or a holiday, the period was extended to the following day. To the contrary, the legislative mandate under Tennessee statutes pertinent to qualifying petitions is that they be filed at least sixty (60) days prior to the date of election; that is, sixty (60) days prior to August 4, 1966.
While perhaps not so stated in terms, the essence of the position of appellee here is that T.C.A. § 2-811 and T.C.A. § 1-302 are to be read in pari materia. It is readily apparent that in some, if not many situations, the concepts embodied in these two enactments may come into conflict. It is equally obvious that the time provision contained in T.C.A. § 2-811 is directed to the single subject matter of the primary election; while, on the contrary, the provisions of T.C.A. § 1-302 are pointed to the computation of time generally. The applicable and true rule is then as enunciated in State ex rel. v. Safley, Chairman (1938) 172 Tenn. 385, 112 S.W.2d 831, as follows:
"Where there is a general provision applicable to a multitude of subjects, and also a provision which is particular and applicable to one of these subjects, and inconsistent with the general provision, it does not necessarily follow that they are so inconsistent that they both cannot stand. The special provision will be deemed an exception, and the general provision will be construed to operate on all the subjects introduced therein except the particular one which is the subject of the special provision."
The above has been approved as lately as Woodroof v. City of Nashville (1946) 183 Tenn. 483, 192 S.W.2d 1013, in which case the opinion was written for the Court by the late and muchly lamented Chief Justice Grafton Green.
In our opinion, the provisions of T.C.A. § 2-811 cannot rightly be considered otherwise than mandatory. They say, without qualification, that a petition such as that here before us shall be filed at least sixty (60) days before such primary election. Whatever method of counting time is used here, the unalterable fact is that the qualifying petition here was filed only fifty-nine (59) days before election.
It is pertinent to point out that this record, aside from appellee's brief, is silent as to any official misconduct or mistake which might justifiably be said to have misled the *190 appellee, to his detriment, or to excuse his noncompliance with the mandatory terms of the qualifying statute. The choice of filing time was his.
If it appeared on this record, by proper pleading and proof, that the appellee was justifiably misled as to proper calculation of time to file his petition for qualification, by official opinion, this Court would not hesitate to excuse him from literal compliance with the otherwise mandatory Tennessee statute; and would order that such person, or any other similarly situated, be placed upon the ballot. There is ample authority available to the Court for this view. We say again, however, that this record does not present the situation just alluded to. It is also pertinent to note that nothing said in this Opinion has any reference to persons who have filed their petitions and whose names have been placed on the ballot. The only thing now before us is a petition for writ of mandamus; traditionally, a very narrow remedy.
It is thus this Court's clear duty to reverse the judgment of the court below, to quash the peremptory writ of mandamus, and to assess the costs against appellee. Judgment will be entered accordingly.
BURNETT, C. J., and DYER, J., concur.
WHITE and CHATTIN, JJ., not participating.
OPINION ON PETITION TO REHEAR
Since the release of our original opinion in this case, we have been presented with a petition to rehear on behalf of Dr. Charles R. Moffett. This petition argues that this Court erred in the following particulars: (1) failed to consider and apply the doctrine of judicial estoppel (2) erred in holding that the computation of time, as set forth in T.C.A. § 1-302, was not applicable (3) erred in finding and holding that the petitioner was not misled as to the last date upon which his petition could be filed, and (4) in restricting the result reached in petitioner's case to that case.
Petitioner's first contention, that this Court erred in failing to consider the doctrine of judicial estoppel, is without merit. That argument was made in his original brief and was considered at the time this Court wrote the original opinion. The position taken by Koella on appeal is not inconsistent with his position that the petition was not properly filed on June 6, 1966. This position was contained in Koella's answer filed in the trial court, so there was no attempt by him to raise this issue for the first time on appeal.
Petitioner's second contention, that T.C.A. § 1-302 is to be considered in pari materia with T.C.A. § 2-811, was given full and adequate consideration in the original opinion, and nothing contained in the petition to rehear provides any substantial basis for changing the conclusion reached in the original opinion.
The third contention made by petitioner here, that he was misled as to the last date upon which his petition could be filed, is outside the scope of the pleadings filed by him in the trial court, and therefore, for the reason stated in the original opinion, is not available to Dr. Moffett on the record as presented to this Court.
The petitioner's final insistence is to the effect that his constitutional rights were violated because this Court, in deciding his case, failed to rule upon other cases that might arise. Obviously, this Court cannot adjudge matters that are not before it. Therefore, the fact that this Court refused to exceed its authority and decide matters not properly before it, certainly cannot be said to have, in any way, violated the petitioner's constitutional rights.
Petition to rehear is denied.
BURNETT, C. J., and DYER, J., concur.
WHITE and CHATTIN, JJ., not participating. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408628/ | 405 S.W.2d 285 (1966)
Edwin Thomas GEORGE, Jr., Appellant,
v.
John F. EVANS, Administrator of Estate of Aline Beatrice Evans, Appellee.
Court of Appeals of Kentucky.
July 1, 1966.
Fielden Woodward, John P. Sandidge, Louisville, for appellant.
Frank E. Haddad, Jr., Allen Schmitt, Louisville, for appellee.
HILL, Judge.
The appellant, Edwin Thomas George, Jr., appeals from a judgment awarding $8,000 to the appellee, John F. Evans, administrator of the estate of Aline Beatrice Evans, as a result of an accident in which she was killed by a car driven by the appellant.
On June 26, 1962, appellant was driving on Fehr Avenue, a one-way street for eastbound traffic only. The accident occurred at the intersection of Campbell and Fehr streets in Louisville.
At the intersection, a traffic light controls traffic in all directions. The decedent, *286 Aline Beatrice Evans, a little girl six years and ten months of age and approximately three and one-half feet tall, was killed when struck by appellant's automobile. Fehr Avenue runs east and west, and Campbell Street runs north and south. Fehr provides four nine-foot lanes; the two outside lanes allow parking. When not in use for parking, all four lanes are used by eastbound traffic.
Previous to the time of the accident, Mrs. Evans and her children, including the deceased, had been visiting at 722 Franklin Street. They had started home shortly before 5:00 p. m. and were proceeding south on the west side of Campbell on the sidewalk about a half block north of the intersection of Campbell and Fehr streets when the accident occurred. The mother was pushing a small baby in a Teeter-Tot. At the time of the accident, the mother was one-half block away from Aline as she and some of the other children ran ahead.
When the children reached the intersection of Campbell and Fehr, the traffic control light was red for traffic moving east through the intersection. Thus, there were cars heading east on Fehr in the first two lanes from its north curb waiting for the traffic light to change. The car in the second lane from the north curb of Fehr was driven by Robert Jackson, who witnessed the accident and later testified. A Mrs. Mantle was behind a truck in the line of cars in the lane next to the north curb of Fehr. The appellant was proceeding east on Fehr in the third lane from the north curb about "three or four" car lengths west of the crosswalk at about twenty or twenty-five miles per hour, according to his own testimony, when the light turned green for traffic traveling east on Fehr.
The deceased ran south from the northwest corner of Fehr and Campbell when the light was red for her and green for the traffic. She ran across the first traffic lane, which was against the north curb, and halfway through the second lane when the driver of the first car, Jackson, blew his horn and told her to go back to the north curb. At that time, she stopped and looked at Jackson momentarily and then proceeded, running across the crosswalk of Fehr when she was struck by appellant's car. There were seven or eight cars in the second lane of traffic, it being the one in which Aline had stopped.
Appellant's car was approximately eighteen inches from the right side of the Jackson car and was being driven in its proper lane. At the time of the accident, the Jackson car and all of the other cars in the first two lanes to the north had not started moving. About one-half block away, appellant said, he saw the traffic control light at Fehr and Campbell showing red, which caused him to slow his automobile gradually to approximately fifteen miles per hour. As he slowed down, the other cars to his left were at a standstill; the light changed to green in his favor, giving him the right-of-way when he was approximately five or six car lengths from the intersection. He proceeded to speed up to approximately twenty or twenty-five miles per hour and to go on through the intersection.
After striking deceased, he immediately applied his brakes, resulting in stopping his car with the front of his car even with the west line of the crosswalk on the east side of the intersection.
The deceased was knocked across the intersection with her body coming to rest four feet east of the east line of the east crosswalk of Fehr. The child died from injuries received in the accident.
The appellee introduced in evidence measurements taken by Professor W. R. McIntosh, a civil engineer and instructor at the University of Louisville. The measurements tended to show that the Jackson car was some eleven feet from the deceased when she stopped in front of his automobile; that due to the make of the Jackson car, which was a Buick, and the appellant's car, a Ford, the appellant should *287 have been able to observe and see the deceased if he had been keeping a proper lookout.
The appellant contends that he was entitled to a directed verdict because there was no negligence proven on his part as the decedent suddenly darted out in front of appellant's car. He was driving at a speed of twenty to twenty-five miles per hour and had his car under such control that he stopped it after the accident within thirty to thirty-six feet. Appellant contends he could not have anticipated that this child would suddenly dart from in front of the Jackson car into the path of his car.
Appellant testified he did not see deceased until the very moment of impact. Having traveled Fehr Avenue to get to his home, appellant admitted he was familiar with traffic conditions, the presence of pedestrians in the vicinity of Fehr Avenue and Campbell Street, and that one block away a housing project contained about five hundred families where children could be expected.
Deceased being under the age of seven years at the time of her injury and death was not chargeable with contributory negligence. Appellant pleaded contributory negligence on the part of the mother of deceased. All the evidence on this question was peculiarly within the knowledge of the mother. She testified she cautioned deceased to wait for her at Fehr Avenue. Her evidence later on was confusing as to when or whether she cautioned the deceased to wait; but conceding arguendo that it was two blocks away, the question of contributory negligence was a matter for the jury to determine, and its verdict absolved the mother of fault. We cannot say as a matter of law that the verdict is not supported by substantial evidence.
We now undertake to examine the facts to determine whether the finding of negligence on the part of appellant was justified. It is true appellant had the "green light" authorizing him to proceed; but he was in motion, traveling at about fifteen miles an hour when the green light came on. From his own testimony, he was from forty to sixty feet back of the crosswalk when the green light flashed his signal to proceed. He had a right to proceed. In doing so, he remained under three important duties and those were to (a) keep a lookout ahead; (b) travel at a reasonable rate of speed, and (c) keep his vehicle under reasonable control. Did he observe these duties? The answer to this question must take into account all the circumstances. The first, and perhaps the most salient circumstance, was the fact that the entire line of traffic in appellant's left lane of traffic had not moved. Of course, that could have been attributable to a stalled motor or some other cause. But another logical reason, which was the real reason in this case, for its failure to move when the green light appeared was that a pedestrian was in the crosswalk. A person in the crosswalk travels about four to five feet per second, while one traveling in a motor vehicle at twenty-five miles an hour will travel 29.4 feet. The pedestrian often gets caught in the crosswalk after his right to walk has expired, but the rights of the pedestrian and those of the motorist at crosswalks are reciprocal ones. If there is any condition at the intersection that is reasonably calculated to place a driver on notice that a pedestrian is in distress, he cannot heedlessly speed through without taking due caution. In such a situation, the driver's first concern should be to determine whether a pedestrian is in distress, and he cannot do so without keeping a lookout. A lookout will avail him nothing if he does not have his vehicle under reasonable control. What reasonable control is may differ, depending upon the driver's ability to observe the crosswalk and the time of his passing with reference to the changing of the traffic signal. The nearer the time of changing of the signal, the greater the possibility of the pedestrian being in the crosswalk. A motor vehicle traveling at any rate of speed above fifteen miles per hour is an instrument of death *288 and destruction when colliding with a human being, while a human being will inflict little damage by running into a standing motor vehicle.
Considering the peculiar circumstances of the present case, we conclude the jury was justified in finding appellant guilty of negligence. Cf. Potts v. Krey, Ky., 362 S.W.2d 726.
Next it is insisted by appellant that the trial court erred in admitting the testimony of an employee of the Kentucky Department of Economic Security, Division of Unemployment Service, on the prevailing wage scale of "domestic help." Appellee was only entitled to recover the loss of earnings of deceased after she arrived at the age of twenty-one years, which period would have commenced about fifteen years after her death. Earning power fifteen years hence is difficult to prove. Of course, the present rate of pay for domestic help may be some evidence of what it may be fifteen years hence. On the other hand, Negro girls twenty-one years of age fifteen years hence may not be limited to "domestic help." It could well be that such persons may be the employers at that time. It was shown deceased was well and healthy and that was sufficient to support the $8,000 verdict. Based upon the life expectancy of 46.77 years for "non-white" females, the deceased would have earned over thirty thousand dollars at the rate of six dollars per day.
Finally, appellant complains of the giving of a last clear chance instruction. This record discloses that the appellee's decedent was in a perilous position from which she could not extricate herself and that appellant had a continuing duty of lookout. In these circumstances, the last clear chance doctrine is applicable. Severance v. Sohan, Ky., 347 S.W.2d 498; Saddler v. Parham, Ky., 249 S.W.2d 945; Riley v. Hornbuckle, Ky., 366 S.W.2d 304. The jury was fully justified in concluding appellant had a "last clear chance" to avoid the accident. Cf. United Fuel Gas Co. v. Friend's Admx., Ky., 270 S.W.2d 946.
The judgment is affirmed.
MONTGOMERY, Judge (dissenting).
I respectfully dissent because I am in accord with the principles stated in Johnson v. Gaines, Ky., 313 S.W.2d 408, and Clayton v. Gray, Ky., 348 S.W.2d 938, holding the driver free of negligence under factual situations which are not distinguishable from the facts of the instant case. Further, under the doctrine of Whitesides v. Reed, Ky., 306 S.W.2d 249, the giving of a "last clear chance" instruction cannot be justified here. There are other cases that sustain the principles of the cases cited.
If the court is going to change the law it should, in all fairness, point out to the losing litigants and the profession generally the basis for distinguishing the cases, or else overrule them, so that the law may have some certainty and that some guide be established by which advice may be given and litigation may be conducted. The old saying "the devil can cite Scripture for his own purposes" will become equally applicable to the law, and that is bad.
Accordingly, I disagree with the majority opinion.
STEWART, J., joins in this dissent. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408630/ | 405 S.W.2d 389 (1966)
J. C. DUNN et al., Appellants,
v.
RELIANCE LIFE & ACCIDENT INSURANCE COMPANY OF AMERICA, Appellee.
No. 215.
Court of Civil Appeals of Texas, Corpus Christi.
June 9, 1966.
Rehearing Denied August 1, 1966.
*390 Joel W. Ellis, Harlingen, for appellants.
Lefkowitz, Green, Ginsberg, Eads & Gilmore, by Jerry C. Gilmore, Dallas, for appellee.
OPINION
SHARPE, Justice.
This appeal is from a summary judgment rendered for appellee, defendant below, that appellant, plaintiff below, take nothing.
The judgment is necessarily based upon a holding that appellant's suit is barred by the Texas four-year statute of limitations (Art. 5529, Vernon's Ann.Civ.St.). The correctness of that holding presents the controlling question.
Appellant's petition was filed herein on August 20, 1964. He sought judgment requiring appellee to re-convey to him a real estate note dated July 31, 1956, executed by Louis Davis, et ux, in the original principal amount of $8,750.00, secured by lien on real estate located in Harlingen, Cameron County, Texas, payable in monthly installments of $75.00 each. In 1957 appellant assigned the Davis note to Insur O Medic Life Insurance Company, which company was later merged with appellee, and received a credit of $5,000.00 on indebtedness then owing by him. Although the written assignment executed by appellant was unqualified, he alleges that the true agreement with Insur O Medic was that a collateral assignment was made, so that after $5,000.00 was paid on the Davis note, it would then be reconveyed to appellant who would be entitled to collect the remaining amount owing, provided appellant was not then otherwise indebted to Insur O Medic. Appellant alleges that a mutual mistake was made in 1957, not in connection with the agreement actually made but in incorrectly evidencing it by an outright assignment of the note, when only a collateral assignment was proper. Appellant's theory of recovery is that his cause of action did not accrue and he did not have a matured right to demand return of the Davis note until the above conditions precedent were met in January, 1964, and that the statute of limitations did not begin to run until then. Alternatively, appellant sought recovery against appellee for payment of usurious interest and for exemplary damages. Under our disposition of the case it will be unnecessary to pass upon appellant's alternative causes of action.
The summary judgment evidence herein consists of the deposition of Luther Fisher, an official of Insur O Medic, at the time of the 1957 transaction with appellant, the deposition of appellant, appellee's answers to appellant's requests for admissions and copies of certain 1957 letters and records. That evidence supports appellant's position that the 1957 assignment was for the purpose of collateral only; that Insur O Medic and appellee, its successor, did not have outright title to the Davis note; and that Insur O Medic had agreed to reconvey the note to appellant when $5,000.00 had been paid on it, provided appellant was not otherwise indebted to it. In view of this, we will hereafter refer to such facts as constituting the "alleged agreement" of the parties.
Appellee contends that appellant's cause of action is barred by the four-year statute of limitations, Art. 5529, V.A.C.S., because appellant discovered as early as October *391 6, 1959, that appellee, who had then taken over Insur O Medic, took the position that appellant did not have any further interest in the Davis note. When appellant was so advised he talked to officials of appellee in Dallas. He refused to accept the repudiation and immediately executed and recorded a correction assignment in which he described the original assignment as a collateral one and claimed the right to have the Davis note returned to him after $5,000.00 had been paid on it to appellee. The correction assignment was dated April 23, 1957, the same as the original assignment, but was acknowledged on October 5, 1959. Copies of the corrected assignment were furnished to appellee. Rights of third persons are not here involved.
The precise question presented is whether the statute of limitations began to run in October, 1959, when appellee committed an anticipatory breach of the alleged agreement, or when the conditions precedent to appellant's recovery of the Davis note were fulfilled in January, 1964.
The applicable rules will be briefly stated. Limitation does not begin to run until the right or cause of action accrues. The right or cause of action does not exist until facts exist which authorize the person asserting the claim to seek relief in a court of competent jurisdiction from the person due to make reparation. It involves both the existence of the right and facts sufficient to constitute a cause of action. Hartman v. Hartman, 135 Tex. 596, 138 S.W.2d 802 (1940); Warnecke v. Broad, 138 Tex. 631, 161 S.W.2d 453 (1942); Port Arthur Rice Milling Co. v. Beaumont Rice Mills, 105 Tex. 514, 143 S.W. 926, 148 S.W. 283, 150 S.W. 884, 152 S.W. 629. Where some condition precedent to the right of action exists, the cause of action does not accrue and the statute of limitations does not begin to run until the condition is performed. Bowers v. Bowers, 99 S.W.2d 334 (Tex.Civ.App.1936, wr. dism.); Ewing v. Schultz, 220 S.W. 625 (Tex.Civ. App.1920, wr. ref.); Skeeters v. Granger, 314 S.W.2d 364 (Tex.Civ.App.1958, wr. ref., n. r. e.). Where anticipatory breach of a contract is committed prior to maturity such action does not ipso facto mature the contract, but gives the other party an option to accept the repudiation and to sue for breach of contract, on the one hand, or, to refuse to accept the same and hold the contract open until the time for performance arrives. Slaughter v. Roark, 244 S.W.2d 698 (Tex.Civ.App.1951, wr. ref., n. r. e.); Main v. Hopkins, 229 S.W.2d 820 (Tex.Civ.App.1950, n. w. h.); 37 Tex. Jur.2d, Limitations, Sec. 85, pp. 229-230.
Under the alleged agreement relied on by appellant and supported by the summary judgment evidence, his cause of action for return of the Davis note could not accrue until two conditions precedent were fulfilled, i. e., payment of $5,000.00 on the Davis note and the absence of other indebtedness owing by appellant to appellee. It is undisputed that these conditions were satisfied for the first time in January, 1964. When appellee repudiated the alleged agreement in 1959, neither of these conditions precedent had been met. Appellant could not have then required appellee to return the Davis note to him because the facts did not exist which were essential to his cause of action. We therefore hold that in the absence of appellant's acceptance of appellee's 1959 repudiation of the alleged agreement (amounting to anticipatory breach of contract) the statute of limitations did not begin to run on appellant's cause of action until January, 1964. His suit was filed shortly thereafter, and, therefore, is not barred as a matter of law under his theory of recovery.
Appellant is entitled to a trial on the genuine issues of material fact shown to be present by the record in this case, particularly concerning the issues as to whether, from all evidence, the true agreement of the parties was that the 1957 assignment was for collateral to secure appellant's debt, and that Insur O Medic *392 agreed to reconvey the Davis note to appellant when $5,000.00 had been paid on it and appellant was not otherwise indebted to that company or its successor. If appellant succeeds in establishing those issues in his favor, his suit will not be barred because of the 1959 repudiation, amounting to anticipatory breach by appellee, who, at best, stands in the shoes of Insur O Medic as to the true agreement made in 1957.
The summary judgment is reversed and the cause is remanded for trial. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408633/ | 405 S.W.2d 100 (1965)
WARREN INDEPENDENT SCHOOL DISTRICT, Appellant,
v.
SOUTHERN NECHES CORPORATION, Appellee.
No. 6788.
Court of Civil Appeals of Texas, Beaumont.
October 14, 1965.
Rehearing Denied November 24, 1965.
*101 E. G. Aycock, Ft. Worth, for appellant.
B. F. Whitworth, Jasper, Garrison, Renfrow, Zeleskey, Cornelius & Rogers, Lufkin, Wheat & Wheat, Woodville, Fountain, Cox & Gaines, Houston, for appellee.
STEPHENSON, Justice.
This is a consolidation of eight cases involving the method of evaluation of property for ad valorem taxes by the Warren *102 Independent School District, hereinafter called "School District". The suits brought by the taxpayers were in the nature of direct attacks seeking relief from the trial court primarily on the ground that an arbitrary and illegal scheme for the evaluation of timberland had been used for the years 1962 and 1963. The suits by the School District were for the collection of taxes for those two years. Inasmuch as each suit involved the same general questions of law, they were consolidated for convenience. Trial was before the court and judgment was rendered that the tax assessments upon the timberlands be set aside and ordered their re-assessment.
The trial court made findings of fact, a part of which were as follows:
"9. In making an appraisal of the timber lands the appraiser used a formula, or method, substantially as follows:
"(a) After an on the ground inspection, an estimate was made of the standing, marketable timber. Then, a determination was made of its value.
"(b) To determine the value of the timber lands, as distinguished from the value of the marketable, standing timber thereon, the appraiser attempted to determine the net revenue per acre to be expected from such lands over a period extending fifty years into the future. The formula was based upon the following assumptions: That the highest and best use of said lands would be the continued growing of timber, under sustained yield management; that the first timber would be cut at the end of 20 years; that further cuttings would occur at the end of 30 years, 40 years and 50 years. The appraiser then attempted to determine the cost of growing such timber during the 50 year period, and attempt was made to determine the revenue to be expected from such operation. A 5% discount was applied to both the estimated costs and the estimated revenues. The amount of estimated net income to be produced per acre was made the basis for determining the value to be placed upon such timber landas distinguished from the value of the standing timber.
"10. In connection with the estimate of the value of standing timber, I find that such timber could only be cut and marketed in an orderly manner over a period of years; it could not be cut and marketed immediately. This factor was not considered by the appraiser when he made his appraisal of the value of such standing timber. No discount was allowed. And as to the growth of such standing timber, during the period before it was cut, the same was not considered by the appraiser, nor did he make any calculation as to what such growth would be.
"11. In connection with the attempt of such appraiser to determine the net income from timber lands at such distant dates in the future as twenty, thirty, forty and fifty years, I find that there are so many, essential, but unknown factors, relating to both the costs and revenues at such distant dates, that any such attempt becomes an expedition into the field of what is purely imaginary, and wildly speculative.
"12. The tax values finally placed upon the timber lands for the years 1962 and 1963 are in excess, percentage-wise, of the values placed upon other properties in the District, that is to say, the percentage of the actual cash market value of the timber lands subjected to taxation is materially greater than the percentage of the actual cash market value of other properties subjected to taxation.
"13. The 100% value placed upon the timber lands, by the District, for the years 1962 and 1963 is a value which is materially in excess of the actual cash market value of such lands.
"18. I find that at the time of such Board hearing in 1962 the members of the Board of Equalization had very great confidence in those appraisers who had *103 appraised the timber lands, so much so, in fact, that they were willing to delegate the function of fixing values on such lands to said appraisers. I do not find any intentional wrongdoing on the part of any of such members. But I do find an attitude on the part of such members that the appraisers could deal with the problem of fixing such values better than they, the Board members, could, and I find that they were willing to accept the judgment of the appraisers as to the values of such timber lands, whatever such judgment might be, so that it would not be necessary for the Board members to study, hear, consider or understand the evidence relating to such issues, of timber land values, nor to exercise their own judgment in passing thereon."
The trial court's conclusions of law were that the failure of the Board of Equalization to use their own judgment rendered their action invalid, and that the manner of conducting their hearings amounted to a denial of due process of law.
The School District first contends the trial court erred in substituting its judgment and discretion for that of the Board of Equalization. The courts of this state are uniform in holding that the courts do not have supervisory control over the boards of equalization and that they cannot set aside a tax assessment as being null and void merely because the court differs with the equalization board as to valuation. State v. Houser, 138 Tex. 28, 156 S.W.2d 968. However, we find nothing in the findings of fact, conclusions of law or the judgment to indicate that the trial court made any such substitution. In the Houser Case, supra, the board of equalization found the value of the land to be $4,000.00 and $4,500.00 and the trial court found the value not to exceed $3,000.00. The Houser Case, supra, further holds that "if a board adopts a method that is illegal, arbitrary, or fundamentally wrong, or if its valuation is grossly excessive, the decision of such board may be attacked and set aside." The point is overruled.
The School District next contends the trial court erred in rendering its judgment because the taxpayers failed to prove fraud, want of jurisdiction, illegality or the adoption of an arbitrary and fundamentally erroneous plan or scheme of valuation, or that the valuations fixed resulted in substantial injury to these taxpayers. In State v. Whittenburg, 153 Tex. 205, 265 S.W.2d 569, it is stated:
"When the attack is made because the board followed an arbitrary plan or scheme of fixing values, the taxpayer, to prevail, must show not only that the plan was an arbitrary and illegal one but also that the use of the plan worked to his substantial injury."
We have concluded that the findings of the trial court, which are set forth above, are in effect a finding by the trial court that the School District had adopted an arbitrary and fundamentally erroneous plan or scheme of evaluation which would result in substantial injury to the taxpayers. It is doubtful that these points of error are specific enough to raise issues in this court as to whether or not the findings of fact set out above in this opinion, are supported by the evidence. The School District uses the term "failed to prove" and it is not specifically stated that the findings of the trial court were supported by "no evidence" or that such findings were "contrary to the weight and preponderance of the evidence." However, we will give a broad and liberal construction to these points, and consider them as raising these issues. First, in passing upon the "no evidence" points, we consider only the evidence favorable to the findings of the trial court. The evidence of both Frank W. Bennett and Richard M. Townsend in their written report and in their testimony in person before the Board of Equalization, which was also offered in evidence before the trial court, shows that the system of placing values upon the *104 timber lands, as found by the trial court in finding No. 9, was adopted and used by the Board of Equalization. A comparison of the values testified to by witnesses for the taxpayers and the values arrived at by the Board of Equalization using the plan found to be arbitrary demonstrates a difference in value which this court construes to constitute "substantial injury." The findings by the trial court are supported by the evidence.
After oral argument, counsel for the School District filed an additional brief and, for the first time, urged specifically that each of the findings by the trial court was supported by "no evidence" and that such findings were each "contrary to the great weight and preponderance of the evidence". Even though this court has the authority to permit an appellant to amend its brief to present additional points of error, no such request was made by the School District in this case.
In passing upon the points as to whether the findings of the trial court were contrary to the weight and preponderance of the evidence, we considered the entire record. There is testimony in the record by members of the Board of Equalization that they were seeking to determine the true cash market value of the timber lands and considered the Bennett-Townsend Report along with all other evidence in arriving at the final values set. This and other evidence offered by the School District did nothing more than raise issues of fact for the trial court to determine, which it did adversely to the School District. We do not find that such findings by the trial court were clearly wrong or manifestly unjust. These points are overruled.
The School District further contends that the trial court erred in determining and adjudging that the Board of Equalization was required to conduct its deliberations in a formal judicial manner and that failure to do so invalidated the taxable values fixed for the properties of appellees by such Board of Equalization. This point is apparently an attack upon the conclusion of law by the trial court that the hearings before the Board of Equalization were conducted in a manner so lacking in the qualities of a judicial hearing as to amount to a denial of due process of law. The law is clear that a Board of Equalization is a quasi-judicial body and is not bound by the ordinary rules of evidence. It is allowed a broad latitude in determining values. In passing upon this point we are controlled by the presumption stated in State v. Whittenburg, supra: "Moreover, when their (Board of Equalization) official action is attacked it will be presumed that such boards discharged their duties as public agencies according to law and acted in good faith."
The record shows that counsel representing some of these taxpayers were denied the right to cross-examine some of the witnesses giving testimony before the Board of Equalization at a hearing conducted in reference to the value of producing minerals. The Board of Equalization also would not require these witnesses to return for cross-examination at the time of the hearing in reference to the value of timber lands. Even though a hearing before a Board of Equalization is not a judicial proceeding and may be informal in nature, at the same time a protesting taxpayer must be given a reasonable opportunity to develop the facts upon which the protest is based. In this instance the owners of the timber lands were protesting the valuations set upon the producing minerals. Proof that one class of property was not bearing its proportionate part of the tax burden would be evidence that an arbitrary and illegal scheme had been adopted. The owners of the timber lands should have been permitted by the Board of Equalization to cross-examine witnesses upon matters which were relevant and material to this contention. It is undisputed that they were denied this right. The evidence supported the finding by the *105 court that the manner in which the hearing was conducted by the Board of Equalization amounted to a denial of due process of law.
The judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2409803/ | 719 S.W.2d 486 (1986)
Gordon W. HAGLER, Respondent,
v.
J.F. JELENKO & CO., Appellant.
No. WD 38041.
Missouri Court of Appeals, Western District.
November 4, 1986.
Andrew See, Shook, Hardy & Bacon, Kansas City, for appellant.
Robert F. Redmond, III, Jeffrey S. Bay, Van Osdol, Magruder, Erickson and Redmond, Kansas City, for respondent.
Before GAITAN, P.J., and DIXON and TURNAGE, JJ.
TURNAGE, Judge.
J.F. Jelenko & Company appeals from a judgment on a jury verdict against it for $10,665.00 on Gordon W. Hagler's claim for breach of contract. Jelenko argues that Hagler's common law contract claim was preempted by the Employee Retirement Income Security Act of 1974, 29 § U.S.C. 1001, et seq. (1982) (ERISA), and that Hagler failed to make a submissible contract case.
Reversed.
Hagler pleaded a cause of action for breach of an employment agreement. He alleged that he had worked for Jelenko for more than 15 years and that one of the terms of his employment contract was that, in the event his employment was terminated, Jelenko would pay him severance pay of one week's salary for each year he had worked for Jelenko. He alleged he was fired by Jelenko, but that Jelenko failed to pay the severance pay required by the employment contract.
Hagler proceeded to trial on the contract theory and submitted the case to the jury *487 by a contract verdict director based on MAI-3d 26.06. The jury returned a verdict in his favor.
Jelenko moved to dismiss the petition for failure to state a claim, arguing that ERISA preempted any common law contract claim for severance benefits. Jelenko also moved for a judgment notwithstanding the verdict, or in the alternative, for a new trial.
Hagler's claim was based on an alleged agreement by Jelenko to provide a severance benefit. Such an agreement to provide severance benefits falls within the regulatory scope of ERISA. ERISA covers "employee benefit plans" that are "established or maintained ... by any employer engaged in commerce or in any industry or activity affecting commerce." 29 U.S.C. § 1003(a).
Jelenko is a manufacturer and national distributor of dental equipment, materials, and supplies used by dental laboratories, and is therefore the sort of employer covered by ERISA.
"Employee benefit plans" include "employee welfare benefit plans", 29 U.S.C. § 1002(3), which are defined (in relevant part) as:
[A]ny plan, fund, or program ... established or maintained by an employer ... to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries ...
(B) any benefit described in Section 186(c) of this title (other than pensions or retirement or death, and insurance to provide such pensions).
Types of benefits "described in" 29 U.S. C.A. § 186(c) (West 1986 Cum.Supp.) have been held to include unfunded severance pay plans, such as Hagler alleged in this case. Gilbert v. Burlington Industries, 765 F.2d 320, 324-26 (2d Cir.1985), aff'd sub nom Roberts v. Burlington Industries, Inc., ___ U.S. ___, 106 S. Ct. 3267, 91 L. Ed. 2d 558 (1986); Scott v. Gulf Oil Corp., 754 F.2d 1499, 1502-03[4] (9th Cir. 1985); Holland v. Burlington Industries, Inc., 772 F.2d 1140, 1144-46[1-3] (4th Cir. 1985), aff'd sub nom Brooks v. Burlington Industries, Inc., ___ U.S. ___, 106 S. Ct. 3267, 91 L. Ed. 2d 559 (1986).
Although Hagler argues that the agreement he alleges was not a "plan" because it was never committed to writing, the fact that a plan is articulated orally rather than in writing does not remove it from the scope of ERISA. Scott, 754 F.2d at 1503[5].
Since the type of benefit alleged by Hagler is covered under ERISA, Hagler's common law cause of action for breach of a contract to confer such a benefit is preempted by ERISA. State ex rel. Montgomery Ward v. Peters, 636 S.W.2d 99, 101-02[1,2] (Mo.App.1982). Therefore, the trial court lacked subject matter jurisdiction over Hagler's common law contract claim.
For the first time Hagler now contends that he proved facts sufficient to constitute an ERISA cause of action for benefits under a plan maintained by Jelenko, see 29 U.S.C. § 1132(a)(1)(B), and that under 29 U.S.C. § 1132(e)(1) the state courts have concurrent jurisdiction with the federal courts over an action for benefits. At trial, Hagler pursued a cause of action for common law breach of contract, as shown above. He may not now adopt a new theory after he tried and submitted the case as a contract action. Folk v. Countryside Casualty Co., 686 S.W.2d 882, 884[3] (Mo.App.1985).
Because preemption by ERISA mandates dismissal of Hagler's contract claim, there is no need to consider Jelenko's argument that Hagler failed to prove a submissible contract case.
The judgment is reversed.
All concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2409755/ | 719 S.W.2d 320 (1986)
David Leon SCHUESSLER, Appellant,
v.
The STATE of Texas, Appellee.
No. 289-83.
Court of Criminal Appeals of Texas, En Banc.
October 15, 1986.
*321 Charles Michael Mallin (on appeal only), El Paso, Mark L. Bennett, Jr., Topeka, Kan., for appellant.
Steve W. Simmons, Dist. Atty., and John P. Calhoun, Asst. Dist. Atty., El Paso, Robert Huttash, State's Atty., and Alfred Walker, First Asst. State's Atty., Austin, for the State.
Before the court en banc.
OPINION ON STATE'S MOTION FOR REHEARING
CAMPBELL, Judge.
Appellant was convicted by a jury of the offense of murder. Punishment was assessed at 30 years confinement in the Texas Department of Corrections. The Eighth Court of Appeals reversed the conviction, holding that appellant, contrary to the jury's verdict, had established his affirmative defense of insanity by a preponderance of the evidence.[1]Schuessler v. State, 647 S.W.2d 742 (Tex.App.El Paso 1983).
We granted the State's petition for discretionary review to determine the correctness of that holding.[2] On original submission, we affirmed the judgment of the Court of Appeals. We have since granted the State's motion for rehearing and will now withdraw our original opinion and reverse the judgment of the Court of Appeals.
I. Facts
A detailed examination of the facts in this case is necessary for this Court to review the Court of Appeals' decision on the insanity issue. In particular, we must focus upon all facts that might be relevant to the defense of insanity. We begin by outlining those facts established by lay witness *322 testimony. We then outline those facts established by expert witness testimony.
A. Lay Witnesses
On January 16, 1980, appellant, his wife and their four year old daughter, upon appellant's sudden urging,[3] left their home in Phoenix, Arizona, and drove to San Carlos, Arizona, to visit relatives. At a family party both appellant and his wife consumed beer. Appellant's wife acknowledge that some persons may have smoked marijuana at the party. Appellant's wife fought with her brother and became increasingly intoxicated. She eventually left without her husband and daughter and returned to Phoenix. Appellant, accompanied by his daughter, left Phoenix the next day in his car.
On January 19, 1980, appellant was seen driving his car alone at high speeds, with a flat tire, while chasing another driver in Scurry County, Texas. After several miles, the female driver of the car being chased stopped at her father's service station and asked her father for help. Appellant exited his car and unsuccessfully attempted to give the woman two stuffed toy animals.
The local sheriff's office received a call for assistance. Appellant was subsequently arrested for driving on a public road with an expired driver's license and taken to the county jail in Snyder, Texas. The arresting officer recovered from appellant the two stuffed animals and two articles of clothinga blouse and a pair of lady's pants. The officer was told that appellant believed that the stuffed animals were hexed and that the license plate of the car he had been chasing "was a message from the devil that he was supposed to give those hexed dolls to her." (R. II-356).
At the county jail, appellant called his brother Don Schuessler in Barnes, Kansas. The arresting officer spoke with the brother and informed him that appellant had been arrested and "that he was upset, emotionally upset, mentally upset possibly, and needed some assistance...." (R. II-217). Later that evening, appellant told the arresting officer and another officer that he had killed his daughter.[4] Appellant also stated that his wife had been killed by her brother; however, the officer later established that appellant's wife was alive.[5]
In describing the death of his daughter, appellant "went into a story telling [the officers] of a Black Horse religion or Black Horse voodoo. He said that the devil was going to take his daughter's soul." (R. II-224). He also said "that he had seen her head getting bigger and bigger and her arms and legs were getting smaller and he had to strangle her to keep the devil from taking her over." (R. II-358). Appellant stated that his daughter was crying and he slapped her and then choked her to death. While choking her, appellant's daughter kicked him in the shins. Appellant stated that "he had to kill her real quick to keep the devil from getting her soul." (R. II-224).
Appellant then "indicated that he traveled for a long ways and felt of her and made sure she was deceased and he stopped and put her out beside the road. He didn't know here he was at, but along side the road somewhere.... He said he didn't have time to bury the body. He was in a hurry." (R. II-225).
That night, appellant refused to eat and slept on the floor of his cell under his bunk with a blanket hung across the front of the *323 bunk. The next day, his brother Don and another brother, John Schuessler, arrived at the county jail. Appellant gave no outward sign of recognizing his brothers. After speaking with appellant and observing his confused mental state, the brothers further questioned appellant concerning the death of his daughter. However, after several unsuccessful attempts to obtain information about the daughter and her possible location, appellant was released to his brothers' care, and they returned with appellant to Kansas.[6]
During the drive to Kansas, appellant refused to eat food and claimed that he had no need to eat to live. However, he ate several cigarette butts and blistered his lips with burning cigarettes. He occasionally rubbed himself with and smelled a bar of soap he had retained from the jail. Appellant also emptied his brothers' suitcases and "seemed to be looking in and around and under and everything...." (R. II-368). In various conversations with appellant about his early childhood and grade school, the brothers found that appellant "seemed to remember most of the stuff real clear." (R. II-368).
After passing through Dallas, appellant "made what appeared to be a little man or doll of (sic) whatever out of a match box and cigarettes" and became alternately agitated and calm over the direction of travel. (R. II-369-70). The three brothers arrived at Don Schuessler's home in Barnes, Kansas, at four or five o'clock in the morning, and then went to the family's house nearby in Hanover, Kansas.
While playing with Don Schuessler's one year old son, the child "let out a kind of a holler" and appellant "ran out of that room and ran into the other room, ... and he sat in the corner and he was crying" and shaking. (R. II-374). Earlier, John Schuessler observed appellant stare at a crack in the wall. Later, John Schuessler discovered that appellant had rearranged an upstairs bedroom, in which he had slept as a youth, to create a nest-like bed on the floor. Upon realizing that appellant was missing, John Schuessler discovered appellant "a block and a half away huddled in a chicken coop with a big fuzzy blanket around him and when we got back in the house and confronted him with it he said he was lost." (R. II-395). John Schuessler then noticed that appellant had earlier defecated into a cardboard box in the kitchen, using a dish rag as toilet paper. When confronted, appellant did not appear to know it was wrong that he had defecated in the box.
That afternoon Don and John Schuessler observed appellant running barefoot and in light summer clothing across a field despite a freezing temperature. The brothers chased appellant and found him with wet legs and feet from falling into a frozen river. While being returned to his brother's house, appellant grabbed a light pole and refused to move further. Appellant stated, "Leave me alone, I don't know where I am at." (R. II-377). The brothers eventually returned appellant to the house, placing him in the shower, where he at first refused to undress and had difficulty turning the shower on.
On January 24, 1980, the dead body of appellant's daughter was discovered in Hudspeth County along Interstate 10 by a patrol agent for the United States Border Patrol. The body was left approximately one mile from a border checkpoint, over a fence and in the vicinity of a flashing sign that informed travelers of the upcoming checkpoint.
On January 25, 1980, appellant was arrested and placed in the Shawnee County jail in Topeka, Kansas. He was visited several times by his brother Don who stated that appellant "had gotten worse than when we had him, he looked like he was spooked or something." (R. II-382). In addition, Don Schuessler observed appellant clutching a pair of slippers and rubbing them against his face.
*324 At trial, appellant called various lay witnesses to establish that, although his father had died of lung cancer while appellant was a child, his childhood had been normal. Following high school, appellant entered the armed forces and served in Vietnam. After returning, appellant married and had one child. Appellant was described as a proud, attentive and loving father who had never been observed abusing his daughter.
The State called four lay witnesses in rebuttal. One of those witnesses, a Texas Ranger who observed appellant while in jail in Snyder, Texas, testified that he never saw appellant eating cigarettes while confined. Another witness, a jailer, observed appellant in March of 1980, while he was confined. He testified that appellant did not exhibit any strange behavior. A third witness, another jailer at the Hudspeth County Jail, also observed appellant while he was confined for several months. He testified that appellant did not engage in any abnormal or bizarre behavior.
B. Expert Witnesses
Appellant presented three expert witnesses: two psychiatrists and one psychologist. The State presented one expert witness: a psychiatrist.
1. Appellant's Expert Witnesses
Appellant's first expert witness was Dr. Herbert C. Modlin, a psychiatrist in Topeka, Kansas. Dr. Modlin visited appellant on February 14th and 15th of 1980 and interviewed appellant's wife and Don Schuessler. Finally, Dr. Modlin heard all of the testimony presented at trial.
Dr. Modlin diagnosed appellant as having had a paranoid psychosis.[7] He also testified that appellant's emotions indicated a diagnosis of schizophrenia psychosis in an atypical form.[8] When asked for his opinion on the state of appellant's sanity at the time of the killing, Dr. Modlin concluded that appellant had been seriously mentally ill to the extent that he had not known the legal difference between right and wrong when he killed his daughter.
In cross-examining Dr. Modlin, the State received several relevant responses. First, the State asked Dr. Modlin if he was "familiar with any studies that have indicated the agreement between diagnoses where two or more psychiatrists are involved is 60%?" Dr. Modlin responded, "Yes," and the State followed by asking if "[t]hat would lead to 40% disagreement?" Dr. Modlin responded: "In that particular research project. And as all things in psychiatry we get different results at different times to different people. That is part of human nature." (R. II-423).
Second, the State established that Dr. Modlin had relied upon a diagnostic manual called DSM-II to diagnose appellant.[9] Further, the State established that illnesses defined within DSM-III are occasionally removed or changed by the American Psychiatric Association. On re-direct, Dr. Modlin testified that paranoia and psychosis had been accepted as serious mental illnesses "for 200 years." (R. II-445).
Third, the State established that a study of eight people who entered various hospitals feigning mental illness had shown an error rate of 100% in diagnosing seven of *325 them as being schizophrenic in remission.[10] On re-direct, appellant established that Dr. Modlin believed that the study was intended to show how poorly State hospitals were staffed and financed.
Fourth, the State asked Dr. Modlin: "Isn't it possible for a person to be mentally ill and perhaps insane but yet not meet either of the tests set out in the Penal Code?" Dr. Modlin answered in the affirmative. (R. II-436). The State followed by asking: "So the scope of mental illness and insanity psychiatrically speaking is much broader than the rather narrow definition given in the Penal Code?" Again, Dr. Modlin replied in the affirmative. (R. II-436).
Finally, the State established that an act such as killing one's daughter could greatly enhance, to the point of degeneration, a process of mental illness that had begun prior to the killing. However, Dr. Modlin would not agree that such a circumstance occurred in the instant case.
Appellant's second expert witness was Dr. Luiz Natalicio, a psychologist in El Paso, Texas. Dr. Natalicio was appointed by the trial court to examine appellant and interviewed appellant on July 2 and August 15 of 1980. Dr. Natalicio testified that he had diagnosed appellant as having a schizophreniform disorder, as classified under the DSM-III. See Diagnostic and Statistical Manual, supra, at p. 199-200. In addition, he testified that at the time of the offense, appellant was suffering from acute psychosis.[11] Dr. Natalicio concluded that at the time of the commission of the instant crime, appellant had a mental illness that made him both unable to determine right from wrong and unable to control his behavior with respect to the requirements of the law.
Appellant's third expert witness was Dr. Ben Hill Passmore, Jr., a psychiatrist from El Paso, Texas. Dr. Passmore was appointed by the trial court to examine appellant and interviewed him on July 2, 18, 29 and August 11 of 1980. After reciting before the jury appellant's statements made to him during those interviews, Dr. Passmore made the following conclusion:
My opinion is he was suffering from a mental disease, specifically schizophreniform psychosis. It is hard to say whether he did not know his conduct was wrong or incapable of conforming. I think the incapable of conforming [standard] kind of encompasses the other if indeed as he told people earlier in the course he was trying to prevent his little girl from being taken over by the devil he would consider his conduct to be right. My opinion was he was insane on the basis of one or the other or both.
* * * * * *
If he knew it was wrong he probably couldn't have stopped it in this psychotic state.
(R. II-481).
On cross-examination, the State established that Dr. Passmore was professionally acquainted with a Dr. Butler, who also practiced psychiatry in El Paso. Dr. Passmore acknowledged that Dr. Butler was a qualified expert in the field of psychiatry.
The State also established that appellant had indicated to Dr. Passmore that he had been a heavy drinker immediately prior to the time of the killing of his daughter, and had tried LSD twice while in Vietnam. Dr. Passmore admitted the difficulty in distinguishing between a drug abuse psychosis and one arising from other problems.
Finally, Dr. Passmore was unable to determine whether appellant would have committed the instant crime if a uniformed *326 policeman had been riding in the car with him. Dr. Passmore testified that such a question "introduces another variable." However, when asked how he could determine that appellant was insane at any given moment, Dr. Passmore replied, "I think you have to make a decision as to whether at the time of the incident he was sane or insane." (R. II-493). Following another question, Dr. Passmore concluded, "He [appellant] had the potential to be insane at any point in time along this period." (R. II-493).
On redirect, Dr. Passmore testified that, in his opinion, appellant's psychosis was not drug induced. However, on recross-examination, Dr. Passmore stated:
It is known, there is real good evidence now somebody basically schizophrenic should not smake (sic) marihuana, that will bring on an acute episode. Apparently a small amount of alcohol doesn't have that effect but large amounts of alcohol over long periods of time do.
(R. II-495). The State followed by asking whether "[t]he large amount of alcohol consumed by the defendant eventually could have been the spark that hit the fuse?" (R. II-495). Dr. Passmore responded, "In the sense the alcohol was reducing his ego and ability to stay off it." (R. II-496).
2. State's Expert Witnesses
The State called one expert witness, Dr. Jack Butler, a psychiatrist in El Paso, Texas. Dr. Butler interviewed appellant on May 14, 1980 and heard the testimony of witnesses throughout the instant trial. In addition, Dr. Butler listened to an interview by the State of appellant, tape recorded on March 31, 1980.
Dr. Butler agreed that appellant was recovering from "a psychotic process." (R. II-520). However, in discussing the relevance of that process to the question of appellant's legal sanity, Dr. Butler responded to the following:
Q. [by the State] Now doctor is it the same thing to say that the defendant during this period of time was going through a psychotic episode as it is to say at the time of the conduct charged because of some mental disease or defect, which apparently he has, but as a result of that mental disorder or defect he did not know his conduct was wrong and was incapable of conforming his conduct?
A. [by Dr. Butler] No it is not the same. That has been pointed out previously today. [P]sychosis is a medical term, psychosis in North American means in law (sic) means terms that you have gone crazy, it means little more, they put it into fancy words. One of the previous medical experts testified it means it came all over the world and that is not (sic) true stability of the term, psychosis has remained true centuries, and was implied by one of the witnesses, that is not true. The term psychosis does not necessarily mean you are crazy, it means there has been a sudden change in your personality, perhaps in the direction of being crazy, but I would not say crazy because he had a psychosis. But for common usage in our society psychosis means a complete breakdown of our own dimensions, a breakdown in our thought processes, no longer reasonable and rational. It means a breakdown in feeling such as has been described about the defendant by previous medical witnesses, that his mood it not appropriate to his thought content.
* * * * * *
The remainder of your question, what is the difference between psychosis and legally insane, you quoted the law, but it is a defense to the prosecution if at the time of the conduct the actor as a result of mental disease or defect did not know the conduct was wrong or was incapable of conforming his conduct to the requirements of the law. That is a legal definition. It is not a medical one. I wanted to stress the two things are different. Psychosis is a medical term, legal insanity is another.
Q. So the two don't mean the same thing?
*327 A. No, although you do need to be psychotic to be legally insane, you do not have to be legally insane to be psychotic.
(R. II-520-523).
The State then asked Dr. Butler to assume that on January 16, 1980, appellant had consumed an unknown amount of alcohol. In addition, Dr. Butler was to assume that appellant was seen leaving the next day in a car with his daughter and later admitted strangling his daughter and throwing the body beside the road, over a fence and within view of a sign informing travelers of an upcoming border checkpoint. Finally, the State asked:
Q. Doctor the hypothesis I have given you, can you explain whether or not it is relevant in your opinion you have whether or not at the time of the conduct charged the defendant either knew his conduct was wrong or was able to conform his conduct to the requirements of the law?
A. Yes. This has some relevance for me.
Q. Would you explain for the jury?
A. Very well. I will refer to previous testimony, all of the previous medical witnesses with the exception of Dr. Passmore last night said that the defendant was legally insane throughout the period in December. How they know that and I do not I cannot answer for them. I do not believe that. I can sit her and swear that somebody was legally competent or incompetent when I saw him, but an inference from other information provided to us and what other information have we got, this bothers me a great deal.
Q. In what sense?
A. All right, here is a man who has been described by medical witnesses as so psychotic as to be legally insane because he either didn't know what he was doing was wrong or if he knew it was wrong he couldn't (sic) conduct himself in a manner that would be in keeping with what the law is. Instead of that we have here someone coming along this road, arriving at that point, and there is an inspection station one mile ahead. As far as I could see the first chance after this incompetent individual stops his car at the side of the road, carries a body from his car, dumps it over a fence into a field, gets back into his car, drives through the checkpoint. Now if he is so incompetent, so crazy, how does he know enough to do that. That bothers me. I am not saying it makes him legally sane. I don't know but neither does anybody else.
* * * * * *
Q. ___ in your opinion this behavior in response to this stimuli is that behavior consistent with an individual who assertedly a) does not know the difference between right and wrong?
A. Well no it is not consistent with that.
Q. Referring to the last portion of Dr. Modlin's report, is that behavior consistent with what Dr. Modlin stated his opinion as being that the defendant was unable to distinguish social moral right from wrong at the time?
A. I am only answering that if it is in fact true that he did this that we have gone through, why would he do that unless he knew it was wrong to go driving along I-10 with a dead body in the car. There is no other answer possible.
Q. Doctor let me ask you whether or not this conduct is consistent with an individual who is incapable of conforming his conduct to the requirements of the law?
A. It doesn't seem to me that doing this, if this individual did it, entirely answers that question. It is necessary to assume that he knew what the law was, there was something illegal about driving around with a dead body in your car, and you don't want to be caught with one. To answer your question it is not consistent with that definition, that portion of the definition of insanity.
Q. You heard Dr. Passmore yesterday testify in effect these two tests are inter-related?
A. Yes sir I heard all of that.
Q. Doctor is it true the person who was incapable of conforming his conduct to *328 the requirements of the law would behave in a manner similar to what I have described, in your opinion?
A. Well now incapable of conforming you conduct to the requirements of the law would mean something to an individual in the sense if he knows that he is doing something unlawful, and the only defense against prosecution is on the grounds of insanity, conforming may tie to the requirements of the law to dispose of evidence like a dead body. So I don't think the question is exactly capable of being answered.
Q. Uh huh. Doctor, in your professional judgment is it possible for anybody based on the information that you have to state the defendant for several days in January or for the whole month of January or on and off during January was insane at any given moment under the legal definition?
[A.] I believe in the judgment of some of the people who have testified here without question. I think they are giving an honest opinion and it is their opinion he was legally insane. I can't do that. I can't say he was or was not.
Q. Can you agree with their opinions in this case?
A. No.
(R. II-524-527).
II. Sufficiency
The Court of Appeals reviewed the evidence and found that the record contained an "overwhelming evidentiary disparity." Schuessler, supra, at 749. In particular, the Court of Appeals noted that appellant presented sufficient evidence to establish his affirmative defense of insanity and that the State presented "no evidence of sanity." Id. Therefore, the Court of Appeals held that the jury's implicit rejection of appellant's affirmative defense of insanity "was contrary to the great weight and preponderance of the evidence." Id.
The State argues that the Court of Appeals applied the wrong standard in reviewing appellant's sufficiency claim. In addition, the State argues that sufficient evidence exists in the record to support the jury's verdict. We agree with both points.
This Court recently established the following appellate standard for determining whether there is sufficient evidence to support a jury's implicit rejection of an affirmative defense:
[An appellate court] must review the evidence of the affirmative defense by looking at the evidence in the light most favorable to the implicit finding of the jury with respect to such affirmative defense and then determine, by examining all the evidence concerning the affirmative defense, if any rational trier of fact could have found that the defendant failed to prove his defense by a preponderance of the evidence.... It is important to note that this analysis does not involve the appellate court in any fact finding function. The test evaluates the legal sufficiency of the evidence using a legal standard. There must be no reweighing or reclassifying of the evidence by the appellate court.
Van Guilder v. State, 709 S.W.2d 178, 181 (Tex.Cr.App.1985), cert. denied ___ U.S. ___, 106 S. Ct. 2891, 90 L. Ed. 2d 978 (1986).
In the instant case, appellant raised the affirmative defense of insanity, see § 8.01, supra, and had the burden of proving the defense by a preponderance of the evidence, see § 2.04(d), supra. The implicit finding of the jury was that appellant was not legally insane at the time he committed the offense of murder. Therefore, we must determine whether the evidence, when viewed most favorably to the jury's verdict, is sufficient to support the jury's implicit rejection of appellant's affirmative defense of insanity.[12]
Several general principles regarding appellate evaluation of a jury's implicit verdict involving a defendant's insanity have *329 been established. These principles recognize the complexity of evidence on insanity and defer to the jury's resolution of that issue when conflicting evidence appears in the record. See Graham v. State, 566 S.W.2d 941 (Tex.Cr.App.1978).
The issue of insanity "is not strictly medical, and expert witnesses, although capable of giving testimony that may aid the jury in its determination of the ultimate issue, are not capable of dictating determination of that issue." Graham, supra, at 949. The circumstances of the offense and the life experiences of the defendant may also aid the jury in considering whether a defendant was insane at the time he committed an offense. Id., quoting Ross v. State, 153 Tex. Crim. 312, 316, 220 S.W.2d 137, 139 (Tex.Cr.App.1949). For example, "[a]ttempts to conceal incriminating evidence and to elude officers can indicate knowledge of wrongful conduct." Graham, supra, at 951. Under some limited circumstances, it may not even be necessary for the State to present medical testimony that a defendant is sane in order to counter testimony by defense experts. Id., at 950.
Furthermore, when testimony conflicts on the issue of insanity, the trier of fact is the sole judge of the weight and credibility to be given to the evidence. Articles 36.13 & 38.04, V.A.C.C.P.; Madrid v. State, 595 S.W.2d 106 (Tex.Cr.App.1979) (opinion on rehearing). See also Van Guilder, supra; Jones v. State, 699 S.W.2d 580, 582 (Tex.App.Texarkana 1985, no pet.) (jury resolves conflict as finder of fact). For example, the jury may resolve a conflict when the testimony of one witness, whether expert or lay, directly contradicts another witness' opinion. Concomitantly, the jury may resolve a conflict when a witness challenges the reliability of another witness' opinion on insanity. See, e.g., Van Guilder, supra, at 182 (explaining Madrid, supra). Cf. Barefoot v. Estelle, 463 U.S. 880, 900-903 & n. 7, 103 S. Ct. 3383, 3398-99 & n. 7, 77 L. Ed. 2d 1090, 1109-11 & n. 7 (1983) (jury capable of resolving evidence challenging reliability of psychiatric predictions of dangerousness).
In addition, proof of a mental disease or defect alone is not sufficient to establish an affirmative defense of insanity. Graham, supra at 943. The insanity defense, at the time of appellant's trial, required:
(1) At the time of the conduct charged,
(2) as a result of mental disease or defect,
(3) the defendant either
(a) did not know that his conduct was wrong, or
(b) was incapable of conforming his conduct to the requirements of the law he allegedly violated.
See § 8.01, supra. Therefore, if a defendant's evidence is undisputed as to the presence of a mental disease or defect, even if it established medical insanity, it would not necessarily establish legal insanity. Graham, supra, quoting McGee v. State, 155 Tex. Crim. 639, 238 S.W.2d 707 (Tex.Cr. App.1951).
A defendant must also establish the causal connection between the mental disease or defect and at least one of the two prongs of the test for legal insanity. See (a) and (b) above. In deciding whether the evidence supports such a connection, "the jury is not restricted to medical science theories of causation." Graham, supra, at 953. "If the opinions of the experts as given in the evidence do not comport with the jurors' idea of sound logic, the jurors have a right to say so." Maryland Casualty Co. v. Hearks, 144 Tex. 317, 321, 190 S.W.2d 62, 64 (Tex.1945). See Graham, supra, at 951 (quoting Hearks, supra, with approval).
In the instant case, appellant presented uncontradicted evidence that he had a mental illness. The State, in questioning its own expert witness, conceded that appellant "apparently" had some "mental disease or defect." (R. II-520). However, the critical issue was whether, as a result of this mental disease or defect, appellant did not know that his conduct at the time *330 was wrong or could not conform his conduct to the requirements of the law.
Appellant's three expert witnesses concluded that appellant was legally insane. The State's expert witness, Dr. Butler, concluded that an opinion could not reliably be given on that issue. Through cross-examination of appellant's expert witnesses, the State also challenged the reliability of their opinions. In addition, Dr. Butler indicated a strong logical basis for concluding that appellant was not legally insane. Specifically, Dr. Butler noted that appellant's disposal of his daughter's body near the border checkpoint was not consistent with the standard for legal insanity.
In addition, the State presented testimony from various lay witnesses who had observed appellant's conduct while in jail. While some of those observations were made several months after appellant committed the instant offense, the jury was entitled to give that evidence some probative value.[13] There was also some evidence that appellant's conduct may have been the result of excessive drinking.
Given Dr. Butler's testimony challenging the reliability of retroactive diagnosis and the particular facts surrounding the death of appellant's daughter, we find that a rational trier of fact could have resolved the conflicting testimony on legal insanity against appellant. While we certainly understand the Court of Appeals might have disagreed with the jury's resolution of the conflicts in the evidence, it could not interfere with the verdict unless the jury's decision was irrational, i.e. lacking in sufficient logical support in the evidence. Otherwise, an appellate court would serve as a "thirteenth juror with veto power." Van Guilder, supra, at 180. We hold that there is sufficient evidence to support the jury's rejection of appellant's affirmative defense of insanity.
The judgment of the Court of Appeals is reversed. The judgment of the trial court is affirmed.
TEAGUE, J., dissents.
CLINTON, Judge, dissenting.
Without unanimity the Court plowed new ground in Van Guilder v. State, 709 S.W.2d 178 (Tex.Cr.App.1985), and went back over it in Baker v. State, 707 S.W.2d 893 (Tex.Cr.App.1986). Within a week after motion for rehearing was denied in Van Guilder, this cause was decided by less than a plurality on original submission. Later I joined the opinion of Presiding Judge Onion dissenting to denying State's motion for rehearing in Baker, primarily because he urged the Court to reconsider Van Guilder. Now, having analyzed Van Guilder from another perspective, I write to suggest that its formulation is based on an faulty premise and is, therefore, erroneous.
Derived from Jackson v. Virginia, 443 U.S. 307, 99 S. Ct. 2781, 61 L. Ed. 2d 560 (1979), which in turn built on In re Winship, 397 U.S. 358, 90 S. Ct. 1068, 25 L. Ed. 2d 368 (1970), the notion guiding Van Guilder is expressed in the following passage:
"Because some review of the affirmative defense is necessary in such cases in order to afford an appellant due process under Jackson, supra, this Court, in keeping with the principles of Jackson, supra, must provide a standard of review consistent with constitutional law in this area and the inviolability of the jury as fact finders in Texas criminal law."
Van Guilder, supra, at 181. Therein lies the faulty premise.
While "some review" of evidentiary sufficiency going to an affirmative defense is surely appropriate, appellate review cannot be "to afford an appellant due process under Jackson," nor done "in keeping with [its] principles." Both Jackson and Winship *331 lay down a constitutional imperative that the State must prove and the trier of fact must find "the essential elements of the crime beyond a reasonable doubt." Jackson, supra, 443 U.S. at 318-319, 99 S.Ct. at 2788-2789).[1] Every "principle" followed or found in Jackson has to do with due process protection against being convicted of crime on insufficient evidence to prove guilt. Accordingly, the relevant question on review of all record evidence is whether any rational trier of fact could have thus found those elements of the offense charged. Ibid.
By definition, however, an affirmative defense is not an element of an offense. See V.T.C.A. Penal Code, § 1.07(a)(13), § 2.04 and, e.g., § 8.01. Neither Jackson nor Winship deals with due process requirements of sufficient proof or appellate review vis a vis an affirmative defense, and the Supreme Court "[will] not lightly construe the Constitution so as to intrude upon the administration of justice [in that respect] by the individual States," because:
"[I]t is normally `within the power of the State to regulate procedures under which its laws are carried out, including the burden of producing evidence and the burden of persuasion,' and its decision in this regard is not subject to proscription under the Due Process Clause unless `it offends some principle of justice so rooted in the traditions and conscience of our people as to be ranked as fundamental. [citations omitted]."
Patterson v. New York, 432 U.S. 197, 201-202, 97 S. Ct. 2319, 2322, 53 L. Ed. 2d 281 (1977).
Charged with murder and permitted by New York law to do so as a factor mitigating degree of criminality or punishment, Patterson raised the affirmative defense of "extreme emotional disturbance." A properly instructed jury found "the essential elements of the charge [of murder] beyond a reasonable doubt," implicitly rejecting his defense in mitigation. Before the Supreme Court the constitutional issue was:
"The question here is the constitutionality under the Fourteenth Amendment's Due Process Clause of burdening the defendant in a New York murder trial with proving the affirmative defense of extreme emotional disturbance as defined by New York law."
Id., 432 U.S. at 198, 97 S. Ct. at 2320.
After reciting the facts of the matter, reviewing parallel developments regarding the defense of insanity from the common law through its own prior decisions and examining in light of Winship and related authorities the claim that his conviction for murder deprived Patterson of due process, the Supreme Court pointed out:
"In convicting Patterson under its murder statute, New York did no more than Leland and Rivera permitted it to do without violating the Due Process Clause. Under those cases, once the facts constituting a crime are established beyond a reasonable doubt, based on all the evidence including the evidence of the defendant's mental state, the State may refuse to sustain the affirmative defense of insanity unless demonstrated by a preponderance of the evidence.
The New York law on extreme emotional disturbance follows this pattern. This affirmative defense ... does not serve to negative any facts of the crime which the State is to prove in order to convict of murder. It constitutes a separate issue on which the defendant is required to carry the burden of persuasion; and unless we are to overturn Leland and Rivera, New York has not violated the Due Process Clause, and Patterson's conviction must be sustained."
Id., at 206-207, 97 S. Ct. at 2325.
Refusing to reconsider Leland and Rivera, the Supreme Court then noticed current trends among the States in tailoring affirmative defenses as they fashioned new penal codes from model penal codes. While it is certainly true that in Patterson the Supreme Court was not formulating standards of appellate review for sufficiency of evidence supporting an affirmative defense, the point it clearly makes is that *332 the Due Process Clause is not a restriction on when and how a State "chooses to recognize a factor that mitigates the degree of criminality or punishment [and] assure[s] itself that the fact has been established with reasonable certainty." Id., 432 U.S. at 209, 97 S. Ct. at 2326. Believing such matters are better reposed in the States, the Supreme Court "thus decline[d] to adopt as a constitutional imperative, operative countrywide, that a State must disprove beyond a reasonable doubt every fact constituting any and all affirmative defenses related to the culpability of an accused." Id., at 210, 97 S. Ct. at 2327.[2]
Finally, the Supreme Court emphasized that holding the Due Process Clause is not violated by statutory treatment of true affirmative defenses does not offend principles of Winship, viz:
"Long before Winship, the universal rule in this country was that the prosecution must prove guilt beyond reasonable doubt. At the same time, the long-accepted rule was that it was constitutionally permissible to provide that various affirmative defenses were to be proved by the defendant. This did not lead to such abuses or to such widespread redefinition of crime and reduction of the prosecution's burden that a new constitutional rule was required. This was not the problem to which Winship was addressed. Nor does the fact that a majority of the States have now assumed the burden of disproving affirmative defensesfor whatever reasonsmean that those States that strike a different balance are in violation of the Constitution."
Id., at 211, 97 S. Ct. at 2327.[3]
When an affirmative defense is not an element of an offense charged and Winship is not implicated by allocation of burden of proving an affirmative defense, it follows that "the critical inquiry on review of the sufficiency of the evidence to support a criminal conviction" prescribed by Jackson v. Virginia is irrelevant to a review of sufficiency of evidence relating to an affirmative defense. The trier of fact was not called on to view the evidence in the light most favorable to the prosecution in order to find "the essential elements of the crime beyond a reasonable doubt." Rather, its function was to determine whether an accused has proved an affirmative defense "by a preponderance of the evidence." Whatever standard governs appellate review of that determination is not controlled by the Due Process Clause nor required by Jackson.
Just as a State is relatively free to provide for affirmative defenses, so also it may test sufficiency of evidence to support them by any reasonable standard of review. Presently Van Guilder precludes consideration of any other standard. Once the underpinnings of Van Guilder are removed, we may formulate a proper test. Given the increasing number of its followers we should act now.
Because the majority will not reexamine Van Guilder, I respectfully dissent.
ONION, P.J., and McCORMICK, J., join.
NOTES
[1] It is an affirmative defense to prosecution that, at the time of the conduct charged, the actor, as a result of mental disease or defect, either did not know that his conduct was wrong or was incapable of conforming his conduct to the requirements of the law he allegedly violated.
V.T.C.A. Penal Code, § 8.01(a) (1974). Amended by Acts 1983, 68th Leg., p. 2640, ch. 454, § 1, eff. Aug. 29, 1983. See V.T.C.A. Penal Code, § 8.01(a) (Supp.1986).
If the issue of the existence of an affirmative defense is submitted to the jury, the court shall charge that the defendant must prove the affirmative defense by a preponderance of evidence.
V.T.C.A. Penal Code, § 2.04(d) (1974).
[2] We also granted appellant's petition for discretionary review to determine whether appellant could be retried if there was insufficient evidence to support the jury's verdict. However, we need not address that ground because we will find the evidence sufficient.
[3] Appellant's wife testified that appellant approached her in a laundromat as she was doing laundry and demanded that they immediately leave the city. She also stated that, over the last month, appellant had become increasingly concerned about his job, even asserting that his boss was "trying to put a hex on him." (R. II-310).
[4] Appellant raised four grounds of error before the Court of Appeals challenging the admissibility of this oral confession. The Court of Appeals rejected all four grounds. Schuessler, supra, at 746-47. We refused appellant's grounds of review challenging that holding.
[5] Appellant's wife called him while he was in jail in Snyder. Appellant told her that he had left their daughter in "a small town in Texas." (R. II-332) He also told her that he thought that she (the wife) had their daughter.
[6] Appellant at first indicated that he wanted to return to Phoenix, Arizona, "and get this whole mess straightened out." (R. II-367). However, his brothers decided to return to their home in Kansas.
[7] Dr. Modlin testified that paranoid thinking refers to an "individual who has paranoid ideas [and] assumes that the environment is attacking him, out to get him[.] [H]e is suspicious." (R. II-413). He testified that "[p]sychosis is our most serious mental illness and it usually involves thinking behavior, thinking becomes disturbed, primarily by the development of delusions, a false fixed idea which the individual cannot be argued out of (sic) which is not amenable to persuasion, reasoning, or anything else." (R. II-413) (emphasis added).
[8] Dr. Modlin testified that "[s]chizophrenia is a type of mental [illness], we have manic depressive, psychosis, organic psychosis, it is our most serious mental illness, the one involving a real disruption of personality." (R. II-415) (emphasis added).
[9] The diagnostic manual referred to by Dr. Modlin, DSM-II, was updated after his use of it to diagnose appellant. That new manual, DSM-III, is officially known as Diagnostic and Statistical Manual of Mental Disorders (Third Edition), (Washington, D.C.: APA, 1980). For a history of the manual's development by the American Psychiatric Association, see pp. 1-2 of that manual.
[10] See generally Rosenthal, D. & Kety, S.S. The Transmission of Schizophrenia. (Pergamon Press, London, 1968).
[11] In explaining this diagnosis, Dr. Natalicio stated that an acute mental illness involves "a very severe expression of that particular illness which may not last for more than a period of a few weeks, a few months, and subside via treatment or spontaneously. In the case of an acute psychotic process we are talking of a mental illness that would definitely impair our ability to determine reality from fantasy, good from bad, right from wrong." (R. II-456).
[12] The Court of Appeals, by applying the "against the great weight and preponderance of the evidence" standard, improperly evaluated the weight and credibility of the evidence presented on the issue of appellant's insanity. See Schuessler, supra, at 749.
[13] We need not decide whether the testimony of these witnesses, if considered alone, would have been sufficient to support the jury's implicit rejection of appellant's affirmative defense of insanity.
[1] All emphasis is mine throughout unless otherwise indicated.
[2] "Traditionally due process has required that only the most basic safeguards be observed; more subtle balancing of society's interests against those of the accused has been left to the legislative branch. We will therefore not disturb the balance struck in previous cases holding that the Due Process Clause requires the prosecution to prove beyond a reasonable doubt all elements included in the definition of the offense of which the defendant is charged. Proof of the nonexistence of all affirmative defenses has never been constitutionally required; and we perceive no reason to fashion such a rule in this case and apply it to the statutory defense at issue here." Ibid.
[3] There are, of course, constitutional constraints on how far a State may go in reallocating burden of proof by calling an element of an offense an affirmative defense. Ibid. Compare Mullaney v. Wilbur, 421 U.S. 684, 95 S. Ct. 1881, 44 L. Ed. 2d 508 (1975). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2409761/ | 329 F. Supp. 2d 574 (2004)
SENSORMATIC SECURITY CORP.
v.
SENSORMATIC ELECTRONICS CORP. and ADT Security Services, Inc.
No. CIV.A. DKC2004-0174.
United States District Court, D. Maryland.
August 10, 2004.
*575 *576 David J. Butler, Martin Louis Zerwitz, Tacie Hashida Yoon, Swidler, Berlin, Shereff, Friedman, LLP, Washington, DC, for Plaintiff.
Beth A. Levene, Bruce Roger Genderson, Williams and Connolly LLP, Terence J. Lynam, Michael Lee Converse, Tobias Eli Zimmerman, Akin, Gump, Strauss, Hauer and Feld, LLP, Washington, DC, for Defendants.
MEMORANDUM OPINION
CHASANOW, District Judge.
Presently pending and ready for resolution is the motion of Defendants Sensormatic Electronics Corporation (Sensormatic) and ADT Security Services, Inc. (ADT) to dismiss the amended complaint of Sensormatic Security Corporation (SSC).[1] The issues have been fully briefed and no hearing is deemed necessary. Local Rule 105.6. For the following reasons, Defendants' motion will be denied in part and granted in part.
I. Introduction
This is the second breach of contract action Plaintiff has brought against the same defendants. The original action, hereinafter Sensormatic I, is still pending before this court. See Sensormatic Security Corp. v. Sensormatic Electronic Corp., DKC 02-cv-1565. In that action, SSC alleges, inter alia, that Sensormatic breached its Franchise Agreement with SSC, and that ADT tortiously interfered with that contract.[2] Also in that action, SSC moved for leave to file a third amended complaint to add an additional breach of contract claim against Sensormatic based upon an alleged breach of paragraph 21 of the Franchise Agreement between SSC and *577 Sensormatic. Paragraph 21 requires that, if Sensormatic enters into any contract with a similarly situated franchisee containing more favorable terms or conditions, the Franchise Agreement must be amended to include the more favorable terms. According to SSC, Sensormatic breached paragraph 21 by not notifying SSC of, or modifying SSC's agreement to include, the terms and conditions contained in an amendment to another franchise agreement entered into between Sensormatic and a former Sensormatic franchisee on or about November 30, 1978. SSC contends that the amendment, "the Winner Addendum," provides more favorable terms or conditions to the former franchisee by expanding the definition of the term "Detection Devices" in the SSC-Sensormatic Franchise Agreement to include a broader range of products, including access control products, which are not encompassed by the SSC-Sensormatic Franchise Agreement. See paper no. 25, at 3. Based on these allegedly more favorable terms, Sensormatic breached the Franchise Agreement when it failed to notify SSC of the addendum and refused to incorporate the more favorable terms into the SSC-Sensormatic Franchise Agreement.
Although SSC learned of the Winner Addendum on May 9, 2003, it did not seek leave to amend its complaint in Sensormatic I until August 28, 2003 nearly two and one half months after the June 3, 2003 deadline set forth in the scheduling order for amendments of the pleadings. On January 20, 2004, the court denied SSC's motion for leave to amend the complaint on the basis that SSC's lack of diligence in failing timely to amend its complaint was without good cause. The following day, SSC filed this separate action, hereinafter Sensormatic II, asserting, almost verbatim, the same claim that the court prohibited SSC from asserting, by amendment of its complaint, in Sensormatic I.
Thereafter, Sensormatic moved to dismiss the one-count complaint, arguing that SSC's claim was barred under the doctrine against claim splitting and was an improper attempt to circumvent the court's denial of its motion for leave to amend. Sensormatic also asserted that the one count complaint failed to state a claim upon which relief could be granted. SSC filed an opposition on March 22, 2004, to which SSC filed a reply. On May 10, 2004, while Sensormatic's motion to dismiss was pending, SSC filed an amended complaint, which asserts the same allegations concerning the Winner Addendum, but adds ADT as a party and three additional claims: count two alleges that Sensormatic committed an additional breach of the Franchise Agreement when it refused to allow SSC to sell Sensormatic's Radio Frequency Identification (RFID) products; count three alleges that SSC committed a breach of the contract and of good faith and fair dealing by authorizing ADT to sell and service Sensormatic access control and RFID products within SSC's exclusive franchise territory; and count four asserts a tortious interference claim against ADT directly for selling, and ordering SSC to refrain from selling, RFID products.
Defendants now move to dismiss SSC's amended complaint on the following grounds: (1) that the complaint constitutes impermissible claim-splitting; (2) SSC's breach of contract claim represents an improper attempt to evade the court's prior decision denying SSC the right to amend its claims in Sensormatic I; and (3) that, as asserted in its motion to dismiss the original complaint, count one of the complaint fails to state a claim for breach of contract under Fed.R.Civ.P. 12(b)(6). SSC responds by arguing that the claims asserted in the amended complaint rely on significantly different facts then the claims in Sensormatic I and, therefore, it is not *578 barred from bringing a separate suit against Sensormatic for breach of the same Franchise Agreement. Specifically, Plaintiff argues that the claims in Sensormatic II require new evidence regarding the execution and concealment of the Winner Addendum, Sensormatic's development and marketing of access control products, and the recent development and marketing (through ADT) of RFID products. See paper no. 25, at 8.
II. Standard of Review
A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) ought not be granted unless "it appears beyond doubt that the Plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957). All that the Federal Rules of Civil Procedure require of a complaint is that it contain "`a short and plain statement of the claim' that will give the Defendant fair notice of what the Plaintiff's claim is and the grounds upon which it rests." Id. at 47, 78 S. Ct. 99; Comet Enters. Ltd. v. Air-A-Plane Corp., 128 F.3d 855, 860 (4th Cir.1997). "Given the Federal Rules' simplified standard for pleading, `[a] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 122 S. Ct. 992, 998, 152 L. Ed. 2d 1 (2002), quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 81 L. Ed. 2d 59 (1984).
In reviewing the complaint, the court accepts all well-pled allegations of the complaint as true and construes the facts and reasonable inferences derived therefrom in the light most favorable to the Plaintiff. Ibarra v. United States, 120 F.3d 472, 473 (4th Cir.1997). The court must disregard the contrary allegations of the opposing party. A.S. Abell Co. v. Chell, 412 F.2d 712, 715 (4th Cir.1969). The court need not, however, accept unsupported legal conclusions, Revene v. Charles County Comm'rs, 882 F.2d 870, 873 (4th Cir.1989), legal conclusions couched as factual allegations, Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L. Ed. 2d 209 (1986), or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir.1979).
III. Analysis
A. Claims Concerning the Winner Addendum and Access Control Products
Two of the newly asserted claims in Sensormatic II involve products not previously at issue in Sensormatic I or encompassed by the terms of the Franchise Agreement. Count one alleges breach of contract based on the existence of the Winner Addendum and is the same claim that SSC was denied leave to amend in Sensormatic I. In count three, SSC alleges, in part, that Sensormatic breached the Franchise Agreement when it authorized ADT to sell access control products in SSC's exclusive territory.[3] Count one and this portion of count three arise as a result of the Winner Addendum, its expansion of Detection Devices to include access control products, and Sensormatic's refusal to notify SSC of the addendum and to incorporate access control products into the SSC-Sensormatic Franchise Agreement and definition of Detection Devices. Based on SSC's unsuccessful attempt to include the *579 Winner Addendum claims in Sensormatic I, Sensormatic now argues that these claims should be dismissed under the doctrine of claim splitting and because SSC knew of the alleged conduct but failed to amend the Sensormatic I complaint to incorporate these claims before the amendment deadline passed.
1. The Doctrine of Claim Splitting
It is undisputed that it is within a district court's power to stay or dismiss a suit that is duplicative of another federal court suit. See Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976) ("As between federal district courts, ... the general principle is to avoid duplicative litigation."). This rule against duplicative litigation, also referred to as "claim splitting," is the "`other action pending' facet of the res judicata doctrine.'" Davis v. Sun Oil Co., 148 F.3d 606, 613 (6th Cir.1998).[4] Like res judicata, claim splitting "prohibits a plaintiff from prosecuting its case piecemeal, and requires that all claims arising out of a single wrong be presented in one action." Myers v. Colgate-Palmolive Co., 102 F. Supp. 2d 1208, 1224 (D.Kan.2000) (internal citations omitted). Thus, when a suit is pending in federal court, a plaintiff has no right to assert another action "on the same subject in the same court, against the same defendant at the same time." Curtis v. Citibank, N.A., 226 F.3d 133, 138-39 (2d Cir.2000).
In a claim splitting case, as with the traditional res judicata analysis, the second suit will be barred if the claim involves the same parties or their privies and "arises out of the same transaction or series of transactions" as the first claim. See Trustmark Insur. Co. v. ESLU, Inc., 299 F.3d 1265, 1269-70 (11th Cir.2002). The court must "assess whether the second suit raises issues that should have been brought in the first." Curtis, 226 F.3d at 140.
Very often, the doctrine of claim splitting applies to bar a plaintiff from filing a new lawsuit after the court in an earlier action denied leave to amend the complaint to add those claims. See Northern Assurance Co. of Am. v. Square D. Co., 201 F.3d 84, 87-88 (2d Cir.2000) (citing string of cases dismissing claim in second suit that was duplicative of claim sought to be amended to first suit); In re Kevco, Inc., 309 B.R. 458, 465-66 (Bkrtcy.N.D.Tex.2004) (same). The preclusion of a claim not only prohibits a plaintiff from filing duplicative suits and from circumventing an earlier ruling of the court, it is in keeping with "the rule that a plaintiff must bring suit against the same defendant on all claims that relate to the same conduct, transaction or event at the same time." Curtis, 226 F.3d at 139.
2. Winner Addendum
The allegations and claims in count one concerning the Winner Addendum are the same allegations and claims that SSC was denied leave to amend in Sensormatic *580 I. As the court noted in that earlier case, the Winner Addendum claims could have been, and in fact were, raised in Sensormatic I. Although now arguing that the Winner Addendum arises out of different operative facts, in seeking the amendment, SCC conceded that policy objectives encourage the "resolution in one action of disputes between the same parties that arise out of the same transaction." See paper no. 21, ex. C., at 8 (citing Chen v. Mayflower Transit, Inc., 159 F. Supp. 2d 1103, 1107 (N.D.Ill.2001)). SSC further argued that amendment was permissible "because the new breach of contract claim is based upon the same Restated Franchise Agreement that is currently at issue." See id. at 2.
Regardless of the specific provision that SSC alleges was breached, the factual predicate of SSC's Winner Addendum breach claim, in both Sensormatic I and Sensormatic II, is the Franchise Agreement between Sensormatic and SSC. Both lawsuits involve breaches of the same contract, committed by the same party and question the extent of the parties' agreed upon obligations. The factual issues to be resolved in both actions are not concerning the validity or scope of the Winner Addendum, but Sensormatic's obligations to SSC under the Franchise Agreement. Thus, SSC's Winner Addendum claims arise out of the same transaction and operative facts underlying the claims in Sensormatic I and could have been heard by the court in the earlier case had the motion to amend been timely. See Trustmark, 299 F.3d at 1270 ("[W]here the second lawsuit alleges a breach of the same contract that was breached in the first, by the same party, in the same general manner those actions constitute the factual predicate, and any claims relating to that contract should be brought in the same lawsuit.").
That the court denied SSC's request, due to its dilatoriness and the harm that would result to Defendants, does not authorize SSC to pursue those denied claims by bringing a second action. See Sendi v. NCR Comten, Inc. 624 F. Supp. 1205, 1207 (E.D.Pa.1986) ("[T]he district count `must insure that the plaintiff does not use the incorrect procedure of filing duplicative complaints for the purpose of circumventing the rules pertaining to amendment of complaints.'") (quoting Walton v. Eaton Corp., 563 F.2d 66, 71 (3d Cir.1977)). Granting Plaintiff leave to pursue its "Winner Addendum" claims in the new action "would frustrate the policies underlying the res judicata doctrine, put the parties to the cost and vexation of multiple lawsuits, deplete judicial resources, foster inconsistent decision, and diminish reliance on judicial decisions." Myers, 102 F.Supp.2d at 1224. Accordingly, count one of SSC's second amended complaint is barred by the rule against claim splitting and, therefore, will be dismissed.
3. Authorization of ADT to Sell Access Control Products
As SSC concedes, the "Detection Devices" covered by the Franchise Agreement and at issue in the first action do not include access control products. See paper no. 25, at 3. In its untimely third amended complaint, it was through the Winner Addendum that SSC sought to expand the definition of products encompassed by the Franchise Agreement. In doing so, SSC alleged that Sensormatic was ordered by SSC to "cease authorizing any third parties to sell, lease, install, repair or maintain access control or access management products." See DKC 02-cv-1565, paper no. 107, ex. 3, ¶ 88 (Sensormatic I, third amended complaint). SSC also sought damages for "all sales of access control and access management products and all service revenue derived from the installation, *581 repair or maintenance of access control or access management products in SSC's exclusive franchise territory since November 30, 1978." See id. at 25 (prayer for relief, ¶ B). The same allegations and demand for relief are found in Sensormatic II. See paper no. 18, ¶¶ 55 & 56; id. at 20, ¶ A. Once again, SSC attempts to circumvent the rule of this court by re-asserting prior claims that could have been heard in Sensormatic I had SSC timely filed its motion to amend.
Access control products are not encompassed by the Franchise Agreement either originally or by virtue of the Winner Addendum. Rather, it is only through the Winner Addendum that SSC may claim any rights related to access control products. Because SSC is barred from asserting its Winner Addendum claims, there exists no basis for a breach of contract claim based on the authorization of ADT to sell access control products in SSC's exclusive territory. Furthermore, as SSC concedes, Sensormatic had authorized ADT, as a third party, to sell access control products as far back as 2001 well before SSC filed its original complaint on April 30, 2002. See paper no. 18, ¶ 52 (alleging, in relevant part, that "[s]ince at least November 2001, ADT has been authorized to sell and service, and has been selling and servicing, Sensormatic access control products and systems in SSC's exclusive franchise territory."). Therefore, based on all the reasons stated, SSC is now barred from asserting the Winner Addendum and access control claims in count I and III.
B. Claims Concerning Sensormatic RFID Products
In Sensormatic I, SSC's breach of contract claims arise out of Sensormatic's contractual obligations regarding specific "Detection Devices": Electronic Article Surveillance (EAS) labels and closed circuit television (CCTV) products. In Sensormatic II, SSC alleges that Sensormatic continued to breach the agreement's provisions regarding Detection Devices, but this time SSC focuses on Sensormatic's RFID products. In a portion of count three of the Sensormatic II amended complaint, SSC alleges breach of contract and the implied covenant of good faith and fair dealing based on Sensormatic's authorization of ADT to sell RFID products in SSC's exclusive franchise territory. Count two alleges a breach of contract and implied covenant of good faith and fair dealing based on Sensormatic's refusal to allow SSC to sell RFID Products in SSC's exclusive territory.
Both counts are based on the same Franchise Agreement and contractual obligations at issue in Sensormatic I and, if brought in a timely manner, arguably could have been heard in the earlier action as they arise out of the same transaction and operative facts. However, although the RFID claims allegedly fall within the definition of Detection Devices at issue in the earlier action, for practical reasons, the court must draw a line in time after which Plaintiff is permitted to assert later-occurring claims based on later-occurring breaches of the same contract.
While not decided in this circuit, other circuits have looked at the issue of claim splitting and timing of claims. In Curtis v. Citibank, N.A., 226 F.3d 133 (2d Cir.2000), the Second Circuit was confronted with a plaintiff who, like SSC, was denied by the district court leave to file a second amended complaint based on procedural grounds of untimeliness. Soon thereafter, the plaintiff tried to re-litigate the same claim, along with additional related claims, in a separate suit before the same court. The district court dismissed the second suit as duplicative and, on appeal, the Second Circuit affirmed in part and reversed in part. *582 The court held that the plaintiff was barred from relitigating in a subsequent suit all claims that could have been asserted in a previous, and still pending, suit. The "could have been asserted" claims were all claims that arose prior to the first amended complaint. See id. at 139. The plaintiff, however, was not under an obligation to bring any claims arising after the filing of the first amended complaint in the earlier action. See id. ("The plaintiff has no continuing obligation to file amendments to the complaint to stay abreast of subsequent events; plaintiff may simply bring a later suit on those later-arising claims.").
The court's holding is based on, and well supported by, the principles of res judicata: it protects parties from the concurrent litigation over the same subject matter and ensures that plaintiffs are barred from filing claims which were raised or could have been raised in an earlier proceeding. See Trustmark, 299 F.3d at 1271-72. Following this reasoning, the operative date in this case is the date the second amended complaint was filed in Sensormatic I: August 8, 2002. As even Sensormatic concedes, unlike the access control products, ADT's authorization to sell RFID products did not occur, and was not known of, until March, 2003, when ADT issued a press release announcing ADT as an authorized distributor of RFID products. See paper no. 18, ¶¶ 35, 39, 40. While this conduct supports the claim for another breach of the Franchise Agreement prohibitions regarding Detection Devices, it was a later-occurring breach that arose after the second amended complaint was filed in Sensormatic I.
The same is true of count two where SSC alleges breach based on Sensormatic's refusal to allow SSC to sell RFID products in its franchise territory. Sensormatic moves to dismiss, arguing that, because SSC knew or should have known in March, 2003 that ADT was an official distributor of RFID products, all RFID claims are restricted to the earlier action. This argument, however, overlooks the fact that Sensormatic's denial of SSC's right to sell RFID products did not occur until March, 2004. While claim splitting and the principles of res judicata prohibit a Plaintiff from prosecuting its case piecemeal, see Haytian Republic, 154 U.S. 118, 14 S. Ct. 992, 38 L. Ed. 930 (1894), a party is not barred from bringing in a subsequent action those claims that could not have been included in the original suit even if they are related, or arise out of, the previously filed claim. See Lawlor v. Nat'l Screen Service Corp., 349 U.S. 322, 75 S. Ct. 865, 99 L. Ed. 1122, (1955).
Although ADT was authorized as a distributer in 2003, it was not until a February 11, 2004 letter from ADT that SSC learned of Sensormatic's position that the Franchise Agreement did not include selling or marketing rights to RFID products. See paper no. 18, ¶ 44. It was also in this letter that SSC was instructed by ADT not to engage in any marketing of RFID products and to refer any sales leads or inquiries to ADT. See id. In response, on March 5, 2004, SSC wrote a letter to Sensormatic, protesting ADT's instructions and contesting Sensormatic's interpretation of the Franchise Agreement. Id. at ¶ 45. By letter dated March 25, 2004, Sensormatic affirmatively refused to acknowledge that SSC had any contractual rights regarding RFID products. Id. at ¶ 46. Thus, Sensormatic's refusal to permit SSC to sell RFID products occurred long after the filing of the second amended complaint in Sensormatic I on August 8, 2002. As stated, Plaintiff is not prohibited from asserting a subsequent suit for any breach that could not have been brought in an earlier action. See Meekins v. United *583 Transportation Union, 946 F.2d 1054, 1057 (4th Cir.1991). Accordingly, Sensormatic's motion to dismiss will be denied as to count two and the portion of count three related to the authorization of ADT to sell RFID products.
C. Tortious Interference Against ADT (count four)
In count four of the amended complaint, SSC asserts a claim of tortious interference against ADT for selling and servicing RFID products, systems and trademarks within SSC's territory. According to SSC, ADT interfered with the Franchise Agreement when it instructed SSC that SSC was prohibited from marketing RFID products and directed SSC to refer all sales leads for RFID products and systems to ADT.[5] As stated previously, this instruction was made by a letter dated February 11, 2004. See paper no. 18, ¶ 44. Because count four is based on ADT's demand that SSC refrain from selling, which did not occur until February, 2004, SSC was not required to bring this claim in Sensormatic I, nor could it have been asserted in that suit. Therefore, Sensormatic's motion to dismiss count four of SSC's amended complaint will be denied.
IV. Conclusion
Based on the foregoing reasoning, Defendants' motion to dismiss will be granted as to counts one and the portion of three dealing with access control devices, but denied as to counts two, four, and the remainder of count three dealing with RFID products. A separate order will follow.
ORDER
For the reasons stated in the foregoing Memorandum Opinion, IT IS this 10th day of August, 2004, by the United States District Court for the District of Maryland, ORDERED that:
1. The motion of Defendant Sensormatic Electronics Corp. to dismiss the original complaint (paper no. 15) BE, and the same hereby IS, DENIED as moot;
2. The motion of Defendants Sensormatic Electronics Corp. and ADT Security Services Inc. to dismiss Plaintiff's amended complaint (paper no. 21) BE, and the same hereby IS, GRANTED as to counts one and the portion of count three dealing with access control devices, and DENIED as to counts two, four, and the portion of count three dealing with RFID products; and
3. The clerk is directed to transmit copies of the Memorandum Opinion and this Order to counsel for the parties.
NOTES
[1] An earlier motion to dismiss the original complaint, paper no. 15, is denied as moot.
[2] The Franchise Agreement grants SSC the exclusive rights to lease, sell, distribute, service, repair and maintain Sensormatic security and anti-theft equipment. Section 9(c) of the Franchise Agreement prohibits Sensormatic from competing with SSC in SSC's exclusive franchise territory or from granting "to any third party a franchise or any other right to sell, lease or service Equipment in SSC's territory." Paper no. 107, ex. 3, ¶ 12. "Equipment" is defined as including "all Detection Devices, Tags, Accessories and Supples." Id. at ¶ 13(a).
[3] In count three, SSC also alleges breach based on Sensormatic's authorization of ADT to sell RFID products in SSC's exclusive territory. These allegations rest on a separate set of facts and are addressed infra.
[4] The rule against claim splitting is based on the same principles as res judicata. Res judicata applies, however, when a second suit is filed after a final adjudication of a first suit and claim splitting applies when, like here, two suits are pending at the same time. Regardless of the differences in form, both doctrines intend to "foster [ ] judicial economy and protect[] the parties from vexatious and expensive legation." Curtis v. Citibank, N.A., 226 F.3d 133, 138 (2d Cir.2000). In order to meet these objectives, courts faced with duplicative suits may stay the second suit, dismiss it without prejudice, enjoin the parties from proceeding with it, or consolidate the two actions. See Curtis, 226 F.3d at 139 (citing cases in which courts took various actions).
[5] The majority of the allegations in count four are worded identically to the claims asserts in count seven of the second amended complaint in Sensormatic I that is, they allege that ADT's interference caused Sensormatic to breach the Franchise Agreement's provisions regarding Sensormatic Equipment and trademarks. In only two discrete places, does SSC refer to RFID specifically. Although, at first glance, count four appears to be stating an identical claim as that stated in Sensormatic I, the court will assume, based the reference to RFID and the interrelation between counts two and four of the amended complaint, that SSC intended this count to be related to ADT's conduct regarding RFID products specifically. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2409791/ | 719 S.W.2d 908 (1986)
CAPITOL LIFE INSURANCE COMPANY, Plaintiff,
v.
Lynn G. PORTER, Defendant-Appellant, and
Theresa Porter, Defendant-Respondent.
No. 50535.
Missouri Court of Appeals, Eastern District.
September 30, 1986.
Motion for Rehearing and/or Transfer Denied October 29, 1986.
Application to Transfer Denied December 16, 1986.
Daniel T. Glowski, Clayton, for defendant-appellant.
Gregory D. O'Shea, Lemay, for defendant-respondent.
Motion for Rehearing and/or Transfer to Supreme Court Denied October 29, 1986.
*909 CRANDALL, Judge.
James A. Porter (insured) was issued a life insurance policy by the Capitol Life Insurance Company (insurer). The insurer's records listed Lynn G. Porter, insured's wife, as beneficiary under the policy. After the insured's death, a change of beneficiary form was found among his personal belongings. The form designated Theresa Porter, his mother, as the new beneficiary.[1] Theresa Porter and Lynn S. Porter both claimed that they were entitled to the proceeds of the insurance policy. Insurer interpled the proceeds to the court and was discharged. Lynn Porter (wife) appeals from the judgment of the trial court, in a court-tried case, awarding the proceeds to Theresa Porter (mother). We affirm.
The record reveals that the insured was thirty-three years of age when he died. Prior to his death, he worked as a custodian for a school district in St. Louis County and also served in the United States Naval Reserve. He was issued a life insurance policy in the amount of $10,000 on which his wife was named as beneficiary. She and insured separated in December, 1982, after she brought an action for dissolution of their marriage. On December 20, 1982, insured executed a change of beneficiary form on which he designated his mother as the new beneficiary under the policy. The application was signed by the insured and witnessed by a family friend. The insured told his mother and the witness that he was changing the beneficiary on his policy because of the pending dissolution action. He also said that he was going to mail the form to the insurer.
At that time, the insured had been experiencing chronic pain and weakness in the upper left side of his body and, to a lesser extent, in his right arm. In fact, the insured had directed his mother to print her name on the beneficiary form because it was too painful for him to write.
From January 14, 1983 until January 28, 1983, insured was on active duty in the Naval Reserve in San Diego, California. Shortly after his return home, he entered the hospital. His illness was diagnosed as cancer. In March, a "forequarter" amputation was performed on the insured in which his left arm, shoulder, and part of his chest were removed. After his release from the hospital in May, 1983, he went to live at his parents' home.
From that time on, the insured was confined to a wheelchair. Five days a week, his father drove him 60 miles, one-way, to the hospital for radiation therapy. His muscle strength and physical condition were deteriorating rapidly. He needed assistance in performing all the basic bodily functions. He was fed and carried about by his parents. Characterized as a "slow learner" prior to his illness, he became even more "vague" as his physical condition got worse. In May, his parents and some friends drove the insured to Connecticut, a trip he wanted to make before he died. The insured died on June 2, 1983.
Throughout his illness his wife did not help care for him. She was not with him when he died and did not attend his funeral.
After his death, his parents found the completed change of beneficiary form among the insured's personal effects which he had stored in their basement during his illness. His mother forwarded the form to the insurer and filed a claim for the proceeds of the policy. Wife also filed a claim. Faced with conflicting claims, the insurer brought this interpleader action.
The trial judge awarded the proceeds of the insurance policy to the insured's mother. The court found that the insured had "substantially complied with the conditions imposed by the policy" and that the "circumstances concerning his illness [had] prevented him from forwarding the form to the insurance company."
*910 Wife raises four points on appeal. She first contends that the trial court erred in awarding the policy proceeds to the mother because the insured did not do all within his power to exercise his right to change the beneficiary. The salient issue is whether the insured's acts constituted sufficient compliance with the change of beneficiary clause so as to effectuate a change in beneficiary.
Preliminarily, we note that this is not an action at law. It is not a suit on the contract between a claimant and the insurer, in which the failure of the insured to strictly comply with the terms of the contract might prevent the change in beneficiary from becoming effective. The terms regulating the manner in which a beneficiary can be changed are primarily for the benefit of insurers, to protect them against multiple liability from conflicting claimants. Provident Life and Accident Ins. Co. v. Buerge, 703 S.W.2d 590, 593 (Mo. App.1986). Here, the insurer proceeded by interpleader and paid the proceeds of the policy into court. By so doing, the insurer waived strict compliance with the method of recording notice of the change upon the policy and upon its books and records. Id.; Persons v. Prudential Ins. Co. of America, 233 S.W.2d 729 (Mo.1950). The insurer merely acknowledged its liability to someone and otherwise stood indifferent to the outcome.
This waiver by the company, however, is simply a waiver as to itself and does not act to confer rights as between the claimants. Although a beneficiary under this type of policy does not have any vested rights during the life of the insured, the right to the proceeds becomes vested upon the death of the insured. St. Louis Union Trust Co. v. Blue, 353 S.W.2d 770, 779 (Mo.1962). Because of this vesting of rights, it is important to understand how a court of equity can allow a substitution of a beneficiary where the insured has not strictly complied with the terms of the policy necessary to effectuate a change in beneficiary.
In Missouri, the equitable doctrine of substantial compliance prevails and is applicable where the insured has not strictly complied with the method provided by the policy for changing the beneficiary. If the insured has done all within his power to exercise his right to change the beneficiary, the irregular or incompleted change is effective as against the original beneficiary. Woodman Accident and Life Co. v. Puricelli, 669 S.W.2d 64, 65 (Mo.App.1984). Equity regards as done that which ought to be done. Postal Life and Casualty Ins. Co. v. Tillman, 287 S.W.2d 121, 127 (Mo. App.1956). The doctrine of substantial compliance simply carries out the intent of the insured. The insured's intention, however, must be established beyond question; and the insured must have done everything possible under the circumstances to effectuate his intent. Equity recognizes that the change of beneficiary was effective during the life of the insured, so that no vested rights of the original beneficiary are defeated. Postal Life, 287 S.W.2d at 127.
The parties do not question that substantial compliance is the law. Their disagreement focuses on the application of the facts to the law. The issue then becomes one of evidence; namely, was there substantial evidence to support the trial court's determination that there was substantial compliance with the policy provisions to effect the change in beneficiary.
Wife contends that, since the insured never mailed the form, he did not do all within his power to exercise his right to change the beneficiary. She relies on several cases to support this argument. In Persons, 233 S.W.2d at 729, the insured mailed the change of beneficiary form, but died while the form was in transit. In Woodman, 669 S.W.2d at 64, the executed forms were delivered to the insured's agent who did not forward them to the insurer until after the insured's death. The unique facts of the present case make it distinguishable from either case cited by the wife.
It is axiomatic that what constitutes substantial compliance will vary with the circumstances *911 of each case. Here, the insured did not comply with the strict terms of the policy. He did, however, take a number of positive steps to effect the change of beneficiary. He obtained the correct change of beneficiary form, executed the form properly and in the presence of a witness, explained to his mother and the witness why the change was being made, and expressed his intent to forward the form to the insurer. See, e.g., Connecticut General Life Ins. Co. v. Gulley, 668 F.2d 325, 327 (7th Cir.1982), cert. denied, 456 U.S. 974, 102 S. Ct. 2237, 72 L. Ed. 2d 848 (1982). The only further step needed to complete the change of beneficiary would have been for the insured to mail the executed form to the insurer.
In Gulley, the insured executed a change of beneficiary form, making his daughter the beneficiary of a group life insurance policy issued to his employer. He left the form with his daughter, saying that he would return to get it and deliver it to his employer. He did not direct his daughter to mail the form for him. One week later, the insured suffered a fatal heart attack. Two days after his death, his daughter mailed the form to insured's employer and claimed the proceeds of the policy. The United States Court of Appeals, Seventh Circuit, found that there was substantial compliance with the terms of the insurance policy. Id. at 327-28. Although there were "no unusual circumstances" that prevented the insured from delivering the form to his employer, the court held that "[w]here insured takes a positive action which evidences his obvious desire for a change of beneficiary, the courts will adopt such construction as will assist in carrying out such intention." Id. at 328 (citations omitted).
In the present case, the evidence and all the reasonable inferences therefrom indicate that there were unusual circumstances which prevented the insured from mailing the change of beneficiary form to the insurer and which distinguishes this case from either Woodman or Persons. The insured was a "slow learner" who became progressively vague as his health deteriorated. He was subjected to a debilitating operation which resulted in the amputation of his left arm and entire shoulder. He underwent radiation treatments on a daily basis for approximately one month. His illness and the prescribed treatments left him physically and mentally spent and totally dependent upon his parents. His condition steadily declined until his eventual death.
We also note that none of the evidence in this case militates against giving effect to the change of beneficiary form executed by the insured. There was no hint of fraud or duress in the execution of the form. There was no indication that the insured changed his mind during the time between the execution of the form and his death. The record reveals that the insured intended to change the beneficiary on the policy to his mother, who cared for him until his death, rather than his wife, who had brought a dissolution of marriage action. Given the unique circumstances of this case, the insured had done everything reasonably within his power to effectuate the change. Wife's first point is denied.
Wife's second point alleges error in the trial court's admission of evidence pertaining to the insured's subjective intention to change the beneficiary of the policy and evidence as to the marital status of the insured. The trial court overruled wife's motion in limine to prevent the admission of this evidence. At trial, however, wife did not renew her objection when such evidence was introduced. After a denial of a motion in limine, a timely objection is required to preserve the point for appellate review. Peters v. Henshaw, 640 S.W.2d 197, 201 (Mo.App.1982). Absent such an objection, wife has not preserved any error for our review. Wife's second point is denied.
In her third point, wife asserts that the trial court's ruling is against public policy because it "extends the substantial compliance rule far beyond all precedent." Wife's fourth point charges error in the trial court's ruling because it did not determine whether the insured did everything in *912 his power to effectuate the change of beneficiary. In view of our holding on Point I that there was substantial compliance to effect a change in beneficiary, an extended opinion on Points III and IV is not warranted. Rule 84.16.
The judgment of the trial court is affirmed.
PUDLOWSKI, P.J., and KAROHL, J., concur.
NOTES
[1] The policy in question reserved the right in the insured to change the beneficiary of the policy at any time prior to his death. It did not require the consent of the company. As such the policy does not confer vested rights in the beneficiary prior to the insured's death. See Postal Life and Casualty Ins. Co. v. Tillman, 287 S.W.2d 121, 125-26 (Mo.App.1956). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2409796/ | 719 S.W.2d 468 (1986)
Carmelita F. BROWN, Plaintiff-Respondent-Appellant,
v.
NEW PLAZA PONTIAC CO., et al., Defendants-Appellants-Respondents.
Nos. WD 37498, 37499.
Missouri Court of Appeals, Western District.
September 30, 1986.
Motion for Rehearing and for Transfer Denied November 4, 1986.
*469 William C. Partin, Kansas City, for defendants-appellants-respondents.
John I. Moran, Kansas City, for plaintiff-respondent-appellant.
Before LOWENSTEIN, P.J., and MANFORD and GAITAN, JJ.
Motion for Rehearing and for Transfer to Supreme Court Denied November 4, 1986.
GAITAN, Judge.
This appeal and cross appeal arise from an action for fraudulent misrepresentation in the sale of an automobile. Judgment was entered against defendant, New Plaza Pontiac Company, ("NPP") for both actual and punitive damages. NPP appeals alleging as error the trial court's failure to grant a judgment n.o.v. on the issue of punitive damages. The plaintiff, Carmelita Brown, cross-appeals alleging the trial court erred by (1) allowing the defendant to present evidence of a settlement offer it made to plaintiff; (2) excluding evidence of a judgment against the defendant in a similar case as proof of malice; and (3) excluding evidence of the defendant's most recent tax return to prove its ability to pay punitive damages. The judgment of the trial court is affirmed.
STATEMENT OF FACTS
This dispute arises from plaintiff's purchase of a used 1980 Datsun 200SX from NPP. Since the mechanical condition of this automobile was a major issue throughout the trial, its history will be reviewed in detail.
Prior to April 1983, this automobile was owned by Charles Morgan. While Mr. Morgan owned the automobile, it was involved in two accidents. The first accident occurred on November 12, 1982, resulting in a repair bill of approximately $4,438.00. The second accident occurred on January 13, 1983, resulting in repair bills of $3963.00.
NPP received the automobile as a trade-in on April 14, 1983. NPP's used car manager, *470 Marion Battaglia, had responsibility for evaluating all trade-ins. Mr. Battaglia testified that his normal procedure in evaluating a trade-in was to make a visual inspection of the automobile, and then to take a test drive.
Within two weeks after it took the Datsun as a trade-in, NPP performed two inspections which should have revealed the damaged state of the car. The first inspection was the Missouri Motor Vehicle Inspection, and the second was a checklist inspection to determine the work necessary to make the car saleable. A NPP Service Department work sheet shows that the inspections were completed by April 27, 1983.
The Motor Vehicle Inspection required a substantial amount of work under the car, including, inter alia, examining the steering, the suspension and the brakes. Although NPP indicated that the Datsun passed the Missouri Motor Vehicle Inspection, Ms. Brown was not provided with a copy of the Inspection Certificate. Coincidentally, when Ms. Brown applied for her tags, Ceslie Henry, the NPP salesman, happened to be at the Motor Vehicle Department. Mr. Henry persuaded the Department employee to issue the tags without receiving an Inspection Certificate.
Like the Motor Vehicle Inspection, the checklist inspection required a substantial amount of work under the car, including examining the suspension, engine block and transmission. Again, no checklist for the Datsun was ever produced.
In conjunction with these two inspections, the worksheet shows that NPP changed the oil and the oil filter on the Datsun's engine and performed a lubrication job on the Datsun's suspension on or about April 27, 1983.
NPP's policy is to accept every proffered trade-in car, whatever its condition, even if it has been wrecked. NPP thereafter decides whether to sell the car to another dealer in the wholesale market, or in the retail market. If the car is to be sold in the retail market, NPP tries to make the car look as new as possible by cleaning the car, and performing cosmetic repairs and detailing work. The decision to sell this Datsun in the retail market appears to have been made in mid-May, 1983.
One day in late June, Ms. Brown saw the Datsun on NPP's lot and it looked very attractive to her. She stopped, and went onto the lot to look at the car. Ultimately, Ms. Brown talked with NPP salesperson, Ceslie Henry. Henry suggested that Ms. Brown drive the car and they agreed to drive to Ms. Brown's home.
On the way the engine ran or idled roughly, and the left turn signal light and the speedometer did not work. When they reached the house, Ms. Brown's mother and a friend of her mother's, Tom Richardson, came out to look at the car. In response to a remark by Richardson, Ceslie Henry stated, in Ms. Brown's presence, that the Datsun was a good car and was in good condition. Henry repeated that statement, again in Ms. Brown's presence, a short time later, after he and Richardson drove the car around the block. Henry added that everything major under the hood was in order and in good condition. Thereafter, Ms. Brown and Henry drove back to NPP.
On the drive back Ms. Brown told Henry that she liked the car and was thinking about buying it, but because she knew nothing about cars she had to rely on Henry to tell her whether it was a good car. Henry assured her again that the car was in good condition.
On the following Tuesday, Ms. Brown returned to NPP. Henry again assured her that the Datsun was a fine car. He explained that the idling problem could easily be fixed with a tune-up and that the signal light and gauge would be repaired. Henry said that NPP would do this work at no cost to Ms. Brown, and she would have a good car with no worries. After a brief conversation about price, Ms. Brown agreed to buy the Datsun for $5,450.
Immediately after taking possession, Ms. Brown began to have trouble with the Datsun. On the day she picked it up it died a number of times. Though she returned the *471 car to NPP numerous times, the problem never was cured.
Other problems with the horn, the signal lights, and squeaking sounds from the brakes appeared. In August, problems with the steering became noticeable. At that point, Ms. Brown decided to take the car to Raytown Datsun. After the mechanics at Raytown Datsun inspected the Datsun, they gave Ms. Brown a service ticket dictated by Don Norfleet which set out the extensive damage described later by Norfleet at trial. The damage to the car lay in three main areas: (1) the steering, (2) the front brakes, and (3) the unibody.
1. Steering
There were two problems in the steering. First, the two main frame rails were drastically out of alignment with one another, having been bent by the wrecks. Likewise, the front wheels were out of alignment with one another. The right front wheel was pushed back so that it was a number of inches behind the left front wheel. Because of the nature and extent of the damage, Norfleet was simply unable to effect repairs that would return proper alignment. The misalignment so adversely affected the steering that it prevented the car from being roadworthy.
The second, and even more dangerous problem was that a portion of the steering arm was rubbing against the frame crossmember. The rubbing was such that if the car hit a pothole the steering arm could become stuck, locking the front wheels in a straight-ahead position, and making it impossible to steer the car.
2. Front Brakes
As a result of the wrecks, one of the brake fluid lines to the front brakes was pinched off by a portion of the front suspension. The friction on the brake line could break the line in two or impair or stop the flow of brake fluid.
According to Norfleet, the brake problem, like the steering arm problem should have absolutely precluded the car from passing the Missouri Motor Vehicle Inspection.
3. Unibody Frame
Two problems also existed with the unibody frame (i.e., the combined frame and body panels), each of which substantially lessened the integrity of the unibody and put persons inside the car at serious risk in the event of a collision.
The first problem was that the two main frame members of the unibody had been bent so far out of shape, that realignment was not possible. This distortion of the frame members put substantial stress on the entire unibody when the car was in operation. Each bump, hole or other irregularity pulled the frame members further out of alignment and caused the entire unibody to be pulled and flexed.
The stress on the integrity of the unibody was compounded by the second problem. The wrecks had broken apart the frame crossmembers and various body panels in the portion of the unibody which enclosed the passenger compartment. The repairs in these areas were grossly inadequate.
Both Sawyer and Norfleet agreed that the damage they found could not possibly have been caused by normal wear and tear, but had to have been caused by wrecks. Both agreed that the damage was readily apparent to a mechanic working under the car. Norfleet, who is a qualified Missouri Motor Vehicle inspector, added that the damage would have been readily observable to a mechanic performing such an inspection and would have prevented the car from passing. Finally, both men agreed that the car was unsafe. Sawyer valued the car at scrapapproximately $800-$850.
After learning of the damaged state of the Datsun, Ms. Brown confronted Chris Esposito, owner of NPP, with the Raytown Datsun repair ticket and requested a refund. Esposito refused, but offered to give Ms. Brown an identical car, or one of comparable value. Ms. Brown refused Esposito's offer, stating she did not want to *472 deal any further with NPP. Ms. Brown then brought this action against Ceslie Henry and NPP.
On May 22, 1985, the jury returned its verdict in favor of Ms. Brown and against defendants Ceslie Henry and NPP for actual damages in the sum of $4,600.00. In addition, the jury returned a verdict for punitive damages of $15,300.00 against defendant NPP, only. Plaintiff and defendants subsequently filed timely motions for new trial, all of which were overruled by the court on August 21, 1985. Thereafter, plaintiff and NPP filed timely notices of appeal to this Court. Defendant, Ceslie Henry, did not file a notice of appeal.
NPP contends that the trial court erred in submitting the punitive damage claim to the jury because after Sanders v. Daniel Int'l Corp, 682 S.W.2d 803 (Mo. banc 1984), ill will, spite, or grudge, i.e., actual malice, must be proved to support punitive damages. NPP argues that because Henry's conduct was imputed to NPP under plaintiff's actual damage claim, it is only Henry's conduct which is to be considered under plaintiff's punitive damage claim. Accordingly, since Henry was not guilty of actual malice, NPP cannot be held to punitive damages. In addition, NPP claims that Instruction No. 8 incorrectly defined "malicious".
NPP's arguments are without merit. The requisite standard of malice is not actual malice. Further, it appears that the actual malice standard of Sanders v. Daniels has been limited to malicious prosecution actions arising from criminal proceedings. See Proctor v. Stevens Employment Services, Inc. 712 S.W.2d 684 (Mo. banc 1986).
In Proctor, the Missouri Supreme Court considered the degree of malice necessary to establish liability in a malicious prosecution action arising out of a civil proceeding, and the degree of malice necessary to recover punitive damages in such an action. The court began by discussing the three degrees of malice as set out in Sanders: (1) actual malice which requires "ill will, spite, personal hatred, or vindictive motives"; (2) legal malice which requires an improper motive; and (3) malice in law wherein malice is inferred from intentionally doing a wrongful act without just cause or excuse. Proctor, at 686, citing, Sanders, 682 S.W.2d at 807-08.
The Proctor court determined that due to public policy considerations present in a malicious civil prosecution action, malice in law satisfies the element of malice required to prove liability. The court then turned to the malice required to recover punitive damages in such an action and decided that legal malice is necessary. Proctor, at 686-87. In so, determining, the court indicated that the standard of malice in cases other than malicious prosecution is generally legal malice. Proctor at 687, citing, Pollock v. Brown, 569 S.W.2d 724, 733 (Mo. banc 1978). Although this dicta in Proctor indicates that legal malice is the standard, the cases ambiguously refer to "legal malice" as the "intentional doing of a wrongful act without just cause or excuse", i.e., the definition of malice in law. See e.g., Pollock v. Brown, 569 S.W.2d 724, 733 (Mo. banc 1978); Ackmann v. Keeney-Toelle Real Estate, 401 S.W.2d 483, 489 (Mo. banc 1966); Parker v. Green, 340 S.W.2d 435, 441 (Mo.App.1960); Walters v. Larson, 270 S.W.2d 112, 116 (Mo.App.1954).
The cases cited by defendant in support of its argument that the Sanders requirement of actual malice has been extended beyond malicious prosecution cases, clearly applied the malice in law standard, not the actual malice standard. In each case, the court's opinion makes clear that the standard of malice applied was malice in law. See Routh v. Burlington Northern Railroad, 708 S.W.2d 211, 217 (Mo.App.1986) ("there is no evidence that Baning acted wrongfully with knowledge that he was taking Routh's property without just cause or excuse"); Gaffney v. Community Fed. Sav. & Loan, 706 S.W.2d 530, 535 (Mo.App. 1986) ("malice is the basis for awarding punitive damages and is to be determined by applying the test of whether the defendant did a wrongful act intentionally without just cause or excuse"); Moon v. Tower *473 Grove Bank and Trust Co., 691 S.W.2d 399, 401 (Mo.App.1985) (although the court stated it was applying the legal malice standard, the court defined legal malice as the "[i]ntentional doing of a wrongful act without just cause or excuse in reckless disregard of the rights of others.")
Instruction No. 8 invoked the legal malice standard by defining "malicious" as "intentionally acting with an improper or wrongful motive, or consciously acting with wanton disregard for the rights of others." Therefore, if legal malice is the correct standard, then Instruction No. 8 was proper. If malice in law is the correct standard, then NPP was not prejudiced by instruction No. 8. Legal malice is the more difficult standard to prove since it "requires proof of a defendant's mental state whereas malice in law rests upon a legal presumption independent of any proof concerning a defendant's mental state." Proctor, at 687.
Second, it is not Henry's conduct alone which should be considered in determining whether NPP is guilty of malice. Henry is an agent of NPP and therefore, the conduct of all the officers and employees of NPP, such as Marion Battaglia is imputed to NPP. This includes the personnel in the Used Car and Service Departments, who must have discovered the wreck-damage and concealed it, which should be considered. That conduct clearly constituted legal malice as defined in Instruction No. 8, and therefore, malice in law as well.
The rule established in State ex rel. Hall v. Cook, 400 S.W.2d 39 (Mo. banc 1966), provides that even though liability for actual damages is joint and several and is accomplished by imputation of the conduct of one defendant to another defendant, separate punitive damages claims (i.e., one against each defendant) may be submitted if the evidence so warrants. Therefore, under Hall, submission of separate punitive damage claims, allowing the jury to consider the different degrees of culpability of Henry and NPP was proper. See also Moore v. Shelton, 694 S.W.2d 500, 501 (Mo.App.1985); Fordyce v. Montgomery, 424 S.W.2d 746, 750-51 (Mo.App.1968).
Accordingly, while the principles of joint and several liability and imputation of conduct may apply to an actual damages claim, such principles are not to be applied to a punitive damages claim when the evidence shows differing degrees of culpability and/or ability to pay. As the Missouri Court of Appeals, Southern District, stated in Fordyce v. Montgomery, 424 S.W.2d 746, 750-51 (Mo.App.1968), wherein an assault committed by one defendant was imputed to a second defendant:
It would be highly artificial and unrealistic, however, to resolve the merits of this appeal simply by saying that the malice of one codefendant must be imputed to the other. Our Supreme Court has recognized that the joint and several liability of joint tort-feasors does not necessarily extend to liability for punitive damages in a case of this kind; there may be differing degrees of culpability among the codefendants and a jury may properly assess punitive damages against them in differing amounts.
Here, the Hall rule was properly applied because of the obviously differing degrees of culpability of NPP and Henry.
Having disposed of the issues on defendant's appeal, we now turn our attention to the cross appeal of plaintiff. As noted, plaintiff received a verdict and judgment against NPP for punitive damages in the amount of $15,300. She filed a motion for new trial on the issue of punitive damages only, which motion was overruled by the trial court. That motion for new trial did not contend that the jury award was inadequate or that it was inadequate because of any of the three points of error raised on her cross appeal: (1) error in allowing NPP to present evidence of its settlement offer; (2) excluding evidence of a judgment against NPP in a similar case as proof of malice; and (3) excluding evidence of NPP's most recent tax return. Thus, no claim was presented to the trial court that the verdict for punitive damages *474 was inadequate, which could be the only basis for awarding plaintiff a new trial on that issue.
On plaintiff's cross appeal, she likewise makes no claim in any point advanced that the punitive damage award was inadequate by reason of the admission and exclusion of evidence. Rule 84.04(d) provides, "The points relied on shall state briefly and concisely what actions or rulings of the court are sought to be reviewed and wherein and why they are claimed to be erroneous, * * *." No point here posits even that the trial court erred in overruling plaintiff's motion for new trial. All that is here stated in three points presented are abstract statements as to the admission and exclusion of evidence, with no reference as to how they affected any ruling of the trial court, or why and wherein any such ruling was error. Abstract statements present nothing for review. Tudor v. Tudor, 617 S.W.2d 610 (Mo.App.1981); Galeener v. Black, 606 S.W.2d 245 (Mo. App.1980). Only the issues properly presented in the points relied upon may be considered on appeal. Smith v. Welch, 611 S.W.2d 398 (Mo.App.1981); Del Monte Corp. v. Stark & Son Wholesale, Inc., 474 S.W.2d 854 (Mo.App.1971). The argument portion of the brief does not flesh out any deficiencies in the points presented. All that is requested is a new trial on the issue of punitive damages, without stating any reason why plaintiff is entitled thereto. Plaintiff's cross-appeal is denied.
The judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2412468/ | 470 F. Supp. 2d 1033 (2007)
Justin J. LOCHTHOWE, Plaintiff,
v.
STATE FARM MUTUAL AUTOMBILE INSURANCE COMPANY, a foreign corporation authorized to do business in North Dakota, Defendant.
No. 4:06-cv-085.
United States District Court, D. North Dakota, Northwestern Division.
January 19, 2007.
Mark Vincent Larson, Larson Law Firm, P.C., Minot, ND, for Plaintiff.
Steven A. Storslee, Storslee Law Firm, Bismarck, ND, for Defendant.
ORDER DENYING PLAINTIFF'S MOTION FOR REMAND
HOVLAND, Chief Judge.
Before the Court is the Plaintiffs Motion to Remand the above-entitled action to the District Court for the State of North Dakota, Northwest Judicial District, Ward County. The basis for remand is lack of jurisdiction under 28 U.S.C. § 1332, in that the amount-in-controversy is not in excess of $75,000.00. For the reasons outlined below, the motion is denied.
*1034 I. BACKGROUND
This matter stems from a November 6, 2000, motor vehicle accident between the plaintiff, Justin Lochthowe ("Lochthowe"), and Melvin Iverson ("Iverson") that occurred in Minot, North Dakota. The two vehicles collided, and Lochthowe was injured in the collision.
Lochthowe sued Iverson in state court, and Iverson's liability insurer settled for the policy limits of $50,000. Lochthowe had an insurance policy through State Farm that provided underinsured motorist coverage and personal injury protection (no-fault) coverage. The underinsured motorist coverage limits under the State Farm policy were $100,000. The no-fault limits under the State Farm policy were $30,000. See Docket No. 9.
Before Lochthowe finalized his settlement with Iverson's insurer, Lochthowe's attorney gave the required statutory notice to State Farm that it could substitute its funds and thereby preserve its underinsured motorist subrogation claim against Iverson. State Farm declined to substitute its funds. Lochthowe then finalized a settlement with Iverson's insurer and received the policy limits of $50,000.
On October 25, 2006, Lochthowe sued State Farm Mutual Automobile Insurance Company ("State Farm") in state court. In the complaint, Lochthowe contends that he has "suffered severe, disabling, permanent and painful injuries and damages both economic and noneconomic." See Docket No. 1-2. On November 13, 2006, State Farm filed a notice of removal to the United States District Court for the District of North Dakota. On November 28, 2006, Lochthowe filed a Motion for Remand with this Court. On December 7, 2006, State Farm filed a response in opposition. See Docket No. 9.
II. LEGAL DISCUSSION
District courts shall have original jurisdiction of all civil, actions between citizens of different states where the amount in controversy exceeds the sum or value of $75,000. 28 U.S.C. § 1332(a)(1). Whether a plaintiff satisfies the $75,000 amount-incontroversy requirement is a jurisdictional issue for the Court to decide. Trimble v. Asarco, Inc., 232 F.3d 946, 959 (8th Cir. 2000). A complaint must be dismissed or the case remanded if it appears that the value of the claim is less than the required amount of $75,000. Id. Following removal of a case to federal court, a plaintiff, can seek remand of the action back to state court 28 U.S.C. 1447(c). It is well-established that the removing party bears the burden of showing that removal was proper. See Rasmussen v. State Farm Mut. Auto. Ins. Co., 410 F.3d 1029, 1031 (8th Cir.2005); In re Business Men's Assur. Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993). When the complaint states a specific amount lower than the required amount, a defendant seeking removal must prove by a preponderance of the evidence that the amount-in-controversy exceeds $75,000. Rasmussen v. State Farm Mut. Auto. Ins. Co., 410 F.3d 1029, 1031 (8th Cir.2005). It must appear to a legal certainty that the claim is for less than the jurisdictional amount to warrant a dismissal or remand back to state court. See Capitol Indemnity Corp. v. 1405 Associates, Inc., 340 F.3d 547, 549 (8th Cir.2003). Removal statutes are strictly construed in favor of state court jurisdiction. In re Business Men's Assur. Co. of Am., 992 F.2d 181, 183 (8th Cir.1993).
It is apparent that complete diversity exists and neither party contests that issue. The critical issue is whether the amount-in-controversy requirement has been satisfied. In order to prevail in its opposition to the motion to remand, State *1035 Farm must establish by a preponderance of the evidence that the amount-in-controversy exceeds $75,000. Krahn v. Cross Country Bank, No. Civ. 01-2069 (PAM/ RLE), 2003 WL 21005295 (D.Minn. Apr. 23, 2003) (citing Larkin v. Brown, 41 F.3d 387, 388-89 (8th Cir.1994) and Peterson v. BASF Corp., 12 F. Supp. 2d 964, 968 (D.Minn.1998)); see also Trimble v. Asarco, Inc., 232 F.3d 946, 959 (8th Cir.2000) ("When a federal complaint alleges a sufficient amount-in-controversy to establish diversity jurisdiction, but the opposing party or the court questions whether the amount alleged is legitimate, the party invoking federal jurisdiction must prove the requisite amount by a preponderance of the evidence. The complaint will be dismissed if it appears to a legal certainty that the value of the claim is actually less than the required amount.").
Lochthowe alleged in the complaint that he is seeking "damages in an amount greater than $50,000," "costs, disbursements, attorney's fees, and interest," and "such other relief as the Court deems just and equitable." See Docket No. 1-2. The law in North Dakota concerning the prayer for relief in a complaint provides as follows:
Any pleading for damages for death or injury to a person may pray for economic and noneconomic damages separately. Any prayer for noneconomic damages of less than fifty thousand dollars or for economic damages may be for a specific dollar amount. Any prayer for noneconomic damages for fifty thousand dollars or more must be stated generally as "a reasonable sum but not less than fifty thousand dollars."
N.D. Cent.Code § 32-03.2-07 (2005). In the complaint Lochthowe alleged that he was seeking economic and noneconomic damages and that he will request leave to amend the complaint to include a claim for punitive damages. Although not required to do so, Lochthowe has not offered to stipulate that his recoverable damages are less than $75,000 which would unquestionably result in a remand of this action to state court.
Lochthowe contends that the maximum recovery of underinsured coverage benefits available under the State Farm policy is only $50,000 because the underinsured limits are $100,000 and $50,000 of that limit has already been exhausted as a result of the settlement. State Farm contends that its exposure for the underinsured motorist claim is actually $100,000 rather than $50,000.
In North Dakota, underinsured motorist coverage is a creature of statute. N.D. Cent.Code §§ 26.1-40-15.1, et. seq. In De-Coteau v. Nodak Mutual Insurance Company, 603 N.W.2d 906 (N.D.2000), the North Dakota Supreme Court discussed different types of "underinsured motorist coverage and traced the history of that coverage through North Dakota statutes to the present time. When the Legislative Assembly of North Dakota adopted the present statutory framework contained in N.D. Cent.Code §§ 26.1-40-15.1, et. seq., the Legislature chose to adopt a threshold definition of "underinsured motor vehicle" which must be met before an underinsured motorist claim arises. In DeCoteau, the North Dakota Supreme Court referred to that definition as the "trigger" for underinsured motorist coverage.
There is no dispute that Iverson's motor vehicle was an "underinsured motor vehicle" as defined under North Dakota law and the State Farm policy. This is because the liability limit applicable to the Iverson vehicle was $50,000 and the underinsured motorist limits under the State Farm policy are $100,000. See N.D. Cent. Code § 26.1-40-15.1(2). Once the definition of "underinsured motor vehicle" has been met and the trigger established, the *1036 underinsured motorist insurer's maximum liability is the lower of (1) the compensatory damages established but not recovered from the tortfeasor; or (2) the limits of the underinsured motorist coverage. Therefore, State Farm's exposure for the underinsured motorist claim is $100,000, not $50,000 as asserted in the plaintiffs motion for remand. The $50,000 that Lochthowe received from the liability insurer would be deducted from the total compensatory damages established, not from the State Farm underinsured motorist limits. For example, if the fact finder determines that Lochthowe's total compensatory damages as a result of the automobile accident are $150,000 or more, the liability limits of $50,000 would be subtracted from the compensatory damages awarded and State Farm would still owe its $100,000 underinsured motorist limits.
State Farm is correct in its contention that its exposure on Lochthowe's underinsured motorist claim is potentially $100,000. State Farm bears the burden of establishing, by a preponderance of the evidence, that the potential damages exceed $75,000. In an attempt to demonstrate that the amount-in-controversy exceeds $75,000, State Farm notes that the $50,000 settlement reached with the liability insurer for the policy limits was paid quickly, without hesitation, and with little or no discovery having been conducted. The fact that the $50,000 policy limits were paid so promptly under the circumstances leads one to reasonably conclude that liability is clear and the damages are significant. State Farm also notes that Lochthowe seeks to recover the remaining no-fault benefits available in the amount of $14,784, for a total no-fault benefit payout of $30,000. This equates to a total of $80,000 in compensatory damages established to date. The potential to recover additional compensatory damages (both economic and noneconomic) remains as well as the potential recovery of economic and noneconomic damages for alleged "bad faith;" damages for breach of fiduciary duty; negligence; breach of contract; the tort of outrage; and punitive damages and attorneys fees.
North Dakota has codified the type of damages recoverable in a personal injury claim.
In any civil action for damages for . . . injury to a person and whether arising out of breach of contract or tort, damages may be awarded by the trier of fact as follows: . . . Compensation for noneconomic damages, which are damages arising from pain, suffering, inconvenience, physical impairment, disfigurement, mental anguish, emotional distress, fear of injury, loss or illness, loss of society and companionship, loss of consortium, injury to reputation, humiliation, and other nonpecuniary damage.
N.D. Cent.Code § 32-03.2-04. North Dakota law allows for the recovery of physical and emotional damages in a personal injury action. There is no statutory cap on the amount of recoverable economic and noneconomic damages.
Having carefully considered all of the evidence, the Court finds that State Farm has at this stage shown, by a preponderance of the evidence, that the amount-in-controversy exceeds $75,000. The Court has not considered the possibility of recovering punitive damages against State Farm in considering the amount-in-controversy requirement. The Eighth Circuit also permits the Court to consider attorneys' fees in determining the amount-in-controversy. See Capitol Indemnity Corp. v. Miles, 978 F.2d 437, 438 (8th Cir.1992). However, it is well-settled that attorneys' fees are not allowed to a successful litigant unless expressly authorized by statute. See In re Estate of Lutz, 620 N.W.2d 589, 598 (N.D.2000). Nevertheless, there is sufficient evidence to show *1037 that a jury could reasonably award more than the statutory minimum in this case.
III. CONCLUSION
For the reasons set forth above, the Court finds that State Farm has presented sufficient evidence to show that a fact finder could legally conclude that the damages the Plaintiff suffered are greater than the $75,000 amount-in-controversy requirement necessary to support diversity jurisdiction. The Court concludes that removal jurisdiction is proper at this stage of the proceedings. Accordingly, the Court DENIES the Plaintiffs' Motion to Remand (Docket No. 5).
IT IS SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2412472/ | 470 F. Supp. 2d 457 (2007)
CREEDON CONTROLS, INC., a Delaware corporation Plaintiff,
v.
BANC ONE BUILDING CORPORATION, an Illinois corporation, and Forest Electric Corporation, a New York corporation Defendants.
No. CIV A 05-300-JJF.
United States District Court, D. Delaware.
January 22, 2007.
*458 Edward Seglias, Esquire and Robert K. Beste, Jr., Esquire of Cohen, Seglias, Pallas, Greenhall & Furman, P.C., Wilmington, DE, for Plaintiff
Lawrence C. Ashby, Esquire, Philip Trainer, Jr., Esquire and Ricardo Palacio, Esquire, of Ashby & Gedes, P.A., Wilmington, DE, Of Counsel: Paul, Hastings, Janofsky & Walker, LLP, New York City, for Defendant Banc One Building Corporation.
Paul A. Bradley, Esquire, of Maron & Marvel, P.A., Wilmington, DE, for Defendant Forest Electric Corporation.
MEMORANDUM OPINION
FARNAN, District Judge.
Pending before the Court are Defendant Banc One Building. Corporation's ("Banc One") Motion For Summary Judgment (D.I. 115) and Defendant Forest Electric's *459 ("Forest") Motion For Partial Summary Judgment. (D.I. 120). For the reasons discussed, Banc One's Motion will be granted and Forest's Motion will be denied.
I. BACKGROUND
Banc One was tasked to construct two data centers, Core Data Center 1 and Core Data Center 2 ("CDC 1" and "CDC 2"). Banc One selected Tishman Construction of Maryland ("Tishman") to act as the "Construction Manager," and Banc One's agent, for the CDC 1 and 2 project. Banc One also contracted with co-defendant Forest to serve as the "Trade Manager for Electrical Work" for the project. Tishman and Forest entered into a Trade Manager Agreement which set forth the parties' understandings with regard to their roles and responsibilities. Forest was tasked with coordinating all electrical power and data connections work, and had the responsibility of competitively bidding and awarding this work to subcontractors.
After submitting a successful bid, Plaintiff Creedon Controls, Inc. ("Creedon") was selected by Forest to perform part of the electrical work. Creedon contracted directly with Forest, as an electrical subcontractor. Forest supervised and coordinated Creedon's performance throughout the project, and served as an intermediary between Creedon, Tishman, and Banc One for any changes to the scope of the project. Forest was also responsible for scheduling the work of all of its electrical subcontractors, including Creedon.
Upset with the significant delays and cost increases it was facing because of Defendants' alleged inefficiency and improper behavior, Creedon initially filed its complaint against Defendants Banc One and Forest in Delaware Superior Court. The case was removed to this Court on May 17, 2005. Banc One and Forest filed the current Motions on July 14, 2006.
II. PARTIES' CONTENTIONS
A. Banc One's Motion For Summary Judgment
By its Motion, Banc One contends that the Court should grant summary judgment in its favor because no contract was ever formed between itself and Creedon. Defendant further contends that Creedon and Forest have failed to establish an agency relationship between Banc One and Forest. Therefore, Banc One contends, summary judgment must be granted because there is no relationship between Creedon and Banc One that could expose Banc One to liability.
In response, both Creedon and Forest contend that summary judgment is inappropriate because there are genuine issues of material fact in dispute as to the existence of an agency relationship between Banc One and Forest.
B. Forest's Motion For Partial Summary Judgment
By its Motion, Forest contends that summary judgment is warranted because there is a contract between Forest and Creedon which expressly precludes any damages for delay. Forest also contends that it was merely an agent of Banc One, and therefore should not be held liable for any damages Creedon may be awarded.
In response, Creedon contends that there are genuine issues of material fact as to what contract language binds the parties and as to which party Creedon may recover from. Creedon also contends that the No-Damages-For-Delay clause is unenforceable due to Forest's bad faith. In its response, Banc One agrees with Forest that contract language expressly precludes damages arising from Forests delays. *460 However, Banc One contends that there are no facts to support Forest's contention that it was an agent of Banc One.
III. LEGAL STANDARD
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, a party is entitled to summary judgment if a court determines from its examination of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In determining whether there are triable issues of material fact, a court must review all of the evidence and construe all inferences in the light most favorable to the non-moving party. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976). However, a court should not make credibility determinations or weigh the evidence. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000).
To defeat a motion for summary judgment, the non-moving party must "do more than simply show that there is some metaphysical doubt as to the material facts. In the language of the Rule, the non-moving party must come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986) (citations omitted). However, the mere existence of some evidence in support of the non-movant will' not be sufficient to support a denial of a motion for summary judgment; there must be enough evidence to enable a jury to reasonably find for the non-movant on that issue. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
IV. DISCUSSION
A. Banc One's Motion For Summary Judgment
Because the parties do not dispute that Banc One and Creedon never contracted directly with each other, the Court must consider whether there is sufficient evidence to enable a jury to find that Forest was acting as Banc One's agent. If there is not, the Court must grant Defendant's Motion, because Creedon will have failed to show any basis under which Banc One might be liable to Creedon.
A principal is liable for the actions of its agent that are within the scope of the agent's actual or apparent authority. Restatement (Second) of Agency § 140. Actual authority is created by words or conduct of the principal, which reasonably cause the agent to determine that the principal wishes the agent to act on the principal's behalf. Edwards v. Born, Inc., 792 F.2d 387, 389-90 (3d Cir.1986). Apparent authority, on the other hand, can be created by words or conduct of the principal, which reasonably cause a third party to believe that the agent is acting on the principal's behalf. Id. at 390.
The Court concludes that no jury could reasonably find that Forest had actual authority to act on Banc One's behalf. Banc One has pointed to contract documents between Banc One and Forest, and Forest and Creedon, which show Forest is not Banc One's agent. Banc One also points to Forest's solicitations for bids, which do not mention Banc One; the award letter sent from Forest to Creedon stating that Creedon was to be a subcontractor to Forest; the subcontract agreement between Forest and Creedon; and the fact that Creedon never signed the one contract document referenced by *461 Creedon and Forest where Forest unilaterally described itself as Banc One's agent
The non-moving parties can point only to parole evidence, an unsigned contract document sent to Creedon a year after work began on the project where Forest unilaterally identified itself as Banc One's agent, and Banc One's initial Answer (D.I. 5), which Creedon and Forest contend is an "admission' which establishes Forest's actual authority. As to the "admission" in its first Answer, Banc One contends that it submitted its Amended Answer (D.I. 92) to, overcome deception perpetrated by Forest's counsel throughout the original Answer, which contained misrepresentations of the contract documents. (D.I. 138).
Generally, "an admission contained in an amended or superceded pleading, while it may not have the full binding force of a judicial admission, is evidence against the pleader of the facts admitted." Barringer v. Prudential Ins. Co. of America, 62 F. Supp. 286, 287 (E.D.Pa.1945); See Bruce E.M. v. Dorothea A.M., 455 A.2d 866, 869 (D.Del 1983)(finding the same). However, some exceptions have been allowed when counsel, not the party himself, verified or signed a pleading, where "it was filed under a clear misapprehension of the facts," or "where the matter constituting an admission . . . is contained in inconsistent pleas or defenses." 52 A.L.R. 516. In this case, whether there is a basis for deviating from this general rule to disallow Banc One's admission, in its original Answer, or not is a factual question. Therefore, for purposes of resolving this Motion, the Court must decide it in a light most favorable to the non-moving parties. Even assuming that Banc One's original Answer can be used as evidence against Banc One, the Court concludes that Creedon and Forest have failed to establish actual authority sufficient to survive a motion for summary judgment.
The Court also concludes that no jury could reasonably find that Forest had apparent authority to act on Banc One's behalf. Creedon and Forest contend that apparent authority was created through (1) the beliefs of several parties to the CDC 1 and 2 project, (2) silence from Banc One's agent, which was interpreted as assent, and (3) Forest's previous transactions with one member of Banc One.
Creedon and Forest point to the words and actions of their own executives, but not to anyone from Banc One, in an attempt to demonstrate an agency relationship. For example, Creedon has asserted views of Forest's management, who contend they were not taking the CDC 1 and 2 job at risk, despite the language of the contract. Creedon has also put forth deposition testimony from its president, who said she relied on Forest's representations that it was Banc One's agent. Finally, Creedon and Forest argue that. Forest became an agent of Banc One because Tishman Construction of Maryland, the CDC 1 and 2 Construction Manager and Banc One's agent, did not object to the few occasions when Forest identified itself as such. However, "apparent authority can never be derived from the acts of the agent alone." Finnegan Const. Co. v. Robino-Ladd Co., 354 A.2d 142, 144 (Del.Super.1976). Furthermore, in order to establish an agency relationship, the nonmoving parties must point to words or actions of the principal, which Creedon and Forest have not done.
Finally, Creedon and Forest contend that there is apparent authority based upon a prior working relationship between Forest and Banc One. However, the pleadings acknowledge that the prior work Forest did for Banc One was entirely unrelated to the CDC 1 and 2 project. Accordingly, the Court finds that Forest did *462 not have apparent authority to act as Banc One's agent.
B. Forest's Motion For Partial Summary Judgment
Forest contends that a contract was formed between itself and Creedon based upon Creedon's conditional agreement and acceptance of Forest's October 2, 2003 offer letter and attached subcontractor agreement. The subcontractor agreement contained, a NoDamagesFor-Delay clause barring Creedon from recovering monetary damages for any delays caused by Forest or Tishman. Both Creedon and Forest contend that, if a contract exists, this clause would generally be enforceable, unless the delay was unanticipated (e.g. act of deity) or resulting from bad faith. Creedon's complaint alleges such bad faith.
Construing the evidence in the light most favorable to Creedon, the Court concludes that there are genuine issues of material fact as to how the delays arose that Creedon experienced, as well as to the enforceability of the NoDamagesFor-Delay clause. Therefore, summary judgment is inappropriate. Accordingly, the Court will deny Defendants' Motion For Partial Summary Judgment. (DJ. 120).
V. CONCLUSION
For the reasons discussed, the Court concludes that Creedon and Forest have failed to establish that Forest was an agent of Banc One, and therefore, there is no privity of contract or other relationship between Creedon and Banc One that would expose Banc One to liability on the claims asserted in this litigation. Accordingly, Defendant Banc One Building Corporation's Motion For Summary Judgment (D.I. 115) will be granted.
Further, the Court concludes that there are genuine issues of material fact regarding the reasons for Creedon's delays and also the enforceability of the No-DamagesForDelay clause in the subcontractor agreement between Forest and Creedon. Therefore, Defendant Forest Electric Corporation's Motion For Partial Summary Judgment (D.I. 120) will be denied.
An appropriate Order will be entered.
ORDER
At. Wilmington, the 22 day of January 2007, for the reasons stated in the Memorandum Opinion issued this date;
IT IS HEREBY ORDERED that:
1. Defendant Banc One Building Corporation's Motion For Summary Judgment is GRANTED. (D.I. 115).
2. Defendant Forest Electric Corporation's Motion For Partial Summary Judgment is DENIED. (D.I. 120). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2643521/ | FILED
United States Court of Appeals
Tenth Circuit
November 21, 2013
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 12-7074
RICHARD DEAN BASNETT,
Defendant-Appellant.
_______________________________________
Appeal from the United States District Court
for the Eastern District of Oklahoma
(D.C. No. 6:12-CR-00015-RAW-1)
_______________________________________
Carl Folsom, III, Research and Writing Specialist (Julia L. O’Connell, Federal
Public Defender, and Robert Ridenour, Assistant Federal Public Defender, on the
briefs), Office of the Federal Public Defender, Eastern District of Oklahoma,
Muskogee, Oklahoma, for Defendant-Appellant.
Gregory Dean Burris, Assistant United States Attorney (Linda A. Epperley,
Assistant United States Attorney, on the brief), Office of the United States
Attorney, Eastern District of Oklahoma, Muskogee, Oklahoma, for Plaintiff-
Appellee.
Before HARTZ, HOLMES, and BACHARACH, Circuit Judges.
BACHARACH, Circuit Judge.
The Defendant, Mr. Richard Basnett, was convicted of unlawful possession
of a firearm and sentenced to 37 months of imprisonment (with 2 years of
supervised release). He appeals, arguing that the sentence was too long. When
the trial court imposed the sentence, it relied on guidelines governing possession
of at least eight firearms and possession of firearms in connection with a separate
felony.
We must decide whether the district court had enough evidence to
reasonably infer that Mr. Basnett possessed: (1) eight or more guns (other than
antiques or those owned solely for hunting or collecting), and (2) at least one gun
in connection with a separate felony. We conclude that the government had
sufficient evidence to draw these inferences, and we affirm.
I. The Quantity of “Firearms”
Mr. Basnett does not deny that he possessed firearms, but does challenge
the number attributed to him. We reject this challenge.
A. The Quantity of Firearms
The threshold question is whether the district judge could reasonably infer
the presence of at least eight “firearms” (as defined by federal statute). At
sentencing, the district judge applied an enhancement based on a sentencing
guideline requiring possession of at least eight firearms. This enhancement was
supported by the testimony of Agent Ashley Stephens, who noted that officers had
found ten guns in their first search of Mr. Basnett’s home and four additional
-2-
guns in a second search of the home. R. vol. 2, at 101-02. From this evidence,
the district court could reasonably infer that Mr. Basnett had at least eight guns.
B. Whether the Firearms Were Antiques
The resulting question is whether the 8+ guns are considered “firearms” for
purposes of federal law. Mr. Basnett points out that a gun does not count if it is
an antique. He is correct; thus, the question is whether there were at least eight
non-antique guns in his home. See 18 U.S.C. § 921(a)(3) (2006).
This question requires us to determine which party bears the initial burden
of producing evidence on whether the guns were antiques. We make that
determination in the context of the federal statute defining “firearm.”
The statute defines “firearm” to mean a weapon that can be readily
“converted to expel a projectile,” but “does not include an antique firearm.” Id.
This language leads both parties to pin the burden of proof on the other. The
government states that because the statute provides an exclusion for antiques,
characterization as an antique is an affirmative defense; Mr. Basnett states that
because the statute provides an exclusion for antiques, the government must prove
that the gun is not an antique.
We agree with the government based on our decision in United States v.
Neal, 692 F.2d 1296 (10th Cir. 1982), where we held that an exclusion (built into
the statutory definition of a “firearm”) involves an affirmative defense rather than
an element of the government’s prima facie case.
-3-
In United States v. Neal, the issue was whether a weapon constituted a
“firearm” consisting of a “destructive device.” See Neal, 692 F.2d at 1303. Like
the law defining a “firearm,” the law in Neal said what the term “destructive
device” excluded: “The term, ‘destructive device’ shall not include any device
which is neither designed nor redesigned for use as a weapon.” 26 U.S.C.
§ 5845(f) (1976). Because the law said what the term “destructive device” didn’t
include—rather than what it did include—the defendant argued that the issue
involved an “element of the offense.” Neal, 692 F.2d at 1303. We rejected this
argument, treating the exclusion as an affirmative defense rather than as an
element of the government’s prima facie case. Id.
We cannot fathom a way to treat the exclusion in Neal as an affirmative
defense and the exclusion here as an element of the government’s prima facie
case. In Neal and the present case, the underlying statutes contained nearly
identical language. Both statutes said what the term (“firearm” or its subset,
“destructive device”) “shall not include.” 26 U.S.C. § 5845(f) (1976); 18 U.S.C.
§ 921(a)(3) (2006). In Neal, we held that this language required us to treat the
exclusion as an affirmative defense. There is no conceivable reason for us to treat
the exclusions for “destructive devices” and “firearms” differently. Indeed, the
definition of “firearm” expressly includes all “destructive devices.” 18 U.S.C.
§ 921(a)(3) (2006).
-4-
Every circuit court of appeals to consider the issue has treated the antique
exception as affirmative defense. See Gil v. Holder, 651 F.3d 1000, 1005 n.3 (9th
Cir. 2011) (“[E]very other circuit of which we are aware that has considered the
§ 921(a)(3) ‘antique firearm’ exception in the criminal context, has treated it as
an affirmative defense rather than an element of the crime.”); 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 establishing that a weapon is an ‘antique,
firearm’ for purposes of §§ 921 and 922 is an affirmative defense. . . .”).
Were we writing on a clean slate, we would be inclined to follow the
approach taken by these courts. Surely owners of antique guns are better
equipped to prove that their guns are antiques than the government, which would
otherwise bear the initial burden of producing evidence in every case to prove
what a gun is not. See United States v. Mayo, 705 F.2d 62, 76 (2d Cir. 1983)
(holding that the defendant bore the burden of proving a gun’s antique status in
part because dealers or collectors of antique guns are “in a better position to place
the [antique-gun] exception in issue”); Lawrence, 349 F.3d at 121-22 (treating
antique status as an affirmative defense in part because the government cannot be
expected to address whether the gun is an “antique” when the defense did not
establish the date of manufacture). But, we are not writing on a clean slate. We
decided the issue in Neal, concluding that Congress created an affirmative
defense when it said what a “destructive device” excluded.
-5-
In his reply brief, Mr. Basnett discounts the case law involving the
definition of a “firearm,” pointing out that we are dealing here with a sentencing
enhancement rather than an issue involving guilt or innocence. Appellant’s Reply
Br. at 2-3, 6. But the guideline commentary expressly adopts the statutory
definition of a “firearm.” U.S. Sentencing Guidelines Manual § 2K2.1 cmt. n.1
(2011). We would have no logical basis to interpret the same statutory language
one way in Neal and the opposite way for sentencing (as Mr. Basnett would have
us do). Thus, we follow Neal in deciding that characterization as an antique is an
affirmative defense rather than an element of the government’s prima facie
burden. See United States v. Spedalieri, 910 F.2d 707, 710 n.3 (10th Cir. 1990) (a
panel cannot overrule circuit precedent).
Because characterization as an antique involves an affirmative defense, the
defendant bears the initial burden of producing evidence. See Patterson v. New
York, 432 U.S. 197, 206-07 (1977).
Mr. Basnett presented no evidence to indicate that a single gun in his home
was an antique. Even without any evidence by Mr. Basnett, a deputy sheriff
testified that the guns seen in the first home visit were not antiques. R. vol. 2, at
71. From this testimony, the sentencing judge could reasonably find that Mr.
-6-
Basnett had at least eight guns that are considered “firearms” for purposes of the
sentencing enhancement. 1
II. Potential Downward Adjustment for Hunting or Collecting
The district court could have applied a downward adjustment to the
guideline calculation if Mr. Basnett possessed the guns solely to collect or hunt.
U.S. Sentencing Guidelines Manual § 2K2.1(b)(2) (2011). For a downward
adjustment, however, Mr. Basnett bore the burden of proving by a preponderance
of the evidence that he had owned the guns exclusively for collecting or hunting.
See United States v. Hanson, 534 F.3d 1315, 1317 (10th Cir. 2008). The district
court did not adjust the guidelines downward on this basis, and Mr. Basnett
contends that the omission constituted error. We disagree.
The sentencing guidelines advise a downward adjustment in the offense
level if the defendant “possessed all ammunition and firearms solely for lawful
sporting purposes or collection.” U.S. Sentencing Guidelines Manual
§ 2K2.1(b)(2) (2011).
Mr. Basnett states that he owned the guns to hunt. But, he never raised this
issue in the district court; thus, we consider only whether the district court
committed plain error. See United States v. Mendoza, 543 F.3d 1186, 1191 (10th
1
In his reply brief, Mr. Basnett argues that the government did not present
evidence that any of the guns had traveled in interstate commerce. Appellant’s
Reply Br. at 7-8. This argument comes too late, as it did not appear in Mr. Basnett’s
opening brief. See United States v. Ford, 613 F.3d 1263, 1272 n.2 (10th Cir. 2010).
-7-
Cir. 2008). We do not believe that the district court committed plain error by
declining to grant a sua sponte adjustment.
In urging that the court should have made such an adjustment, Mr. Basnett
argues that one of the guns was a type of rifle that would have been used for
hunting. Appellant’s Opening Br. at 29. This argument, even if believed, would
not demonstrate plain error because: (1) Mr. Basnett did not present any evidence
to the district court to suggest that he had used the rifle solely to hunt, and (2) the
government presented evidence that there were fourteen guns in the home; and
even now, Mr. Basnett does not suggest that he had used any of the other guns
solely to hunt. As noted above, Mr. Basnett would have been entitled to a
downward adjustment only if he showed that he had kept all of the guns and the
ammunition—rather than just one of the fourteen guns—solely to hunt or collect.
Thus, even if we were to credit Mr. Basnett’s unproven factual assertion in this
appeal, we would not regard the absence of a downward adjustment as plain error.
In addition to claiming that the rifle was useful for hunting, Mr. Basnett
contends that he owned the guns solely for collection. The parties disagree about
whether this issue was properly preserved. Even if it had been preserved,
however, the district court did not err by declining to address the possibility of a
downward adjustment.
Mr. Basnett raised the issue in his sentencing memorandum, stating that
three of the guns were bought as heirlooms for children and that a fourth gun (the
-8-
stolen .270 Winchester rifle) had been possessed “for collection purposes.” R.
vol. 1, at 22-23. But Mr. Basnett did not present evidence to support this
statement; and even if we were to accept the statement at face value, it would not
have accounted for ten of the fourteen firearms found in Mr. Basnett’s home. As
a result, the district court did not err by declining to grant a downward adjustment
or to discuss this issue.
III. Possession of the Firearms in Connection with a Separate Felony
The guidelines allow a sentencing enhancement for possession of firearms
in connection with a separate felony. U.S. Sentencing Guidelines Manual
§ 2K2.1(b)(6) (2011). The district court applied this enhancement, finding that
Mr. Basnett had kept the guns in connection with his concealment of stolen
property. Mr. Basnett challenges this finding, and we must decide whether the
finding constituted clear error. See United States v. Bunner, 134 F.3d 1000, 1006
(10th Cir. 1998). It did not.
The district court could apply the enhancement if the weapon had the
potential to facilitate a separate felony offense. U.S. Sentencing Guidelines
Manual § 2K2.1(b)(6) cmt. n.14(A) (2011). In applying this test and invoking the
enhancement, the district court relied on the volume of stolen merchandise at Mr.
Basnett’s home and the proximity of his guns to the stolen property. R. vol. 2, at
10-11. Mr. Basnett argues that the district court:
-9-
! lacked sufficient evidence of a theft ring because the testimony
consisted of hearsay or double hearsay, and
! lacked sufficient evidence for an inference to link the guns to a
separate offense involving stolen property.
We reject both arguments.
A. Use of Hearsay
In part, Mr. Basnett challenges the finding that he had committed another
felony. This challenge is based on the trial court’s use of hearsay. The hearsay
consisted of out-of-court statements by Jason Sears, Eddie Arnold, and Mr.
Basnett’s son to officers who repeated the statements to Agent Stephens.
According to Mr. Basnett, the trial court improperly relied on the hearsay
testimony in finding that he had stolen property. 2 And, without that finding, the
enhancement would have been improper because Mr. Basnett could not have used
a firearm to commit a non-existent felony. We reject Mr. Basnett’s contention.
Our analysis of the contention involves three steps:
! whether Mr. Basnett preserved an objection to the use of hearsay,
! whether the hearsay statements contained minimal indicia of
reliability, and
2
Mr. Basnett contends that the district court relied on a felony involving
concealment of stolen property. This contention is inaccurate. The district court
relied on a crime involving transportation of stolen property. Concealment and
transportation of stolen property are separate crimes. Concealment is a crime under
Oklahoma law, and interstate transportation is a crime under federal law. See Okla.
Stat. tit. 21, § 1713(B) (2011); 18 U.S.C. § 2314 (2006).
-10-
! whether the district court committed clear error in its finding.
The government contends that we should confine our review to plain error
because Mr. Basnett did not object to the admissibility of the out-of-court
statements. Mr. Basnett responds that defense counsel argued to the district court
that it should not rely on the out-of-court statements. We need not decide
whether the plain-error standard applies because we would affirm even under a
more rigorous standard of review. Still, we should address the nature of defense
counsel’s objection because it bears on our inquiry.
Defense counsel argued against reliance on the out-of-court statements, but
did not object to their admissibility. On appeal, Mr. Basnett appears to make the
same argument, challenging the district court’s reliance on the out-of-court
statements rather than their admissibility.
We can assume, for the sake of argument, that defense counsel’s argument
sufficiently preserved the objection. But, even so, we would consider only
whether the district court’s finding was clearly erroneous. See United States v.
Backas, 901 F.2d 1528, 1529 (10th Cir. 1990) (holding that the sufficiency of
evidence for a sentencing enhancement was “primarily factual,” requiring
application of the clearly erroneous standard). Applying this standard, we
conclude that the finding was not clearly erroneous.
In arguing that the finding did constitute clear error, Mr. Basnett relies
largely on the fact that Mr. Sears was a convicted felon and that the statements
-11-
made by Mr. Sears and Mr. Arnold constituted double hearsay. We may assume,
for purposes of argument, that these statements involved double hearsay. But, the
district court could rely on double hearsay as long as the statements contained
minimal indicia of reliability. See United States v. Lopez, 100 F.3d 113, 120
(10th Cir. 1996) (“Hearsay statements need only contain minimal indicia of
reliability to be used at sentencing.”).
The district court could reasonably infer reliability from the existence of at
least some corroboration. For example, Mr. Sears told investigators that they
would find a .270 Winchester rifle (with some unique characteristics) at the
Basnett home—and they did. R. vol. 2, at 88. Mr. Sears told investigators that
the rifle had been stolen, and Agent Ashley Stephens testified that officers were
able to corroborate this statement through a record review. Id.
Apart from the out-of-court statements by Mr. Sears, Mr. Arnold, and Mr.
Basnett’s son, authorities were able to confirm from “over a hundred pages of
documentation” that many of the items in Mr. Basnett’s home had been stolen. Id.
at 123.
Mr. Basnett argues that the district court could not rely on this
documentation because it was not included in the record. Appellant’s Reply Br.
at 16. For this proposition, he relies on United States v. Boyd, 289 F.3d 1254
(10th Cir. 2002). Appellant’s Reply Br. at 16. This decision is inapplicable, and
-12-
Mr. Basnett confuses the need for record evidence supporting the enhancement
and the need for corroboration.
Agent Stephens’s testimony about the documentary evidence served only to
support the reliability of his testimony about the out-of-court statements to other
officers. The district court could rely on the testimony about this documentary
evidence to decide whether the hearsay testimony was reliable.
Boyd does not suggest otherwise. There, the district court attempted to
account for two different measurements of drug quantity. See United States v.
Boyd, 289 F.3d 1254, 1257 (10th Cir. 2002). Rather than try to reconcile the
difference through the evidence, the district court looked to case law and found
opinions referring to decreases in drug quantity with the passage of time. See id.
The district court relied on these decisions, rather than evidence, to arrive at its
own finding on drug quantity. Id. We held that the court could not rely on
evidence outside the record. Id. at 1258-60. But, we did not say—and have never
said—that a district court is powerless to find reliability based on testimony about
the content of supporting documents. Thus, we reject Mr. Basnett’s contention
that the district court improperly relied on the documentary evidence discussed by
Agent Stephens.
In addition to complaining about the omission of this documentary proof
from the record, Mr. Basnett argues that one witness, Mr. Kyle Eller, gave an out-
of-court statement that accounted for at least some of the property believed to be
-13-
stolen. The government presented evidence that two Kubota tractors had been
stolen, and Mr. Eller said that he and Mr. Basnett had bought something from a
Kubota dealer. R. vol. 2, at 56-57, 89-90, 110. But, Mr. Eller also told
investigators that he had been asked by Mr. Basnett to store a skid loader. Id. at
109. And, according to Agent Stephens, authorities were eventually able to
confirm that this skid loader had been stolen. Id. at 107.
Because Agent Stephens’s out-of-court statements were corroborated, the
district court could reasonably rely on them to find that Mr. Basnett had a
substantial volume of stolen merchandise in his home. Thus, the district court’s
finding did not constitute clear error.
B. Connection Between the Gun Possession and Transportation of
Stolen Property
The record also provided a reasonable basis to link the guns to a separate
offense involving transportation of stolen property.
The evidence indicated that 60 stolen items were found in Mr. Basnett’s
home. Id. at 106-07. And the government presented evidence that Mr. Basnett
had participated in a theft ring that involved hundreds of thousands of dollars. Id.
at 57.
With the stolen property, Mr. Basnett had an extensive supply of guns and
ammunition throughout his home. As discussed above, authorities saw fourteen
different guns between the two searches. The authorities also found:
-14-
! sixteen rounds of .243 ammunition,
! five boxes of .270 ammunition,
! four boxes of 12 gauge ammunition,
! two boxes of .300 Winchester Magnum ammunition,
! one box of .38 Special ammunition,
! one box of .45 caliber ammunition, and
! two boxes and nine rounds of 20 gauge ammunition.
Id. at 62-63.
Some guns were under Mr. Basnett’s bed, and others were in a child’s room
and in a dresser drawer. Id. at 64, 78, 99-101. According to one individual living
in the home, there were several guns “out in the open.” Id. at 124. Other
evidence indicated that the guns had been moved “back and forth from room to
room.” Id.
From the volume of stolen property, guns, and ammunition at the home, the
sentencing judge could reasonably infer that Mr. Basnett kept the guns in
connection with his transportation of stolen property. The guns were spread
throughout the home, with some out in the open. From this evidence, the district
court could reasonably have inferred that Mr. Basnett had the guns out in the open
so that he could use them to safeguard his stash of stolen merchandise. See
United States v. Waltower, 643 F.3d 572, 578 (7th Cir. 2011) (holding that the
accessibility of a loaded handgun supported the enhancement under section
-15-
2K2.1(b)(6) because the firearms had the potential to facilitate a drug trafficking
offense).
The court could also reasonably have inferred that Mr. Basnett kept the
guns for protection. The theft ring involved hundreds of thousands of dollars, and
Mr. Basnett had 60 stolen items in his home. The court could legitimately have
inferred that Mr. Basnett needed to keep the guns to secure his stolen property.
See United States v. Justice, 679 F.3d 1251, 1255 (10th Cir. 2012) (holding that
the enhancement can be applied if possession of a firearm could embolden the
possessor to commit an offense). After all, if others were to steal from Mr.
Basnett, he could scarcely have called the police. Thus, the district court could
reasonably have inferred that the extensive supply of guns and ammunition
provided Mr. Basnett with his sole source of protection. In these circumstances,
the district court did not commit clear error in finding that Mr. Basnett had
possessed one or more guns in connection with a separate felony. See United
States v. Rogers, 594 F.3d 517, 522 (6th Cir. 2010) (upholding application of the
enhancement because the defendant’s possession of a gun at his home had the
potential to facilitate his unlawful “chop-shop,” because “chop-shop customers
are by definition not law-abiding” and the defendant could not call the police if a
customer decided to steal his parts), vacated on other grounds, __ U.S. __, 131 S.
Ct. 3018 (2011) (mem.).
IV. Substantive Reasonableness of the Sentence
-16-
Mr. Basnett argues that his sentence was substantively unreasonable. We
reject this argument.
In addressing this argument, we consider whether the district court abused
its discretion. Gall v. United States, 552 U.S. 38, 51 (2007). And in determining
whether the court abused its discretion, we give substantial deference to its
selection of an appropriate sentence. United States v. Smart, 518 F.3d 800, 806
(10th Cir. 2008). We presume the sentence is substantively reasonable when it
falls within the sentencing guideline range. United States v. Reyes-Alfonso, 653
F.3d 1137, 1145 (10th Cir. 2011).
The district court did not abuse its discretion. In sentencing Mr. Basnett to
37 months in prison and 2 years of supervised release, the district court discussed
the pertinent factors under 18 U.S.C. § 3553 and ultimately chose the lowest
possible sentence under the guidelines. The district court acted within its
discretion; thus, we reject Mr. Basnett’s contention based on substantive
reasonableness.
V. Conclusion
The district court did not err in applying the sentencing guidelines. In
applying these guidelines, the court could justifiably find that Mr. Basnett
possessed eight or more “firearms.” Once the court made this finding, it could
also apply an enhancement based on possession of the guns in connection with the
transportation of stolen property, and the court had no obligation to provide a
-17-
downward adjustment based on exclusive use of the firearms for hunting or
collecting. The eventual sentence, falling at the bottom of the guideline range,
was substantively reasonable. As a result, we affirm.
-18- | 01-03-2023 | 11-21-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2414185/ | 432 F. Supp. 2d 948 (2006)
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, and
Rodney Graves, Plaintiff-Intervenor
v.
UMB BANK, N.A., Defendant.
No. 04-1084-CV-W-GAF.
United States District Court, W.D. Missouri, Western Division.
March 17, 2006.
*949 *950 Barbara A. Seely, Jan Shelly, St. Louis, MO, for Plaintiff.
Lynne J. Bratcher, Kristi L. Kingston, Bratcher Gockel & Kingston, L.C., Kansas City, MO, for Plaintiff-Intervenor.
William C. Martucci, Carrie McAtee, Shook, Hardy & Bacon LLP, Kansas City, MO, for Defendant.
ORDER
FENNER, District Judge.
Presently before the Court is a Motion for Partial Summary Judgment, filed pursuant to Fed.R.Civ.P. 56(c) ("Rule 56(c)") by Plaintiff, Equal Employment Opportunity Commission (the "EEOC"). (Doc. # 61). The EEOC moves the Court for summary judgment on the issue of whether it made a good faith effort to conciliate Plaintiff-Intervenor Rodney Graves' ("Graves") charge of employment discrimination as required under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq ("Title VII"). Id. The EEOC argues that it is entitled to summary judgment on this issue because the undisputed facts establish that it made a good faith effort to conciliate Graves' charge of discrimination. Id. Defendant, UMB Bank, N.A. ("UMB") opposes this Motion, arguing that partial summary judgment should not be granted because the EEOC did not make a good faith effort to conciliate Graves' charge of employment discrimination before filing suit. (Doc. # 73). Having reviewed the evidence submitted by the parties, the EEOC's Motion is DENIED and this case is STAYED for a period of sixty (60) days from the date of this Order.
DISCUSSION
I. Facts
This case arises from the EEOC's allegations that UMB discriminated against Graves in violation of the Americans with Disabilities Act ("ADA") by refusing to hire him for a Customer Service Representative[1] position based on his disability.[2] (Doc. # 1). In its complaint, the EEOC asserts that "all conditions precedent to the institution of this lawsuit have been fulfilled." Id. UMB denied this averment in its answer. (Doc. # 7). The issue presented in the instant Motion is whether the EEOC engaged in good faith efforts to conciliate Graves' charge of employment discrimination prior to filing suit, as required by Title VII, 42 U.S.C. § 2000e-5(b). (Doc. # 61-1).
Graves filed his charge of discrimination on April 8, 2003. (Doc. # 73-1). On April 21, 2003, UMB submitted a timely response to the charge. (Bretches Depo. 25:3-24). Based on UMB's response, EEOC investigator Mark Bretches ("Bretches") was aware that UMB's position was that it did not hire Graves because he was not able to perform the essential functions of the job for which he applied. (Bretches Depo. 30:1-6). Bretches also understood UMB's position to be that Graves discussed his need for voice recognition software in order to perform the Customer Service Representative job, but that voice recognition software was not a viable accommodation. (Bretches Depo. 27: 11-30:6). Conversely, Bretches understood Graves' position to be that he did not need voice recognition software to perform the Customer Service Representative job. (Bretches Depo. 35:16-23).
*951 On March 24, 2004, Bretches left a voicemail for UMB Human Resources Officer Shannon Andresen-Johnson ("Andresen-Johnson"), stating that the EEOC found reasonable cause to believe that Graves had been discriminated against by UMB on the basis of disability. (Andresen-Johnson Depo. 36:9-13). On March 25, 2004, a teleconference took place between Bretches, Andresen-Johnson, UMB Corporate Counsel Peter Granat ("Granat"), and UMB Senior Vice President of Employee Relations James Rawlings ("Rawlings"). (Doc. # 732-5). During this teleconference, Bretches explained that it was Graves' position that he did not need voice recognition software. (Andresen-Johnson Depo. 37:5-9). UMB informed Bretches that this was the first UMB had learned of Graves' contention that he did not need voice recognition software to do the job. (Andresen-Johnson Depo. 36:7-38:13; 42:10-18; Doc. # 73-5). Bretches explained that UMB would have the opportunity to discuss this concern during the conciliation process. (Andresen-Johnson Depo. 43:10-25; 152:8-153:1; 160:24-161:4; Doc. # 73-5). Granat and Andresen-Johnson requested a meeting with Bretches and Graves regarding the issue of voice recognition software. (Andresen-Johnson Depo. 37:12-38:18). Bretches indicated that he would look into whether a meeting would be an option. Id.
On April 14, 2004, the EEOC issued a Letter of Determination, in which it stated that "[t]he evidence obtained during the investigation establishes violations of the ADA in that Respondent failed to hire Charging Party because of his disability." (Doc. # 61-2). In its Letter of Determination, the EEOC invited UMB to resolve the matter, by informal methods of conciliation. Id. On June 11, 2004, UMB's Vice President of Human Resources, Sharmyn Calhoun ("Calhoun") sent an e-mail to Bretches, in which Calhoun wrote that UMB "[w]ould welcome the opportunity to conciliate this matter with the [EEOC] and Mr. Graves." (Doc. # 61-7).
Sometime shortly thereafter, Granat spoke with Bretches by telephone to discuss the EEOC's findings and the conciliation process. (Doc. # 73-1). Bretches communicated a $3,000,000 settlement demand on behalf of Graves. Id. Granat understood this settlement demand to be non-negotiable. Id. Granat told Bretches that UMB would not be willing to resolve the matter for $3,000,000, and that it would be fruitless for UMB to respond to a $3,000,000 demand. Id. On June 30, 2004, EEOC District Director Lynn Bruner ("Bruner") sent a letter to Graves which stated, "EEOC has determined that efforts to conciliate have been unsuccessful. This letter constitutes notice that the [EEOC] has determined that conciliation had failed." (Doc. # 61-8). Bruner's letter also stated that "no further efforts to conciliate will be made by EEOC" and that the EEOC was "forwarding the case to the Regional Attorney for litigation consideration." Id. Granat was copied on this correspondence. Id.
On July 29, 2004, Bretches sent a letter to Granat, stating:
To clarify our conciliation proposal, please be advised that the EEOC's damage demands are limited by the caps set forth in the Civil Rights Act of 1991. Having said that, the EEOC is willing to conciliate this charge now for backpay for Mr. Graves in the amount of $43,680.00 ($480 per week from November 1, 2002 to July 31, 2004) plus the weekly cost to [UMB] for the same period for any and all fringe benefits that Charging Party would have been entitled to if he had been hired. In addition, the EEOC is seeking $300,000.00 in compensatory damages, the maximum allowed by the applicable statutory cap. The Commission also asks [UMB] to *952 hire [Graves] as a Customer Support & Sales Agent and to provide ADA training to all of its managers and supervisors. Please understand, however, that Mr. Graves continues to demand $3,000,000 to resolve this case and that [UMB's] unilateral conciliation with the EEOC would not effect his right to pursue private litigation.
(Doc. # 61-9). Bretches' July 29, 2004 letter was the first time the EEOC's conciliation proposal, as opposed to Graves' conciliation proposal, was communicated to UMB. (Bretches Depo. 47:11-48:23; 52:20-53:10).
On July 30, 2004, Granat sent correspondence to Bruner, explaining that UMB was unaware that Graves did not need voice recognition software to perform the essential functions of the job until Bretches first informed UMB of the results of the EEOC's investigation. (Doc. # 61-10). On or around August 5, 2004, Granat spoke with Bretches over the telephone regarding the settlement proposals of both the EEOC and Graves. (Doc. # 73-5). During that conversation, Granat expressed UMB's willingness to conciliate and told Bretches that UMB would respond to the EEOC's new conciliation proposal. Id. Regarding Graves' settlement demand of $3,000,000, Granat told Bretches that UMB would not simply open its checkbook and give Graves a $3,000,000 handout. Id.
On August 18, 2004, Bretches sent correspondence to Granat responding to the points Granat raised in his letter of July 30, 2004. (Doc. # 61-11). On August 30, 2004, Bretches sent correspondence to Granat asking Granat to forward UMB's conciliation proposal by September 7, 2004, and stating that Bretches would assume that UMB was no longer interested hi conciliation if he did not hear from Granat by September 7, 2004. (Doc. # 61-12). The same day, Granat sent correspondence indicating that UMB intended to respond to the EEOC's proposal but was unsure whether it could do so by September 7. (Doc. # 61-13).
On September 15, 2004, Granat sent a letter to Bruner and forwarded a copy of a telephone interview with William Hawkins ("Hawkins"), the UMB employee who interviewed Graves and would have been his supervisor had Graves been hired. (Doc. # 61-14). Granat indicated that there had possibly been a "failure to communicate" with respect to the possible hiring of Graves and offered Graves the chance to return to UMB and see if Graves could perform the essential functions of the job. Id. Accordingly, Granat stated that UMB was willing to offer Graves the position he applied for as long as he was able to fulfill the essential functions of the position. (Doc. # 61-14). On September 28, 2004, Bruner sent a letter to Granat, stating that Hawkins' telephone interview did not change the EEOC's view of the merits of the case. (Doc. # 61-15). Bruner asked Granat to communicate UMB's conciliation proposal to Bretches by October 8, 2004 and stated that if the EEOC did not hear from UMB within that time period, the EEOC would consider conciliation efforts to have failed. Id.
On October 1, 2004, Granat sent correspondence to Bretches, reiterating UMB's proposal to employ Graves in the position for which he applied if he was able to perform the essential functions of the job. (Doc. # 61-16). Granat's letter further stated that UMB wished to meet with Bretches and Graves and, in the event that Graves could not carry out the essential functions of the job for which he applied, UMB was willing for Graves to apply for other available positions for which Graves was qualified. Id. On October 5, 2004, Bruner sent a letter to Granat stating that the EEOC had determined that efforts to *953 conciliate had been unsuccessful and that no further conciliation effort would be made. (Doc. # 61-17).
Granat sent Bruner a letter on October 7, 2004 emphasizing UMB's continued willingness to conciliate. (Doc. # 61-18). On October 15, 2004, Bruner, by Billie Ashton ("Ashton"), sent Granat a letter indicating that the EEOC was forwarding the case to headquarters for possible litigation but that the EEOC would consider any further settlement proposal that UMB wished to make. (Doc. # 61-19). On November 5, Granat sent Ashton a letter indicating that it would offer $15,000 to resolve the case and reiterating UMB's desire to meet in person to discuss the issues involved. (Doc. # 61-20). Robert Johnson ("Johnson"), Regional Attorney for the EEOC, responded by a letter dated November 10, 2004. (Doc. # 61-21). Johnson indicated that the EEOC would lower its $300,000 offer to $295,000 but that it did not believe a meeting would be fruitful in light of the fact that the parties were very far apart in terms of a monetary settlement. Id.
On November 10, 2004, Granat sent a letter to Johnson, again conveying UMB's willingness to conciliate and UMB's request for a face to face meeting. (Doc. # 61-22). Johnson responded on November 19, 2004 indicating that the EEOC would still consider any further settlement offers that UMB wished to make, but noted that "the time for a confidential settlement grows ever shorter." (Doc. # 61-23). The EEOC filed suit on December 1, 2004. (Doc. # 1).
II. Standard
Under Rule 56(c), summary judgment is appropriate when 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 the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). When the evidence supports conflicting conclusions, a genuine issue of material fact exists and summary judgment should be denied. Kells v. Sinclair BuickGMC Truck, Inc., 210 F.3d 827 (8th Cir.2000). When considering this Motion, the Court views all facts in the light most favorable to UMB and gives it the benefit of all reasonable inferences. See Prudential Ins. Co., 121 F.3d at 366.
In the instant case, EEOC is asking this Court for a declaration that, as a matter of law, it engaged in sufficient efforts to conciliate Graves' charge of employment discrimination as required by Title VII. However, if the Court finds that the EEOC's conciliation efforts were insufficient to comply with the requirements set forth in Title VII, dismissal is too harsh a remedy in the absence of grossly unreasonable conduct or substantial prejudice to UMB. See EEOC v. Klingler Elec. Corp., 636 F.2d 104, 107 (5th Cir.1981). Instead, the appropriate remedy is to temporarily stay the action, as permitted by 42 U.S.C. § 2000e-5(f)(1), thus requiring the parties to resume conciliation efforts. Id.
III. Analysis
Under Title VII, the EEOC is obligated to conciliate in good faith before filing suit. 42 U.S.C. § 2000(e)-5(b); EEOC v. Asplundh Tree Expert Co., 340 F.3d 1256, 1260 (11th Cir.2003) ("[t]he duty to conciliate is at the heart of Title VII") (citations omitted); EEOC v. Keco Indus., Inc., 748 F.2d 1097, 1102 (6th Cir.1984). The EEOC's statutory duty to conciliate embodies "the congressional intent that enforcement be effected wherever possible without resorting to formal litigation." Marshall v. Sun Oil Co., 592 F.2d 563, 565 (10th Cir.1979). One court described the purpose of the conciliation process as follows:
*954 [I]t is clear that Congress placed great emphasis upon private settlement and the elimination of unfair practices without litigation on the ground that voluntary compliance is preferable to court action. Indeed, it is apparent that the primary role of the EEOC is to seek elimination of unlawful employment practices by informal means leading to voluntary compliance.
Hutchings v. United States Indus., 428 F.2d 303, 309 (5th Cir.1970) (citations omitted).
To satisfy the statutory requirement of good faith conciliation, the EEOC must "(1) outline to the employer the reasonable cause for its belief that the law has been violated; (2) offer an opportunity for voluntary compliance; and (3) respond in a reasonable and flexible manner to the reasonable attitudes of the employer." Asplundh, 340 F.3d at 1259 quoting EEOC v. Klingler Electric Corp., 636 F.2d 104, 107 (5th Cir.1981); EEOC v. Johnson & Higgins, Inc., 91 F.3d 1529, 1534 (2nd Cir. 1996); EEOC v. One Bratenahl Place Condominium Assoc., 644 F. Supp. 218, 221 (N.D.Ohio 1986). Whether the EEOC has adequately fulfilled its obligation to conciliate is dependent upon the "reasonableness and responsiveness of the [EEOC's] conduct under all the circumstances." Asplundh, 340 F.3d at 1259 quoting Klingler, 636 F.2d at 107; see also EEOC v. Sears, Roebuck & Co., 650 F.2d 14, 19 (2nd Cir. 1981). The EEOC's efforts should be considered sufficient if it made a sincere and reasonable attempt to negotiate by providing UMB with an "adequate opportunity to respond to all charges and negotiate possible settlements." Bratenahl, 644 F.Supp. at 220 quoting Marshall v. Hartford Fire Ins. Co., 78 F.R.D. 97, 107 (D.C.Conn. 1978).
In the instant case, the EEOC argues that the undisputed facts establish that, as a matter of law, the EEOC made good faith efforts to conciliate. UMB argues that, in light of UMB's repeated requests for a face-to-face meeting, the EEOC's refusal to conduct a face-to-face meeting is evidence of the EEOC's unreasonableness and lack of good faith. Indeed, the EEOC's efforts to conciliate have been found to be inadequate where the EEOC has refused to meet with the employer. See, e.g., EEOC v. Pacific Maritime Assoc., 188 F.R.D. 379, 380-81 (D.Or. 1999) (no good faith conciliation where the EEOC failed to explain the basis for its damages calculation and refused several requests by the employer to schedule a face-to-face meeting); EEOC v. First Midwest Bank, N.A., 14 F. Supp. 2d 1028, 1032-1033 (N.D.Ill.1998) (no good faith effort to conciliate where EEOC refused to meet with employer despite repeated requests); Bratenahl, 644 F.Supp. at 221 (no good faith conciliation where employer "indicated its willingness to meet and negotiate a conciliation [and][s]uch a meeting would have provided a forum for the free exchange of ideas and proposals to hopefully reach mutually accepted remedies"). Though face-to face conciliation meetings are not statutorily required, "failure to hold a conciliation conference has been an important factor in determining that [the EEOC] has not fulfilled its statutory duty to conciliate." EEOC v. Hugin Sweda, Inc., 750 F. Supp. 165, 167 (D.N.J.1990) (citations omitted).
In the instant case, the Court finds that it was unreasonable of the EEOC to refuse UMB's repeated requests for a conciliation conference. At the heart of this case is Graves' ability, or lack thereof, to perform the essential functions of the position for which he applied. Although the EEOC sent letters, held phone conferences, and solicited monetary offers from UMB, the EEOC nevertheless refused UMB the opportunity to evaluate the crucial issue of whether Graves was in fact capable of *955 performing the essential functions of the position for which he applied.
The EEOC provided UMB with no basis for its conclusion that Graves did not require voice recognition software, other than Graves' own assertion that such software was not required. Without the opportunity to assess Graves' ability to perform the Customer Service Representative position, UMB had no foundation from which to engage in meaningful conciliation discussions or to generate a conciliation proposal. Accordingly, the Court finds that the EEOC denied UMB an "adequate opportunity to respond to all charges and negotiate possible settlements," Bratenahl, 644 F.Supp. at 220, and that the EEOC did not respond in a "reasonable and flexible manner to the reasonable attitudes of the employer." Asplundh, 340 F.3d at 1259. Therefore, partial summary judgment in favor of the EEOC is not appropriate.
CONCLUSION
The Court finds that the EEOC's refusal to meet with UMB regarding Graves' claim and his ability to perform the essential functions of the position for which he applied was not reasonable under the circumstances. Accordingly, the EEOC's Motion for Partial Summary Judgment is DENIED and this case is hereby STAYED for a period of sixty (60) days from the entry of this Order.
IT IS SO ORDERED.
NOTES
[1] The Customer Service Representative is required to talk on the telephone to customers and simultaneously use a computer. (Doc. # 61-10, # 61-13).
[2] Graves is a quadriplegic. (Doc. # 73-3) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1798069/ | 481 S.W.2d 930 (1972)
NUECES COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 3, Appellant,
v.
TEXAS WATER RIGHTS COMMISSION et al., Appellees.
No. 11906.
Court of Civil Appeals of Texas, Austin.
May 17, 1972.
Rehearing Denied June 21, 1972.
*931 Roger C. Butler, Robstown, Vinson, Elkins, Searls & Smith, Victor W. Bouldin, Clifford W. Youngblood, Houston, for appellant.
James R. Riggs, City Atty., Corpus Christi, I. M. Singer, Wood, Burney, Nesbitt & Ryan, Allen Wood, Corpus Christi, Baker & Botts, Edward S. Howell, Houston, Timothy L. Brown, Austin, for Texas Water Rights Commission.
Crawford C. Martin, Atty. Gen., Nola White, First Asst. Atty. Gen., Roger Tyler and Vince Taylor, Asst. Attys. Gen., Austin, for other appellees.
SHANNON, Justice.
The main question to be decided is whether a conservation and reclamation district, under the circumstances of this case, could change the use of irrigation waters under its certified filing to municipal and domestic purposes as conditions change without filing an amendment to its certified filing and obtaining the approval of the Texas Water Rights Commission. We hold that it could.
This is a companion case to No. 11,907, Nueces County Water Control and Improvement District No. 3 v. Texas Water Rights Commission et al., 481 S.W.2d 924, which was decided by this Court today.
Appellant, Nueces County Water Control and Improvement District No. 3, appeals from the judgment of the District Court of Travis County sustaining the order of the Texas Water Rights Commission[1] dated February 7, 1968. The Commission's order, seemingly, was a partial cancellation of appellant's claimed rights under Certified Filing No. 70 and Permit No. 529. The appellees are the Commission and the City of Corpus Christi.[2] We will reverse the judgment of the trial court, and here render judgment that the order of the Commission dated February 7, 1968, be set aside and annulled.
In this summary the facts set out in the companion case will not be repeated unless necessary. Appellant, a conservation and reclamation district, was created in 1921 and since that time it has been the only source of water for Robstown. Appellant also supplies water to farms within its boundaries primarily for irrigation purposes. As Robstown's population increased, its metropolitan population now being about 21,000, its urban area occupied farmlands formerly supplied irrigation water by appellant. Appellant has acquired by deed all water rights for 372 acres which have been changed from farming to urban development, and the owners of about 3,750 acres have authorized appellant to change the portion of the irrigation waters to *932 which their land is entitled to the higher use of municipal and domestic purposes.
Appellant owns two water rights, Certified Filing No. 70 and Permit No. 529. Certified Filing No. 70 allows appellant to irrigate a total of 4,303.1 acres. Appellant is empowered by Permit No. 529 to appropriate 2,774 acre-feet of water per year for the irrigation of 1,109.5 acres and 166 acre-feet per year for a water supply for Robstown.
The 166 acre-feet of water for municipal purposes mentioned in Permit No. 529 soon became inadequate to supply Robstown. In 1926 appellant reported to the Commission's predecessor that it had used 185 acre-feet of water for municipal purposes. And after 1926 each yearly water service report showed steady increases in the annual quantities of water used for municipal purposes in keeping with the growth of Robstown. By 1947 municipal uses of the water had increased to 1,204 acre-feet per annum and to 1,515.65 acre-feet per annum by 1963. Though the Commission was notified of the increase of municipal uses for thirty-eight years, it made no effort to stop the practice until the initiation of the cancellation proceedings on December 1, 1965.
By its order of February 7, 1968, the Commission attempted to forfeit and cancel appellant's right to irrigate 1,146 acres of land under Certified Filing No. 70 by reducing the authorized acreage from 4,306 acres to 3,160 acres. Its order also presumed to limit the use of water under Certified Filing No. 70 to irrigation purposes only, and to limit appellant's total water rights for municipal and domestic use to the 166 acre-feet authorized for these purposes under Permit No. 529.
In summary, the Commission attempted to forfeit that portion of Certified Filing No. 70 which had been converted from irrigation to municipal and domestic uses prior to the hearings and to foreclose appellant's right to continue to convert water from irrigation to municipal and domestic uses as the need for irrigation declines and the need for municipal and domestic uses increases.
The judgment of the trial court sustained the Commission's order and the trial court concluded as a matter of law that appellant could not change the purpose of use of any water under Certified Filing No. 70 until it had applied for and obtained from the Commission an amendment authorizing such change. The appellees' position in the trial and here is that appellant could not, without amending Certified Filing No. 70 through Commission action, convert water formerly used for irrigation purposes under Certified Filing No. 70 to municipal and domestic purposes, and that as irrigation is reduced by urban spread, the water right is lost to that extent. Underlying the City's interest in this proceeding is its claim in the Nueces County lawsuit that appellant should be required to pay the City for all water used by appellant for municipal and domestic purposes over the 166 acre-feet per annum authorized by Permit No. 529, a claim for $218,143.51 in addition to $22,000.00 per year for each year after 1965.
Appellant's position is that it is authorized to change the use of irrigation waters under Certified Filing No. 70 to municipal and domestic purposes as conditions change and as the need of the people for the one use decreases and the need for the other use increases without being required to obtain an amendment to Certified Filing No. 70 from the Commission. We sustain appellant's position for several reasons.
Art. 7880-4a[3] empowers the directors of a district, such as appellant, to withdraw water from an inferior use, e. g. irrigation, to a superior use, e. g. domestic and municipal use.
Art. 7880-4a provides as follows:
"Preference in use of water.
Districts organized under the provisions of this Act may in the discretion *933 of their directors award use of waters of the district in the following order of preference and superiority, viz.:
1st. Domestic and municipal use;
2nd. Industrial use, other than the development of hydro-electric power;
3rd. Irrigation;
4th. Development of hydro-electric power:
5th. Pleasure and recreation.
Where the welfare of the district may require, the directors of such district may withdraw water from an inferior use and appropriate such water to a superior use, as hereinabove given discretionary preference. Whenever such diversion or withdrawal will affect a vested right, such withdrawal or diversion must be after condemnation proceedings as provided for in Section 126 of this Act. Acts 1925, 39th Leg., p. 86, ch. 25, § 4a, added Acts 1927, 40th Leg., 1st C. S., p. 496, ch. 107, § 3."
There is nothing in Art. 7880-4a or any other statute, of which we are aware, which would require a district to obtain the approval of the Commission before it could exercise the discretionary power which is vested solely in its directors.
The only condition stated in the statute is that a district must condemn any vested right which would be adversely affected by such conversion. There has been no showing made in this record of any injury caused by appellant's conversion. The owners of 70 percent of the irrigatable land in appellant's boundaries have consented to and encouraged such conversion and appellant has conveyances to all water rights to which 372 acres of land formerly under irrigation are entitled. Similarly, the City neither pleaded nor proved any adverse effect which the conversion would have on any of its vested rights.
Nor have we been shown a statute authorizing the Commission to amend a certified filing or requiring the Commission's approval before the purpose of use of water appropriated under a certified filing may be changed. With respect to the rules and regulations of the Commission, until 1964, they contained nothing concerning certified filings. The first rules and regulations were adopted in 1914, and there were revisions in 1917, 1925, 1945, 1953, 1955 and 1964. In the 1964 revision, Rules 605.1 and 605.2 provide procedures for amending "an existing water right" without public hearing and Rules 610.1 and 610.2 provide procedures for amending "permits and certified filings." Rules 610.1 and 610.2 may not be applied retroactively to invalidate appellant's conversion of water under Certified Filing No. 70.
Clark v. Briscoe, 200 S.W.2d 674 (Tex. Civ.App.1947, no writ) is not controlling in this case. The question there was whether or not the owner of a permit issued by the Commission after 1913 could change the place and purpose of use of his water from that specifically authorized in the permit. A certified filing was not involved. The rationale of Clark, supra, is that the necessity for obtaining approval of the Commission to change the authorized place or purpose of use of water under a permit is implied from the statutory policy and requirements relating to the grant of a permit in its original form, including the Commission's approval of the original place and purpose of use. Those reasons are absent in the instance of a certified filing since the State's approval of the place and purpose of use was not required in initiating a certified filing.[4]
We reverse the judgment of the trial court and here render judgment that the Commission's order of February 7, 1968 be set aside, and held for naught.
Reversed and rendered.
NOTES
[1] Usually referred to as the "Commission" in this opinion.
[2] Usually referred to as the "City" in this opinion.
[3] References are to Vernon's Texas Civil Statutes.
[4] See: The Irrigation Act of 1889 (Chap. 88, p. 100, General Laws, 1889); The Irrigation Act of 1895 (Chap. 21, p. 21, (751), General Laws, 1895); The "Burges-Glasscock Act" (Chap. 171, p. 358, General Laws, 1913). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418473/ | 580 S.W.2d 645 (1979)
GULF INSURANCE COMPANY, Appellant,
v.
TEXAS CASUALTY INSURANCE COMPANY, Appellee.
No. 18085.
Court of Civil Appeals of Texas, Fort Worth.
April 12, 1979.
Rehearing Denied May 10, 1979.
*646 Lang, Cross, Ladon, Boldrick & Green, and Allan K. Dubois and Stephen Lang, San Antonio, for appellant.
Hilgers, Watkins & Hays and David W. Hilgers, Austin, for appellee.
OPINION
MASSEY, Chief Justice.
Gulf Insurance Company has appealed from a take nothing judgment entered following trial before the court without intervention of a jury of its suit against Texas Casualty Insurance Company.
We affirm.
We will later discuss the issues between the parties upon Gulf's contention that there had been a waiver by Texas Casualty of right to rely upon the provisions of its insurance policy to defeat the claim against it, and upon estoppel to rely thereon. We will first state and discuss the meaning and validity of the provisions. Incidentally, the very same provisions upon which Texas Casualty relies are likewise to be found in the policy of Gulf Insurance Company.
The claim by Gulf was not originally its own. The claim upon which it declared by its suit was transferred to it and subrogated and assigned on October 14, 1971. The *647 subrogation instrument was executed by Glastron Boat Company, and by one Bewell W. Plant, Jr., who at all times material was the truck driver for Glastron.
Pursuant to proceedings by method of friendly suit, with judgment rendered on November 10, 1971, Gulf, for the benefit of Glastron and Plant, settled a case of great potentiality as to liability and damages as result of the death of a man by the name of Junior W. Roberts. The potential tort liability of Glastron and Plant was outgrowth of a collision on or about July 1, 1971. Plant was driving a truck, rented by Glastron from a truck rental company. In the State of Kentucky he caused or allowed the same to come into collision with another truck in which Mr. Roberts was occupant. Because of the force of the collision Roberts suffered injuries resulting in his death.
On the occasion of that collision the insurance policy of Gulf was in force and effect upon the rented truck; the insurance policy of Texas Casualty was no doubt in force and effect upon the semi-trailer being towed, it being the property of Glastron and containing its products. (Whether Gulf's policy was or was not in force is immaterial to disposition of its suit against Texas Casualty.)
The "no action" clause in the Texas Casualty policy:
"ACTION AGAINST COMPANY: No action shall lie against the company, unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of the policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company. ..." (Emphasis supplied.)
The "subrogation" clause contained in the Texas Casualty policy provides:
"Subrogation: In the event of any payment under this policy the company shall be subrogated to all the insured's rights of recovery therefor against any person or organization and the insured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights. The insured shall do nothing after loss to prejudice such rights." (Emphasis supplied.)
It is upon the two provisions aforesaid in the policy of Texas Casualty Insurance Company, in particular the language of each clause which we have lent emphasis, that said insurance company defended the suit, originally that of Glastron Boat Company and its driver, and by subrogation and assignment become the claim of Gulf Insurance.
It was by the identical subrogation clause in its own policy of insurance that Gulf Insurance Company (which settled and extinguished the claims against Glastron and Plant growing out of the fatal collision of July 1, 1971, upon the theory that Gulf did in fact insure them against liability under its policy) sought and obtained execution of the subrogation agreement. It is plain from the record that Gulf, at and prior to the time such settlement, knew that a dispute existed between Gulf and Texas Casualty upon the matter of which of the two companies was the correct insurer of Glastron and Plant. The conclusion of the trial court, by which we hold such court not to have erred, was that Gulf, (being unable to obtain the agreements it desired from Texas Casualty immediately prior to the time it effected settlement of the potential liability of Glastron and Plant), chose of its own volition to proceed and accomplish the settlement. In its presentation to the trial court and to this court Gulf showed that it chose to "place a ceiling" on the amount anticipated to eventually become the subject matter of the dispute. That dispute concerned which company stood contractually bound, or, in the event a right of either to compel contribution from the other, the correct amounts each company was obligated to pay in making the total of the settlement amount paid by Gulf.
Texas Casualty Insurance Company, absent waiver or estoppel, was entitled to rely upon and to have its acquittal of liability *648 under the "no action" clause of its policy covering Glastron and Plant. There not having been any actual trial, and the parties having contracted that Texas Casualty should have no liability by its policy until the obligation to pay on the part of those insured by the policy had been finally determined by judgment against it or them after actual trial, the insurance ceased as subject matter which might be demanded. On this the evidence showed that disposition was by "friendly suit", i. e., though by judgment rendered by a court of competent jurisdiction following a hearing, upon a hearing for the purpose of examining the issues upon liability and damages in the determination of whether to approve the agreement upon disposition brought to the court by the parties, and not for the purpose of litigating the same issues in the event the court withheld its approval. The evidence established as a matter of law that what occurred was such a "friendly suit", and one wherein the proposed agreed settlement was approved, and, as approved, made the judgment of the court.
On the above, this court, on a prior occasion, passed upon the question of whether a friendly suit was an "actual trial", though not in the context of the contractual provision in an insurance policy. Our holding was that by such procedure there was not a case litigated, whether the proposed settlement presented to the trial court be approved or disapproved, pointing out that, if not approved, the character of the case would change and become one ripe for trial upon a truly adversary proceeding. Brightwell v. Rabeck, 430 S.W.2d 252 (Tex.Civ. App.Fort Worth 1968, writ ref'd n. r. e.).
There has been like holding in a case involving the construction of a "no action" clause in an insurance policy; the term "actual trial" having been deemed a condition precedent to the prosecution of a suit upon the policy contract. Wright v. Allstate Insurance Co., 285 S.W.2d 376, 378 (Tex.Civ.App.Dallas 1955, no writ).
By our holding hereinabove, there would be support of our action affirming the judgment. However, an affirmance would be likewise required by the provisions of the "subrogation" clause in the Texas Casualty policy. Therein is provided for the subrogation rights to be possessed by Texas Casualty Insurance Company in the event it should make any payment under other of the provisions of the policy; and further, that "the insured shall do nothing after loss to prejudice said rights." Noted is that Glastron Boat Company and its employee Plant, as "insureds" under the policy of Gulf Insurance Company, signed the instrument transferring their rights, whatever they might be, to Gulf. In turn Gulf predicated its suit against Texas Casualty upon the rights subrogated to it by Glastron and Plant.
The breach of the policy condition in the contract of Glastron and Plant with Texas Casualty precludes a recovery by Gulf, as their assignee. Gulf Ins. Co. v. White, 242 S.W.2d 663 (Tex.Civ.App.Dallas 1951, no writ); Millers Mutual Fire Ins. Co. of Tex. v. Mitchell, 392 S.W.2d 703 (Tex.Civ.App. Tyler 1965, no writ); Foundation Reserve Insurance Company v. Cody, 458 S.W.2d 214 (Tex.Civ.App.Dallas 1970, no writ). All of these cases were suits on individual policies by the insured against his insurer, after the insured had foreclosed ability of the insurer to have the subrogation rights against third persons who might be responsible in damages to the insured. Nevertheless the identical legal principle exists by the circumstances now under consideration: if the insurer which has contracted that it is to receive the rights to subrogation is denied that for which it contracted by the action of its insured there is material breach by the insured; and because of the breach the benefit otherwise applicable or payable to him may not be enforced against the company.
Upon occurrence of the collision on July 1, 1971, which resulted in the fatal injury to Mr. Roberts, Gulf Insurance Company made its investigation. It is not clear whether Texas Casualty made any investigation, though it was rather fully informed by Gulf. Gulf had discovered that all claims could be settled for an amount it considered *649 desirable, no matter which company might be compelled to assume the ultimate liability. Gulf was, of course, interested in favorably settling the claim with funds provided by both insurers. Settlement conferences were held between the attorneys for Texas Casualty and Gulf, but to no avail.
October 7, 1971, Texas Casualty advised Gulf by letter that "it would be in order for your company to proceed to make such settlement as it feels to be indicated under the facts without any assistance or permission from this Company."
October 11, 1971 Gulf demanded that Texas Casualty assent to the reasonableness of a proposed settlement of $200,000.00 "without prejudice to questions of coverage to be later determined" and gave Texas Casualty forty-eight hours to give such assent, or be liable for all costs of settlement and expenses. Texas Casualty never made any response to the letter. Gulf decided to proceed and to accomplish the settlement.
October 14, 1971, Glastron and Plant entered into a subrogation agreement with the Gulf Insurance Company. This was because of Gulf's decision to proceed and accomplish the settlement, deferring for later conclusion its dispute with Texas Casualty upon the question of insurance "coverage".
November 2, 1971 suit was filed by the estate of Junior Roberts against Bewell W. Plant, Jr. and Glastron Boat Company in the United States District Court, Northern District of Indiana for $250,000.00. November 8, 1971, the estate of Junior W. Roberts received authority from the Elkhart, Indiana Superior Court to compromise the wrongful death claim.
November 9, 1971 an answer was filed in the federal suit on behalf of defendants Plant and Glastron, denying liability. November 10, 1971, was heard the merits of that case. The trial judge heard testimony, reviewed documentary evidence pertaining to liability and damages, made a specific finding that Plant was negligent, that Roberts was not, and that the plaintiffs had suffered actual and pecuniary loss in the amount of $205,000.00. November 10, 1971, judgment was rendered reflecting the court's findings. The amount was that all parties represented to the court as consented by them.
July 11, 1972, Gulf filed suit against Texas Casualty praying for recovery, under its subrogation rights, the amount it had paid in settlement, its expenses attendant thereto, interest from date of the settlement payment, and court costs.
On the issues of estoppel and waiver it was incumbent that Gulf present evidence and secure findings of fact that Texas Casualty had either waived the defenses we have held valid or had so conducted itself that it should be held estopped to rely upon them. Except for execution of the October 14, 1971 subrogation assignment, on none of the occasions listed above, from October 7, 1971 to November 10, 1971 when the judgment was rendered in the friendly suit, was there any participation by either Glastron or Plant. Neither does it appear that Texas Casualty was ever advised that the friendly suit was filed, scheduled to be heard, or heard, until after all the proceedings incident to settlement stood fully accomplished. Texas Casualty had notified Gulf that if it effected settlement it would be "without any assistance from "Texas Casualty.
Gulf was unable to persuade the trial court to make any findings it desired upon the matters of Texas Casualty's waiver and estoppel; indeed the court made findings to the contrary of those desired.
The case was submitted largely upon facts stipulated, together with documents. There were issues raised, but they are to be deemed as concluded against Gulf. We have examined the evidence and we cannot find that the findings of the trial court were contrary to the greater weight and preponderance of the evidence. Complaints presented relative thereto are without merit and are therefore overruled.
Gulf's final point of error is complaint because the trial court overruled its motion to disqualify the attorney representing Texas Casualty and in refusing to order such attorney to turn over to Gulf papers, documents *650 and pertinent files. There was a hearing antecedent to the trial from which there is the appeal upon Gulf's motion to disqualify, etc. There was not a record made and brought forward of the evidence at that hearing. For this reason the point would be properly overruled. However, we actually need not predicate our decision upon such ground for in any event the complaint is immaterial to the issues proper to be reviewed upon the appeal.
Judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418748/ | 130 F. Supp. 2d 1344 (2000)
CONTROL LASER CORPORATION, a Delaware corporation, Plaintiff,
v.
ROCKY MOUNTAIN INSTRUMENT CO., a Colorado corporation, Defendant.
No. 6:00-CV-309-ORL-28B.
United States District Court, M.D. Florida, Orlando Division.
December 13, 2000.
Michael Constantine Marsh, Akerman, Senterfitt & Eidson, Miami, FL, Joseph J. Ortego, Kevin McElroy, Nixon Peabody LLP, Garden City, NY, for Control Laser Corp.
David L, Kolko, Cooper & Kolko, Denver, CO, Michael George Cooksey, Cooksey & Cooksey, P.A., Riviera Beach, FL, Jaffrey C. Pond, Daniel E. Rohner, Moye, Giles, O'Keefe, Vermeire, Denver, CO, for Rocky Mountain Instrument Co.
ORDER
ANTOON, District Judge.
This cause came on for consideration without oral argument on Defendant's Motion to Dismiss for Lack of Jurisdiction Over the Person and for Improper Venue (Doc. 12, filed April 24, 2000) to which Plaintiff has filed a Response (Doc. 22, filed July 6, 2000). The United States Magistrate Judge has submitted a Report and Recommendation (Doc. 27, filed July 14, 2000) recommending this Motion be denied. Noting that no objections to the Report and Recommendation have been filed, it is ORDERED and ADJUDICATED as follows:
1. The Report and Recommendation is ADOPTED.
2. Defendant's Motion to Dismiss for Lack of Jurisdiction Over the Person and *1345 for Improper Venue (Doc 12, filed April 24, 2000) is DENIED.
REPORT AND RECOMMENDATION
BAKER, United States Magistrate Judge.
TO THE UNITED STATES DISTRICT COURT
This cause came on for consideration without oral argument on the following motion filed herein:
MOTION: DEFENDANT'S MOTION TO
DISMISS FOR LACK OF
JURISDICTION OVER THE
PERSON AND FOR IMPROPER
VENUE (Doc. No. 12)
FILED: April 24, 2000
------------------------------------
THEREON it is RECOMMENDED that the motion be DENIED.
This is an action for breach of contract and breach of implied and express warranties. Defendant, a Colorado corporation, moves to dismiss, asserting that the Court lacks personal jurisdiction and that venue is improper. The Court has reviewed the record, including the Affidavits filed by the parties, and the applicable law. The motion is due to be DENIED.
STANDARDS OF LAW
Where the Court does not conduct an evidentiary hearing on a motion to dismiss for lack of personal jurisdiction, the plaintiff must establish a prima facie case of jurisdiction over the defendant by presenting "sufficient evidence to defeat a motion for directed verdict." Structural Panels v. Texas Aluminum Industries, 814 F. Supp. 1058, 1063 (M.D.Fla.1993), quoting Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829, 855 (11th Cir.1990). The Court must accept the facts alleged in plaintiff's complaint as true, to the extent that they are not contradicted by the defendant's affidavits. Id. at 855. Where there is conflicting evidence, the Court must construe all reasonable inferences in favor of the plaintiff. Id.
In order to determine whether the Court may exercise personal jurisdiction over a nonresident defendant, the Court must determine whether the state longarm statute permits assertion of jurisdiction; and whether sufficient minimum contacts exist to satisfy the due process requirements of the Fourteenth Amendment so that maintenance of the suit does not offend "traditional notions of fair play and substantial justice" under International Shoe Co. v. Washington, 326 U.S. 310, 366, 66 S. Ct. 154, 90 L. Ed. 95 (1945). See Structural Panels, 814 F.Supp. at 1064.
FINDINGS OF FACT
For purposes of this motion, the Court accepts the following uncontradicted allegations of the Complaint as true. Plaintiff is a Delaware corporation with its principal place of business in Orange County, Florida (Doc. No. 1, allegation 6). Defendant is a Colorado corporation. The parties negotiated and entered into an agreement whereby Defendant would sell and deliver to Plaintiff mirrors, pursuant to certain specifications, for Plaintiff's use in the manufacture of laser machines for commercial use (Allegations 7, 10). Plaintiff alleges that it issued numerous purchase orders (attached to the complaint as an exhibit) for hundreds of mirrors (Allegation 20). The Complaint asserts that Defendant failed to deliver all the mirrors ordered, or delivered mirrors in an untimely manner (Allegation 21), and that the mirrors that were delivered were defective (Allegation 25). Telephone conversations between the parties were had (Allegations 27 and 41), as well as communications by letters and facsimiles (See, for example, Allegations 16, 17, 30, and 31).
The Affidavit of Defendant's corporate secretary (Doc. No. 13) indicates that Defendant is not licensed to do business in Florida, has no bank accounts, office, employees, agents, telephone numbers or business operations in Florida, and that the purchase orders were "received and accepted" in Colorado, and the goods manufactured in and shipped from Colorado.
*1346 The Affidavit of Charles Wade of Control Laser Corporation (Doc. No. 22, Exhibit 1) reiterates the multiple telephone conversations, facsimiles and correspondence sent by Defendant to Plaintiff in Florida, and states that Defendant delivered defective mirrors to Plaintiff in Florida.
As is clear on the uncontroverted facts, Defendant negotiated with Plaintiff by phone calls placed to Plaintiff in Florida and facsimiles sent to Plaintiff in Florida and correspondence sent to Plaintiff in Florida and agreed to manufacture and ship mirrors to Plaintiff in Florida.
ANALYSIS
As Plaintiff's causes of action are state law claims, before the Court on the basis of diversity jurisdiction, the Court looks to Florida's long-arm statute. Florida Statute § 48.193 provides:
1. Any person, whether or not a citizen or resident of this state, who personally or through an agent does any of the acts enumerated in this subsection thereby submits himself and, if he is a natural person, his personal representative to the jurisdiction of the courts of this state for any cause of action arising from the doing of any of the following acts:
a) operating, conducting, engaging in, or carrying on a business or business venture in this state or having an office or agency in this state.
. . . . .
g) Breaching a contract in this state by failing to perform acts required by the contract to be performed in this state.
The undisputed facts compel a conclusion that Defendant was conducting business in the state of Florida. Defendant negotiated with Plaintiff via phone calls, correspondence and facsimile sent to Florida, contracted with a Florida resident, for delivery of a finished product to the Florida resident in Florida, and accepted payments sent from Florida. Plaintiff has established that Defendant was conducting a "general course of business activity in the State for pecuniary benefit." Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 627 (11th Cir.1996) (internal citation omitted).
Moreover, the delivery of non-defective mirrors was to occur, according to the purchase orders, in Florida. To the extent the Complaint asserts failure to deliver non-defective items, Defendant "failed to perform acts required by the contract to be performed in Florida."
The Court next considers whether the assertion of jurisdiction over Defendant survives the due process test. As this Court noted in Interfase Marketing, Inc. v. Pioneer Technologies Group, Inc., 774 F. Supp. 1355 (M.D.Fla.1991):
Federal due process imposes certain restraints on a state's long-arm statute. Poston v. American President Lines, Ltd., 452 F. Supp. 568, 572 (S.D.Fla.1978) ... The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful "contacts, ties, or relations." International Shoe, Co. v. Washington, 326 U.S. 310, 319, 66 S. Ct. 154, 90 L. Ed. 95 (1945). By requiring that individuals have "fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign," Shaffer v. Heitner, 433 U.S. 186, 218, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977) (Stevens, J., concurring in judgment), the Due Process Clause "gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit," World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980) ...
Notwithstanding these considerations, the constitutional touchstone remains whether the defendant purposefully established "minimum contacts" in the forum State. International Shoe Co. v. Washington, 326 U.S. at 316, 66 S.Ct. *1347 154 ... "[t]he foreseeability that is critical to due process analysis ... is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." (Cite omitted) (footnotes omitted).
774 F.Supp. at 1357.
The facts as set forth in the pleadings and the declarations establish that the Defendant has the requisite minimum contacts with the state. Defendant willingly participated in negotiations with and manufactured the mirrors pursuant to the specifications of and for the Florida Plaintiff. Defendant delivered the goods in question to the Florida Plaintiff within Florida and received a pecuniary benefit from the sales. Having purposely availed itself of the privilege of conducting business in Florida, Defendant should have reasonably anticipated that it could be sued with respect to that business here.[1]
Having established that Defendant has met the minimum contacts requirement, we must determine whether or not the exercise of personal jurisdiction over it would transgress traditional notions of fair play and substantial justice. Cable/Home Communication, 902 F.2d at 858. In making this determination, the Court considers the contacts in light of these factors: 1) the burden on the defendant in defending the lawsuit; 2) Florida's interest in adjudicating the dispute; 3) Plaintiff's interest in obtaining convenient and effective relief; 4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and 5) the shared interest of the states in furthering fundamental substantive social policies. Cronin v. Washington National Ins. Co., 980 F.2d 663, 671 (11th Cir.1993). Reviewing these factors, the court finds the exercise of personal jurisdiction over Defendant to be appropriate and does not violate traditional notions of fair play and substantial justice.
The burden on Defendant in litigating the suit here appears to be no more than the burden on Plaintiff to litigate in Colorado. Moreover, Florida has a strong interest in adjudicating disputes involving its residents and those who do business with its residents. Defendant has failed to identify or support any factor which tips the scales in its favor.
The Court concludes that the exercise of personal jurisdiction over Defendant is appropriate and the motion should therefore be DENIED.
To the extent that the motion alleges improper venue, this, too, must be DENIED. Venue is proper in this District under 28 U.S.C. § 1391(a), as the judicial district in which a substantial part of the events or omissions giving rise to the claim occurred. Although certain events did occur in Colorado, it is plain that a substantial part of the events occurred in Florida. Moreover, as explained above, Defendant is subject to personal jurisdiction here.
Failure to file written objections to the proposed findings and recommendations contained in this report within ten (10) days from the date of its filing shall bar an aggrieved party from attacking the factual findings on appeal.
July 14, 2000.
NOTES
[1] Conspicuously absent from Defendant's Affidavit is a statement that this is the only time Defendant ever sold and delivered goods in Florida. According to its website, www.rmico.com, Defendant holds itself out as the "ultimate optics and coatings company" and a "world class, international company" inviting customers to "contact RMI with your specific problem and let us by [sic] your custom solution." Defendant cannot claim that it is a stranger to Florida. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418641/ | 974 S.W.2d 572 (1998)
UNITED CAPITOL INSURANCE COMPANY, Respondent,
v.
HOODCO, INC., Appellant.
No. 73025.
Missouri Court of Appeals, Eastern District, Division One.
June 16, 1998.
Motion for Rehearing and/or Transfer to Denied August 6, 1998.
Application to Transfer Denied September 22, 1998.
Richard J. Zalasky, Rabbitt, Pitzer & Snodgrass, St. Louis, for appellant.
Robert W. Cockerham, T. Michael Ward, Russell F. Watters, Brown & James, P.C., St. Louis, for respondent.
Motion for Rehearing and/or Transfer to Supreme Court Denied August 6, 1998.
*573 GARY M. GAERTNER, Judge.
Appellant, Hoodco, Inc., appeals the judgment entered by the Circuit Court of St. Louis County in favor of respondent, United Capitol Insurance Company, on United Capitol's motion for summary judgment and on Hoodco's counter-motion for summary judgment. We affirm.
This appeal involves questions regarding United Capitol's liability for property damage sustained by Hoodco as a result of the great flood of 1993. Hoodco is a discount building supply company with several locations in Missouri, including a store in West Alton, which is the subject of this appeal. In March 1993, Hoodco's current insurance carrier informed Hoodco it would no longer provide coverage to the company due to a change in the insurer's practices. Hoodco contacted its broker, Bill Wittenberg, at C.J. Thomas Company and informed him they needed to find a new insurer. Wittenberg had secured insurance for Hoodco since 1986.
On April 14, 1993, Wittenberg filled out an "ACORD" form, which is a standard commercial insurance application used in the industry. One portion of the form asked whether the applicant, Hoodco, had "[a]ny catastrophe exposure?" This question generally pertains to exposure to flooding, earthquake, and the like. Although Hoodco's West Alton store lies in a class A-2 floodplain,[1] Wittenberg checked the "no" box in answer to this question, because he was not asking for flood coverage. When Wittenberg was unable to secure insurance for Hoodco in the regular insurance market, he contacted Kevin Westrope of Westrope & Associates. Westrope was a surplus and excess lines broker who could submit applications to various surplus and excess lines carriers. He had a contract with United Capitol, which was one such carrier. The brokerage agreement between the parties allowed Westrope to submit applications to United Capitol for its review, but gave Westrope no binding authority for the insurer.
Wittenberg forwarded a copy of the ACORD application to Westrope along with a copy of Hoodco's current policy, which did not provide flood coverage. Westrope drafted a cover letter to various excess and surplus lines carriers to accompany the ACORD application. The letter, dated June 3, stated, "[Hoodco has] no flood exposure and earthquake is minimal." Westrope claimed he made this assertion after discussing the fact with Wittenberg. Wittenberg denied ever telling Westrope that Hoodco had no exposure to flood. The cover letter also proposed various terms of coverage including flood coverage. The letter and applications were faxed to various insurers on June 4, 1993.
United Capitol responded to Westrope's letter and the application by relaying a quote back to Westrope. The quote included terms for flood coverage. Westrope forwarded the quote to Wittenberg on June 9. Wittenberg saw the quote included flood coverage which he thought advantageous to Hoodco. He did not inform Westrope or United Capitol of Hoodco's increased risk for flooding, although he knew of Hoodco's West Alton store location in a floodplain. Hoodco settled on the quote offered by United Capitol, and on June 21, Wittenberg made his first request for a binder.
Four days later, on June 25, 800 families were evacuated from West Alton due to rising flood waters. An article in the June 26, 1993 "St. Louis Post-Dispatch" stated a second crest of the Mississippi could take place on July 7 or 8, due to flood waters moving down from Wisconsin.
On June 29, 1993, Wittenberg again contacted Westrope requesting a binder which reflected Hoodco had flood coverage because, at this time, Hoodco had a "good indication" it's West Alton store would be flooded. Around this date, Hoodco began advertising a "Flood Sale" in an attempt to liquidate its inventory. On July 6, 1993, United Capitol issued a binder, through Westrope, reflecting the various coverage terms including coverage for loss due to flood. The binder stated the policy went into effect at 12:01 a.m. on July 8, 1993, the date on which Hoodco's then current policy expired. Also on July 6, Hoodco was moving inventory from the West Alton store to its other locations in an attempt *574 to minimize its loss. Hoodco received the binder on July 7. That same day, the levee protecting the town of West Alton was breached, and thousands of West Alton residents were evacuated.
Prior to receiving the binder on July 7, Wittenberg contacted Jesse Martin, an employee of Westrope & Associates. He requested the flood coverage in the policy from United Capitol be made "in excess of" the flood coverage Hoodco had through the National Flood Insurance Plan ("NFIP").[2] Martin did not speak with anyone at United Capitol before converting Hoodco's coverage, despite her knowledge that insureds who qualify for NFIP coverage are situated in flood plains. Wittenberg received the endorsement effecting this change to the binder on July 8. Sometime late on July 9, Hoodco's West Alton store flooded.
On July 12, 1993, United Capitol received a copy of the binder and endorsement issued by Westrope. On July 20, 1993, United Capitol received Hoodco's proof of loss claim for the property it lost as a result of the flood. On July 21, 1993, United Capitol issued the insurance policy to Hoodco. Almost one year later, after investigating Hoodco's claim, United Capitol sent Hoodco a letter on June 24, 1994, denying its claim, citing Hoodco's material misrepresentation regarding its catastrophe exposure, as well as the fact the flood was in progress at the time the insurance policy went into effect. United Capitol also returned Hoodco's premium payment.
United Capitol then filed its petition for declaratory judgment, alleging the insurance contract was void due to Hoodco's material misrepresentation on the application and alleging Hoodco's loss was in progress before the policy went into effect, and therefore was not covered. Hoodco filed a counterclaim for damages alleging United Capitol breached the insurance contract by a vexatious refusal to pay. Both parties filed motions for summary judgment accompanied by memoranda and various documents and deposition testimony. The trial court entered judgment in favor of United Capitol on both motions, and Hoodco appeals.
Summary judgment is appropriate where the moving party shows, through the use of pleadings, depositions, admissions, or affidavits, there exists no genuine issue as to any material fact, thereby entitling the moving party to judgment as a matter of law. Rule 74.04(c)(3). Because the trial court's judgment is founded wholly on the record submitted and on the law, we need not defer to the trial court's order granting summary judgment, but may conduct an independent review. Jos. A. Bank Clothiers, Inc. v. Brodsky, 950 S.W.2d 297, 300 (Mo.App. E.D.1997). We review the evidence in the light most favorable to the non-moving party, though facts set forth by affidavit or otherwise in support of the motion will be taken as true unless contradicted by the non-moving party's response. Id. We will uphold the judgment of the trial court if it is sustainable under any theory. Id. Having set forth our standard of review, we turn to the issues raised by Hoodco.
Hoodco's first and second points on appeal relate to whether Hoodco made a material misrepresentation on its application so as to render the policy void ab initio, and whether genuine issues of material fact exist so as to preclude the trial court from entering summary judgment on this ground. Hoodco's last point on appeal challenges the trial court's use of the "loss in progress" doctrine as a basis for granting United Capitol's motion for summary judgment. Because Hoodco's last point is dispositive, we will address it first.
Hoodco argues the trial court erred in granting summary judgment in favor of United Capitol based on the "loss in progress" doctrine as the damage sustained by Hoodco did not occur until after Hoodco had applied for the policy and after the policy went into effect. We disagree.
The "loss in progress" doctrine is "`a fundamental principle of insurance law [which provides] that an insurer cannot insure against a loss that is known or apparent to the insured.'" Inland Waters Pollution Control v. National Union, 997 F.2d 172, 177 *575 (6th Cir.1993) (citation omitted); see Bartholomew v. Appalachian Ins. Co., 655 F.2d 27, 28 (1st Cir.1981) (holding insureds could not recover from insurer where insureds were fully aware of loss before policy in effect). The doctrine builds upon the principle one cannot insure property that has already been destroyed. See M.F.A. Mut. Ins. Co. v. Quinn, 259 S.W.2d 854, 860 (Mo.App.K.C. 1953). The doctrine is rooted in preventing fraud on the part of an insured, who would obtain an insurance policy knowing he has suffered or is in imminent danger of suffering a loss, and who would fail to disclose these facts to the insurer. See Presley v. National Flood Insurers Association, 399 F. Supp. 1242, 1244 (E.D.Mo.1975); United Technologies Corp. v. American Home Assur. Co., 989 F. Supp. 128, 151 (D.Conn. 1997).[3] Moreover, several courts, including a federal court applying Missouri law, have approvingly stated, "`[W]here some quick process of destruction is under way at the moment, even insurance innocently bought and issued should not cover.'" Presley, 399 F.Supp. at 1244-45 (citations omitted). As stated by the Sixth Circuit after a comprehensive review of case law addressing the issue, the "loss in progress" doctrine "operates only where the insured is aware of a threat of loss so immediate that it might fairly be said that the loss was in progress and that the insured knew it at the time the policy was issued or applied for." Inland Waters, 997 F.2d at 178.
In Presley, the district court found flood damage suffered by the insured was not covered where the insured applied for and received the insurance policy after flood waters had already entered his home and receded several times, though the greatest damage occurred within the policy period. Id. at 1245. Similarly, in Summers v. Harris, the court applied the doctrine so as to preclude coverage for flood damage where the flood was in progress when the insurance was purchased though the water did not actually cause damage until after the policy period began. 573 F.2d 869, 872 (5th Cir.1978). In reversing the trial court, the court of appeals found it was error to find coverage merely because the insured "won the race with the waters ... " where the flood causing the damage had been in progress for over a week. Id. at 871. See also Drewett v. Aetna Cas. & Sur. Co., 539 F.2d 496, 498 (5th Cir.1976) (holding insurer was not liable on policy which was issued after flood waters had reached insured's property but had not entered the home).
Here, there were indications of flooding as early as March 1993, though Hoodco was not in imminent danger at that time. Hoodco, through Wittenberg and with the help of Westrope, went about securing a policy of insurance from April through early July. On June 21, merely four days before hundreds of West Alton citizens were evacuated, Hoodco decided to obtain its new policy through United Capitol, and requested a binder. When the binder had not been sent by June 29, Wittenberg, who acknowledged the parties had "a good indication" Hoodco's West Alton store would be flooded at that time, repeatedly contacted Westrope about issuing a binder reflecting Hoodco was protected in the event of flood. Throughout these conversations, Wittenberg remained silent about the peril immediately facing the Hoodco property. During this time, Hoodco was holding a "Flood Sale" in an attempt to liquidate its merchandise.
On July 6, United Capital issued a binder to Wittenberg and Hoodco, who were at this time certain the store would flood. Hoodco was in the process of moving material from its West Alton location to other stores. On July 7, Wittenberg videotaped the road leading into West Alton in order to show the flood waters had not yet reached the town, misstating on the tape the date was July 8, the day the levee was expected to break and, incidentally, the day the policy from United Capitol was effective. Also on July 7, the levee broke causing thousands to be evacuated. The Hoodco property flooded on July 9 and 10.
*576 This demonstrates the loss was in progress before the policy went into effect: the levee protecting the town and Hoodco's store broke one day before the effective date of the policy. Therefore, what before had been a contingent event, the flooding of Hoodco's property, became a real and known event at that time. Accordingly, it does not matter who "won the race with the waters," because once the levee broke the loss was in progress so as to preclude coverage, although the damage did not manifest itself until two days later. Summers, 573 F.2d at 871-72. Moreover, in light of the knowledge component of the "loss in progress" doctrine, the flood was in progress even before the levee broke when Hoodco admitted it knew the property would flood at least three or four days before it happened, and Hoodco actively engaged in efforts to diminish its losses by holding a sale and removing merchandise from its West Alton warehouse. "By its very nature, insurance is fundamentally based on contingent risks which may or may not occur.... Where the insured has evidence of a probable loss when it purchases a ... policy, the loss is uninsurable under that policy (unless the parties otherwise contract) because the `risk of liability is no longer unknown.'" Outboard Marine v. Liberty Mut. Ins., 154 Ill. 2d 90, 180 Ill. Dec. 691, 607 N.E.2d 1204, 1210 (1992) (citation omitted).
Hoodco's argument against the application of the "loss in progress" doctrine centers on Hoodco's knowledge of the probability of flood at the time it applied for the insurance. While some of the cases previously cited involved facts where the insured applied for the insurance when the loss was occurring, this distinguishing fact is not dispositive. In those cases, the application was filled out and the insurance was issued within a very short period of time, as opposed to the instant case, where several months passed between the application and the issuance of the binder reflecting coverage. Here, Hoodco actively sought to secure coverage when it knew its property was in imminent danger of flooding by making repeated requests for a binder and failing to disclose its immediate risk. Under the present facts, the contingent risk of flooding for which United Capitol agreed to insure Hoodco beginning on July 8, 1993, was no longer contingent when the policy went into effect. See Bartholomew, 655 F.2d at 28. The application of the loss in progress doctrine under these circumstances is consistent with the theory of insurance, which is to insure unknown and contingent risks. Accordingly, we find the application of the doctrine appropriate in this case.
Because we can sustain the judgment of the trial court on this ground, we decline to address Hoodco's other points on appeal. Based on the foregoing, the judgment is affirmed.
GRIMM, P.J., and PUDLOWSKI, J., concur.
NOTES
[1] This is the highest class of floodplain.
[2] Wittenberg testified in his deposition he advised Martin of the possibility Hoodco was going to flood. Martin testified in her deposition she was not so informed.
[3] The "loss in progress" doctrine is often discussed in conjunction with the "known loss" doctrine, and often these doctrines are used interchangeably. Outboard Marine v. Liberty Mut. Ins., 154 Ill. 2d 90, 180 Ill. Dec. 691, 607 N.E.2d 1204, 1209-10 (1992). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3037000/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 04-1152
___________
United States of America, *
*
Plaintiff-Appellee, *
*
v. * On Appeal from the United
* States District Court for the
Stute Company, Inc., * District of Nebraska.
*
Defendant-Appellant; *
*
S.R. Livestock, Inc.; *
State Bank of Benkelman, Nebraska; *
A. M. Hahn, *
*
Defendants. *
___________
Submitted: August 26, 2004
Filed: March 30, 2005
___________
Before LOKEN, Chief Judge, BEAM, and WOLLMAN, Circuit Judges.
___________
BEAM, Circuit Judge.
The United States brought an action to foreclose a mortgage Stute Company,
Inc. (Stute) had given it to secure a loan. The district court granted the United States'
motion for summary judgment, entered judgment, decreed foreclosure of the
mortgage, and ordered a sale of the property. Stute appeals. We dismiss the appeal
insofar as Stute has not timely appealed the summary-judgment ruling and vacate and
remand with instructions to dismiss because the remaining issues are now moot.
I. BACKGROUND
In April 1980, the United States, through the Farmers Home Administration,
lent money to Stute. As security, Stute gave the United States a real-estate mortgage
covering land located in Dundy County, Nebraska. Stute fell into default on the loan.
In July 2001 the United States filed an action to foreclose the mortgage to satisfy the
debt.
The district court granted the United States' motion for summary judgment,
decreed foreclosure, and ordered that the property be sold after a twenty-day
redemption period had elapsed. Stute then filed various motions. Some sought
amendments to the court's judgment, and they are detailed below. Another sought to
stay the foreclosure sale under Nebraska law. The district court denied the motion
to stay the foreclosure sale. The United States sought and obtained an order of sale
from the district court clerk, scheduling the sale for February 11, 2004. Stute paid the
underlying indebtedness it owed to the United States on February 10, 2004. As a
result, the United States cancelled the sale.1 Stute's appeal questions the district
court's grant of summary judgment, its denial of Stute's motion to stay the foreclosure
sale, and the order of sale issued by the clerk of the district court.
1
The United States also asked the district court to vacate its prior judgments
and dismiss the action. That motion, however, was presented to the court after the
notice of appeal had been filed. Thus, the district court found it had no jurisdiction
to consider the motion and forwarded the motion to us.
-2-
II. ANALYSIS
A. Summary Judgment
Stute claims the district court erred in granting the United States' summary-
judgment motion because the debt secured by the mortgage was not collectible and,
thus, the mortgage was not enforceable. The United States argues that we lack
jurisdiction, claiming Stute filed its notice of appeal too late to present that question.
We agree. A party must file a notice of appeal with the district court within sixty
days of the order or judgment from which the appeal is taken when the United States
is a party. Fed. R. App. P. 4(a)(1)(B). "Timely filing is not merely a procedural
requirement, but 'is mandatory and jurisdictional.'" United States v. Fitzgerald, 109
F.3d 1339, 1342 (8th Cir. 1997) (quoting Bartunek v. Bubak, 941 F.2d 726, 728 (8th
Cir. 1991)). Stute filed its notice of appeal on January 14, 2004. The district court
entered judgment on October 10, 2003, amended it on October 15, 2003 (Amended
Judgment), amended it again on November 5, 2003 (Second Amended Judgment),
and amended it a final time by order on November 25, 2003 (November 25 Order).
The earliest district court order that is within the Rule 4(a) time frame is the
November 25 Order. See Fed. R. App. P. 4(a)(1)(B) (notice of appeal must be filed
within sixty days of the judgment appealed). If the Rule 4 clock began to run upon
the original entry of judgment, the Amended Judgment, or the Second Amended
Judgment then Stute's appeal was untimely and we lack jurisdiction.
The district court amended its judgments because State Bank of Benkelman
(SBB) purportedly had a lien on the mortgaged property. On October 10, 2003, when
the first judgment was entered, the amount of SBB's claim, if any, remained unknown.
The district court ordered SBB to prove up the amount of its lien within ten days.
SBB filed a "Motion for Judgment" on October 14, 2003. Construing the motion as
one to make further factfinding under Federal Rule of Civil Procedure 52(b), the
district court granted the timely motion and entered the Amended Judgment on
-3-
October 15, 2003, to include a debt to SBB for approximately $58,000 and a lien for
that amount on the subject property.
On October 16, 2003, Stute filed two sets of papers that attacked SBB's debt
and lien and argued that SBB's claim had been extinguished in a prior bankruptcy. On
October 22, 2003, the district court construed Stute's papers as a motion to alter or
amend the judgment and ordered SBB to file a brief in response. On October 30,
2003, SBB filed a brief claiming the amount of the debt was correct but that it indeed
had no lien on the property because the bankruptcy court's decree had extinguished
it. The district court accordingly granted Stute's October 16 motions and entered the
Second Amended Judgment on November 5, 2003.
The Second Amended Judgment appropriately stated that SBB had no lien on
the subject property, but it retained the language about the debt that Stute purportedly
owed SBB. This language posed problems to Stute when it sought to borrow money
to pay the debt that the United States was seeking to satisfy through the foreclosure.
So Stute contacted SBB and requested that it clarify the court's understanding of the
bankruptcy decree, which, according to Stute, had extinguished the debt as well. On
November 14, 2003, SBB filed a "Second Brief in Response to Memorandum and
Order Dated October 22, 2003" (Second Brief). In that brief, SBB acknowledged that
Stute owed it no money. On November 24, 2003, Stute filed a motion entitled, in
relevant part, "Renewed Motion that the United States District Court Stay Its Decree
of Sale in Favor of the United States Until the Court Has Once Again Amended Its
Final Decree and Order such that the Third Amended Order Indicates that the State
Bank of Benkelman Has No Remaining Claim Against the Stute Company" (Renewed
Motion). The district court granted that motion in its November 25 Order and
amended the Second Amended Judgment to say that Stute owed nothing to SBB.
Stute had sixty days from the disposition of the United States' summary-
judgment motion to file his notice of appeal. Fed. R. App. P. 4(a)(1)(B). Certain
-4-
post-judgment motions filed under the Federal Rules of Civil Procedure lengthen the
time within which the notice of appeal must be filed. Those motions must be "timely
file[d]" by a party. Fed. R. App. P. 4(a)(4)(A). SBB's October 14 motion and Stute's
October 16 motions, all of which were construed as motions under Rule 52(b), were
filed within ten days of the of the judgments they sought to amend. Thus, they were
timely, Fed. R. Civ. P. 52(b), and therefore the time to appeal began to run "for all
parties from the entry of the order disposing of the last such remaining motion." Fed.
R. App. P. 4(a)(4)(A). The last order disposing of those timely motions was entered
on November 5, 2003.
The United States argues that the time for appeal began to run on November
5, 2003, and therefore Stute's January 14, 2004, notice of appeal was untimely
because it was filed more than sixty days after the order was entered. Stute argues
that SBB's November 14 Second Brief constituted a motion attacking the judgment
under Rule 59(e), and that, as such a motion, it was timely because it was filed within
ten days of the November 5 Second Amended Judgment. If SBB's Second Brief were
a Rule 59(e) motion, we would agree that Stute's January 14 notice of appeal was
timely because it was filed within sixty days of the November 25 Order that disposed
of that motion. But SBB's Second Brief cannot be construed as a motion. Motions
under the Federal Rules of Civil Procedure must, among other things, "set forth the
relief or order sought." Fed. R. Civ. P. 7(b)(1). The closest this brief comes to such
a statement is, "[t]o the extent the Decree in this case needs to be modified to satisfy
potential lenders of the Defendants, State Bank of Benkelman has no objection to
such modification," and "State Bank of Benkelman has no objection to any further
amendment to the Decree which will satisfy the Court and the other parties." SBB's
Second Brief does not seek any relief or order. Cf. Riley v. N.W. Bell Tel. Co., 1
F.3d 725 (8th Cir. 1993) (dismissing appeal for want of jurisdiction because the
appellant's motion to amend the judgment failed to comply with Rule 7).
-5-
In fact, neither the district court nor Stute understood the Second Brief as a
motion. Stute filed its Renewed Motion on November 24 to correct the error, and the
district court ordered the Second Amended Judgment amended based on Stute's
Renewed Motion.2 That cumbersomely titled motion—even if we construe it as a
Rule 52(b), Rule 59(e), or a Rule 60(b) motion—sought an amendment to the court's
Second Amended Judgment that was filed on November 5. But it was not filed on or
before November 19, 2003—the final day of the ten-day period. See Fed. R. App. P.
4(a)(4)(A)(ii, iv, vi), 26(a); Fed. R. Civ. P. 6(a). Thus, that Renewed Motion did not
toll the time in which Stute could file its notice of appeal, and the November 5
Second Amended Judgment started the clock for Rule 4 purposes. We are therefore
without jurisdiction to consider the errors Stute assigns to the district court's grant of
summary judgment—that the mortgage was unenforceable because the underlying
debt was unenforceable. Fitzgerald, 109 F.3d at 1341-42.
B. Motion for Stay
Stute's notice of appeal, however, lists more than the district court's grant of
summary judgment. Specifically, Stute appeals the district court's denial of its motion
to stay under Nebraska law. That motion was denied on December 12, 2003. So
Stute's appeal is timely with regard to the disposition of that motion.
Stute claims it was entitled to a nine-month stay under section 25-1506 of the
Nebraska Revised Statutes. Under section 25-1506, "[t]he order of sale on all decrees
for the sale of mortgaged premises shall be stayed for the period of nine months from
2
Similarly, it would be too much of a stretch to conclude that Stute's October
16 motion was a "remaining motion" for purposes of Rule 4(a)(4)(A). The November
5 order disposed of that motion and Stute recognized the necessity of the further
motion it made on November 24. And the district court did not base its November
25 Order on the October 16 motion.
-6-
and after the rendition of such decree." If this provision applies to the Nebraska
mortgage at issue, then a stay should have been entered. The United States responds
by arguing that this provision of Nebraska law was validly waived by Stute in the
mortgage. See United States v. Jacobsen, 319 F.3d 323, 324 (8th Cir. 2002) (per
curiam) (finding waiver valid under United States v. Birchem, 100 F.3d 607, 609 (8th
Cir. 1996)). However, the waiver provision the United States relies on only waives
"any right of redemption . . . following any foreclosure sale." Section 25-1506 does
not grant the mortgagor any right of redemption, and the stay it allows the defendant-
mortgagor is, by definition, pre-sale. Thus, this argument misses the mark.
However, many provisions of state law are preempted when the United States
acts as mortgagee. See United States v. Kimbell Foods, Inc., 440 U.S. 715 (1979).
In any event, Stute has made the issue of a stay under state law moot. When events
occur that leave the appellate court with no remedial power, the appeal is moot.
Church of Scientology v. United States, 506 U.S. 9, 12 (1992); Fitzgerald, 109 F.3d
at 1342. After the district court entered its Second Amended Judgment and denied
the motion to stay, Stute did not seek a stay pending appeal. Rather, it paid the debt
that the United States was seeking to satisfy through the mortgage. Stute now claims
that the district court erred by refusing to stay the foreclosure sale for nine months
under Nebraska law. But the foreclosure sale has not occurred, nor will it occur. The
United States cannot request an order of sale now that it has accepted payment, and
we do not believe we have the power to direct a district court to stay a sale that will
not occur. Thus, the dispute over the stay has become moot.
Stute suggests that we order the United States to return the money Stute paid
to avoid the foreclosure sale. If we were to order the money returned, a foreclosure
sale would be inevitable, and a stay would be within a court's power to issue. But we
have no power to order the money returned. Stute cites a Nebraska case for the
proposition that a judgment debtor who pays a judgment to prevent execution on his
property does not thereby divest himself of the ability to pursue an appeal. While that
-7-
premise is correct, Tungseth v. Mut. of Omaha Ins. Co., 43 F.3d 406, 409 (8th Cir.
1994), Stute's case is quite distinguishable. When a party pays a judgment that is
later invalidated, restitution remains an available and appropriate remedy because the
payee has no right to the payment made under the invalidated judgment. The
availability of that remedy keeps the dispute from becoming moot, even after
payment. Had the mortgage here been unenforceable, the United States would not be
entitled to the payment Stute made, restitution would be an available remedy, and the
availability of that relief would keep the enforceability question from becoming moot.
But we do not have the merits of the summary-judgment ruling—that which settled
the enforceability question—before us because we lack jurisdiction to consider that
issue. See ante. Thus, the district court's ruling on the validity of the debt underlying
the mortgage, and therefore the enforceability of the mortgage, is settled as the law
of the case. In re Design Classics, Inc., 788 F.2d 1384, 1386 (8th Cir. 1986). So the
United States was and is legally entitled to the payment it accepted. This remains true
even if the foreclosure sale should have been stayed. We cannot order the United
States to refund a payment to which it was legally entitled. Thus, restitution is not an
available remedy, and the question whether a stay should have issued remains moot
because we have no way of correcting the alleged error that Stute presents. By
choosing to pay the United States—rather than, for instance, posting a supersedeas
bond—Stute limited our remedial power and thereby mooted the stay issue.3
3
Stute has also brought a third party's rights into this case. Stute sold its
interest in the property to Sitzman-Mitchell & Company, giving it a deed, and
retained an option to repurchase the property. Stute has given us no information as
to the terms of the option. In this regard, ordering the United States to pay money
back to Stute, even though (1) we have no assurances that Stute will reacquire the
property and (2) we are unsure of a court's ability to order Stute and the absent third
party to consummate such a transaction, implicates the rights of a third party that is
not before the court. This further supports our mootness determination. See Matter
of Magnes, 29 F.3d 1034, 1042-43 (5th Cir. 1994).
-8-
C. Order of Sale
Finally, Stute asserts as error the order of sale issued by the district court clerk.
Stute raised this error before the district court in its November 24 Renewed Motion.
The district court denied this part of the motion on November 25, 2003. According
to Stute, the order of sale the clerk issued was invalid because it was issued under the
October 15, 2003, Amended Judgment, which was superseded by the Second
Amended Judgment on November 5, which was amended by the November 25 Order.
The order of sale was never executed by the United States Marshals because the sale
was cancelled by the United States after Stute's payment. Even if the order of sale
was deficient, the United States' action accorded Stute the relief we would be able to
give it. Thus, this issue is also moot. See McMillan v. Chief Judge, Circuit Ct. of
Greene County, 711 F.2d 108, 109 (8th Cir. 1983).
III. CONCLUSION
Accordingly, we vacate the judgments of the district court that were properly
appealed and remand with directions to dismiss the motions relating to those items
as moot. CIA v. Holy Spirit Ass'n for the Unification of World Christianity, 455 U.S.
997 (1982) (mem. order). The appeal is dismissed with regard to Stute's untimely
appeal of the district court's summary-judgment ruling. We return the United States'
motion to vacate and dismiss to the district court. If the district court chooses to
entertain the motion—which is premised on the impact of Stute's payment of the
underlying indebtedness—the United States should inform the district court whether
it has made and recorded the appropriate release of its interest in the subject property.
______________________________
-9- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2418668/ | 130 F. Supp. 2d 844 (2001)
Sharon PARIS, Plaintiff,
v.
DALLAS AIRMOTIVE, INC., Defendant.
No. Civ.A.3:97-CV-0208-L.
United States District Court, N.D. Texas, Dallas Division.
January 8, 2001.
*845 John E Shulman, Law Office of John E Shulman, Dallas, TX, Robert L Sims, White Sims & Wiggins, Dallas, TX, Jamshyd Michael Zadeh, Bourland Kirkman Seidler & Evans, Fort Worth, TX, for Sharon Paris.
Robin S Ghio, Jenkens & Gilchrist, Dallas, TX, Richard Matthew Kobdish, Jr, Fulbright & Jaworski, Dallas, TX, for Dallas Airmotive Inc.
MEMORANDUM OPINION AND ORDER
LINDSAY, District Judge.
Before the court is Defendant's Rule 12(b)(1) Motion to Dismiss, filed August 11, 2000. After careful review of the applicable authorities and filing submitted by the parties, the court, for the reasons that follow, denies Defendant's motion to dismiss
I. Background
Plaintiff Sharon Paris filed this lawsuit on January 31, 1997, against Defendant Dallas Airmotive, Inc., alleging sexual harassment, discrimination and retaliation, as well as state law claims of intentional infliction of emotional distress and assault. Plaintiff, a test cell mechanic, was terminated from her employment with Defendant in August 1996. Pursuant to the parties' collective bargaining agreement, Plaintiff filed a grievance challenging her termination and treatment. When the company responded unfavorably. Plaintiff's union instituted arbitration proceedings on September 16, 1996, pursuant to the collective bargaining agreement. On October 15, 1996, Plaintiff filed an amended discrimination charge with EEOC, alleging sex and race discrimination and retaliation. On August 15, 1997, a hearing on Plaintiff's grievance was heard before a neutral arbitrator, and Plaintiff's grievance was denied on October 31, 1997.
Defendant has filed a motion to dismiss pursuant to Rule 12(b)(1). Defendant contends that Plaintiff has waived her right to bring a statutory discrimination claim against it pursuant to the collective bargaining agreement.[*] Plaintiff contends *846 that Defendant's motion should be denied because the collective bargaining agreement does not contain any clear and explicit language which establishes that the union agreed to a waiver of the employee's right to litigate employment discrimination claims in a federal forum. Defendant maintains that case law supports its argument that the court should enforce the parties' collective bargaining agreement, which it contends places the statutory rights raised in Plaintiff's Complaint in the province of an arbitrator.
II. Analysis
The most informative and helpful case in deciding the issue presented by Defendant's motion to dismiss is Wright v. Universal Maritime Serv. Corp., 525 U.S. 70, 119 S. Ct. 391, 142 L. Ed. 2d 361 (1998). To require arbitration, the Court held that any union-negotiated contract must contain "clear and unmistakable" language that the parties intend to waive a statutorily protected right. Id. at 80, 119 S. Ct. 391. The collective bargaining agreement in this case contains a grievance and arbitration provision and a nondiscrimination provision. The nondiscrimination language states in pertinent part:
Article 5
Nondiscrimination
. . . . .
B. The Company and the Union agree they will comply with all statutes and laws prohibiting discrimination against any employee because of race, religion, creed, color, age, national origin, disability, or sex. The parties further agree to comply with all other anti-discrimination in employment statutes applicable to the parties. The parties likewise agree that any adopted and amended governmental statutes and regulations pertaining to nondiscrimination applicable to the Company (as prime contractor or subcontractor for [the] government or as an enterprise in interstate commerce) shall be adopted as part of the Agreement and shall have the same force and effect as if actually written herein.
Defendant argues that the nondiscrimination provision requires this action be dismissed for lack of subject matter jurisdiction. While Defendant certainly makes a respectable and appealing argument, the court cannot ignore the plain and unequivocal language of Wright which requires that any waiver of an employee's right to a judicial forum for federal claims be stated in clear and unmistakable language. The court has carefully examined the portion of the collective bargaining agreement that deals with arbitration, and no language at all is even referenced regarding waiver or the relinquishment of any known rights, much less the waiver of a federally protected statutory right pertaining to employment discrimination.
Defendant contends that the nondiscrimination clause of the collective bargaining agreement unmistakably covers and incorporates its (Defendant's) noncompliance of federal discrimination statutes, and, in conjunction with the general arbitration provision, requires any alleged noncompliance to be presented to an arbitrator for resolution. Assuming this to be the case, the inclusion of such language fails to carry the day for Defendant. What the court finds troublesome is that there is no clear and explicit language in the collective bargaining agreement that informs employees of what rights or remedies they have under Title VII and that they are knowingly giving up their right to have any alleged violation of Title VII heard in a federal judicial forum. A waiver by definition necessarily requires that a person knowingly relinquish or give up a known right. Without being apprised in some fashion of the right being relinquished, one simply cannot say that the waiver of a federal forum was "clear and unmistakable," or that the intent to waive a federal *847 judicial forum was "clear and unmistakable."
In advancing its position that the statutes under which Plaintiff brings her lawsuit have been expressly incorporated into the collective bargaining agreement and therefore it is unmistakably clear that the antidiscrimination statutes are part of the collective bargaining agreement, Defendant relies on Brown v. ABF Freight Sys., Inc., 183 F.3d 319 (4th Cir.1999), and Carson v. Giant Food, Inc., 175 F.3d 325 (4th Cir.1999). Although both cases state the two situations under which a clear and unmistakable waiver can occur, neither held that the nondiscrimination provision before them was sufficiently incorporated into the collective bargaining agreement to make particularly clear the intent of the parties to arbitrate statutory employment discrimination claims. Other than stating the rule of law, these cases provide little assistance in resolving the issue presented to the court.
Carson discusses the two situations where waiver of a statutory conferred right in a collective bargaining agreement is sufficiently clear and unmistakable. First, such a waiver meets this test if the arbitration provision in the collective bargaining agreement contains language whereby the employees specifically agree to submit all federal claims arising out of their employment to arbitration. Id. at 331-32. As no such language exists in the collective bargaining agreement, the first situation is inapplicable to this case. Second, a waiver will be clear and unmistakable if the collective bargaining agreement contains an explicit incorporation of the statutory antidiscrimination requirements and a general arbitration provision. Id. at 332. Specific incorporation requires that the collective bargaining agreement identify the statute by name or citation. Rogers v. New York Univ., 220 F.3d 73, 76 (2nd Cir.), cert. denied, ___ U.S. ___, 121 S. Ct. 626, 148 L. Ed. 2d 535 (2000); Bratten v. SSI Servs., Inc., 185 F.3d 625, 631 (6th Cir.1999); and Quint v. A.E. Staley Mfg. Co., 172 F.3d 1, 9 (1st Cir.1999). The collective bargaining agreement in this case clearly does not identify the antidiscrimination statutes by name or citation, and thus fails to satisfy the second situation. Accordingly, the waiver in this case is not clear and unmistakable under either situation.
III. Conclusion
For the reasons stated herein, the court finds that the collective language agreement in this action does not contain a clear and unmistakable waiver of the covered employees' rights to a judicial forum for federal claims of employment discrimination. Accordingly, Defendant's Rule 12(b)(1) Motion to Dismiss is denied.
NOTES
[*] Waiver is an affirmative defense which must be pleaded See Fed. R. Civ. P. 8(c). Defendant has not pleaded waiver; however, it is being raised in the context of subject matter jurisdiction which can be raised at any stage of the litigation, including the appellate level. Defendant's motion is therefore proper. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418689/ | 550 S.W.2d 509 (1977)
Jimmy Keith SELF, Appellant,
v.
COMMONWEALTH of Kentucky, Appellee.
Supreme Court of Kentucky.
March 11, 1977.
Jack Emory Farley, Public Defender, David E. Murrell, Deputy Public Defender, Timothy T. Riddell, Asst. Public Defender, Frankfort, for appellant.
Robert F. Stephens, Atty. Gen., William W. Pollard, Asst. Atty. Gen., Frankfort, for appellee.
STEPHENSON, Justice.
Jimmy Keith Self was convicted of the capital offense of murder during the course of robbery in the first degree. KRS 507.020(2)(b). The jury in accordance with the statute fixed his punishment at death.
In addition, Self was tried and convicted on four counts of first-degree robbery, KRS 515.020(1)(b), and given 20 years' imprisonment; first degree assault, KRS 508.010(1)(b), and given 20 years' imprisonment; and criminal attempt, KRS 506.010, and given 20 years' imprisonment. Self was not sentenced on these convictions.
Self asserts the unconstitutionality of the 1974 statute providing for a mandatory death penalty.
This assertion has been answered and disposed of in Boyd v. Commonwealth, Ky., 550 S.W.2d 507, decided this day.
We have determined the 1974 mandatory death penalty statute to be unconstitutional in Boyd by virtue of the decisions of the Supreme Court of the United States cited therein. We hold that the punishment to be imposed on Self for the conviction of murder is the maximum constitutionally permissible under the 1974 Penal Code, life imprisonment. This disposition answers Self's arguments with regard to the death penalty and assignment of error in closing argument.
The sole remaining assertion of error is that Self's right to effective assistance of counsel was violated by the trial court.
The evidence developed at the trial shows that Self and Beverley Headley, a codefendant, entered the Bachelor II Cocktail Lounge in Paducah, Kentucky. After shooting pool for a while with Ronnie Morris, *510 Headley left the premises. Shortly thereafter, according to the other persons present, there was a shot near the pool table, Morris was seen lying on the floor, Self was waiving a pistol and stated "this is a robbery." Self pointed the pistol at Herman Bentley, the bartender, Brenda McDonald and Richard Flowers, patrons of the bar, and ordered them to approach the pool table. Self ordered them to persuade Morris to get to his feet. They did so and when Morris, wounded, reached his feet, Self said in substance, "Now watch me kill this Nigger," and fired again at Morris, killing him. He then proceeded to rob Bentley, McDonald and Flowers and took money from the cash register. Bentley informed Self there were no guns on the premises; and when Self found a .45 caliber revolver under the bar, he placed the muzzle of the gun under Bentley's chin and attempted to pull the trigger. The gun did not fire. Then Self discovered a safe next to the bar. He ordered Bentley to open it. When Bentley denied he knew the combination, Self stabbed Bentley in the abdomen with a knife. During this episode, N. T. Younger came to the door. Self led Younger in, identified himself and robbed Younger.
Self then left the premises, and he and Headley were later captured in Missouri. The authorities recovered the stolen money, watches and rings.
Self made a statement to the Missouri authorities that the shooting was in self-defense and that Bentley offered him the money from the cash register. Self did not testify at the trial.
Self's trial counsel, a public defender, also represented Headley. On the day of the trial, Self objected to his trial counsel representing him and asked for other counsel. It appeared that Headley, after a visit in jail by the Commonwealth's attorney and a detective, agreed to enter a guilty plea to the charges on the promise to receive less than a life sentence in return for testifying for the Commonwealth. At first Self thought his trial counsel was present at the meeting with Headley and stated he and Headley had been "sold out." The Commonwealth's attorney had invited Self's counsel to the meeting, but he declined to attend. Self appeared to suggest to the trial court at the in-chambers hearing that his trial lawyer should have prevented Headley from agreeing to testify and in not so doing created a conflict at the trial and failed to properly represent either Self or Headley or both of them. The trial court declined to grant a continuance.
Headley was not present in the Bachelor II premises when the incidents occurred. She testified to the details of herself and Self travelling from Illinois to Paducah and entering the Bachelor II premises. She testified she left the premises on instructions from Self, that he stated he was going to "rob the place." She testified about waiting in the car, the get away and pursuit leading up to the capture. We cannot see Headley's testimony as adding to the strength of the Commonwealth's case. Self, in his argument for other counsel, asserted Headley was not guilty of any crime. He argues that Headley's testimony as to his stated intention to rob had great significance, showing premeditation.
We are of the opinion Self was not denied effective assistance of counsel. The evidence of guilt was clear, convincing and overwhelming. In view of the other evidence for the Commonwealth, Headley's testimony was innocuous. Even had it been otherwise, there is nothing in the record to show a conflict of interest on the part of Self's trial counsel or that he failed in any respect in his duty to afford Self competent representation.
The judgment is reversed insofar as it imposes the death penalty upon Self with directions that Self be sentenced to a term of life imprisonment. In all other respects, the judgment is affirmed. Further, this cause is remanded to the trial court for sentencing on the three convictions for which sentence was not pronounced. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418697/ | 550 S.W.2d 482 (1977)
Milton RAY, Jr., Appellant,
v.
COMMONWEALTH of Kentucky, Appellee.
Supreme Court of Kentucky.
February 18, 1977.
Rehearing Denied June 10, 1977.
*483 Jack Emory Farley, Public Defender, J. Vincent Aprile II, Asst. Public Defender, Frankfort, for appellant.
Robert F. Stephens, Atty. Gen., Victor Fox, Asst. Atty. Gen., Frankfort, for appellee.
CLAYTON, Justice.
Mrs. Iveta Sprowles was working in a liquor store in Springfield, Kentucky, on September 26, 1975, when three black men entered, struck her unconscious, and robbed her of personal items and cash, as well as cash and checks from the store's cash register. Mrs. Sprowles subsequently identified as a participant in the robbery the appellant, Milton Ray, Jr., resulting in his indictment and ultimate conviction of first-degree robbery, for which he was sentenced to imprisonment for 20 years. He appeals, alleging three separate grounds for reversal.
Appellant first complains the trial court committed reversible error by overruling his motion to suppress any in-court identification of him by Mrs. Sprowles without first conducting an evidentiary hearing outside the presence of the jury to determine whether such identification was tainted by the prior identification during the police station lineup, which was stipulated by the Commonwealth to have been improper. In denying this motion the trial judge indicated he did so because he felt Mrs. Sprowles' testimony would demonstrate the extent to which her ability to recognize appellant as a participant in the robbery had been influenced by the unduly suggestive lineup, so that any suppression of such evidence in this initial stage of the proceeding he considered to be premature. Although we are of the opinion that the holding of such a hearing prior to the introduction of this testimony would have been the preferred course to follow, we are not persuaded the failure to have done so requires reversal of appellant's conviction. The record shows Mrs. Sprowles testified on direct examination regarding her ability to recognize the appellant and was extensively cross-examined on this same point, but it does not indicate her in-court identification was affected by the prior improper identification. As such, we do not consider the trial court to have committed prejudicial error by permitting the witness to identify the appellant in the jury's presence.
Appellant secondly argues the trial court erred in denying his motion for a directed verdict of acquittal, contending the evidence does not indicate appellant committed robbery in the first degree in violation of KRS 515.020, and that there was no evidence of his complicity in the offense to make him liable for the conduct of another under the provisions of KRS 502.020(1). We have reviewed the evidence and conclude that it was sufficiently incriminating to warrant submission of the issue to the jury. Cf. Rogers v. Commonwealth, Ky., 444 S.W.2d 548 (1969). The testimony presented, we feel, was sufficient to support *484 a finding that appellant participated in the robbery with a specific intention to promote or facilitate its commission, and so we hold there to have been no error in the overruling of appellant's motion.
Appellant's final allegation of error concerns the trial court's instruction on the law of complicity liability. The trial court instructed the jury to the effect that if it believed from the evidence beyond a reasonable doubt that (1) Ray "or persons aiding and assisting him" stole a sum of money from the Springfield Liquor Store and (2) in the course of so doing and with intent to accomplish the theft "one of them caused physical injury to Iveta Sprowles by striking her with his hand or fist or some instrument," it should find him guilty of first-degree robbery. Cf. KRS 515.020(1)(a).
Ray argues first that the evidence was insufficient to permit the jury to believe that he personally committed robbery in the first degree, hence the instructions should have embraced only the theory that he was an aider and abettor. Since, however, Mrs. Sprowles did not know for certain which of the participants struck her, and of course did not know which of them took the money, the only proper basis for the instructions was, in effect, that Ray should be found guilty if he participated with one or more other persons in stealing the money and that in the course of and with intent to accomplish the theft any one of them caused physical injury to Mrs. Sprowles. Substantially that is what the instruction in question said.
There are, of course, other ways in which the instruction might very well have been worded. We do not agree that it had to be couched in terms of specific intention on the part of Ray as an aider and abettor. Though KRS 502.020(1) requires as a condition of culpability that an accomplice intend to promote or facilitate the offense, we think that the word "steal" or "stole" is universally understood to connote an intentional taking. One may "take" unintentionally, but he cannot "steal" unintentionally. So, if a person "steals," either personally or through a confederate, he is guilty of theft an intentional taking without permission.
If there is a weakness in the first phase of the instruction, it is in the words "or persons aiding and assisting him." For one thing, in legal context "aiding and assisting" generally connotes that the person being aided or assisted is the principal actor, whereas this form of instruction treats the "persons aiding and assisting him" as the principal actors. More seriously, however, one might conceivably infer that this expression would fix responsibility on the defendant for an assistant's act regardless of the purpose for which the assistance had been sought or, indeed, even though the aid and assistance had not been sought at all. For example, in its strict literal sense this language would hold the defendant liable for the act of another person who was assisting him in making a delivery of merchandise to the store, and even though the defendant had not been present. But we think that the possibility of a jury's speculating beyond the scope of the evidence introduced in this trial was so remote that it would be hypertechnical to declare the instruction prejudicially erroneous.
In future cases with comparable facts it would be better to instruct according to one or the other of the following two alternative forms:
(a) that the defendant stole a sum of money from the ____ store, OR that another person or persons present with him on the occasion in question did so pursuant to an agreement with the defendant that one or more of them would do so. [Essentially, this form combines the theory of conspiracy with physical presence.]
(b) that the defendant stole a sum of money from the ____ store, OR that another person did so and the defendant aided and abetted him by standing in immediate readiness to assist him in so doing. [This form presents the theory of aiding and abetting regardless of the existence, vel non, of a conspiracy, or previous agreement.]
With respect to the second phase of the instruction, there is no requirement that *485 the physical injury itself be intended. It is not an element of the crime of robbery, but only an aggravating circumstance increasing the degree. When the first phase, discussed above, is properly expressed in the alternative to embrace a theft by the defendant personally or by a confederate acting in concert with him, the second phase may properly read, as it did here, "that in the course of so doing and with intent to accomplish the theft one of them caused physical injury to ____ by striking her with his hand or fist [or some other object or instrument]."
The foregoing discussion has been provided only because of the newness of the Kentucky Penal Code. Actually, Ray did not object to the instructions and was not in a position to complain of any error. RCr 9.54(2); Hopper v. Commonwealth, Ky., 516 S.W.2d 855 (1974).
The judgment is affirmed.
All concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418702/ | 550 S.W.2d 904 (1977)
Paul BROTHERTON, Plaintiff-Respondent,
v.
A. L. KISSINGER, Defendant-Appellant, and
Bob Joyce, Bill Joyce and Nona Kissinger, Defendants.
No. 10003.
Missouri Court of Appeals, Springfield District.
May 2, 1977.
*905 R. Jack Garrett, Clyde A. Butts, Garrett & Butts, West Plains, for plaintiff-respondent.
Rich D. Moore, Moore & Brill, West Plains, for defendant-appellant.
Before STONE, P. J., and TITUS and FLANIGAN, JJ.
TITUS, Judge.
Count I of plaintiff's 4-count amended petition, prayed for dissolution of his alleged separate partnerships with defendants Joyce and defendant Kissinger, an accounting and judgment in a sum equal to his interests in the partnerships. Following a bench trial, where no opinion containing a statement of the grounds for the court's decision was asked or given (Rule 73.01-1(b), V.A.M.R.), the court rendered judgment completely exonerating defendants Joyce and declaring defendant Kissinger liable to plaintiff for $3,833, plus 6% interest thereon from August 17, 1970. After one unsuccessful attempt at appealing, defendant Kissinger has again appealed.[1]
In May 1968 the Joyces and plaintiff commenced a retail propane gas business at West Plains under the name of Crown Gas Company (hereinafter "old Crown"). Plaintiff's most unsatisfactory testimony regarding his association with the Joyces was that "We didn't have a contract or nothing," or we "never did have a clear cut agreement." Plaintiff's "understanding" about the matter, which ordinarily is not competent evidence [Dill v. Poindexter Tile Company, 451 S.W.2d 365, 372 (Mo.App.1970)], was "that if the business paid for itself or something like that," he would become a partner with a one-third interest in old Crown. In reality, the Joyces put up all the money, bought all the supplies and equipment, and plaintiff commenced selling and delivering gas for which he was paid $65 a week. Partnership income tax returns were filed for old Crown for 1968 and 1969 (final). These showed a percentage of partnership or beneficial interest of two-thirds in the Joyces and one-third in plaintiff. The undertaking lasted only until January 6, 1969, at which time, via various bills of sale, the Joyces without objection of plaintiff, sold all the assets of old Crown to defendant Kissinger. Plaintiff's name did not appear on the bills of sale as either seller or buyer. Old Crown suffered an operating loss in 1968 and at the end of that period plaintiff's capital account was reported to be "minus $295.85." Briefly and in passing, the only Joyce to testify referred to the venture as a "partnership agreement" with "a third interest for each one of us."
The final partnership return (1969) filed by old Crown reported the "Total Sale Price" to be $43,000. Kissinger asserted this was the actual sale and purchase price agreed to by him and the Joyces. Joyce conceded that in computing the $43,000 sale price, no reduction was made in the value of accounts receivable, in the price of propane tanks, vehicles, inventory, equipment or "anything." Documentary evidence (with the exception of only $503.71 in untraceable cash) evidenced that Kissinger paid $41,848.59 in checks and cash directly to the *906 Joyces. The balance of the $43,000 sale price, or $1,151.41, was paid by Kissinger by check to satisfy an outstanding account owed by old Crown. Plaintiff did not receive, either from the Joyces or from Kissinger, any of the money involved in the sale of old Crown.
Plaintiff and Joyce, in effect, agreed the $43,000 paid by Kissinger for old Crown represented a profit of $12,000 to $13,000 or a net of $4,000-plus to each of the three "partners." However, since plaintiff got no money, explaining what became of plaintiff's supposed profit posed somewhat of a problem. Predicated on Joyce's and plaintiff's additional asseveration that Kissinger said he would buy old Crown only if plaintiff continued in new Crown on the same basis he had shared with the Joyces, plaintiff and Joyce undertook to answer the question in the following fashions.
In his pretrial deposition, plaintiff testified that Kissinger actually paid only "something like" $38,000 of the agreed $43,000 total sale price because his (plaintiff's) $4,000-plus portion of the total profit was deducted from the $43,000 sale price so it could go into new Crown as his contributive share of a new partnership with Kissinger.[2] However, when it became obvious that Kissinger had indeed paid $43,000 in checks and cash, and resorting to the plea that "they had me so tangled up" when his deposition was taken, the gist of plaintiff's trial-testimony was that the $43,000 represented only the value of old Crown's assets and the Joyces' share of the profit, but did not include his individual share of the profits that was to be a credit to him on new Crown. In fine, plaintiff's attempted explanation suggests a total agreed-to selling price approximating $47,000. When reminded of his testimony that the total $43,000 sale price placed on old Crown did not include any discount of the assets, Joyce quixotically answered (in an effort to lend viability to plaintiff's claim to a share of the profits) that plaintiff's "interest had already been figured out of it." Should this pronouncement somehow be credited with logic, it would amount to an agreement with plaintiff's trial-testimony that the total sale price agreed to between the Joyces and Kissinger was really about $47,000 not $43,000 and that the $4,000-plus not paid by Kissinger would somehow find its way into new Crown as an individual credit to plaintiff. Nevertheless, whatever amount of payment or credit it was that plaintiff claimed, that figure never found its way into the accounts or tax returns of either old Crown or new Crown; neither did the alleged payment or credit ever find a place in the individual tax returns filed by plaintiff.
As shown by old Crown's final return, Kissinger insisted the actual sale price of that concern was $43,000 and that there was no agreement plaintiff was to have a starting credit of any amount in new Crown. While acknowledging plaintiff was to work in the new business and denying that this was a condition attached to the purchase, Kissinger stated that "our agreement was that I would furnish the capital to operate the business, to buy the business, and [plaintiff] was to draw a drawing out of the business for his work in the business.. . . If and when the business ever paid for itself, then [plaintiff] would draw a third of the profits, and he would own a third of the business, and that was our agreement." The new business never paid for itself and 16 months after its purchase, Kissinger was casting about for a buyer "Because the business wasn't making a profit." Kissinger offered to sell new Crown to plaintiff for "just what I've got invested in it," but plaintiff declined because he had no money.
During new Crown's existence (January 6, 1969, to August 17, 1970), plaintiff was paid a weekly salary of $75 which was increased to $100 "for about the last month *907 or so." To purchase old Crown and commence operating new Crown, Kissinger put up $26,500 of his own funds and $20,000 borrowed from the West Plains Bank, for which he pledged all the physical assets of new Crown as collateral. Sometime after this note was signed by Kissinger et uxor, it was also signed by plaintiff and his wife. After paying $43,000 for old Crown and giving plaintiff a $500 "draw on future profits," $3,000 remained in new Crown's checking account for operating capital. Kissinger did not draw a salary from new Crown during its lifetime. Some attestation of the financial difficulties encountered by new Crown lies in the fact it borrowed from AMF Beaird, Inc., $1,050 in December 1969, and $2,491.50 in March 1970. The first note was signed "Crown Gas Company By A. L. Kissinger, Owner"; the second note was signed "Crown Gas Company By [plaintiff] Partner." Plaintiff made no cash contribution to new Crown at any time. Kissinger made a sale of new Crown to Ozark Gas Company on August 17, 1970, for $49,663. The bill of sale to Ozark and the depreciation schedule contained in new Crown's 1970 (final) partnership tax return, reveal that $10,057 in purchases of new equipment had been made by new Crown after it bought the business from old Crown in January 1969. This new equipment was contained in the sale to Ozark. The tax accountant who prepared the returns for both old and new Crown, stated that new Crown had experienced a 1969 operating loss of $2,780.88, a 1970 operating gain of $3,950.07, and a loss on the sale to Ozark in the sum of $1,672.87, making a net overall loss of $503.68. Plaintiff did not assume and did not pay any losses experienced by new Crown.
Upon receipt of $49,663 from Ozark, Kissinger paid the balance due on the promissory notes, supra, and discharged all obligations owed by new Crown to its outside creditors. Thereupon, Kissinger wrote a $26,000 check to himself which left new Crown with a bank balance of 47 cents. A further contribution by Kissinger to pay bank charges was necessary to close new Crown's bank account.
The question at issue, as pleaded, tried and presented on appeal, is whether a partnership in praesenti existed between plaintiff and Kissinger which should be dissolved and an accounting ordered. The burden of proving the existence of the partnership rested with plaintiff and if he failed to satisfy this requirement he would not be entitled to the other relief sought. Bates v. Morris, 467 S.W.2d 286, 290[1] (Mo.App. 1971).
The Uniform Partnership Law defines partnership as "an association of two or more persons to carry on as co-owners a business for profit." § 358.060-1, V.A.M.S. Judicially, the term is defined as "`a contract of two or more competent persons to place their money, effects, labor and skill, or some or all of them, in lawful commerce or business and to divide the profits and bear the loss in certain proportions.' . . . The contract creating the partnership need not be written, but may be expressed orally or implied from the acts and conduct of the parties. . . . The primary consideration in determining the existence of a partnership is whether the parties intended to carry on as co-owners a business for profit." Stuart v. Overland Medical Center, 510 S.W.2d 494, 497[1-3] (Mo.App.1974).
Other general principles to bear in mind are that merely "helping out" in a business is not sufficient proof of a partnership; that receipt by a person of a share of the profits does not raise an inference of partnership if the profits were received in payment as wages (§ 358.070(4)(b), V.A.M. S.); that the purported partners must have made a definite and specific agreement proved by cogent, clear and convincing evidence, or at least by a preponderance of the credible evidence; that an agreement to share the profits and the losses may be implied, but the sharing of profits is not conclusive of the existence of a partnership unless there be a corresponding right of management in each partner. Grissum v. Reesman, 505 S.W.2d 81, 85-86 (Mo.1974). The fact a business files or doesn't file a partnership income tax return is not sufficient *908 alone to prove or disprove the existence of a partnership. Grundel v. Bank of Craig, 515 S.W.2d 177, 180 (Mo.App.1974); Bates v. Morris, supra, 467 S.W.2d at 290[6]. Unlike statutory and judicial definitions, the tax definition of "partnership" includes any pool, group, syndicate, joint adventure or other unincorporated organization by means of or through which any financial operation or business is carried on and which, for income tax purposes, is not a corporation, trust or estate. 1 Tax Coordinator, Tax Research Institute of America, Inc., ¶ B-1001, p. 14,051.
On this appeal we are not concerned with plaintiff's relationship to the Joyces during the existence of old Crown except as it may bear on his relationship with Kissinger. The best that can be said for plaintiff's equivocal testimony was that he had an "understanding" that at some time in futuro he would become a partner with the Joyces when "the business paid for itself or something like that," and that he would continue in new Crown with Kissinger under the same "understanding" or basis he had with the Joyces. In other words and in substance, plaintiff's "understanding" with both the Joyces and with Kissinger was that he would become a partner in either old Crown or new Crown upon the happening of some future contingency, i.e., when the business paid for itself. It is undisputed that neither operating business paid for itself or had produced net profits sufficient to reimburse either the Joyces or Kissinger for their capital contributions.
There is a vast difference between a partnership in praesenti and a partnership to be formed in futuro. Persons who agree to become partners at some future time or upon the happening of some future contingency have only an executory contract, and they do not become partners until the condition precedent is met. Goodwin v. Winston, 241 Mo.App. 357, 363-365, 230 S.W.2d 793, 796-798[1-3] (1950); Thompson v. Thompson, 500 S.W.2d 203, 209[10] (Tex. Civ.App.1973); Arnold v. Caprielian, 437 S.W.2d 620, 625[3] (Tex.Civ.App.1969); Willis v. Harvey, 349 S.W.2d 323, 326[2] (Tex. Civ.App.1961); Higgins v. Higgins, 266 Ala. 514, 97 So. 2d 812, 815 (1957); Southard v. Oil Equipment Corporation, 296 P.2d 780, 785[19] (Okl.1956); 68 C.J.S. Partnership § 11 a., pp. 418-419; 59 Am.Jur.2d, Partnership, § 29, at p. 953.
Not unlike the case at bar was Cearley v. Cearley, 331 S.W.2d 510, 512[1] (Tex.Civ. App.1960). In Cearley the agreement was that A would lease the store, buy all the necessary fixtures and equipment, and that when he recovered his costs, B would then become a partner and half owner of the business. The court there held the parties had only an executory contract to form a partnership in futuro and that B would not become a partner until A was paid in full for his expenditures. That contingency, as in the instant situation, never occurred and the formation of a partnership was never accomplished.
As once noted, the trial court gave no reason for the judgment rendered. Consequently, we do not know if the judgment was based, in part, upon a belief that a partnership in praesenti existed between plaintiff and Kissinger. Furthermore, if this was the case, we do not see how the court could have arrived at any sum of a money judgment without an accounting procedure which was not afforded by and cannot be gleaned from the superficial evidence produced at trial.[3] In any event, if the judgment was predicated on a finding of the existence of a partnership, the judgment was in error and was for the wrong party. Plaintiff suggests in his brief that the court's decision could be based on a finding of an individual obligation owed by *909 Kissinger to plaintiff irrespective of the existence of a partnership. But this was not the theory pleaded nor on which the case was tried, and for plaintiff now to raise an entirely new theory supporting affirmance of his own favorable judgment below is contrary to the established practice of appellate procedure. Wantuck v. United Savings & Loan Ass'n, 461 S.W.2d 692, 697[7] (Mo. banc 1971); Huter v. Birk, 439 S.W.2d 741, 745[9] (Mo.1969); MFA Mutual Ins. Co. v. Southwest Baptist College, Inc., 381 S.W.2d 797, 802-803[6] (Mo.1964); Stevens v. Missouri Pacific R. R. Co., 355 S.W.2d 122, 127[1] (Mo.1962); Shelton v. M & A Electric Power Cooperative, 451 S.W.2d 375, 380[8] (Mo.App.1970). Plaintiff's new theory is not before us and we decline to consider it sua sponte. Nevertheless, if the enigmatic $4,000-plus profit plaintiff allegedly realized from the sale of old Crown was ceded, arguendo, to be a reality, there is not one jot of evidence (except through an excessive stretch of a biased imagination) that Kissinger acknowledged its existence or agreed to its placement in new Crown as any benefit for plaintiff. At most under the proof, plaintiff's averred profit from the sale of old Crown and its alleged accommodation into the operations of new Crown was a unilateral declarative of plaintiff and the Joyces which perished from lack of mutuality or assent on the part of defendant Kissinger.
With caution and a firm belief that the judgment nisi was wrong, we hold the trial court's judgment was against the weight of the evidence and that there was no substantial evidence to support it. Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). Being of that mind, the judgment is reversed.
All concur.
NOTES
[1] The judgment was also in favor of defendants Joyce on Kissinger's cross-claim against them. In Kissinger's appellant's brief he observes that "For the purpose of this appeal, we are concerned only with Count I" of plaintiff's petition. This manifests an abandonment of any complaint Kissinger could have asserted on appeal anent denial of his cross-claim. Burger King of St. Louis, Inc. v. Weisz, 444 S.W.2d 517[1] (Mo.App.1969). Ergo, we sustain Joyces' motion to dismiss the appeal as it may have affected them. However, plaintiff's motions to dismiss defendant's appeal are overruled.
[2] Of course, $4000-plus would not equal anything like a contribution towards one-third interest in new Crown.
[3] It is suggested the $3,833 judgment was calculated by subtracting from $4,333 the $500 "draw on future profits" given to plaintiff by Kissinger at the inception of new Crown. However, there was no factual foundation for concluding that plaintiff's interest in new Crown was, in fact, $4,333. Such a figure could be arrived at only by guess, speculation and conjecture and shielding plaintiff's alleged interest from participation in purchases, expenses and losses experienced by new Crown. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418864/ | 640 S.W.2d 824 (1982)
Darlene (Darcy) Bannigan HESINGTON, Plaintiff-Appellant,
v.
ESTATE OF Charles W. HESINGTON, Deceased, Defendant-Respondent.
No. 12166.
Missouri Court of Appeals, Southern District, Division Two.
January 29, 1982.
Motion for Rehearing and to Transfer Denied February 22, 1982.
Paul L. Bradshaw, David C. Agee, Neale, Newman, Bradshaw & Freeman, Springfield, for plaintiff-appellant.
John W. Housley, Johnson, Lowther & Cully, Springfield, for defendant-respondent.
Motion for Rehearing and to Transfer to Supreme Court Denied February 22, 1982.
MAUS, Chief Justice.
By their excellent briefs and oral arguments the parties have presented to the court a question, not heretofore directly answered by an appellate court of this state, concerning the validity of a common-law marriage. Charles W. Hesington died March 8, 1980, a resident of Greene County, Missouri. On June 4, 1980, Letters of Administration With Will Annexed were issued upon his estate by the Probate Division of the Circuit Court of Greene County, Missouri. In this proceeding the appellant seeks to establish that she is the widow of the decedent by virtue of a common-law marriage contracted in Tulsa, Oklahoma, on April 8, 1978. The Probate Division of the Circuit Court denied that relief.
It is not necessary to set forth in detail the evidence in support of and in derogation of that asserted common-law marriage. In view of the findings of the trial court, it is sufficient to review the evidence favorable to that claim. The favorable evidence is summarized as follows. The appellant and the decedent were before, at the time of, and after the asserted common-law marriage domiciled in and actually resided in Greene County, Missouri. The appellant and the decedent each had an interest in attending dog shows. Before April 8, 1978, they began dating. They attended numerous dog shows together. On April 8, 1978, they made a business trip to Tulsa, Oklahoma, to see one Donna Wainwright. They related to her that during the trip, without witnesses or solemnization, they exchanged marriage vows. The following week they attended a dog show in Tulsa in a mobile home. They repeated their marriage vows to a friend staying in the next mobile home. They told the friend that they had been married the preceding weekend. Thereafter, the trial court found they "were known to cohabitate [sic], refer to each other as husband and wife, and otherwise publicly hold themselves out as such".
From these findings the trial court concluded the appellant and the decedent "spoke words and acted in such a manner *825 that had they been residents of the State of Oklahoma on April 8, 1978, they would have met the requirements of a common-law marriage". However, the trial court then reviewed the statutes and the case law of this state and concluded that Missouri will not recognize a common-law marriage consummated in a common-law state, "while its residents only temporarily leave the state to attempt such marriage and immediately return". The trial court entered its judgment that the alleged marriage was null and void and of no force nor effect.
Section 451.040.5, RSMo 1978, provides: "Common-law marriages hereafter contracted shall be null and void". This provision was adopted in 1921. Laws of Missouri 1921, page 468. It has been consistently held that a common-law marriage contracted in Missouri after that date is null and void. State v. Eden, 350 Mo. 932, 169 S.W.2d 342 (1943); Rone's Estate v. Rone, 218 S.W.2d 138 (Mo.App.1949).[1]
43 Okla.St.Anno. § 4 provides that no person shall contract a marriage in Oklahoma without a license being first issued. Subsequent sections contain provisions concerning the issuance of a license, its contents and endorsement and return. 43 Okla.St.Anno. § 7 provides: "[a]ll marriages must be contracted by a formal ceremony" as prescribed in that section. Nevertheless, common-law marriages contracted in Oklahoma are recognized by the courts of that state. Daniels v. Mohon, 350 P.2d 932 (Okl.1960).[2] The requirements of a common-law marriage in Oklahoma have been said to be:
(1) an actual and mutual agreement between the spouses to be husband and wife;
(2) a permanent relationship;
(3) an exclusive relationship;
(4) cohabitation as man and wife;
(5) the parties to the marriage must hold themselves out publicly as husband and wife. Estate of Phifer, 629 P.2d 808, 809 (Okl.App.1981).[3] (Footnotes Omitted).
This case presents a narrow conflict of laws question. The issue presented is circumscribed by the following facts. As stated, the appellant and the decedent were before, at the time of, and after the asserted common-law marriage domiciled in and actually resided in the state of Missouri. The asserted common-law marriage was without witnesses and was not based upon any formal ceremony. The parties made no effort to comply with the Oklahoma statutes providing for the issuance of a marriage license and the formalities of a marriage. The asserted marriage was what may be termed a strictly common-law marriage.
It has often been said by the courts of this state that the validity of a marriage is to be determined by the law of the state where it was contracted. Hartman v. Valier & Spies Milling Co., 356 Mo. 424, 202 S.W.2d 1 (1947); Doyle v. Doyle, 497 S.W.2d 846 (Mo.App.1973); Taylor v. Taylor, 355 S.W.2d 383 (Mo.App.1962). Perhaps as a result it has often been assumed that even if the parties are domiciled in and actually reside in this state, Missouri is required to recognize a marriage which was valid where contracted even though it would not be valid had it been contracted in Missouri. That is not true.
*826 A state is fully sovereign with respect to the control and regulation of marriages for the purpose of promoting public morality and the moral and physical development of the parties, and every state has the power to determine not only who shall assume, but also who shall occupy, the matrimonial relationship within its borders. 52 Am.Jur.2d Marriage § 79, page 929. (Footnotes Omitted).
Also see In re Duncan's Death, 83 Idaho 254, 360 P.2d 987 (1961); Davis v. Seller, 329 Mass. 385, 108 N.E.2d 656 (1952); Hartman v. Valier & Spies Milling Co., supra; In re Shun T. Takahashi's Estate, 113 Mont. 490, 129 P.2d 217 (1942); Ross v. Bryant, 217 P.2d 364 (Okl.1923). This is consistent with Restatement (Second) of Conflict of Laws § 283(1) (1971) which provides: "The validity of a marriage will be determined by the local law of the state which, with respect to the particular issue, has the most significant relationship to the spouses and the marriage under the principles stated in § 6."[4] However, as a matter of comity, Missouri will recognize a marriage valid where contracted unless to do so would violate the public policy of this state. This is consistent with Restatement (Second) of Conflict of Laws § 283(2) (1971) which provides: "(2) A marriage which satisfies the requirements of the state where the marriage was contracted will everywhere be recognized as valid unless it violates the strong public policy of another state which had the most significant relationship to the spouses and the marriage at the time of the marriage."
The issue is whether or not it is against the public policy of this state to recognize a marriage of parties, domiciled in and actually residing in Missouri, contracted in a strictly common-law manner, while on a temporary sojourn in Oklahoma. Similar issues have been decided by many other states. In expressing the majority view in applying New Jersey Law, the U.S. Court of Appeals, 3rd Circuit, said:
But where the parties, while retaining their domicile in one state, pay a temporary visit to another state and there enter into a marriage which would not be recognized by the law of the state of their domicile if entered into therein, the latter state does not always look to the law of the place of the marriage to determine its validity. On the contrary, when the state of their domicile has a strong public policy against the type of marriage which the parties have gone to another state to contract, which policy is evidenced by a statute declaring such marriages to be void, the former state as the one most interested in the status and welfare of the parties will ordinarily look to its own law to determine the validity of the alleged marriage. Metropolitan Life Insurance Company v. Chase, 294 F.2d 500, 503-504 (3rd Cir.1961).
For cases involving factual situations similar to this case in which the validity of a common-law marriage was denied see Grant v. Superior Ct., in and for County of Pima, 27 Ariz.App. 427, 555 P.2d 895 (1976) and Vaughn v. Hufnagel, 473 S.W.2d 124 (Ky.1971). Also see Stevens v. United States, 146 F.2d 120 (C.C.A.Okl.1944); Marek v. Flemming, 192 F. Supp. 528 (D.C.Tex. 1961); In re Enoch's Estate, 52 Ill.App.2d 39, 201 N.E.2d 682 (1964); Kennedy v. Damron, 268 S.W.2d 22 (Ky.1954). Other cases are collected in Laikola v. Engineered Concrete, 277 N.W.2d 653, 655 (Minn.1979) in which the court concluded: "Only a few courts have actually held that residents of a state, which prohibits common-law marriages, may temporarily leave the state without taking up a new residence and consummate a common-law marriage elsewhere". For cases recognizing such common-law marriages see Tatum v. Tatum, 241 F.2d 401 (9th Cir.1957); Matter of Pecorino, 64 A.D.2d 711, 407 N.Y.S.2d 550 (1978). A statute prescribing that a marriage valid where celebrated is valid everywhere was involved in Gallegos v. Wilkerson, 79 N.M. 549, 445 P.2d 970 (1968). A distinction has been recognized where the *827 parties actually resided in the common-law jurisdiction even though they were not domiciled therein. Metropolitan Life Insurance Company v. Holding, 293 F. Supp. 854 (D.C.Va.1968); Walker v. Yarbrough, 257 Ark. 300, 516 S.W.2d 390 (1974). The same is true where there was a formal ceremony without a license or with a license that had been improperly issued. Annot., Solemnized Marriage Without License, 61 A.L. R.2d 847 (1958). Also see State v. Eden, supra. It is also true where there was a ceremonial marriage to which there was a legal impediment, which impediment was not known to at least one of the parties, a common-law marriage has been recognized upon removal of that impediment. Metropolitan Life Insurance Company v. Holding, supra. Also see Old Republic Insurance Company v. Christian, 389 F. Supp. 335 (D.C. Tenn.1975).
The public policy of this state in regard to the recognition of the strictly common-law marriage in question has not been declared by the Supreme Court. Nor has the issue been dealt with decisively by the Court of Appeals. In Hodge v. Conley, 543 S.W.2d 326, 330 (Mo.App.1976) the court observed that Oklahoma, "where the 1966 marriage occurred and presumably where the parties then lived, recognized at that time and still recognizes common-law marriages". In Pope v. Pope, 520 S.W.2d 634 (Mo.App.1975) at least one of the parties was apparently a resident of Kansas as he had an apartment in that state. In McGrath v. McGrath, 387 S.W.2d 239 (Mo. App.1965), the court refused to recognize a Texas common-law marriage and observed that the parties were domiciled in and residents of Missouri and that there was no new agreement of marriage in Texas. In Preston v. Preston, 342 S.W.2d 956, 958 (Mo.App.1961) in denying the validity of a Kansas common-law marriage the court observed, "[i]n the first place, every Kansas case examined is a case where the parties have been actual bona fide residents of Kansas, and not merely transient workers, whose actual permanent residence is shown to be in another state".
"Both statutes and judicial decisions have a bearing in ascertaining the public policy of a state, but statutes are the very highest evidence of public policy and binding on the courts". Brawner v. Brawner, 327 S.W.2d 808, 812 (Mo. banc 1959). (Emphasis Added). It is significant that § 451.040.5 expressly declares that "common-law marriages hereafter contracted shall be null and void". (Emphasis Added). State v. Eden, supra; In re Guthery's Estate, 205 Mo.App. 664, 226 S.W. 626 (1920). Also see Metropolitan Life Insurance Company v. Chase, supra, 294 F.2d 500.[5] Those domiciled and residing in Missouri are most often married in Missouri. Without a doubt, one of the purposes of § 451.040.5 is to require some degree of solemnity and reliability in establishing a marriage of those domiciled in and residing in Missouri. State v. Eden, supra. To forbid a common-law marriage in this state but recognize a strictly common-law marriage of domiciliaries and residents of Missouri on a sojourn in a common-law state, of which there are several, would defeat that purpose. The public policy declared by § 451.040.5 must be consistent with its purpose. State v. Miles Laboratories, 365 Mo. 350, 282 S.W.2d 564 (banc 1955). The judgment of the Probate Division of the Circuit Court of Greene County is affirmed.
PREWITT, P.J., and HOGAN and BILLINGS, JJ., concur.
NOTES
[1] The issue in this case is to be distinguished from the proof of a ceremonial marriage by cohabitation and reputation. In re Estate of Tomlinson, 493 S.W.2d 402 (Mo.App.1973).
[2] Two Oklahoma cases indicate that whether or not a common-law marriage contracted in Oklahoma will be recognized is dependent upon the law of the domicile of the parties. Lopez v. Bonner, 439 P.2d 687 (Okl.1967); Red Eagle v. Cannon, 201 Okl. 511, 208 P.2d 557 (1949). "Every sovereign state may determine the status of those having their domicile within its territory, and the law of the domicile of the parties governs the status of marriage." Ross v. Bryant, 90 Okl. 300, 217 P. 364, 365 (1923).
[3] It has been held the cohabitation and holding out necessary to establish a common-law marriage must occur in the state that recognizes common-law marriage. Grant v. Superior Ct., in and for County of Pima, 27 Ariz.App. 427, 555 P.2d 895 (1976); Kennedy v. Damron, 268 S.W.2d 22 (Ky.1954); Laikola v. Engineered Concrete, 277 N.W.2d 653 (Minn.1979); Andrews v. Signal Auto Parts, Inc., 492 S.W.2d 222 (Tenn.1972).
[4] The most significant contacts principle has been adopted in regard to the application of a guest statute in a tort action. Kennedy v. Dixon, 439 S.W.2d 173 (Mo. banc 1969).
[5] "Because of this provision making common-law marriage null and void, we hold that Minnesota residents may not enter into a valid common-law marriage by temporarily visiting a state which allows common-law marriages." Laikola v. Engineered Concrete, supra, n. 3, 277 N.W.2d at p. 663.). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418890/ | 640 S.W.2d 678 (1982)
Larry Dean RAYMOND, Appellant,
v.
The STATE of Texas, Appellee.
No. 08-81-00153-CR.
Court of Appeals of Texas, El Paso.
June 23, 1982.
Discretionary Review Refused October 6, 1982.
Kerry P. Fitzgerald, Dallas, for appellant.
Henry Wade, Criminal Dist. Atty., Dallas, Stanley Keeton, Richard Aguire, Luther C. Laman, Asst. Dist. Attys., for appellee.
Before WARD, OSBORN and SHULTE, JJ.
OPINION
OSBORN, Justice.
Appellant was tried under a complaint and information for the misdemeanor offense of resisting arrest, alleged to have occurred on November 10, 1978. The first trial ended with a hung jury. The second trial resulted in a guilty verdict. Punishment was assessed at thirty days confinement, probated for twelve months, and a fine of $200.00. We reverse and render.
Appellant's Ground of Error No. One asserts that the evidence was insufficient to support a conviction. He contends that there was no evidence of force directed at the arresting officer, an essential element of the offense. Tex.Penal Code, Section 38.03(a). Appellate review of such a contention requires that the evidence be examined in a light most favorable to the verdict. Ahearn v. State, 588 S.W.2d 327, 336 (Tex. Cr.App.1979).
The complainant, Chief of Police Mike Thornhill, testified that on November 9, 1978, he observed the Appellant commit several driving violations. On November 10, 1978, he drove to Appellant's home with Officer Mike Dupree. They arrived in a marked patrol vehicle. Dupree was in full police uniform; Thornhill had his badge pinned to his civilian shirt. Thornhill advised Appellant of the citations and asked him to sign them. Appellant denied any knowledge of the matters and walked away. Thornhill followed the Appellant, still seeking signatures. He had no intent to arrest at that point.
Appellant crawled under his vehicle, apparently to work on it. Thornhill asked him to come out, and Appellant refused. Thornhill began to pull on Appellant's leg. At first, Thornhill testified that Appellant kicked his hand away. He later repudiated the kicking allegation. Appellant then emerged from under the vehicle. Thornhill still had no intent to arrest Appellant, but continued asking for signatures on the citations. Appellant continued to deny knowledge of the traffic violations and refused to sign. Thornhill ordered Appellant to turn *679 around, advising him that he was under arrest. He grabbed Appellant's right arm. Appellant pulled his arm out of Thornhill's grasp. This grabbing and jerking away sequence took place a second time. Appellant then submitted to arrest and handcuffing.
The testimony of Officer Dupree was identical to that of Thornhill, particularly as to the description of Appellant pulling his arm away. For that matter, Appellant's own version of the actual physical confrontation is consistent with the officers' testimony. The only question on appeal is whether the act of pulling his arm out of Officer Thornhill's grasp constituted "using force against the peace officer." We conclude that it does not.
The very language of Section 38.03 indicates that the required force must be directed at the officer or applied to him. Appellant appropriately points to the Practice Commentary to Section 38.03:
One who runs away or makes an effort to shake off the officer's detaining grip may be guilty of evading arrest under Section 38.04, but he is not responsible under this section.
The Practice Commentary has been cited by the Court of Criminal Appeals with apparent approval. Sutton v. State, 548 S.W.2d 697, 700 (Tex.Cr.App.1977); Washington v. State, 525 S.W.2d 189, 190 (Tex.Cr.App. 1975).
In Sutton, the appellant was convicted of aggravated assault on a police officer. The appellate court reversed for failure to charge the jury on the lesser included offense of resisting arrest. It was undisputed that the appellant struck the arresting officer in the face with his arm, causing a gash.
In Washington, two arresting officers attempted to handcuff a 240-pound woman. She not only tried to break their grasp, but once partially handcuffed, dragged both officers a distance of ten feet. The court held that there was sufficient evidence to sustain a conviction for resisting arrest. Dragging the officers by the handcuffs constituted force directed against them and went beyond a simple effort to disengage. Id. at 190.
In Humphreys v. State, 565 S.W.2d 59, 61 (Tex.Cr.App.1978), the court upheld a conviction where the appellant dislodged the arresting officer's arm by striking it. He followed that action with repeated blows which the officer blocked with his arms.
Striking an arresting officer's arm away constitutes force directed against the officer. This is distinctly different from the direction of force employed in simply pulling one's arm away. There is no danger of injury to the officer in the latter action.
The elements of violence and danger to the officer are further reflected in the differing statutory requirements. Where violence toward the officer is present, Section 38.03 applies, and it is no defense that the arrest was unlawful. Section 38.03(b). If a deadly weapon is used, the offense is elevated to a third degree felony. Section 38.03(d). If bodily injury results, the actor may be charged with aggravated assault under Section 22.02. Where violent force is not directed at the arresting officer, the circumstances are not exigent. The actor may be charged with evading arrest under Section 38.04. Under these circumstances, however, the arrest must be lawful.
Appellant's action in twice pulling his arm away did not constitute force against the peace officer. There being no other evidence upon which the jury could base its verdict, the conviction must be reversed and a judgment of not guilty rendered. Ground of Error No. One is sustained. This ruling eliminates the need to address Appellant's Ground of Error No. Two.
The conviction is reversed and the case is remanded for the entry of a judgment of not guilty. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418948/ | 175 F. Supp. 2d 176 (2000)
Craig L. ROBERTS, Sr., individually and on behalf of a class of persons similarly situated,
v.
The State of RHODE ISLAND, and George A. Vose, Jr., individually and in his capacity as Director of the R.I. Department of Corrections, and Roberta Richmond, individually and in her capacity as the Warden of The Women's Facility at the Adult Correctional Institutions, and Albert Gardiner, individually and as Warden of the Intake Services Center at the Adult Correctional Institution,
and
Craig L. Roberts, Sr., individually,
v.
Two Unknown Rhode Island State Troopers whose names will become known in the course of pretrial discovery.
No. 99-259ML.
United States District Court, D. Rhode Island.
March 16, 2000.
Opinion Amending Decision, March 24, 2000.
*177 Thomas W. Kelly, Newport, RI, Gregory A. Belzley, Frost Brown Todd, LLC, Louisville, KY, for plaintiff.
Rebecca Tedford Partington, Attorney General's Office, Providence, RI, for defendants.
MEMORANDUM AND DECISION
LISI, District Judge.
This case is before the Court on the parties' cross-motions for summary judgment. The plaintiff has moved for partial summary judgment as to the issue of liability on Counts One and Two of his First Amended Complaint. The State has also moved for summary judgment. For the reasons stated herein, the Court grants *178 the plaintiff's motion and denies the defendants' motion.
I. Standard of Review
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue is "genuine" if the evidence would permit a reasonable jury to return a verdict for the non-movant, and a fact is "material" if it has the potential to sway the outcome of the litigation under the applicable law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
Where the parties have filed cross-motions for summary judgment, the standard of review does not buckle. See Blackie v. State of Maine, 75 F.3d 716, 721 (1st Cir. 1996)("The happenstance that both parties move simultaneously for brevis disposition does not, in and of itself, relax the taut line of inquiry that Rule 56 imposes."). The trial court must consider each motion separately, viewing the facts and drawing all inferences in a light that is most favorable to the non-movant. See Reich v. John Alden Life Ins. Co., 126 F.3d 1, 6 (1st Cir.1997).
II. Undisputed Facts[1]
A. The Searches
In the early morning hours of April 20, 1999, the plaintiff, Craig Roberts ("Roberts"), was a passenger in a vehicle driven by an individual named Steven Rizzo ("Rizzo"). State police troopers John Gibbs and John Allen stopped the vehicle on Bellevue Avenue in Newport, Rhode Island, because the registration stickers on its license plate had expired. The troopers checked the occupants' identification, and allowed the vehicle to pull away after Rizzo produced the proper registration stickers.
As the vehicle pulled away, the troopers stopped it again and asked Roberts to exit the car. The troopers advised Roberts that the computer had revealed that he was subject to an outstanding body attachment.[2] The troopers performed a patdown frisk, which revealed no weapons, and placed Roberts in the back of the cruiser. Roberts then produced a carbon-copy of a family court order issued by magistrate George DiMuro, dated September 1, 1998, withdrawing the body attachment. After relaying this information to dispatch, the troopers declined to release Roberts and transported him to the Intake Services Center ("ISC") at the Adult Correctional Institution ("ACI") in Cranston, Rhode Island.
Upon arriving at the ISC, the troopers transferred Roberts to the correctional officer on duty. He was placed in a temporary holding cell and the committing officer completed a "New Inmate Committing Sheet." The officer photographed Roberts, took his fingerprints, and requested that he submit to a blood test. Roberts refused the blood test.
*179 At some point during the committing procedure, a member or members of the ISC staff subjected Roberts to a strip search in accordance with two policies promulgated by the Department of Corrections ("DOC"). Pursuant to those policies, Roberts was told to remove his clothing one item at a time for inspection. The member or members of the ISC staff completed a "Scars and Tattoo Sheet." The ISC staff member or members ordered Roberts to run his fingers through his hair. They then inspected the inside of his mouth, the inside of his nose, his hands, and his feet. Roberts was also ordered to spread his buttocks, whereupon the officer or officers visually inspected his body cavity. Noone touched Roberts during the course of the search. The ISC staff member or members then gave Roberts prison garments and placed him in a segregated cell because he had refused the blood test.
The ISC staff subjected Roberts to a similar search before transporting him to the Garrahy Judicial Complex later that morning. It is unclear from the deposition transcripts and Rule 12.1 submissions whether the area in which Roberts was searched was secluded from public view, although Roberts's deposition does suggest that another individual was next to him during the second strip search procedure. After showing the carbon-copy of the order withdrawing the body attachment to a sheriff in the Garrahy Complex, Roberts was released from custody. He was not presented before a judicial officer.
B. The Policies
There are two policies in issue in this case, both of which were in effect at the time of Roberts's search. The first policy, dated June 15, 1984, is located in a DOC "Operational Memorandum" numbered 5.15.05-2. The subject of the memorandum is the "Reception and Identification for Awaiting Trial and Newly Sentenced Inmates." Part V.B. of that policy provides as follows:
B. SEARCH OF INMATE AND BELONGINGS:
Each new commitment's person, clothing, and personal belongings shall be thoroughly searched for contraband.
1. The commitment officer shall thoroughly search the inmate's body to include examination of hair, arms, hands, ears, mouth, nose; visual examination of groin and rectum; toes and soles of feet.
(a) Any artificial limbs, dentures, or bandages shall be carefully examined.
2. The new commitment's clothing and belongings shall be thoroughly searched to include examination of all pockets, cuffs, seams, hat bands, waistbands, zippers, and collars; all clothing shall be turned inside-out and linings checked; soles, heels, socks, and inside of all shoes shall be examined; the contents of any and all luggage, packages, bags, etc. shall be thoroughly examined.
The second policy in issue derives from a DOC "Policy and Procedure" dated January 27, 1997, numbered 9.14-1. The subject of the memorandum is "Procedures for Detecting and Controlling Contraband On or In the Possession of Inmates." Part III.B.2. of that policy provides as follows:
2. Strip Searches
a. Strip searches of inmates will always be conducted for objective purposes only and will always be carried out in an expeditious and efficient manner. They will never be done for punitive purposes or as a form of harassment.
(1) Strip searches shall be conducted under the direction of the Shift Supervisor *180 or other Superior Officer, or as required by policy.
(2) Two (2) Correctional Officers shall be assigned to conduct a strip search.
(3) Strip searches shall be conducted by officers of the same sex as the inmates being searched, except during emergencies.
(4) The following search plan shall be followed when conducting a strip search. The officer will examine:
(a) All pockets;
(b) Run fingers over linings, seams, collars, cuffs, waistbands, and fly;
(c) Shoes, inside soles and heels;
(d) Socks, turning them inside out;
(e) False teeth, artificial limbs, plaster casts;
(f) Inmates will run their fingers through their hair. Officers will check for wigs and hairpieces;
(g) Inmates ears will be checked inside and out;
(h) The officer will look inside the inmate's nose;
(i) Inmates will open their mouths, lift their tongues and roll each lip, for the officer's view;
(j) Inmates will lift their penises and testicles on the officer's command to provide a clear view of the groin area;
(k) Inmates will then lift their feet so that the officer can clearly see between the toes and the soles;
(l) Inmate's hands will be visually inspected;
(m) Inmates will be required to bend over and spread the rectum to provide a clear view of the area.
Roberts's summary judgment motion asks this Court to declare these policies unconstitutional; the state seeks precisely the opposite.
C. The ISC[3]
The DOC operates the ACI, which currently consists of seven facilities with a total capacity of 3,858 beds. One of the seven facilities that the DOC operates is the ISC. The ISC serves as the receiving facility for all males committed to the care, custody, and control of the DOC. The Rhode Island State Police, sheriffs, local police departments, United States Marshals Service, and the Immigration and Naturalization Service all bring commitments to the ISC.
Commitments housed at the ISC fall into several categories. Some are pretrial detainees, some are newly sentenced inmates who await classification to other facilities, some are pretrial protective custody detainees, and others are sentenced protective custody inmates. The length of time an inmate remains committed to the ISC is approximately 16.8 days.
It is a standard policy at the ISC to strip search each male processed as a commitment. Nevertheless, if someone bails a commitment out of the facility within a very short[4] period of time, he does not enter the general population and is not subjected to the routine strip search. The correctional officers at the ISC search inmates in accordance with the aforementioned DOC policies. Those officers *181 receive training about the strip search procedure in video and lecture form.
Rhode Island has a unified prison system. This means that there are no regional facilities to house pretrial detainees before they are tried and sentenced. The ISC is, therefore, considered a maximum security prison. The affidavit suggests that the strip search policies ensure the facility's security, which consists of an integrated general population. The ISC's commitments are out of their cells for approximately eight hours each day, during which time they commingle with the other commitments in different areas of the facility. The strip searches have resulted in the discovery of contraband in the past. Although none of the incident reports supplied by the defendants indicates that contraband was found during visual body cavity searches, one report did discuss an inmate who had secreted cocaine in a plastic bag in his mouth. The strip search of Roberts yielded no weapons or contraband.
III. Discussion
The question that this Court must answer is whether the DOC's policies requiring all of the ISC's commitments to undergo a visual strip and body cavity search[5] comports with the Fourth Amendment's prohibition against unreasonable searches. Upon careful review of the stipulated facts and relevant policies, the Court finds those policies to be unconstitutional.
Any analysis of the policies in issue necessarily begins with Bell v. Wolfish, 441 U.S. 520, 99 S. Ct. 1861, 60 L. Ed. 2d 447 (1979). In that case, the Supreme Court of the United States considered whether a policy requiring pretrial detainees at a federal detention facility to expose their body cavities to visual inspection after contact visits with persons outside the institution was constitutional. Id. at 558, 99 S. Ct. 1861. In holding that the policy did not violate the petitioners' Fourth Amendment rights, the Supreme Court defined the parameters of the reasonableness inquiry in these kinds of cases:
The test of reasonableness under the Fourth Amendment is not capable of precise definition or mechanical application. In each case it requires a balancing of the need for the particular search against the invasion of personal rights that the search entails. Courts must consider the scope of the particular intrusion, the manner in which it is conducted, the justification for initiating it, and the place in which it is conducted.
Id. at 559, 99 S. Ct. 1861.
Since the Court's decision in Wolfish, the courts of appeals have addressed myriad strip search policies applied to arrestees and detainees. See, e.g., Weber v. Dell, 804 F.2d 796 (2d Cir.1986)(holding unconstitutional blanket jail policy of subjecting all arrestees to strip and visual body cavity searches); Mary Beth G. v. City of Chicago, 723 F.2d 1263 (7th Cir.1983)(holding unconstitutional city policy of subjecting all females arrested and detained to strip and visual body cavity *182 searches); Logan v. Shealy, 660 F.2d 1007 (4th Cir.1981)(finding policy to strip search all detainees for weapons or contraband unconstitutional). But see, e.g., Dobrowolskyj v. Jefferson County, Ky., 823 F.2d 955 (6th Cir.1987)(upholding as constitutional strip search policy requiring strip and visual body cavity search of all inmates being moved from one security area of a prison to another). The United States Court of Appeals for the First Circuit has also addressed a similar policy.
In Arruda v. Fair, 710 F.2d 886 (1st Cir.1983), the court of appeals considered a strip search policy that provided for routine strip searches of certain maximum security inmates after the inmates had left the prison law library and infirmary, and after they had received visitors in the maximum security unit's visiting rooms. Recognizing the "severe if not gross interference with a person's privacy that occurs when guards conduct a visual inspection of body cavities," a divided court of appeals upheld the policy in question due in large part to the nature of the facility and the "particularly dangerous prisoners" confined therein. Id. at 887 (noting that 83% of inmates confined to the facility "were serving maximum sentences of more than 10 years").
Almost fourteen years after Arruda, the court of appeals revisited Bell in Swain v. Spinney, 117 F.3d 1 (1st Cir.1997). In Swain, the court addressed anew the standard set forth in Wolfish. Noting that other courts of appeals had concluded that "to be reasonable under Wolfish, strip and visual body cavity searches must be justified by at least a reasonable suspicion that the arrestee is concealing contraband or weapons," the First Circuit adopted the reasonable suspicion standard as well. Id. at 7 ("Accordingly, it is clear that at least the reasonable suspicion standard governs strip and visual body cavity searches in the arrestee context as well."). See also Weber, 804 F.2d at 802 (adopting reasonable suspicion standard), quoted in Wachtler v. County of Herkimer, 35 F.3d 77, 81 (2d Cir.1994).
The facts in Swain were different from the facts in the case now under consideration. In Swain, 117 F.3d at 1, police officers arrested the plaintiff ("Swain") and her boyfriend for possession of marijuana and theft. Police pat-frisked the plaintiff at the scene and then transported her and her boyfriend to the police station. Swain was taken to a booking area and her information was processed by a female employee. During the booking process, Swain was permitted to use the bathroom unobserved. She then made a telephone call to her lawyer. Upon concluding the conversation, she was again pat-frisked and placed in a holding cell. Id. at 3.
Swain was in the cell for approximately twenty minutes when a male officer entered the cell to interrogate her about her boyfriend's criminal activities. The officer became angry when Swain insisted that she knew nothing about those activities. The officer then departed. Five to ten minutes later, a female employee of the department entered the cell and informed Swain that she would have to submit to a strip search. The subsequent strip and visual body cavity search revealed no contraband or weapons. Id. at 3-4.
Although the facts of Swain are different from the facts in the case at bar, this Court must adhere to the standard propounded by the court of appeals. To pass muster under that standard, a strip and visual body cavity conducted in this circuit must be based at least upon a reasonable suspicion that the arrestee is concealing contraband or weapons.
Even the most cursory glance at the policies propounded by the DOC for use at *183 the ISC indicates that they are constitutionally deficient. Policy number 5.15.05-2, the policy that governs the admission of new commitments to the ISC, contains no language concerning what factors might give rise to the reasonable suspicion that would permit a constitutional strip and visual body cavity search. Policy number 9.14-1 states that strip searches for controlling contraband in the facility shall "be conducted for objective purposes only." Nevertheless, it does not provide any guideposts respecting which objective criteria might give rise to reasonable suspicion, which would permit a constitutional strip and visual body cavity search. See, e.g., Weber, 804 F.2d at 802 (dicta suggesting that particularized suspicion might arise from the nature of the charge and the specific circumstances surrounding the arrest); Dufrin v. Spreen, 712 F.2d 1084, 1087 (6th Cir.1983)(holding strip search constitutional where police arrested the plaintiff for felonious assault); Logan, 660 F.2d at 1013 (finding blanket search policy unconstitutional as applied to plaintiff where, inter alia, offense of drunken driving was "one not commonly associated by its very nature with the possession of weapons or contraband"). In fact, the policies evidence no exceptions to the firm rule that all commitments to the ISC are to be subjected to a strip and visual body cavity search.
While this Court is mindful of the DOC's need to implement and maintain policies that will promote order within the ACI and particularly the ISC, the Court is also aware of "the severe if not gross interference with a person's privacy that occurs when guards conduct a visual inspection of body cavities." Arruda, 710 F.2d at 887. As the United States Court of Appeals for the Fourth Circuit admonished in Logan, 660 F.2d at 1013: "An indiscriminate strip search policy routinely applied to detainees such as [Roberts] along with all other detainees cannot be constitutionally justified simply on the basis of administrative ease in attending to security considerations." Thus, while some strip and visual body cavity searches at the ISC will, no doubt, be constitutionally permissible, the current indiscriminate practice of subjecting all commitments to those searches cannot pass Fourth Amendment scrutiny.
Based upon the stipulated statement of facts, the facts submitted by the defendants in support of their motion for summary judgment, and a careful survey of the precedential landscape, this Court concludes that DOC policies 5.15.05-2 and 9.14.1 do not comport with Swain's reasonable suspicion standard and are therefore unconstitutional. In light of this determination, the Court also concludes that those policies, as applied to Roberts, violated his right to be free from an unreasonable search in violation of 42 U.S.C. § 1983.
IV. Conclusion
For the reasons stated herein, the plaintiff's motion for partial summary judgment on Count One of the First Amended Complaint is GRANTED. The Court hereby declares DOC policy number 15.5.05-2 and DOC policy number 9.14-1 unconstitutional because they violate the Fourth Amendment. Furthermore, the Court restrains and enjoins the defendants' from conducting strip and visual body cavity searches in accordance with those policies.
The plaintiff's motion for partial summary judgment on Count Two of the First Amended Complaint is moot. It relates to a class action, and by a Memorandum and Order dated January 6, 2000, the Court denied the plaintiff's motion to certify a class.
The defendants' motion for summary judgment is DENIED.
SO ORDERED.
*184 AMENDED DECISION
On March 16, 2000, this Court issued a Memorandum and Decision ("March 16 Decision") in this action. That Memorandum and Decision enjoined the defendants from conducting certain strip and visual body cavity searches and declared two Department of Corrections policies relating to those searches to be unconstitutional. On March 22, 2000, the defendants moved pursuant to Fed. R. Civ. P. 60 for a clarification of that decision.
I. Discussion
A. The Caption
The defendant's first request for clarification concerns the case caption included in the Court's March 16 Decision. On January 5, 2000, the Court granted the plaintiff leave to file an amended complaint. The plaintiff filed his First Amended Complaint on January 28, 2000. That complaint substituted new defendants for the Jane and John Doe defendants included in the caption of the initial complaint.
The defendants have asked this Court to amend its March 16 Decision to reflect the caption as it appeared in the initial complaint. Defendants assert that they were never served with a copy of the First Amended Complaint; the Court's file supports that assertion. The Court therefore grants the defendants' motion to amend on this ground, and amends the March 16, 2000, decision to include the caption listed in this Amended Decision.
B. The Substantive Clarification
The defendants next ask for a clarification of the scope of the Court's declaration and the injunctive relief rewarded. Particularly, the defendants argue that the March 16 Decision, as written, nullifies DOC policies 15.5.05-2 and 9.14-1 in toto, thus prohibiting the use of other security procedures contained within those documents. The Court amends its March 16 Decision and declares unconstitutional the strip and visual body cavity search provisions of policies 15.5.05-2 and 9.14-1 insofar as those policies are universally applied to pre-arraignment detainees without any prior determination that there is a reasonable suspicion that the individual may be carrying weapons or contraband.
Finally, the defendants have asked this Court to amend the March 16 Decision to narrow the scope of the injunctive relief granted. The defendants aver that, as written, the March 16 Decision enjoins all strip and visual body cavity searches at the Department of Corrections. To clarify this confusion as to the scope of the injunctive relief afforded in the March 16 Decision, the Court amends it to enjoin the Department of Corrections from conducting strip and visual body cavity searches of pre-arraignment detainees that are not found upon a reasonable suspicion that the particular detainee is concealing weapons or contraband.[1]
II. Conclusion
The Court hereby amends its March 16, 2000, Memorandum and Decision to be consistent with the text of this Amended Decision.
SO ORDERED.
NOTES
[1] In support of their motions for summary judgment, the parties submitted a joint factual stipulation pursuant to D.R.I. Loc. R. 12.1. Unless otherwise stated, the Court draws the relevant facts from that document and the exhibits that accompany it.
[2] Pursuant to R.I. Gen. Laws § 8-10-3.1(c)(8), a duly appointed master of the family court has the power to issue a "capias and/or body attachment." Black's Law Dictionary defines the term "capias," also termed "body execution," as "[a]ny of various types of writs that require an officer to take a named defendant into custody." Black's Law Dictionary 199 (7th ed.1999).
[3] The Court draws the following facts from the affidavit of A.T Wall II ("Wall") and the documentation that accompanied it. At the time of the filing, Wall was Interim Director of the DOC. The defendants submitted his affidavit in support of their motion for summary judgment.
[4] Neither policy in issue defines a "very short" period of time.
[5] In support of their motion for summary judgment, the defendants seek to classify the searches in question as strip searches. Clearly, the searches in issue involved visual body cavity searches as well. As the court of appeals noted in Blackburn v. Snow, 771 F.2d 556, 561 n. 3 (1st Cir.1985):
A "strip search," though an umbrella term, generally refers to an inspection of a naked individual, without any scrutiny of the subject's body cavities. A "visual body cavity search" extends to visual inspection of the anal and genital areas. A "manual body cavity search" includes some degree of touching or probing of body cavities.
[1] The Court will not revisit the paramenters of the reasonable suspicion calculus, as the March 16 Decision already addresses the issue. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418962/ | 640 S.W.2d 955 (1982)
CONNECTICUT GENERAL LIFE INSURANCE COMPANY and American National Insurance Company, Appellants,
v.
Lois STICE, Appellee.
No. 21126.
Court of Appeals of Texas, Dallas.
September 14, 1982.
Rehearing Denied October 25, 1982.
*956 Thomas J. Nash, Jr., Dallas, for appellants.
Charles M. Wilson, III, Carter, Jones, Magee & Rudberg, Dallas, for appellee.
Before STEPHENS, ALLEN and GUILLOT, JJ.
STEPHENS, Justice.
This is an appeal from a suit brought by Lois Stice to recover the proceeds of an insurance policy on the life of her deceased husband issued by Connecticut General Life Insurance Company (Connecticut General) through her employer, American National Life Insurance Company (American National). Additionally, she sought treble damages from American National for engaging in deceptive and misleading practices under the insurance code. The jury answered special issues favorably to Stice and the trial court entered judgment for $50,000.00, plus the statutory penalty, interest and attorneys' fees against Connecticut General and for $150,000.00 plus attorneys' fees against American National. Both insurance companies appealed. We affirm the judgment against Connecticut General and reverse the judgment against American National.
*957 The evidence developed at trial showed that Mrs. Stice was employed by American National. Through her employer, she was given the opportunity to enroll in a group contract of accidental death and dismemberment insurance offered by Connecticut General. She enrolled herself and her dependents under this plan. On March 16, 1976, while covered by the policy, Stice's husband fell and fractured his hip. During his hospitalization following surgical repair of the fracture, he developed a wound infection which would not heal and his liver functions began to deteriorate. Stice's condition continued to worsen, and he died on June 21, 1976.
Connecticut General denied Mrs. Stice's claim for benefits under the accidental death policy, contending that Mr. Stice's death did not result from an accidental injury independent of all other causes as required under the coverage clause of the policy. Mrs. Stice then brought the instant suit.
Appellant Connecticut General contends in five points of error that there was no evidence or insufficient evidence to support the jury's findings to the following special issues:
SPECIAL ISSUE NO. 1
Do you find from a preponderance of the evidence that Roy Stice suffered an accidental bodily injury, which, directly and independently of all other causes, resulted in his death within 180 days?
Answer "Yes" or "No."
ANSWER: Yes
SPECIAL ISSUE NO. 2
Do you find from a preponderance of the evidence that the hepatocellular disease cirrhosisof Roy A. Stice, if any, was not the proximate cause of his death?
Answer: "It was not the proximate cause"
or
"It was the proximate cause"
ANSWER: It was not
SPECIAL ISSUE NO. 3
Do you find from a preponderance of the evidence that the hepatocellular disease cirrhosisof Roy A. Stice, if any, was not a contributing cause of his death?
Answer: "It was not a contributing cause"
or
"It was a contributing cause"
ANSWER: It was not
In deciding a "no evidence" point, we must consider only that evidence and reasonable inferences therefrom which viewed in its most favorable light support the jury finding and we must reject all evidence or reasonable inferences to the contrary. Glover v. Texas General Indemnity Company, 619 S.W.2d 400, 401 (Tex.1981); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). An "insufficient evidence" point requires the court to consider and weigh all the evidence, including any evidence contrary to the trial court's judgment. See Burnett v. Motyka, 610 S.W.2d 735, 736 (Tex.1980); In re King's Estate, 150 Tex. 662, 664-65, 244 S.W.2d 660, 661 (1951).
The evidence showed that Mr. Stice suffered from chronic cirrhosis of the liver for approximately ten years prior to his death. However, the condition had not required any regular treatment in the two-year period before he broke his hip. Dr. Kempe, the family physician, testified that the cirrhosis caused Stice to be more susceptible to infection. He also had to limit his protein intake because the diseased liver had a decreased ability to break down and detoxify protein substances. After undergoing surgery on his hip, Stice developed a wound infection and his liver functions began to deteriorate. The attending physicians attempted to promote healing of the infection with protein but the dosage was limited because of Stice's liver disease. According to the autopsy, death resulted from "combined metabolic, hepatic and renal disorder with cardiac failure."
Dr. Kempe testified that under stressful situations, Stice's long term liver problem "could certainly be a terminal event." In his opinion, Stice's liver disease played a *958 significant role in his death. However, at the time of Stice's admission to the hospital, his liver condition was stable and did not require treatment. In Kempe's estimation, Stice's accidental fall was "a challenge that initiated the whole sequence of events" and the infection of the wound area "played a very dominant role" in causing Stice's death. Kempe also expressed the following opinion in a letter to the claims manager of American National (admitted as plaintiff's exhibit 8):
His terminal illness, however, was a result of his fall and subsequent fracture. While I cannot say with absolute certainty that Mr. Stice would be alive today had he not had his fracture, I suspect that he probably would as he had weathered through various infections with his liver disease without difficulty. The severity of his fracture plus the prolonged bed confinement and surgical procedure caused his death in my estimation.
The only other medical evidence presented was the death certificate, autopsy protocal, and past medical history recorded by Dr. Kempe. The death certificate recorded the immediate cause of death as "acute renal failure due to cirrhosis of liversevere." "Intertrochanteric fracture right hip" was listed as a significant condition contributing to death but not related to the terminal disease condition. The autopsy protocol described the cause of death as "post-operative state, nailing of intertrochanteric fracture of right hip, complicated by hemorrhage and infection of the operative site in the presence of advanced cirrhosis of the liver resulting in combined metabolic, hepatic and renal disorder with cardiac failure."
Under the coverage clause of the policy, the burden was on Mrs. Stice to prove that the death of her husband was caused by accidental bodily injury directly and independently of all other causes and that the loss occurred within 180 days after the injury was received. A coverage clause of this type requires a showing that the accidental injury was the sole proximate cause of death. See Stroburg v. Insurance Co. of North America, 464 S.W.2d 827, 829 (Tex.1971); Pan American Life Insurance Co. v. Youngblood, 569 S.W.2d 951, 956 (Tex.Civ.App.Tyler 1978, writ ref'd n.r.e.). Nevertheless, recovery is not defeated when a pre-existing condition or disorder is so remote in the scale of causation, so dormant and insubstantial, or so temporary and transient that it does not materially contribute to the death or injury. See Stroburg v. Insurance Co. of North America, supra at 829. Applying the "no evidence" test, we are satisfied that there was probative evidence from which the jury could have reasonably concluded that accidental injury was the sole proximate cause of death and that cirrhosis did not materially contribute to the death. See Stroburg v. Insurance Co. of North America, supra at 829; Pan American Life Ins. Co. v. Youngblood, supra at 957. Appellant's "no evidence" points are overruled.
In considering appellant's "insufficient evidence" points, we must consider also the evidence contrary to the jury's findings. Although there was some testimony that cirrhosis did contribute to Stice's death, we cannot say that the jury's findings are so against the great weight and preponderance of the evidence as to be manifestly unjust. See In re King's Estate, supra 244 S.W.2d at 661; Pan American Life Ins. Co. v. Youngblood, supra at 957-58. Appellant's "insufficient evidence" points are overruled.
In its sixth ground of error, Connecticut General contends that the overwhelming weight of the evidence showed that Stice's death was caused or contributed to by disease within the meaning of the exclusionary language of the policy. The accidental death and dismemberment policy under which Stice was covered excluded benefits for any loss resulting "directly or indirectly from infection (except pyogenic infections which occur through an accidental cut or wound) or disease, whether the infection or disease is the proximate or a contributing cause of the loss." In its original answer, Connecticut General specifically relied upon this exclusion as a basis for *959 denying liability under the policy. Consequently, Mrs. Stice retained the burden of proving that her right to recover was not defeated by the exclusion pleaded. See Tex.R.Civ.P. 94; Aetna Life & Casualty Ins. Co. v. Nuzum, 551 S.W.2d 768, 770 (Tex.Civ.App.Amarillo 1977, writ ref'd n.r.e.). In Stroburg v. Insurance Co. of North America, supra, the court discussed the meaning of a policy provision excluding liability for loss resulting "wholly or partly, directly or indirectly, from disease or mental or bodily infirmity." 464 S.W.2d at 831. The court held that such a provision excepts loss from risks which are an indirect or remote as distinguished from a proximate cause of the loss. Stroburg v. Insurance Co. of North America, supra at 831-32. Although the exclusion in the instant case does contain the language "directly or indirectly," it also restricts the exception to an infection or disease which is a proximate or contributing cause of the loss. "Contributing cause" has been deemed equivalent to proximate cause. See National Life & Accident Ins. Co. v. Franklin, 506 S.W.2d 765, 768 (Tex.Civ.App.Houston [14th Dist.] 1974, writ ref'd n.r.e.). We conclude that in order for the exclusion to apply, the disease had only to be a proximate cause rather than the sole proximate cause of loss. See National Life & Accident Ins. Co. v. Franklin, supra at 768. In special issue number 2, the jury found that cirrhosis was not the proximate cause of Stice's death. As previously discussed, we cannot say that the finding is so against the great weight and preponderance of the evidence as to be manifestly unjust. We overrule Connecticut General's sixth point of error and affirm the judgment against it.
We next consider the points of error presented by appellant American National. Mrs. Stice sued her employer, American National, for engaging in false, deceptive and misleading practices as prohibited by the Insurance Code, Tex.Ins.Code Ann. art. 21.21, § 4(1) and (2) (Vernon 1981), and the Deceptive Trade Practices Act, Tex.Bus. & Com.Code Ann. § 17.46(b)(5) (Vernon Supp. 1982). Specifically, she argues that American National distributed a brochure misrepresenting the policy exclusions contained in Connecticut General's accidental death and dismemberment policy.[1] She claimed reliance upon the statements contained in the brochure, and that she sustained actual damages in the amount of $50,000 when Connecticut General denied liability based upon the more restrictive exclusionary language contained in the actual policy. The jury answered special issues favorably to Mrs. Stice and she was awarded treble damages against American National with a credit allowed of $50,000 upon payment of the benefits due under the policy by Connecticut General.
In its fourteenth point of error, American National contends that Mrs. Stice cannot suffer damages by virtue of misrepresentation in the brochure if she recovers benefits under the accidental death policy. We agree. The Deceptive Trade Practices Act permits the adversely affected plaintiff to recover the greatest amount of actual damages he has alleged and established by proof to be factually caused by the defendant's conduct. See Hyder-Ingram Chevrolet, Inc. v. Kutach, 612 S.W.2d 687, 689 (Tex.Civ.App.Houston [14th Dist.] 1981, no writ). See also Brown v. American Transfer & Storage Co., 601 S.W.2d 931, 939 (Tex.1980). The injury claimed by Mrs. Stice was that she thought her husband was covered by a policy of insurance for loss resulting from accidental death or dismemberment, whereas, the insurance company *960 denied liability based on a policy exclusion different from the exclusion described in the brochure. The damage sustained was the amount recoverable under the policy. See Royal Globe Ins. Co. v. Bar Consultants, Inc., 577 S.W.2d 688, 694 (Tex.1979). The jury found that Stice's death was covered under the terms of the policy, and Mrs. Stice recovered the benefits due by virtue of the trial court's judgment. Consequently, she has sustained no actual damages as a result of any conduct of American National. See Royal Globe Ins. Co. v. Bar Consultants, Inc., supra at 695. In view of our holding, we reverse and render judgment that Mrs. Stice take nothing against American National.
The judgment against appellant Connecticut General is affirmed. We reverse and render a take nothing judgment against appellant American National.
NOTES
[1] The exclusionary clause appearing in the brochure read as follows:
"No benefits will be payable for loss resulting from:... disease or infection (except pus-forming infection which occurs through or with an accidental cut or wound)."
The exclusionary clause appearing in the policy read as follows:
"The insurance does not cover, and no payment will be made for, any loss which results directly or indirectly from
* * *
2. infection (except pyogenic infections which occur through an accidental cut or wound) or disease, whether the infection or disease is the proximate or a contributing cause of the loss." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418976/ | 640 S.W.2d 737 (1982)
George J. AUBIN, et al., Appellants,
v.
TERRITORIAL MORTGAGE COMPANY OF AMERICA, INC., Appellee.
No. C3008.
Court of Appeals of Texas, Houston (14th Dist.).
August 19, 1982.
*738 Theo W. Pinson, Paschetag, Old & Pinson, Houston, for appellants.
Timothy A. Beeton, James E. Doyle, Ronald J. Restrepo, Foreman & Dyess, Houston, for appellee.
Before MILLER, MORSE and JAMES, JJ.
OPINION
MORSE, Justice.
This is an interlocutory appeal from an order appointing a receiver for the assets and business of MA Financial Corporation and from an order striking the appearance of the firm of Susman & McGowan as attorneys for said corporation. Finding no unconstitutionality on the face of or in the application of Tex.Bus.Corp.Act. Ann. art. 7.05 (Vernon 1980), or in the exercise of the equity jurisdiction of the trial court in appointing such receiver to conserve the assets of the corporation and avoid damage to the parties at interest and to determine whether or not the corporation should make application for a receiver to liquidate its assets under Article 7.06 of the Act, we affirm.
Appellee, Territorial Mortgage Company of America, Inc., sued appellants, Aubin and MA Financial Corporation (hereinafter "MAF"), asserting a derivative action for *739 MAF, asking for a temporary restraining order and a temporary injunction to restrain Aubin from (1) writing or authorizing certain checks on the accounts of MAF, (2) pledging MAF's assets, (3) taking certain actions with regards to its records, and (4) acting as an officer of MAF. By ex parte temporary restraining order, specific and limited restraints on negotiation of checks and with regard to the records were effectuated, and the TRO was later supplanted by an agreed temporary injunction. After an expedited discovery schedule, a temporary injunction hearing was held and a temporary injunction was entered on July 2, 1981. After additional discovery, the appellee filed on September 11, 1981 a Third Amended Original Petition and Application for Receiver along with a Motion to Strike Appearance of Counsel Susman and McGowan on the basis of conflict of interest. At the hearing on the latter motion on September 14, it was announced that MAF had filed for reorganization under Chapter 11 of the Bankruptcy Code. The bankruptcy action was dismissed by agreement on November 2, 1981 and hearing on the receivership reconvened on that date. At that same time the trial court struck the appearance of the firm Susman and McGowan, which had previously on June 25 withdrawn as counsel for Aubin.
New counsel for MAF requested a continuance which was denied and pointed out that appellee was not a creditor authorized under Article 7.06 to apply for receivership. Thereupon, the court went forward as to receivership, announcing that if appellee had no standing, a receiver would be considered on the Court's own motion. By order of November 4, 1981, the court appointed the Honorable John L. Compton as receiver for the business and assets of MAF Financial Corporation, stating that in the Court's equitable discretion it was of the opinion that a receiver should be appointed under Article 7.05 to conserve the assets and avoid damage to the parties at interest and to determine whether or not the corporation should make application for a receiver to liquidate the assets of the corporation under Article 7.06, the appointment being "during the period of time required to determine the status of the corporation's businesses and to determine whether or not the corporation should apply to the Court for the appointment of a receiver to liquidate the corporation."
Appellants assert five points of error. The first three points contend that Article 7.05 is unconstitutional and violates due process "on its face" and "in its application" and that appellants' constitutional rights were also violated when the trial court exercised its "equity jurisdiction" in appointing a receiver. Appellants' fourth point of error asserts that the trial court erred in appointing an operating receiver when the uncontroverted evidence is claimed to have shown that the corporation could not be rehabilitated. The fifth point of error complains of the trial court's disqualification of the original firm acting as attorneys for MAF because appellee lacked the standing to seek such disqualification and did not show cause for such disqualification.
With regard to the first three points of error, appellants rely on the mandates of due process articulated in Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983, 32 L. Ed. 2d 556 (1972), and in Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S. Ct. 1895, 40 L. Ed. 2d 406 (1974). These cases involve statutory seizures of property without previous notice or hearing, based upon a filing by a creditor initiating proceedings against a defendant not previously brought before the court. In Fuentes v. Shevin, supra, the statutory replevin procedure on unsworn ex parte application and posting of bond was held contrary to due process despite the defendant's ability to reclaim by bonding within three days. The United States Supreme Court held that there was no "extraordinary situation" shown to justify the postponing of notice and hearing prior to such seizure because of public interest, special need for prompt action and state's strict control of the application of such force. The unconstitutionality stems from the statute's abdication of effective state control over the state power, because no state official participated in the decision to seek the writ, the basis of the claim or the need for immediate seizure.
*740 On the other hand, in Mitchell v. W.T. Grant, Co., supra, the statutory sequestration procedure was approved by the United States Supreme Court despite lack of prior notice and hearing, because the ex parte application was verified as required by statute and made the requisite showing of grounds for the writ, which was issued on judicial order after presentation and pursuant to the court's control from beginning to end. This procedure, held not contrary to due process requirement, was similar to the temporary restraining order procedure, which was followed earlier in the case below, without any complaint by appellants as to deprival of due process.
Unlike the situation in Fuentes v. Shevin, supra, appellants Aubin and MAF had been parties participating in proceedings over a period of nearly six months during which there had been agreed orders, discovery, temporary injunction hearing and numerous appearances on motions before the court. There had been the delays caused by the filing and dismissal of bankruptcy proceedings and by the removal to Federal Court and remand. A hearing was held on November 2, 1981 at which the whole matter of a receivership of the assets and business of the nominal defendant corporation was considered under the statutory provisions sought to be made applicable by the appellee as well as under the provisions which the court had announced it would consider on its own motion. This was two days prior to the entry of the order appointing a receiver after the court "read the pleadings and considered the evidence presented in all of the proceedings and hearings before the court in this case." The court then stated it arrived at the opinion that the application for receiver for the business and assets of the corporation should be granted and that "upon its own motion, and in the Court's equitable discretion," a receiver should be appointed under Article 7.05 "to conserve the assets of the corporation and to avoid damage to parties at interest and to determine whether or not the corporation should make application for a receiver to liquidate the assets of the corporation under Tex.Bus. Corp.Act Ann. art. 7.06 (Supp.1980)."
Article 7.05, although codified under the title "Appointment of a Receiver to Rehabilitate Corporation", provides as follows:
A. A receiver may be appointed for the assets and business of a corporation by the district court for the county in which the registered office of the corporation is located, whenever circumstances exist deemed by the court to require the appointment of a receiver to conserve the assets and business of the corporation and to avoid damage to parties at interest, but only if all other requirements of law are complied with and if all other remedies available either at law or in equity, including the appointment of a receiver for specific assets of the corporation, are determined by the court to be inadequate, and only in the following instances:
(1) In an action by a shareholder when it is established:
(a) That the corporation is insolvent or in imminent danger of insolvency; or
(b) That the directors are deadlocked in the management of the corporate affairs and the shareholders are unable to break the deadlock, and that irreparable injury to the corporation is being suffered or is threatened by reason thereof; or
(c) That the acts of the directors or those in control of the corporation are illegal, oppressive of fraudulent; or
(d) That the corporate assets are being misapplied or wasted.
(e) That the shareholders are deadlocked in voting power, and have failed, for a period which includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election and qualification of their successors.
(2) In an action by a creditor when it is established:
(a) That the corporation is insolvent and the claim of the creditor has been reduced to judgment and an execution thereon returned unsatisfied; or
(b) That the corporation is insolvent and the corporation has admitted in writing *741 that the claim of the creditor is due and owing.
(3) In any other actions where receivers have heretofore been appointed by the usages of the court of equity.
B. In the event that the condition of the corporation necessitating such an appointment of a receiver is remedied, the receivership shall be terminated forthwith and the management of the corporation shall be restored to the directors and officers, the receiver being directed to redeliver to the corporation all its remaining properties and assets.
Long prior to the enactment of that article 7.05 in 1955, receivers had been appointed for corporations pursuant to "the usages of the court of equity" in Texas. In Berkshire Petroleum Corp. v. Moore, 268 S.W. 484 (Tex.Civ.App.San Antonio 1925, no writ), the court stated:
A court of equity may, at the instance of minority stockholders, except perhaps where they own a comparatively small interest, appoint a receiver for a corporation where the business has been so mismanaged as to render it insolvent, or where it is absolutely necessary to preserve the property and business, or the interest of the stockholders.
That is a clear statement of the law in Texas. The appointment of a receiver is largely a matter of discretion of the trial judge, and unless it appears that there has been a clear abuse of such discretion, an appellate court will not interfere with such appointment. The only requirement in the exercise of such discretion is that it is sound and judicial.
Berkshire Petroleum Corporation v. Moore, supra at 486. On rehearing the court further stated:
Courts of equity have inherent power to appoint receivers independently of statutory authority, 5 Pomeroy's Equity Jur. § 116. And while, without a statute providing for it, equity recognizes no such thing as a suit for the mere appointment of a receiver, yet, if some final relief, as in this instance, is asked by a shareholder, a court of equity will recognize the suit. 5 Pom.Eq.Jur. § 118. In the older cases it was held that the general equitable powers of courts of equity would not justify the appointment of a receiver to assume the management of the affairs of a corporation at the suit of a stockholder alleging fraud or mismanagement. However, the trend of modern authority favors the inherent power of the court in a proper case to place the affairs of a corporation, at the suit of stockholders, in the hands of a receiver, when the officials are guilty of fraud or neglect. 5 Pom.Eq.Jur. §§ 120-122, and the numerous authorities cited in the footnotes in support of the text.
The motion for rehearing is overruled. Berkshire Petroleum Corporation v. Moore, supra at 487.
The sworn allegations in the original petition filed below on May 26, 1981 as well as in the Third Amended Original Petition and Application for Receiver filed September 11, 1981, clearly asserted acts by the Appellant Aubin (and by MAF through him) which created danger of insolvency, threatened irreparable injury to the corporation and its shareholders and were illegal, oppressive and fraudulent and amounted to misapplication and waste of the corporate assets. These activities, regardless of the deadlock shown to exist between the two equal owners of the corporation whose representatives were the only two directors, were sufficient to show the need for a receiver under the general principles of equity.
As to the contended unconstitutionality of Article 7.05, for failure to specify the requirement of due notice and opportunity for hearing prior to seizure of property by receivership, it should be noted that the statute only allows a receiver to be appointed "whenever circumstances exists deemed by the court to require" it and then "only if all other requirements of law are complied with and if all other remedies available either at law or in equity ... are determined by the court to be inadequate," in addition to the specific grounds for such appointment which were set out in the following *742 subsections. There could be no lack of due process "on the face of" such statute under the principles of Fuentes v. Shevin, supra, where the court is required to determine that other remedies are inadequate and to deem that such appointment is required to conserve the assets in business of the corporation and to avoid damaging the parties at interest, and also where all other requirements of law are required to be complied with. This latter provision would include any legal requirements of notice or hearing.
Neither was there any unconstitutional deprival of due process in the application of the statute, because notice and hearing as to the appointment of a receiver, whether or not as to the extent of such receivers functions, were clearly provided. Furthermore, there has been no showing that the express notification of the court that consideration of appointment of receiver under Article 7.05 and the opportunity for hearing afforded appellants by the trial court prior to the entry of its order complained of were not adequate.
Appellant's first three points of error are overruled because there has been no showing of an unconstitutional deprival of due process under the statutory provisions, their application or in the equitable jurisdiction exercised by the trial court.
In their fourth point of error, appellants contend that the trial court erred in appointing a rehabilitating receiver under art. 7.05 when the evidence indicated that the corporation could not be rehabilitated. Appellants' reasoning is unclear and no authority is cited in support of their position. However, we assume that appellants' position is that the trial court abused its discretion in appointing the rehabilitating receiver under Art. 7.05.
In Greater Fort Worth v. Mims, 574 S.W.2d 870, 872 (Tex.Civ.App.Fort Worth 1978, writ dism'd), the court stated:
We recognize that, at common law, receivership is a drastic remedy and the appointment of a receiver will be reversed where no evidence supports it. Zanes v. Lyons, 36 S.W.2d 544 (Tex.Civ.App.Dallas 1931, no writ). Where the trial court appoints a receiver it is presumed the court acted fairly and according to law, and that proper and sufficient grounds existed. Scott v. Sampson, 333 S.W.2d 220 (Tex.Civ.App.Fort Worth 1960, writ ref'd n.r.e.). This is especially the case where the court made the appointment on its own motion. Since receivership is an equitable remedy within the sound discretion of the trial court, an appointment will not be disturbed on appeal unless the record reveals a clear abuse of discretion. Strategic Minerals Corp. of America v. Dickson, 320 S.W.2d 882 (Tex.Civ.App.Austin 1959, writ ref'd n.r.e.).
A close review of the record before us does not show a clear abuse of discretion by the trial court in appointing a receiver under Article 7.05. Appellants' fourth point of error is overruled.
Appellants' fifth point of error contends that the trial court erred in disqualifying Susman & McGowan as counsel for defendant MAF. Appellant argues that plaintiff-appellee (1) did not have standing to seek the disqualification and (2) did not show cause for such disqualification. Appellee asserts that this court does not have jurisdiction to decide said issue because the order complained of was interlocutory and not appealable.
This court recently held in Nowlin v. Wheeler, 617 S.W.2d 809 (Tex.App.Houston [14th Dist.] 1981, no writ), that:
This court is without jurisdiction to act on interlocutory orders save in the four instances provided by statute: 1) pleas of privilege, 2) appointments of receivers or trustees, or orders overruling motions to vacate such appointments, 3) orders certifying or refusing to certify a class in suits brought pursuant to Tex.R.Civ.P. 42, and 4) temporary injunctions. Tex. Rev.Civ.Stat.Ann. art. 2008 (Vernon 1964), art. 2250 (Vernon Supp.1980-81), art. 2251 (Vernon 1971).
The order disqualifying Susman & McGowan as counsel for defendant is interlocutory *743 and we are without jurisdiction to consider this matter upon this appeal. Thomas v. Peoples National Bank, 380 S.W.2d 789 (Tex.Civ.App.Fort Worth 1964, writ dism'd). Appellants' fifth point of error is overruled and the judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2418997/ | 175 F. Supp. 2d 697 (2001)
OMNIPOINT COMMUNICATIONS, INC., Plaintiff,
v.
The CITY OF WHITE PLAINS, The Planning Board of the City of White Plains, and Mary Cavallero, James Gould, J. Russell Imlay, John Garmet, Terrence Guerriere, Robert Stackpole and Juan Carlos Roskell in their capacities as members of the Planning Board of the City of White Plains, Defendants.
No. 01 Civ. 3285(CM).
United States District Court, S.D. New York.
December 4, 2001.
*698 *699 Robert I. Bodian, C. Anthony Mulrain, Lara M. Burnazian, Mintz Levin Cohn Ferris Glovsky and Popeo, PC, New York City, Joseph Maria, White Plains, New York.
MEMORANDUM, DECISION AND ORDER
McMAHON, District Judge.
Omnipoint Communications, Inc. ("Omnipoint") brings this action against the City of White Plains and its Planning Board (the "Board"), alleging violations of the Federal Telecommunications Act of 1996, 47 U.S.C. § 332 (the "TCA"), Article 78 of The New York Civil Practice Laws and Rules, and 42 U.S.C. § 1983, for the Board's denial of Omnipoint's application for a permit to build a 150 foot monopole, with antennas and associated equipment, on certain premises owned by the Fenway Golf Club, located on Old Mamaroneck Avenue in the City.
Omnipoint alleges a violation of Section 704 of the TCA, 47 U.S.C. § 332(c)(7)(B)(iii), alleging that the Board's decision was not supported by substantial evidence (Count I); a violation of 47 U.S.C. § 332(c)(7)(B)(i)(I) for defendants' "unreasonable discrimination" against Omnipoint (Count II); a violation of 47 U.S .C. § 332(c)(7)(B)(i)(II) for defendants' "prohibit[ion] of the provision of personal wireless services" (Count III); a violation of 47 U.S.C. § 332(c)(7)(B)(ii) for defendants' unreasonable delay in its processing of Omnipoint's Application (Count IV); a violation of Civil Practice Laws and Rules Article 78 for the defendants' abuse of discretion in its denial of the Application (Count V); and, a violation of 42 U.S.C. § 1983 for defendants' violation of Omnipoint's rights, privileges, or immunities under the TCA (Count VI). Omnipoint sues for injunctive relief, declaratory relief, damages, costs and attorney's fees.
Omnipoint moves for partial summary judgment under Count I of its Complaint. Defendants cross-move for summary judgment to dismiss all six counts in Omnipoint's complaint.
For the reasons stated below, plaintiff's Motion for Partial Summary Judgment as to Count I is granted. Defendants' Motion for Summary Judgment as to Counts III, IV and V is granted. Defendants' Motion for Summary Judgment as to Count II is denied. Count VI is subsumed into Counts I and II.
*700 FACTS PERTINENT TO THE MOTION
A. Local Rule 56.1(d)
Plaintiff has moved to strike defendant's Response to plaintiff's Rule 56.1 Statement of Facts and to deem defendants' unsupported general denials as admissions. Defendants failed to reply to plaintiff's motion to strike, and have supplied no explanation for this failure.
Local Rule 56.1(d) provides that "material facts set forth in the statement required to be served by the moving party will be deemed to be admitted unless controverted by the statement required to be served by opposing parties." In their response, defendants make general denials, and fail to, despite the voluminous record supplied by plaintiff in this matter, provide any record support or other basis for these denials. The Court is permitted to disregard such general denials when not supported by citations or if cited materials do not support factual assertions. See Watt v. New York Botanical Garden, Civ. No. 98-1095(BSJ), 2000 WL 193626, at *1 n. 1 (S.D.N.Y. Feb. 16, 2000); see also Monahan v. New York City Dep't of Corrections, 214 F.3d 275, 292 (2000) (noting that statements filed under Local Rule 56.1 by party opposing summary judgment must be accompanied by citation to admissible evidence).
In their Response, defendants generally denied 41 of plaintiff's 61 statements of fact. The rest are admitted. They provided no record support for these denials. Defendants' unsupported general denials are not only unhelpful, they are misleading. For instance, defendants denied ¶ 21 of plaintiff's 56.1 Statement, which states: "[S]ection 1.3 of the Ordinance, setting forth the purposes of the Ordinance specifically provides that one purpose of the Ordinance is `[t]o regulate and restrict the location of trades and industries in the location of `buildings' designed for specified `uses,' and for said purposes to divide the City into districts and to prescribe for each such district the trades and industry that shall be excluded or subjected to special regulation and the `uses' for which `buildings' may not be erected or altered.'" Plaintiff cited to the City of White Plains Zoning Ordinance located in the Record at pages 1262-63 (the "Zoning Ordinance"). Except for one small and inconsequential typographic error (sentence should read "and the location of `buildings'," not "in the location of buildings"), Omnipoint accurately quotes the Zoning Ordinance.
Defendants submitted a counter-statement of facts in support of their cross-motion for summary judgment. It it, they affirmatively pled statements of fact they had previously denied. For example, ¶ 7 of plaintiff's Rule 56.1 Statement avers: "On or about June 1, 2000, Omnipoint submitted the Application to the Board. The Application was submitted in accordance with Section 2.4 (Definitions), Section 6.2.25 (Special Permit Uses), and as required by Section 5.2 (List of Use regulations), Section 6.4 (Review Procedures), Section 6.5 (Standards), and Section 6.7.12 (Public Utility Standards) of the Ordinance." In their Response, defendants denied this paragraph. Yet, ¶ 5 of defendants' Rule 56.1 statement repeats this language verbatim.
This District has adopted Local Rule 56.1(d) for a reason: to supply the Courts with an accurate factual record and to prohibit parties from taking the kind of misleading and unfair "shortcuts" (i.e., unsupported denials) as defendants have used here. I will, therefore, accept all of plaintiff's proposed facts as true for purposes of this motion. See Watt, Civ. No. 98-1095(BSJ), 2000 WL 193626, at *1 n. 1; Monahan, 214 F.3d at 292.
*701 B. Pertinent Facts
The following facts are taken from Plaintiff's Statement of Undisputed Material Facts made pursuant to Local Rule 56.1, such of Defendants' Statement of Undisputed Material Facts that are admitted by plaintiff, and the substantial record before the Court.
Omnipoint provides integrated wireless personal communication services ("PCS") through a national wireless network using PCS technology. [Pl. Facts, ¶ 1.] Omnipoint received a PCS wireless broadcast license from the Federal Communications Commission ("FCC") for several cities, including the New York Metropolitan area. White Plains is part of this area.
The defendant Planning Board is an agency of the City of White Plains, and the individually named defendants are all members of this Board, having been appointed by the Mayor of White Plains. [Def. Facts, ¶ 3.] The Board has the delegated authority to grant applications for special permits and site development approval under the City of White Plains Zoning Ordinance (the "Zoning Ordinance").
Based upon Omnipoint's research and analysis, and as part of an extensive site review, Omnipoint determined that a 150 foot unmanned telecommunications monopole, with associated equipment (the "Facility") was needed in order to fill a gap in its coverage in the City of White Plains. [Pl. Facts, ¶¶ 1 & 2.] The proposed type of monopole is designed to look like a tree, and the antennas on such a monopole are "hidden" or camouflaged. [Pl. Facts, ¶ 3.] At some point in 2000, Omnipoint entered into an agreement with Fenway Golf Club to lease space for the Facility.
1. The Application and Hearing Process
On or about June 1, 2000, Omnipoint submitted its Application to the Board requesting a special permit and any and all other necessary permits to construct the Facility. This Application complied with all of the requirements set out in the Zoning Ordinance. [Pl. Facts, ¶ 7.] Section 4.4.15.2 exempts Omnipoint's 150 foot monopole from the height limitations contained in the Ordinance. [Pl. Facts, ¶ 8.] As part of its Application, Omnipoint provided visual simulations of the proposed structure from various viewpoints. [Pl. Facts, ¶ 5.] Omnipoint presented evidence that the surrounding residential neighborhood is buffered by a mature and deciduous tree line. Id. It asserted that this natural buffer combined with the camouflaged monopole would mitigate the visual impact of the Facility to the greatest extent possible. Id. It showed that the greatest visual impact would be on the Fenway Golf Course itself, the lessor of the property. Id.
The Board held public hearings on the Application on July 11, 2000, September 12, 2000, October 10, 2000, November 14, 2000, December 19, 2000, January 16, 2001, February 13, 2001 and March 20, 2001. During the course of these hearings, extensive evidence, through both submitted reports and oral testimony, was presented to the Board on behalf of both Omnipoint and those residents opposed to the construction of the Facility.
(a) Gap in coverage evidencing a "public necessity"
Section 6.7.12.1 of the Zoning Ordinance requires a finding that a "public necessity" exists for the erection of the Facility. In its Application, Omnipoint submitted an engineering report written by Richard A. Conroy a senior Radio Frequency Engineer at Omnipoint. The Report explained, with the aid of maps and charts, that there was a gap in Omnipoint's coverage in the White Plains area. It analyzed the possible construction of monopoles at various sites in the community, and determined *702 whether a monopole at a particular site would close the coverage gap. The report concluded that a facility located at the Golf Course "is necessary to provide coverage [necessary to close the gap] as well as overlap with existing and planned sites." [Pl. Facts, ¶ 27.] The report stated that a tower on any of the other sites examined would fail to close the gap.
Pursuant to the Board's request at the July 11, 2000 hearing, Omnipoint also submitted an Addendum to this report, dated July 20, 2000, describing six alternative installation scenarios with maps showing the coverage provided at each alternative location and combination of these locations, and finding that coverage lacking.
Chris Olson, a Radio Frequency Engineering Consultant for Omnipoint responsible for Omnipoint's radio frequency design in New York, testified at various hearings that he was familiar with the Zoning Ordinance, the existing Facilities in White Plains, and the proposed Facility at the Golf Course. Mr. Olson testified to the existence of a gap in Omnipoint's coverage which needed to be filled by a new monopole facility. He also testified that the 150 foot tall proposed Facility on the Golf Course would fill this gap in Omnipoint's coverage. At the Board's suggestion, Olson tested additional sites, and combinations of sites as alternative locations of an antenna facility. Of the sites that Omnipoint could possibly lease, Olson found that only two "combination" scenarios would close the coverage gap, and none of the individual sites would close the gap. Omnipoint's project planner later determined that the "combination" scenarios would have a greater visual impact upon the community, and they were rejected as viable sites.
The evidence submitted by Omnipoint to demonstrate a significant gap in coverage and the necessity of the Facility to close such a gap included detailed analyses submitted by licensed radio frequency engineers. It was never rebutted by another radio frequency engineer. [Pl. Facts, ¶ 29.] The Board, however, rejected the evidence presented by Omnipoint. Id. Instead, based on testimony and letters from the public stating that cellular telephones serviced by other providers currently operated in the vicinity, the Board determined that no public necessity existed because other wireless providers were able to serve the "gap" area. Id. Nothing in the language of the Ordinance provides any requirement that there be no other provider in the area. [Pl. Facts, ¶ 30.] In previous Board decisions granting permits to similar monopole installations, the Board analysis related only to whether the applicant had demonstrated a gap in its service. See White Plains Planning Board Resolution approving SMSA Ltd. Partnership's Special Permit Use application for a Public Utility Structure consisting of a Cellular Radio Facility to be located on Old Road to Kensico, dated February 15, 1995, p. 7; White Plains Planning Board Resolution approving SMSA Ltd. Partnership's Special Permit Use application for a Cellular Facility/Public Utility to be located on North Street, dated June 10, 1998, p. 3, found at Mulrain Aff., Exhs. A & B; Pl. Facts, ¶ 33 [hereinafter "Kensico Road Decision" and "North Street Decision"].
(b) Visual/aesthetic impact
Prior to submitting its Application, Omnipoint engaged a professional planner, Donna Marie Stipo, to perform an evaluation of the aesthetic impact associated with installing the Facility on the Golf Course. [Pl. Facts, ¶ 39.] Stipo is the President of DMS Consulting Services, Inc. and a member of the American Planning Association. She is responsible for project planning for Omnipoint in Westchester, Rockland, Orange, Putnam, Nassau, Suffolk, Ulster and Duchess Counties.
*703 As Stipo testified before the Board, to evaluate the aesthetic impact associated with the Facility, Stipo conducted a crane test which involved raising a crane the height of 150 feet. [Pl. Facts, ¶ 39.] With the crane mast lifted to 150 feet, Stipo traveled to each street within a one-mile radius of the Golf Course to determine the area from which the Facility would be visible. Id. In any instance where Stipo observed the crane, she then used a 50 mm camera to photograph it. Thereafter, Stipo utilized computer software to insert into her photographs a simulation of the Facility in the precise location and at the exact height that the crane and its mast were located. Id.
Stipo concluded that the greatest impact on the Facility would be to the Golf Course itself. self [Pl. Facts, ¶ 40.] In addition, Stipo testified that "Soundview is the closest or nearest residential roadway and that roadway was driven ... numerous times to make sure that [Stipo] would be able to spot the crane." Id. Based on Stipo's analysis and photo simulations, Stipo testified that "the crane is located or has a view with respect to one property and the property would be the closest home ... 258 Soundview Avenue." Id. 258 Soundview Avenue is situated approximately 350 feet "from the edge' of the Facility's compound." Id. Stipo further testified that the neighboring Temple Kol Ami "would not have a view of the structure [because] they have a heavily wooded area that provides a natural buffer." [Pl. Facts, ¶ 41.] According to the City's own tree height analysis, "[t]he trees to the north, between the proposed tower and the residences on Soundview Avenue and Kol Ami appear to be in good health and range in height from 80 to 100 feet." [Pl. Facts, ¶ 42.] Stipo testified that only four feet of the Facility would be visible at a 70-foot tree line. Id.
At the conclusion of the July 11 hearing, the Board requested that Omnipoint evaluate the feasibility of locating the proposed Facility on eight alternative sites, or on a combination of these alternative sites. [Pl. Facts, ¶ 43.] Omnipoint's engineer determined that only two of the proposed alternative sites would enable Omnipoint to adequately fill its coverage gap. Id. These two site scenarios involved the construction of several Facilities on a group of the alternative sites. Stipo made a visual impact analysis of these two scenarios and submitted her findings to the Board in a Supplemental Planning Analysis. Stipo concluded that both of these scenarios would have a more intrusive impact to the community than the proposed Facility at the Golf Course. Id.
During the course of these hearings, Stipo performed a visual impact analysis of the Facility at a different location on the Golf Course, at a point 40 feet further away from the nearest public street. She positioned a crane at that point on the Golf Course and performed the same analysis as she did for the proposed site. In her professional opinion, she found this location would be more visible to residents. Stipo concluded that from her crane tests, visual observations, and logistical planning reports, Omnipoint's proposed location for the monopole would have a minimal visual or aesthetic impact on the community, and would only be seen by those on the golf course and by one neighboring house.
The Board chose largely to disregard Stipo's photo simulations. [Pl. Facts, ¶ 46.] Because the Board did not attend the crane testing, it rejected Stipo's testimony, ruling that the failure to have Board members attend was in and of itself sufficient to support "an inference that visual impact analysis testing demonstrated that no measure could mitigate the visual impact of the proposed monopole." Id.; Decision, p. 23; Pl. Facts, ¶ 49.
*704 The Ordinance contains no provision requiring or suggesting that an applicant conduct crane testing or other visual impact analysis. [Pl. Facts, ¶ 50.] Moreover, the Ordinance contains no requirement that if an applicant decides to conduct such visual impact analysis, that the Board must be notified, that the public be notified, or that the Board participate. Id.
Another basis for the Board's Decision to deny Omnipoint's Application was its finding that "[p]hoto simulations provided by the Applicant are not very useful in the review of the project because they do not demonstrate the full visual impact of the tower, (i.e., views from the second story windows, backyards and different angles.)" [Pl. Facts, ¶ 53.] The Ordinance does not require any photo simulations or that such photo resolutions be taken from second story windows in resident homes, backyards of private property and at different angles. Id. At no point did the Board request that Omnipoint provide photo simulations from these locations. Id. In the previous applications relating to monopoles that the Board reviewed, the Board had accepted photo simulations similar to those submitted by Omnipoint, and had based favorable decisions on these photos. In those instances, the Board found that the photo simulations constituted substantial evidence. [Pl. Facts, ¶ 55.]
Those residents opposed to the Application submitted a visual impact study conducted by Charles P. May and Associates, P.C., dated November 14, 2000. [Pl. Facts, ¶ 56; Def. Facts, ¶ 14.] May provided an "engineering cross-section" which purported to provide "what the scale of the actual tower would be in relationship to a home or actually a car or anything along those lines." Id. In support of this analysis, May also provided certain rudimentary diagrams. Id. As Omnipoint pointed out, May's submission, among other things, disregarded the actual topography of the area, the existing trees and the existing structures. [Pl. Facts, ¶ 57.]
In response to May's submission, Omnipoint provided additional expert testimony. Id. Omnipoint also provided a supplemental planning analysis to the Board. Omnipoint submitted an aerial photograph of the area prepared by the Westchester County Department of Planning which demonstrated the proposed structure in relation to the actual wooded tree line. Id. Additionally, Omnipoint witness Neil Wilson testified that May's study was flawed in that May "was raising a specific visual project using very general information." [Pl. Facts, ¶ 58.] Wilson charged that May's analysis is based on a "very flat plane, a desert like surface for apt description." Id. Wilson presented a corrected graph analysis, which included information publicly available regarding this area. [Pl. Facts, ¶ 59.]
The Board gave a considerable amount of weight to letters and testimony from nearby residents opining about the negative aesthetic impact of the proposed Facility. The Board also considered the testimony and numerous communications it received from the congregants of the Kol Ami Temple. The Temple's land abuts the Golf Course. These congregants expressed their concerns that the monopole would detrimentally effect their ability to worship at the Temple, especially in the glass-walled Schulman Chapel, known as the Chapel in the Woods.[1]
(c) Property Values
In response to concerns voiced regarding the potential adverse effects on property *705 values resulting from the erection of the Facility, Omnipoint provided the Board with a detailed appraisal report by Lane Appraisals, Inc., dated October 27, 2000. [Pl. Facts, ¶ 34.] The appraiser who submitted the report inspected the Golf Course site and investigated the sales of over eighty properties sold after a cell tower was erected in their vicinity. [Pl. Facts, ¶ 35.] The report concluded that the Facility would not result in a diminution of the real estate values of nearby properties. [Pl. Facts, ¶ 36.] Lane Appraisals submitted an updated report to the Board in January 2001, also based on an analysis of actual home sales and concluded again that there was "no diminution of value to homes close to cell phone towers." [Pl. Facts, ¶ 37.]
Despite the detailed report submitted by Lane Appraisals, the Board found the evidence submitted by those opposed to Omnipoint's Application to be weightier. [Pl. Facts, ¶ 37.] This evidence consisted of a letter from an individual at an appraisal company and a letter from a realtor. Id. The letter from the appraisal company states his opinion that the creation of the monopole would have a significant detrimental affect on property value. This letter does not indicate, or even suggest, that its author visited the Golf Course site, was familiar with the Facility, analyzed home sales to support his opinion, or adhered to the requirements or guidelines of any professional association. Id. The realtor's letter is also conclusory, and opines that the Facility would constitute an "eyesore" which would lower selling prices of surrounding properties. Id. As with the appraiser's letter, no support was offered for the realtor's conclusions. Id.
2. The Decision
At the conclusion of the January 16, 2001 hearing, the Board closed the public hearing and advised Omnipoint that it intended to deny its Application. [Def. Facts, ¶ 8.] At the March 20, 2001 hearing, the Board denied the Application and issued a written resolution (the "Decision"). [Def. Facts, ¶ 9.]
In its Decision, The Board relied on Sections 1.2, 1.3, 1.5, 1.6 and 1.11 [Purposes], Sections 6.5.1 and 6.5.2 [Standards for Special Permit Uses], and Sections 6.7.12.1 and 6.7.12.3 [Specific Standards for Public Utility Structures] of the Zoning Ordinance. The Board denied Omnipoint's Application for a special permit and site development approval. The Board ultimately rejected Omnipoint's expert testimony and reports, visual impact analysis testing and photo simulations. [Def. Facts, ¶ 12.] The Board did accept the evidence submitted by those residents opposed to the Application. The Board denied Omnipoint's Application based on its "`Findings of Fact' and findings regarding the conformity of the Application to the Zoning Ordinance and the standards for review of the aesthetic impact of telecommunications installations established by the Planning Board in previous applications for similar installations." [Decision, p. 25.] Specifically, the Board found the there was substantial evidence that the Facility would have an adverse visual impact on the community, that property values would decline if the Facility were to be erected, and that Omnipoint had failed to establish that there was a gap in coverage that would create a "public necessity" for the Facility. [Decision, pp. 21-25.]
3. The Current Proceeding
Omnipoint timely commenced this action on April 19, 2001. Omnipoint moves for partial summary judgment on its first count against defendants, violation of 47 U.S.C. § 332(c)(7)(B)(iii). Omnipoint alleges that defendants are in violation of 47 U.S.C. § 332(c)(7)(B)(iii) because the Board's Decision was not supported by *706 substantial evidence. Omnipoint claims that the Board wrongly disregarded or gave improper weight to the many studies and reports it submitted, and to the testimony its experts gave, namely those by the radio frequency engineers, the reports, photos and testimony of Donna Marie Stipo, and the detailed appraisal of homes in areas where cell phone towers were built, compiled by Lane Appraisals. Omnipoint argues that the Board's reliance on the non-expert testimony of residents and Kol Ami congregants, the unsupported opinions of a local realtor and an appraisal company, and a faulted visual impact analysis was improper because these submissions did not constitute "substantial evidence" in light of the totality of the evidence submitted.
Defendants cross-move for summary judgment on Omnipoint's entire complaint. Defendants argue that they acted in accordance with both State and Federal law at all times, and rendered a decision which is within that substantial evidence standard of the TCA.
DISCUSSION
I. Mootness
Defendants argue that this action is now moot because, on October 19, 2001, the Fenway Golf Club terminated the Revocable Agreement[2] between itself and Omnipoint, on the ground that Omnipoint had not obtained "by the end of the Option Period (as defined in the Revocable Agreement) all appropriate White Plains governmental approvals authorizing its construction and use of the PCS and associated antenna." See Citron Aff., Exh. A. It does appear that the agreement has expired.[3] Although the termination of the agreement does make the award of injunctive and declaratory relief moot, it does not moot the case.
In its Complaint, Omnipoint sued for damages for violation of the TCA and § 1983, and for costs and attorneys fees, in addition to its claims for injunctive and declaratory relief. "The availability of damages or other monetary relief almost always avoids mootness." See Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d § 3533.3, at p. 261 (1984 & 2001 Supp.). Even if the "amount at issue is undeniably minute ... as long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot." Ellis v. Brotherhood of Railway, Airline and Steamship Clerks, Freight Handlers, Express and Station Employees, 466 U.S. 435, 442, 104 S. Ct. 1883, 1889, 80 L. Ed. 2d 428 (1984). See also Ellis v. Blum, 643 F.2d 68, 82-83 (2d Cir.1981) (finding that although plaintiff's claim was mooted on her claims for injunctive and declaratory relief, a live damages claim for $1500 "save[d] the action from the bar of mootness").
Here, Omnipoint has alleged that defendants' violations of law caused it to suffer money damages. If White Plains did indeed violate the TCA and § 1983, the very issue that moots the claims for declaratory and injunctive relief failure to issue the necessary special permits gives rise to *707 damages for such items as lost revenue due to coverage gaps and costs incurred in the fruitless effort to build the monopole. The amount of said damages may be significant.[4]
Of course, if plaintiff cannot collect damages under either the TCA or § 1983 as a matter of law, it cannot avoid having the complaint dismissed as moot. I conclude, however, that § 1983 affords plaintiff relief, in the form of damages, for any violations of the TCA committed by defendants.
Omnipoint asserts that defendants violated 42 U.S.C. § 1983 by violating its federal rights under the TCA. In response, defendants argue that a violation of the TCA does not support a § 1983 claim.
The Second Circuit has never decided whether a violation of the TCA can support § 1983 claim. Indeed, no court of appeals has addressed this issue.[5] Several district courts in the Second Circuit, however, have affirmatively held that § 1983 relief is available for violations of the TCA. See Sprint Spectrum, L.P. v. Mills, 65 F. Supp. 2d 161, 162 (S.D.N.Y.1999); see also SBA Communications, Inc. v. Zoning Comm'n of the Town of Franklin, 164 F. Supp. 2d 280, 294-95 (D.Conn.2001); SBA Comm., Inc. v. Brookfield, 96 F. Supp. 2d 139, 142 (D.Conn.2000); Omnipoint Comm. v. Wallingford, 91 F. Supp. 2d 497 (D.Conn.2000); Cellco Partnership v. Farmington, 3 F. Supp. 2d 178 (D.Conn. 1998); Smart SMR of New York, Inc. v. Zoning Comm'n of the Town of Stratford, 995 F. Supp. 52, 60-61 (D.Conn.1998). I concur with their reasoning.
Section 1983 may be employed to remedy violations of federal statutes. See Maine v. Thiboutot, 448 U.S. 1, 4, 100 S. Ct. 2502, 65 L. Ed. 2d 555 (1980). Section 1983 remedies are not available in actions for violations of all federal statutes, however. In order to state a claim under § 1983, Omnipoint must meet two requirements. First, the federal statute must create private rights enforceable under § 1983; second, the statute must not evidence congressional intent to foreclose a cause of action under § 1983. See Blessing v.. Freestone, 520 U.S. 329, 117 S. Ct. 1353, 137 L. Ed. 2d 569 (1997).
Blessing controls whether the TCA gives rise to a federal right. This Court must consider whether (1) Congress intended the statutory provision to benefit the plaintiff; (2) the right allegedly protected by the TCA is not so "vague and amorphous" that its enforcement would strain judicial competence; and (3) the TCA clearly imposes a binding obligation on the states. Town of Franklin, 164 F.Supp.2d at 295 (citing Blessing, 520 U.S. at 329, 117 S. Ct. 1353).
I must first decide whether Congress intended that the TCA benefit the plaintiff. Blessing, 520 U.S. at 340, 117 S. Ct. 1353. The TCA allows "any person adversely affected by any final action or failure to act by a State or local government or any instrumentality thereof that is inconsistent with this subparagraph" to "commence an action in any court of competent jurisdiction." 47 U.S.C. § 332(c)(7)(B)(v). According to the plain meaning of the statute, Omnipoint, as the recipient of an improperly decided denial, is an intended beneficiary of the TCA.
*708 Next, I must consider whether "the right assertedly protected by the statute is not so `vague and amorphous' that its enforcement would strain judicial competence." Blessing, 520 U.S. at 340, 117 S. Ct. 1353. The plain language of the TCA vests enforcement with the judiciary. 47 U.S.C. § 332(c)(7)(B)(v). Congress itself believed that the rights protected by the TCA should be protected by the courts. I find that enforcement of the TCA would not strain judicial competence.
Finally, I must decide whether the TCA "unambiguously impose[s] a binding obligation." Blessing, 520 U.S. at 341, 117 S. Ct. 1353. The TCA uses the term "shall," which is a mandatory term. See 47 U.S.C. § 332(c)(7)(B)(i)-(iii). Accordingly, the TCA imposes binding obligations on state and local government. The TCA satisfies the three prongs described in Blessing. Accordingly, I find that plaintiffs are enforcing a federal right under the TCA.
Once a statute is found to create a federal right, "there is [] a rebuttable presumption that the right is enforceable under § 1983." Blessing, 520 U.S. at 341, 117 S. Ct. 1353. This presumption will be rebutted if Congress explicitly or implicitly foreclosed a remedy under § 1983. Id. Congress did not explicitly foreclose § 1983 remedies. To the contrary, Congress explicitly endorsed alternative remedies under the TCA. A provision of the TCA provides: "This Act and the amendments made by this Act shall not be construed to modify, impair, or supersede Federal, state, or local law unless expressly provided in such Act or amendments." Pub.L. No. 104-104, § 601(c)(1), 110 Stat. 143 (1996) (reprinted in 47 U.S.C. § 152, historical and statutory notes). The presumption that Omnipoint's federal right under the TCA is not foreclosed by Congress is not rebutted. Section 1983 remedies are viable under the TCA.
Because Counts I, II, III and IV seek damages under § 1983 for defendants' alleged violations of the TCA, these claims are not moot. Count V, however, alleges a violation of Civil Practice Laws and Rules (Article 78). Damages may not be awarded under Article 78. Accordingly, Count V is dismissed as moot.[6]
II. Governing Law
A. The City of White Plains Zoning Ordinance
The Zoning Ordinance applies to many types of structures within the city of White Plains, from swimming pools to hotels to fast food restaurants. A PCS monopole is considered a public utility. Sections 5.1, 6.5, 6.7.12 of the Zoning Ordinance set forth the criteria for the construction of a public utility structure in the R1-30 zoning district in which the Golf Course resides. The Board purportedly denied Omnipoint's Application on the basis of particular sections of the Zoning Ordinance.
Section 1 lists the overarching "Purposes" of the Zoning Ordinance. The Board relied on several of these purposes in its denial of Omnipoint's Application. They are excerpted as follows:
1.2 ... these regulations are designed to promote ... the most desirable "use" for which the land of each district may be adapted and are intended to conserve the value of "buildings" and enhance the value of land throughout the City.
1.3 These regulations are designed to promote the public health, safety and general welfare and are made *709 with reasonable consideration, among other things, to the character of the district, its peculiar suitability for particular "uses," the conservation of property values and the direction of building development, in accord with a well considered plan.
1.5 To protect the character and the social and economic stability, and to encourage the orderly and beneficial development of the City and all of its neighborhoods.
1.6 To ... minimize conflicts among the "uses" of land.
1.8 To provide a guide for public policy and action in the efficient provision of public facilities and services, and for private enterprise in building development, investment, and other economic activity relating to "uses" of land throughout the City.
1.11 To preserve the natural beauty of the City; to protect the City against unsightly, obtrusive, and obnoxious land "uses" and operations; to enhance the aesthetic aspect of the natural and manmade elements of the City; and to ensure appropriate development with regard to those elements.
Section 6.5 of the Zoning Ordinance provides general standards with which all special permit uses must comply. The relevant provisions are as follows:
6.5.1 The location and size of the special permit "use," the nature and intensity of the operations involved in or conducted in connection with it, the size of the site in relation to it and the location of the site with respect to "streets" giving access to it are such that it will be in harmony with the appropriate and orderly development of the area in which it is located.
6.5.2 The location, nature and "height" of "buildings," walls, fences and the nature and extent of the existing or proposed plantings on the site are such that the special permit "use" will not hinder or discourage the appropriate development and `use' of adjacent land and "buildings."
Section 6.7.12 establishes specific standards for "public utility" "structures," such as the proposed monopole. They are as follows:
6.7.12.1 When proposed in a residential district, "public utility" "buildings" or "structures" shall be subject to a finding, in addition to the standards of Section 6.5, that a public necessity exists for such "use," and that "use" of the particular site for which application is made is necessary from the public standpoint.
6.7.12.2 The approving agency may require that such "use" be enclosed by protective fencing with a gate which shall be closed and locked except when necessary to obtain access thereto.
6.7.12.3 The installation shall be so designed and enclosed, painted and screened with evergreens that it will be harmonious with the area in which it is located. The entire property shall be suitably landscaped and maintained in reasonable conformity with the standards of property maintenance of the surrounding neighborhood.
B. Federal Telecommunications Act of 1996
In the TCA, the Federal Government imposes limitations on the "regulation of *710 the placement, construction, and modification of personal wireless service facilities by any State or local government or instrumentality thereof." 47 U.S.C. § 332(c)(7). The TCA was intended "to provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services ... by opening all telecommunications markets to competition...." Cellular Telephone Co. v. Town of Oyster Bay, 166 F.3d 490, 493 (2d Cir.1999) (quoting a TCA Conference Committee report found at H.R.Conf. Rep. No. 104-458, at 206 (1996), reprinted in 1996 U.S.C.C.A.N. 124, 124). In furtherance of this goal, Congress added 47 U.S.C. § 332(c) to the act. Id. That section provides:
(7) Preservation of local zoning authority
(A) General Authority
Except as provided in this paragraph, nothing in this chapter shall limit or affect the authority of a State or local government or instrumentality thereof over decisions regarding the placement, construction, and modification of personal wireless service facilities.
(B) Limitations
(i) The regulation of the placement, construction, and modification of personal wireless service facilities by any State or local government or instrumentality thereof
(I) shall not unreasonably discriminate among providers of functionally equivalent services; and
(II) shall not prohibit or have the effect of prohibiting the provision of personal wireless services.
(ii) A State or local government or instrumentality thereof shall act on any request for authorization to place, construct, or modify personal wireless service facilities within a reasonable period of time after the request is duly filed with such government or instrumentality, taking into account the nature and scope of such request.
(iii) Any decision by a State or local government or instrumentality thereof to deny a request to place, construct, or modify personal wireless service facilities shall be in writing and supported by substantial evidence contained in a written record.
(iv) No State or local government or instrumentality thereof may regulate the placement, construction, and modification of personal wireless service facilities on the basis of the environmental effects of radio frequency emissions to the extent that such facilities comply with the Commission's regulations concerning such emissions.
(v) Any person adversely affected by any final action or failure to act by a State or local government or any instrumentality thereof that is inconsistent with this subparagraph may, within 30 days after such action or failure to act, commence an action in any court of competent jurisdiction. The court shall hear and decide such action on an expedited basis. Any person adversely affected by an act or failure to act by a State or local government or any instrumentality thereof that is inconsistent with clause (iv) may petition the Commission for relief.
Traditionally, federal courts are extremely deferential in reviewing local zoning decisions. See e.g., Schad v. Borough of Mount Ephraim, 452 U.S. 61, 68, 101 S. Ct. 2176, 68 L. Ed. 2d 671 (1981). Although Congress has preserved local zoning authority over the siting of wireless facilities under § 332(c)(7)(A), the method by which siting decisions are made is subject to judicial oversight under § 332(c)(7)(B). "Therefore, denials subject *711 to the TCA are reviewed by this court more closely than standard local zoning decisions." Town of Oyster Bay, 166 F.3d at 493.
III. Summary Judgment Standard
Plaintiff moves for partial summary judgment and defendants cross-move for summary judgment dismissing the complaint. The standard of review is the same for both on the issue of liability. Under Rule 56(c) of the Federal Rules of Civil Procedure, the Court will grant summary judgment if the record shows that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The Court views the record in the light most favorable to the non-movant and resolves all ambiguities and draws all reasonable inferences against the movant. See United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 8 L. Ed. 2d 176 (1962); Donahue v. Windsor Locks Bd. of Fire Commn'rs, 834 F.2d 54, 57 (2d Cir.1987).
An issue of fact is "genuine" if it provides a basis for "a rational trier of fact to find for the nonmoving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). The mere existence of disputed factual issues is not enough to defeat a motion for summary judgment. See Knight v. United States Fire Ins. Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S. Ct. 1570, 94 L. Ed. 2d 762 (1987). The moving party bears the initial burden of demonstrating the absence of any genuine issue of material fact. See Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568 (2d Cir.1993) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970)). This burden may be met by demonstrating that there is a lack of evidence to support the nonmoving party's claim. See Celotex Corp., 477 U.S. at 325, 106 S. Ct. 2548. Once the moving party satisfies this initial burden, the nonmoving party must set forth "specific facts showing that there is a genuine issue for a trial." Fed.R.Civ.P. 56(e).
IV. Substantial Evidence (Count I)
A. Substantial Evidence Standard
The TCA established procedural requirements that local planning boards must comply with in their evaluation of cell site applications. Town of Oyster Bay, 166 F.3d at 494. The TCA requires that denials of permits to build wireless service facilities be supported by substantial evidence. 47 U.S.C. § 332(c)(7)(B)(iii). This Court should apply "the traditional standard used for judicial review of agency actions" in its determination of whether the denial was supported by substantial evidence. Town of Oyster Bay, 166 F.3d at 494 (quoting H.R.Conf.Rep. No. 104-458, at 206 (1996), reprinted in 1996 U.S.C.C.A.N. 124, 223). The Court may neither engage in its own fact-finding nor supplant the Board's reasonable determinations. Id. (citing PrimeCo Personal Communications, L.P. v. Village of Fox Lake, 26 F. Supp. 2d 1052, 1063 (N.D.Ill. 1998)).
Although it is true that a district court generally defers to a zoning board's decision by not substituting its judgment for that of the Board, "it must overturn the board's decision under the substantial evidence test if it `cannot conscientiously find that the evidence supporting the decision is substantial, when viewed in the light that the record in its entirety furnishes, including the body of evidence opposed to the Board's view.'" SBA Communications, Inc. v. Zoning Comm'n of the Town of Brookfield, 112 F. Supp. 2d 233, 237 (D.Conn.2000) (quoting BellSouth Mobility, Inc. v. Gwinnett County, 944 F.Supp. *712 923, 928 (N.D.Ga.1996)); see also Town of Oyster Bay, 166 F.3d at 494. Substantial evidence has been construed to mean less than a preponderance, but more than a scintilla of evidence. "It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera v. NLRB, 340 U.S. 474, 477, 71 S. Ct. 456, 95 L. Ed. 456 (1951) (internal quotations omitted). The record should be viewed in its entirety; that is, evidence opposed to the Town's view must be considered as well. American Textile Mfr. Inst., Inc. v. Donovan, 452 U.S. 490, 523, 101 S. Ct. 2478, 69 L. Ed. 2d 185 (1981). Local and state zoning laws govern the weight to be given the evidence. Town of Oyster Bay, 166 F.3d at 494.
B. Grounds for Denial
(1) Wrongful reliance on the "Purposes" of the Zoning Ordinance
Plaintiff argues that the Board wrongfully relied on the "Purposes" section of the Zoning Ordinance, specifically Sections 1.2, 1.3, 1.5, 1.6 and 1.11, in support of its conclusion that Omnipoint was not entitled to a special permit. Although it would be improper for the Board to rely solely on the general purposes of the Zoning Ordinance, it is not improper to rely on the purposes section of an ordinance in conjunction with its more specific standards. See Veysey v. Zoning Bd. of Appeals of the City of Glens Falls, 154 A.D.2d 819, 820-21, 546 N.Y.S.2d 254, 255 (N.Y.App.Div.1989) (finding that a general policy statement in a zoning ordinance is a valid factor in the board's determination); Moriarty v. Planning Bd. of Village of Sloatsburg, 119 A.D.2d 188, 198, 506 N.Y.S.2d 184, 190 (N.Y.App.Div.1986), lv. denied 69 N.Y.2d 603, 512 N.Y.S.2d 1026, 504 N.E.2d 396 (1987) (finding that a general purpose of an ordinance must be limited by the more specific purposes enunciated in the ordinance).
In its Decision, the Board did not base its denial of plaintiff's application for a special permit solely on the general purposes of the Zoning Ordinance. It cited and relied upon the relevant specific provisions of the Zoning Ordinance as well. The Zoning Ordinance must be read as a whole, and all parts harmonized to attain the legislative purpose and to avoid rendering any part surplusage. Glens Falls, 154 A.D.2d at 821, 546 N.Y.S.2d 254 (citing Briar Hill Lanes v. Town of Ossining Zoning Bd. of Appeals, 142 A.D.2d 578, 581, 529 N.Y.S.2d 911 (N.Y.App.Div.1988)). See also Town of Brookfield, 112 F.Supp.2d at 240 (finding that under Connecticut law, the Zoning Commission may base its denial on the purpose statement of a zoning ordinance "only in conjunction with, and not as an alternative to, the substantive standards set forth"). Thus, there was nothing improper about the Board's invocation of the "Purposes" section of the Ordinance.
(2) Alleged failure to establish a public necessity for the Facility
The Board found that Omnipoint had not established a "public necessity," as required by the Zoning Ordinance.
In its Decision, the Board concluded that Omnipoint failed to comply with Sections 6.7.12.1 of the Zoning Ordinance because it did not establish a "public necessity" for the proposed Facility. Section 6.7.12.1 provides that "When proposed in a residential district, `public utility' `buildings' or `structures' shall be subject to a finding, in addition to the standards of Section 6.5 [general standards], that a public necessity exists for such `use,' and that `use' of the particular site for which the application is made is necessary from the public standpoint." In its findings pursuant *713 to Section 6.7.12.1, the Board acknowledged the submission of an engineering report "which states there is a gap in Omnipoint's coverage in the project vicinity," but relied on the testimony and letters from the public "stating that cellular telephones serviced by Omnipoint, Verizon and AT & T currently operate in the project vicinity,." [Decision, p. 23], to support its finding against Omnipoint.
Omnipoint claims that the Board's findings on this point were not supported by substantial evidence. In particular, it contends that there is no evidence that Omnipoint has coverage in the vicinity. In its Decision, the Board identified only two letters a scintilla of evidence if ever there was one from the public attesting to existing cell phone coverage. [Decision, p. 11.] However, the authors of these letters state that Verizon and AT & T cell phones operate in the vicinity. Id. Since the Board did not cite to evidence of Omnipoint coverage in the area, and defendants have not cited to the Record in support of this proposition, I must conclude that there is no evidence that Omnipoint customers have adequate service in the area.
Omnipoint also argues that the Board incorrectly relied on evidence that was not pertinent to the analysis required by the Zoning Ordinance under New York law. Furthermore, Omnipoint argues that, even if the evidence relied on by the Board was relevant, it did not constitute "substantial evidence" in light of the entirety of the evidence.
Finally, Omnipoint argues that the Board erroneously relied on inapplicable law and ignored the correct definition of the words "public necessity" in the Zoning Ordinance.
Omnipoint is correct on all counts.
Cell towers are public utilities. "It has long been held that a zoning board may not exclude a utility from a community when the utility has shown a need for its facilities." Cellular Tel. Co. v.. Rosenberg, 82 N.Y.2d 364, 371, 604 N.Y.S.2d 895, 624 N.E.2d 990 (1993) (quoting Consolidated Edison Co. of New York, Inc. v. Hoffman, 43 N.Y.2d 598, 611, 403 N.Y.S.2d 193, 374 N.E.2d 105 (1978)). New York courts have ruled that there is a necessity for a new cell tower when there is a service gap for a particular provider in a particular service area. Cellular Tel. Co., 82 N.Y.2d at 371, 604 N.Y.S.2d 895, 624 N.E.2d 990. Cf. Sprint Spectrum, L.P. v. Willoth, 176 F.3d 630, 647-48 (2d Cir.1999); Sprint Spectrum, L.P. v. Zoning Bd. of Appeals of Guilderland, 173 Misc. 2d 874, 662 N.Y.S.2d 717, 719 (N.Y.Sup.Ct.1997).
In its Decision, the Board argued that courts have "interpreted the [TCA] to protect service providers from discrimination by approving agencies, but it does not guarantee `seamless coverage' to every carrier," and cited to APT Pittsburgh Ltd. Partnership v. Penn Township Butler County of Pennsylvania, 196 F.3d 469 (3d Cir.1999) and Omnipoint v. Newtown, 219 F.3d 240 (3d Cir.2000), cert. denied, 531 U.S. 985, 121 S. Ct. 441, 148 L. Ed. 2d 446 (2000). [Decision, p. 23.] In its Decision, the Board extrapolated from these Third Circuit cases the proposition that there can be no public necessity for a cell tower as long as some wireless service provider operates in the vicinity.
However, that proposition is clearly not true under the Zoning Ordinance's "public necessity" requirement, which must be interpreted in light of New York law.
In Cellular Tel. Co., Cellular One brought an Article 78 proceeding seeking review of the Dobbs Ferry Planning Board's denial of its application for a permit to construct a cellular telephone cell site. Id., 82 N.Y.2d at 368, 604 N.Y.S.2d 895, 624 N.E.2d 990. This new cell site would enable Cellular One to expand and fill gaps in its service area. Id. Following *714 the submission of Cellular One's application, the Planning Board held a series of public hearings regarding the application. The Planning Board denied the application, finding that Cellular One had offered insufficient evidence to establish, among other things, "that there exists a public necessity for its service, or what the need of the broader public is relating to such service, or that it is a public utility relating to the zoning ordinance." Id. at 370, 604 N.Y.S.2d 895, 624 N.E.2d 990.
A CPLR Article 78 proceeding followed, challenging the Planning Board's determination. Cellular One alleged that the Planning Board's denial was arbitrary and capricious, unsupported by the record, not supported by substantial evidence, and contrary to law. Id. Specifically, Cellular One "asserted that the Board failed to apply the appropriate standard of public necessity set forth in Matter of Consolidated Edison Co. v. Hoffman, 43 N.Y.2d 598, 403 N.Y.S.2d 193, 374 N.E.2d 105 (1978)." Id.
The New York Supreme Court granted plaintiff's Article 78 petition, and directed the Planning Board to issue the permit, finding that the Planning Board's decision was "significantly flawed in its analysis and conclusions" and "arbitrary and capricious." Id. The Appellate Division affirmed. Id.
On appeal, appellants argued that the Supreme Court and the Appellate Division improperly applied the "public utility" exception to the unnecessary hardship test set forth in Matter of Consolidated Edison. Id., at 372, 403 N.Y.S.2d 193, 374 N.E.2d 105. The test created by the Court of Appeals in Matter of Consolidated Edison provides that a public utility must show that the use requested "is a public necessity in that it is required to render safe and adequate service, and that there are compelling reasons, economic or otherwise, which make it more feasible to modify the plant than to use alternative sources of power such as may be provided by other facilities." Matter of Consolidated Edison, 43 N.Y.2d at 611, 403 N.Y.S.2d 193, 374 N.E.2d 105.
The Court of Appeals ruled that (1) cellular telephone companies are "public utilities"; (2) the Matter of Consolidated Edison test applies to all public utilities; and, (3) the Matter of Consolidated Edison test applies to entirely new sitings of facilities, as well as modifications of existing facilities. Cellular Tel. Co., 82 N.Y.2d at 372, 604 N.Y.S.2d 895, 624 N.E.2d 990. Furthermore, the Court restated its holding in the Matter of Consolidated Edison that "a zoning board may not exclude a utility from a community where the utility has shown a need for its facilities." Id. In light of these findings, the Court held that Cellular One proved the requisite public necessity for its new cell site by establishing "that the erection of the cell site would enable it to remedy gaps in its service area that currently prevent it from providing adequate service to its customers in the Dobbs Ferry area." Id., at 374, 604 N.Y.S.2d 895, 624 N.E.2d 990 (emphasis added).
Cellular Tel. Co. thus established that wireless service providers must demonstrate that its proposed tower would remedy gaps in a particular provider's service area in order to prove that the tower is a "public necessity."
This rule of law has been recognized by White Plains in connection with prior applications. For example, in its Kensico Road Decision, the Board found that, in accordance with the Zoning Ordinance, "[t]he Applicant is licensed by the [FCC] and the New York State Public Service Commission and is required under said license to provide continuous service. The Applicant has indicated that the site was selected to fulfill its FCC mandate to *715 expand and fill gaps in its service area. (emphasis added) Presently, due to large intervals between existing sites, the Applicant cannot adequately transmit or receive calls in the area of the site. (emphasis added) Calls of customers in the area are often interrupted or disconnected due to the lack of a site in the area. In addition, cross-talk and intermodulation render inaudible any calls which are connected. Therefore, a public necessity exists for this use at the site." [Kensico Road Decision, p. 7. (emphasis added).]
In the Kensico Road Decision, there is no indication that any evidence was presented regarding any other service provider. The Board found there to be a public necessity under the Ordinance based solely on the applicant's inability to service the area. The Board, in compliance with Cellular Tel. Co., explicitly found that the existence of a gap in an individual provider's coverage, combined with an FCC mandate to fulfill all gaps in coverage, created a public necessity. The Board in this case offered no explanation of why Omnipoint was subjected to a different standard.
Obviously, the Third Circuit was not confronted in APT or Newtown, with the meaning of the term "public necessity" under the law of the state of New York. Those cases are, therefore, inapposite, and the Board improperly relied on them in support of its findings.
The proper test under the Zoning Ordinance for establishing that a public necessity exists pursuant to Section 6.7.12.1 is whether the wireless service provider has proven that there is a gap in its existing coverage that this new structure would fill. See Cellular Telephone Co., 82 N.Y.2d at 374, 604 N.Y.S.2d 895, 624 N.E.2d 990. Therefore, evidence which establishes that other wireless service providers have coverage in the area is not relevant in a determination of whether Omnipoint has presented sufficient evidence to establish a finding of a public necessity for its proposed Facility under state law, as codified in the Zoning Ordinance.
I must now determine whether there was substantial evidence to support the Board's finding under the Cellular Tel. Co. definition of "public necessity." There was not. The only evidence the Board cited to in support of its finding that there was no "public necessity" for Omnipoint's proposed Facility was the submission of "testimony and ... letters from the public stating that cellular telephones serviced by Omnipoint, Verizon, and AT & T currently operate in the project vicinity." As noted above, there is no such letter relating to Omnipoint's ability to operate in the area, which under New York's definition of "public necessity" is all that would matter. Neither in its decision, nor during the course of this action, did the Board cite to anything in the record to support its conclusion.
Thus the only evidence in the record on the public necessity question is Omnipoint's very substantial evidence of a scientifically documented coverage gap in its service. On this basis alone, the Board violated the TCA.[7]
(3) Concern regarding the visual/aesthetic impact on the community
The Board emphasized throughout the hearings and in the Decision its concern *716 that the Facility would have an adverse visual impact on the community. Aesthetic concerns may provide a valid basis for zoning decisions. Town of Oyster Bay, 166 F.3d at 494. However, a few generalized expressions of concern with the adverse visual impact of the Facility cannot serve as substantial evidence on which the Board could base its denial. Id. at 496.
Defendants argue that the aesthetic concerns expressed by residents and congregants of Kol Ami, along with the study by Charles P. May & Associates, were sufficient to satisfy the substantial evidence standard. Omnipoint argues that the uninformed opinions of the residents and congregants do not overcome the extensive expert studies performed by Donna Stipo. Omnipoint also argues that its experts successfully neutralized the impact of the May study during its rebuttal.
In arriving at its Decision, the Board disregarded Ms. Stipo's expert reports and testimony, and placed great reliance on the residents' and congregants' views. The Board's dismissal of Stipo's findings, both from her crane tests and from her logistical studies, was improper. The Board "determined that the photo simulations are of limited value in assessing the aesthetic impact of the proposed tower because they were taken from a limited number of viewpoints on public property." [Decision, p. 19.] The Board also found that Omnipoint's failure to invite the Board to participate in the crane testing "alone can lead to an inference that the visual impact analysis testing demonstrated that no measures could mitigate the visual impact of the proposed monopole." [Decision, p. 23.]
These "findings" are improper. Ms. Stipo prepared a thorough and detailed report of the visual impact of the proposed Facility from many public locations in a one mile radius around the proposed site. She is an expert in her field and no allegations of impropriety or bias were imputed to her. The Board's implications of chicanery are unfounded, and could be viewed as a reflection of an unacceptable bias on the part of the Board. As stated above, although a board may deny an application because it does not believe expert testimony, it has the burden of supporting its decision not to believe the expert testimony with substantial evidence in the record. Brookfield, 112 F.Supp.2d at 240
The only substantive evidence presented to the Board to counter the Stipo reports and testimony was the study by May & Associates. Omnipoint argues that the May report was unreliable. Omnipoint is correct. May's submission disregarded that actual topography of the area, the existing trees and the existing structures. Additionally, May did not employ the advanced technology used by Stipo. The graphs and expert testimony submitted by Omnipoint to rebut the May study demonstrated the serious flaws in the May study. I find that the May study does not constitute substantial evidence of an adverse visual impact.
While the Board rejected Stipo's detailed studies, it appears to have accepted without question the unsupported fears of local residents, whose views can only be based on speculation since (1) they have never seen the monopole (as it has not yet been built), and (2) they propounded no countervailing photo simulations of their own. As in Town of Oyster Bay, the aesthetic concerns expressed by residents reveal that these residents did not understand what the proposed Facility would actually look like, and where it would be seen. The tests performed by Ms. Stipo, however, provided substantial evidence that the visual impact would be minimal, and that the site of the proposed Facility is the least intrusive means of filling Omnipoint's coverage gap. The Board acted *717 improperly in finding that the proposed Facility was not the least intrusive means of filling Omnipoint's coverage gap, and in concluding that the Facility would have a more than minimal adverse visual impact on the community.
(4) Concerns regarding residential property value
The Board argues that residents' concerns regarding the negative impact on residential property values, and a letter and testimony from a local real estate agent and appraiser, constituted substantial evidence that property values would decrease if the Facility were constructed. The court disagrees.
Neither the Board nor the residents offered expert evidence that the proposed Facility would cause a decrease in property values. Omnipoint, however, presented an expert report from Lane Appraisals stating that the Facility would have no impact on the property value of nearby homes. Lane Appraisals studied the sale of over eighty homes in close proximity to cell towers, and concluded that there was no decrease in property values as a result of the cell towers. In the face of expert testimony, unsupported constituent testimony opposing cellular tower location generally will not satisfy the substantial evidence test. See SBA Communications, Inc. v. Zoning Comm'n of the Town of Franklin, 164 F. Supp. 2d 280, 292 (D.Conn. 2001); PrimeCo Personal Communications, L.P. v. Village of Fox Lake, 26 F. Supp. 2d 1052, 1063 (N.D.Ill.1998).
Residents, the realtor and the appraiser all offered unsubstantiated opinions that property values would decrease, and offered no evidence to prove how they reached their conclusions. General, unsupported assertions by residents and realtors that property values would decrease do not constitute substantial evidence in light of a report and testimony of a real estate appraiser who found, after a detailed study, that the construction of cell towers had no impact on property values. See Town of Oyster Bay, 166 F.3d at 496; SiteTech Group Ltd. v. Bd. of Zoning Appeals of the Town of Brookhaven, 140 F. Supp. 2d 255, 262-63 (E.D.N.Y.2001); PrimeCo, 26 F.Supp.2d at 1063. These unpersuasive resident concerns, in light of Omnipoint's expert report and testimony, are not "adequate to support a conclusion," Universal Camera, 340 U.S. at 477, 71 S. Ct. 456, 95 L. Ed. 456, that the special permit should be denied.
I conclude that the Board's denial of Omnipoint's application for a special permit and all other necessary permits was not supported by substantial evidence as required by 47 U.S.C. § 332(c)(7)(A)(iii). Plaintiff's motion for summary judgment of liability on Count I is granted; Defendants' cross-motion to dismiss the Count is denied.
V. Unreasonable Discrimination Claim (Count II)
Omnipoint alleges that the Town "unreasonably discriminate[d] among providers of functionally equivalent services" in violation of § 332(c)(7)(B)(i)(I). As a threshold matter, Omnipoint must show that defendants discriminated among providers of functionally equivalent services and that these providers were treated unequally. Nextel Partners of Upstate New York, Inc. v. Town of Canaan, 62 F. Supp. 2d 691, 698 (N.D.N.Y.1999). Defendants move for summary judgment on this claim, on the ground that Omnipoint has offered no such proof.
The record is on this issue is virtually non-existent. However, in support of its unreasonable discrimination claim, Omnipoint points to the prior Kensico Road and North Street Decisions of the Board. These decisions, issued in February 1995 and June 1998, granted SMSA Limited *718 Partnership, a wireless service provider, special permits to build cellular utility towers on Kensico Road and on North Street. Omnipoint asserts that the Board applied different and more strenuous standards to Omnipoint's Application than to the two prior applications with respect to (1) the purposes of the Ordinance, (2) the effect of photo simulations; (3) the standard for public necessity determination; and, (4) the ability to mitigate visual impact, [Pl. Reply, p. 22], and that these more stringent standards led to the denial of their Application.
"[T]he [TCA] explicitly contemplates that some discrimination among providers of functionally equivalent services is allowed. Any discrimination need only be reasonable." Willoth, 176 F.3d at 638 (quoting AT & T Wireless PCS, Inc. v. City Council of Va. Beach, 155 F.3d 423, 427 (4th Cir.1998) (internal quotation marks omitted)). Under the TCA, local governments may reasonably consider the location of the cell tower in deciding the nature of the inquiry to be made, and whether to approve the application for construction. Id. at 639. The legislative history of the TCA contemplated some discrimination would occur, noting that the "unreasonable discrimination" standard "will provide localities with the flexibility to treat facilities that create different visual, aesthetic, or safety concerns differently to the extent permitted under generally applicable zoning requirements even if those facilities provide functionally equivalent services." H.R.Conf. No. 104-458, at 208, reprinted in 1996 U.S.C.C.A.N. at 222.
As defendants point out, Omnipoint's Application for its proposed Facility did differ significantly from the two prior Applications. Omnipoint proposed the construction of a Facility 150 feet in height, and located on a golf course only a few hundred feet from expensive residential homes. The prior Applications proposed Facilities that were somewhat different in size and in location. However, I cannot determine on this paltry record whether the applicants were truly "differently situated" as to eliminate any possible Equal Protection claim.[8]
The fact that the applications differed, however, is not sufficient to defeat a claim of unreasonable discrimination. Some providers got their permits. Omnipoint did not. There is a disputed issue of material fact. Summary judgment is denied.
VI. Prohibition of Wireless Service Claim (Count III)
Defendants have moved for summary judgment on all of plaintiff's remaining claims Counts II, III, IV[9], and VI of *719 the Complaint. Plaintiff opposes the motion.
Omnipoint contends that the Decision "prohibits or has the effect of prohibiting the provision of personal wireless services" in violation of 47 U.S.C. § 332(c)(7)(B)(i)(II). Defendants, in moving for summary judgment, contend that the record contains no evidence of total prohibition of cellular service in the area. I agree.
In Sprint Spectrum, L.P. v. Willoth, 176 F.3d 630, 647-48 (2d Cir.1999), the Second Circuit, following a lengthy analysis of the TCA, which included a "detailed parsing of the statutory language, including layers of highly technical definitions," concluded that "the Act's ban on prohibiting personal wireless services precludes denying an application for a facility that is the least intrusive means for closing a significant gap in a remote user's ability to reach a cell site that provides access to land-lines." Willoth, 176 F.3d at 643 (emphasis added); Omnipoint Communications, Inc. v. Port Authority of New York and New Jersey, 1999 WL 494120, 99 Civ. 0060, at *12 (S.D.N.Y. July 13, 1999) (noting that Willoth makes clear that "once any wireless carrier provides service to a given area ... there is no prohibition on the provision of wireless services"). In Port Authority of New York and New Jersey, another judge of this court similarly found that, since other service providers, namely AT & T and BAM, already provided service in the contested area, the defendants had not prohibited wireless service within the meaning of the TCA. Id.
In this action, it is clear from the record that (1) there exists a significant gap in Omnipoint's coverage; and, (2) the construction of the proposed Facility is the least intrusive means for closing Omnipoint's coverage gap. What is not clear from the record is whether there is a significant gap "in a remote user's ability to reach a cell site that provides access to land-lines." See Willoth, 176 F.3d at 643.
The only evidence provided by defendants in support of the proposition that other cell providers have coverage in the area are the two letters from residents indicating that they can use their Verizon and AT & T cell phones in the area. Plaintiff introduced no evidence whatsoever to prove that other providers were unable to operate in White Plains, as is required to meet the Willoth standard. Defendants, as the moving party, have satisfied their burden by showing that there is a lack of evidence to support the nonmoving party's claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Omnipoint has failed to set forth "specific facts showing that there is a genuine issue for a trial" sufficient to withstand a motion for summary judgment. Fed.R.Civ.P. 56(e).
VII. Section 1983 Claim (Count VI)
Plaintiff's claim under § 1983 is subsumed by the requests for damages in Count I and II.
CONCLUSION
For the reasons stated above, Omnipoint's Motion for Partial Summary Judgment on liability is granted as to Count I. Defendants' Motion for Summary Judgment dismissing Counts III, IV and V is granted. Defendants Motion for Summary Judgment dismissing Counts II and VI is denied. Discovery will proceed in accordance with the attached expedited *720 schedule. No adjournments will be granted for any reason.
This constitutes the decision and order of the Court
NOTES
[1] I have already concluded that any argument based on "religious use" has no merit as a matter of law. See Omnipoint Communications, Inc. v. City of White Plains (Matter of Kol Ami), 202 F.R.D. 402 (S.D.N.Y.2001).
[2] The Revocable Agreement is not in the Record, so the Court can not comment on its terms.
[3] Omnipoint has orally represented to the Court that it is engaged in discussions with Fenway concerning a new lease option. Fenway denies that any said discussions are taking place. [Citron Aff., p. 2.] Putting to one side the issue of whether Omnipoint and this Court were misled by White Plains (with perhaps a behind-the-scenes boost from Fenway) into adjourning the adjudication of this motion pending a settlement that never happened, the pendency of negotiations or lack of same turns out to have no bearing on the question of mootness.
[4] Plaintiff purports to sue for damages under both the TCA and § 1983. No Court has ever concluded that damages are available under the TCA itself.
[5] The Eleventh Circuit did address this issue in AT&T Wireless PCS, Inc. v. City of Atlanta, 210 F.3d 1322 (11th Cir.2000). A panel of that Court held that violations of the TCA do support a § 1983 claim. Id. This decision, however, was recently vacated in anticipation of an en banc rehearing. AT&T Wireless PCS, Inc. v. City of Atlanta, 260 F.3d 1320 (11th Cir.2001).
[6] Count VI simply seeks damages pursuant to § 1983. It does not purport to state any independent factual ground or legal basis for relief. It is the basis for damages. It is, therefore, subsumed in the other claims for relief.
[7] Although a board may deny an application because it does not believe expert testimony, it has the burden of supporting its decision not to believe the expert testimony with substantial evidence in the record. SBA Communications, Inc. v. Zoning Comm'n of the Town of Brookfield, 112 F. Supp. 2d 233, 240 (D.Conn.2000). There was no relevant evidence opposing the engineering reports and testimony. The Board had no basis for rejecting plaintiff's expert engineering reports.
[8] This differentiates the instant case from Harlen Assoc. v. The Incorporated Village of Mineola and Board of Trustees for the Incorporated Village of Mineola, 273 F.3d 494, ___ (2d Cir.2001), in which the Second Circuit affirmed the dismissal of a claim for an equal protection violation based on discrimination among convenience store operators in applications for permits. The district court found, as a matter of undisputed fact, that the providers were not similarly situated because the concerns relied on by the board to turn down the permit proximity to a school and a dangerous crosswalk were not at issue in those cases where permits had been granted to other convenience stores owners. Thus, plaintiff and the other providers were not "similarly situated." The Court of Appeals affirmed.
[9] Omnipoint agrees that Count IV, which alleges that the Board unreasonably delayed its processing of Omnipoint's application in violation of 47 U.S.C. § 332(c)(7)(B)(ii), should be dismissed. [Pl. Reply, p. 5, fn. 2.] I agree. As I stated in an earlier opinion, "Congress could not have intended for plaintiffs to bring a claim that a Board's action was both a final denial of their application and a delay that had the effect of a denial. By waiting until after the final decision was rendered, Plaintiffs forwent a claim of `unreasonable delay.'" Town of Clarkstown, 99 F. Supp. 2d 381, 395 (S.D.N.Y.2000). Whether White Plains misled Omnipoint into joining in requests that I delay adjudication of this motion while the clock ran and the Fenway lease option expired does not raise an issue under the TCA, and is therefore not implicated in Count IV. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2419017/ | 640 S.W.2d 58 (1982)
Gregory HEFLIN, Appellant,
v.
The STATE of Texas, Appellee.
No. 3-81-029-CR.
Court of Appeals of Texas, Austin.
September 1, 1982.
Rehearing Denied October 13, 1982.
Discretionary Review Refused January 12, 1983.
*59 David H. Reynolds, Frank Maloney & Associates, Austin, for appellant.
Ronald Earle, Dist. Atty., Philip A. Nelson, Jr., First Asst. Dist. Atty., Austin, for appellee.
POWERS, Justice.
The trial court convicted appellant of intentionally murdering his mother, for which crime the jury assessed punishment of thirty years imprisonment. Tex.Penal Code Ann. art. 19.02(a)(1). Judicially admitting the homicide, appellant interposed at trial the defense of insanity, Tex.Code Crim.P. Ann. art. 46.03, and brings to this court *60 numerous grounds of error which bear on that defense. We will affirm the trial court judgment.
Appellant contends in his initial ground of error that the trial court erred when it overruled his challenge for cause, directed at a venireman who was allegedly prejudiced against the insanity defense. Tex.Code Crim.Pro.Ann. art. 35.16. The record, for this ground to be sustained, must establish the following: (1) the trial court overruled a valid challenge for cause; (2) appellant exhausted his number of peremptory challenges; (3) one or more disqualified jurors sat in the case; and (4) the trial court denied appellant's request for additional peremptory challenges, or would have done so had they been requested by appellant. Peters v. State, 575 S.W.2d 560 (Tex.Cr.App.1979); Adami v. State, 524 S.W.2d 693 (Tex.Cr.App.1975); Powers v. State, 497 S.W.2d 594 (Tex.Cr.App.1973). The requisite elements are not established in present case. The juror in question did not state that he would be unable in every circumstance to find the accused not guilty by reason of insanity; he stated that he would set aside any problem he might have with the insanity defense and "accept it." He was not shown, therefore, to have possessed the bias essential to a valid challenge for cause. Burns v. State, 556 S.W.2d 270 (Tex.Cr.App.1977); Huffman v. State, 450 S.W.2d 858 (Tex.Cr.App.1970). Moreover, the record does not establish either a request by appellant for additional peremptory challenges which the trial court denied, or that the trial court would have denied them had they been requested. Peters v. State, supra; Burns v. State, supra Accordingly, we overrule appellant's first ground of error.
In appellant's next three grounds of error, he contends the trial court erred in refusing to permit his counsel to explain to the venire generally, or to the jury by instruction, the effect of appellant's being found guilty by reason of insanity, referring in this respect to the commitments authorized by the provisions of Tex.Code Crim.Pro.Ann. art. 46.03. The same contention was rejected in Granviel v. State, 552 S.W.2d 107 (Tex.Cr.App.1977). We overrule the ground of error.
In several grounds of error, appellant contends the trial court erred in failing to exclude the testimony of four psychological expert witnesses called by the State to testify in rebuttal of similar testimony adduced by appellant to prove his plea of insanity. The psychological experts called by the State examined appellant under authority of various orders entered by the trial court before trial. Two of the witnesses were ordered initially to examine appellant for the purpose of ascertaining his competency to stand trial; and were subsequently ordered to examine him to ascertain, as well, his mental state at the time of the homicide, following his filing notice that he would rely upon the defense of insanity. Tex.Code Crim.Pro.Ann. arts. 46.02, 46.03. The trial court ordered the remaining two expert witnesses to examine appellant solely with regard to his claim of insanity at the time of the homicide. At trial, appellant's counsel judicially admitted that appellant was competent to stand trial and that issue is not before us on appeal.
The four expert witnesses called by the State were permitted to relate to the jury their respective opinions that appellant was sane at the time of the homicide. They were permitted as well to relate the substance of their conversations with appellant, the particulars of psychological tests which they administered to him, and their observations of his behavior, all of which had taken place in numerous interviews between the witnesses and appellant following his arrest. Appellant's counsel was not present at these interviews and did not consent to them. His attempts to have excluded the testimony of these expert witnesses were overruled by the trial court; the chronological account which follows will illuminate his ensuing contentions on appeal.
Appellant killed his mother on June 1, 1980 in Austin, Texas and attempted to flee to Canada. He was arrested at the Canadian border on June 3. The grand jury indicted *61 him on June 4 and, on the same day, the State moved the trial court to appoint disinterested and qualified experts to ascertain appellant's competency to stand trial. Tex.Code Crim.Pro.Ann. art. 46.03. The motion averred as grounds for such appointment appellant's alleged murder of his mother, his seriously wounding his sister in the same episode, and information received by the State that appellant had recently "dropped out of school and [had become] withdrawn and depressed and [had] consulted a psychiatrist with regard to such condition." Without notice to appellant's counsel, the trial court considered the State's motion ex parte and granted it the same day, appointing a psychiatrist on June 4 to make the competency examination.
Appellant returned to Austin on June 5 in the custody of a policeman. On that day, appellant's counsel moved the trial court to "stay" its order of the previous day which had appointed a psychiatrist to conduct the competency examination. Appellant's motion averred several basic grounds: the appointment of the psychiatrist was made without notice to appellant's counsel and thereby deprived appellant of his right, under the Sixth Amendment to the Constitution of the United States, to meaningful assistance of counsel; the trial court's order deprived appellant of his rights, under the Fifth Amendment, to remain silent and free of any official compulsion which might result in his making self-incriminating statements; and the provisions of Tex.Code Crim.Pro.Ann. arts. 46.02 and 46.03 were unconstitutional in purporting to authorize an examination in the circumstances.
On June 5, the trial court denied appellant's motion after hearing. At 7:30 p. m. that same day, a magistrate advised appellant of the various rights of accused persons delineated in Tex.Code Crim.Pro.Ann. art. 15.17. Later the same evening, the psychiatrist appointed by the trial court interviewed appellant in the company of another psychiatrist who had not, at that time, been appointed by the trial court, although he was subsequently appointed on June 9 to assist the first psychiatrist in determining appellant's competency to stand trial. On June 6, a neuropsychiatrist, retained by appellant's counsel, examined appellant. In the days which followed, appellant was examined alternately and on several occasions by his own neuropsychiatrist and the psychiatrists appointed by the trial court to determine his competency to stand trial. The psychiatrists appointed by the trial court determined that appellant was competent to stand trial and filed with the trial court their report to that effect. Tex.Code Crim.Pro.Ann. art. 46.02 § 3(d).
On June 27, appellant filed a notice that he would introduce at trial evidence of his insanity at the time of the homicide. Thereafter, the two psychiatrists appointed by the trial court were ordered to examine appellant with regard to the insanity defense. They again interviewed and tested appellant for that purpose. Concluding that he was sane at the time of the homicide, they filed their report to that effect. Tex.Code Crim.Pro.Ann. arts. 46.02 § 3(i), 46.03, § 3(a), (d). The trial court thereafter ordered that two other psychological experts also examine appellant on the issue of his insanity at the time of the homicide. They too concluded he was sane.
Appellant raises on appeal, as he did below, several constitutional and statutory grounds for the exclusion of the testimony of the psychological experts appointed by the trial court. They may be summarized as follows: (1) the provisions of Tex.Code Crim.Pro.Ann. art. 46.02(3)(g) expressly exclude, on the issue of guilt, any evidence of statements made by the accused during an examination to determine his competency to stand trial; (2) the trial court's order for the competency examination was based upon grounds that were, and are, legally insufficient; (3) in conducting their competency examination, the psychological experts exceeded the authorized scope of the examination, enlarging the very first interview to include the question of appellant's sanity at the time of the offense, thereby making themselves agents of the State and not disinterested witnesses concerned only with appellant's competency to stand trial, *62 as contemplated by the holding in Estelle v. Smith, 451 U.S. 454, 101 S. Ct. 1866, 68 L. Ed. 2d 359 (1981); (4) appellant's counsel was not given advance notice of the interviews, resulting in appellant's being denied his right under the Sixth Amendment to the effective assistance of counsel in deciding whether to submit to the competency interviews and in preparing for them; (5) appellant did not consent to the interviews and testing conducted by the psychological experts appointed by the trial court; (6) in none of the interviews did appellant first receive advice of his "right to remain silent" and a warning that "anything said can and will be used against" him in court, as required by the decision in Miranda v. Arizona, 384 U.S. 436 (1966); (7) the State failed to establish that appellant, before participating in the interviews and tests, received the required warning of his Miranda rights, understood them, and voluntarily waived them; (8) one of the psychological experts appointed by the trial court interviewed appellant after the filing of his competency and sanity reports, and therefore after his authority to interview appellant had expired; (9) the provisions of Tex.Code Crim.Pro.Ann. art. 46.03 are unconstitutional in purporting to allow the introduction of statements made by an accused during a sanity examination, contrary to the Fifth Amendment's guaranty against incriminating statements compelled by the State, applicable to State criminal proceedings through the Fourteenth Amendment; (10) the provisions of Tex.Code Crim.Pro.Ann. arts. 46.02 and 46.03 are unconstitutional in purporting to allow examinations of an accused's mental state without the presence of his counsel, during the examinations, contrary to the Sixth Amendment's guaranty of the right of counsel in criminal cases; and (11) the provisions of Tex.Rev.Civ.Stat. Ann. art. 5561h, assuring the confidentiality of mental health information and prohibiting the disclosure of communications between a "patient/client [sic] and a professional," rendered inadmissible the testimony of the court-appointed psychological experts in the present case.
The grounds upon which appellant insists the testimony should have been excluded must be understood in the special circumstances of the present case, wherein appellant judicially admitted the homicide, interposed the insanity defense, and, in an attempt to prove that defense, introduced the testimony of his own psychological experts who based their opinions of insanity upon numerous interviews and tests to which appellant voluntarily submitted. Moreover, a careful distinction must be maintained, though it is ignored by appellant, between the three categories into which the whole of the testimony of the court-appointed expert witnesses may be divided: (1) their statements to the jury that appellant admitted to them that he killed his mother; (2) their statements that appellant was, in their opinion, sane at the time of the homicide; and (3) their statements describing the particulars of their interviews with appellant, the tests they administered to him, and their observations of his behavior, from all of which they formed their opinions. We hold that any error in admitting the first category of testimony was harmless error, beyond a reasonable doubt, if it was error at all, which we do not believe it was. Appellant, by statements of counsel to the jury before any psychological evidence was introduced, judicially admitted the homicide, which was, indeed, the factual basis upon which appellant erected his entire theory of paranoid schizophrenia a mental illness which appellant contended rendered him incapable of resisting the urge to kill his mother, as elaborated at length by his psychological experts.
The matter is more complicated with respect to the remaining two categories of testimony. We conclude, nevertheless, that such testimony did not violate appellant's Fifth Amendment rights because appellant had waived his privilege thereunder; the trial court's violation of appellant's Sixth Amendment right to meaningful assistance of counsel was rendered harmless by subsequent proceedings in the case; and the relevant statutes were constitutional and properly applied by the trial court.
*63 Appellant interjected by his special plea the defense of insanity. By introducing extensive psychological testimony of his insanity, resulting from contemporaneous interviews and tests by his own psychological experts, before the psychological witnesses called by the State ever testified, appellant implied that the interviews and tests conducted by his own experts, and their resulting conclusions, represented the truth of the matter regarding his mental state at the time of the homicide. He invoked by his plea and his evidence the function of the trial court to determine the truth of his plea of insanity, a defense for which he had the burden of proof. He invoked as well the fundamental purpose of the Fifth and Sixth Amendments upon which he now relies incongruously to urge the exclusion of testimony of identical character but opposite effect, that purpose being to assure an adversary system of criminal justice. Such a system, under the Constitution of the United States, includes without question a right in the State to test the truth of an accused's plea of insanity, whether by cross examination or by introducing in evidence the contrary opinions of others who had occasion to interview, test, and observe the accused and form thereby an expert opinion of his mental state at the time of the alleged offense. Jenkins v. Anderson, 447 U.S. 231, 100 S. Ct. 2124, 65 L. Ed. 2d 86 (1980); Garner v. United States, 424 U.S. 648, 96 S. Ct. 1178, 47 L. Ed. 2d 370 (1976). Had the accused taken the stand personally, he would have subjected his testimony to these tests that the jury might be assisted in arriving at the truth; we see no difference when he does essentially the same thing through his communications to his expert psychological witnesses, which they relate to the jury as illustrating or substantiating various aspects of their conclusions that he was insane at the time of the homicide.
The Supreme Court of the United States, in Estelle v. Smith, supra, took care to point out the significance of an accused's reliance upon the defense of insanity, as it bore upon enforcement of the exclusionary rules designed to fully effectuate the Fifth Amendment privilege against self-incrimination and the Sixth Amendment right to counsel. The language used there denies the validity of any procedure whereby an accused might raise a defense of insanity which the State could not possibly meet owing to the strictures of an exclusionary rule:
Nor was the interview [in Estelle v. Smith] analogous to a sanity examination occasioned by a defendant's plea of not guilty by reason of insanity at the time of his offense. When a defendant asserts the insanity defense and introduces supporting psychiatric testimony, his silence may deprive the State of the only effective means it has of controverting his proof on an issue that he has interjected into the case. Accordingly, several Courts of Appeals have held that, under such circumstances, a defendant can be required to submit to a sanity examination conducted by the prosecution's psychiatrist. [citations omitted] Respondent, however, introduced no psychiatric evidence, nor had he indicated that he might do so.
We hold that appellant, by pleading and attempting to prove his insanity through the introduction of the testimony of expert psychological witnesses who had observed, interviewed, and tested appellant with his cooperation, waived his Fifth Amendment privilege against self-incrimination. Stultz v. State, 500 S.W.2d 853 (Tex.Cr.App.1973); Blaisdell v. Commonwealth, 372 Mass. 753, 364 N.E.2d 191, 200 (1977); State v. Whitlow, 45 N.J. 3, 210 A.2d 763 (1965); Lee v. County Court, 27 N.Y.2d 432, 318 N.Y.S.2d 705, 267 N.E.2d 452, cert. denied, 404 U.S. 823, 92 S. Ct. 46, 30 L. Ed. 2d 50 (1971); McVeigh v. State, 73 So. 2d 694 (Fla.), appeal dismd., 348 U.S. 885, 75 S. Ct. 210, 99 L. Ed. 696 (1954); Lewis v. Thulemeyer, 189 Colo. 139, 538 P.2d 441 (1975); People v. Segal, 54 N.Y.2d 58, 444 N.Y.S.2d 588, 429 N.E.2d 107 (Ct.App.1981); Commonwealth v. O'Connor, 7 Mass.App. 314, 387 N.E.2d 190 (1979); U.S. v. Cohen, 530 F.2d 43 (5th Cir., 1976); U.S. v. Albright, 388 F.2d 719, 726 (4th Cir., 1968).
*64 The privilege against compelled self-incrimination, contained in the Fifth Amendment provision that "[n]o person ... shall be compelled in any criminal cases to be a witness against himself," rests upon four fundamental values:
a. The assurance of an accusatorial system of criminal prosecution rather than one of inquisition.The privilege was designed in part to require that guilt be established by evidence freely and independently secured through resources while lie at the command of the prosecution: police detectives, police laboratories, and government prosecutors. Without the constitutional privilege, the temptation to rely upon the defendant's own words to convict him would be too great. Miranda v. Arizona, supra.
b. The right of persons to a private enclave. One's innermost beliefs and thought processes should be immune from discovery by the government, even in criminal prosecutions. Id.
c. The right of persons to be free from official coercion. Police custody furnishes an inherent opportunity for undue mental and physical pressure, whether subtle or blatant, directed at the accused in a criminal proceeding. Escobedo v. Illinois, 378 U.S. 478, 84 S. Ct. 1758, 12 L. Ed. 2d 977 (1964). The coercive effect of questioning by a highly-trained and skilled psychiatrist, in such circumstances, may be even more malignant than that of an ordinary police detective. See e.g., Leyra v. Denno, 347 U.S. 556, 559, 74 S. Ct. 716, 718, 98 L. Ed. 948 (1954). We reject coerced statements of self-incrimination for humane reasons and for their intrinsic lack of reliability. When such a statement results from official custody, we assume it to be the product of coercion unless the prosecution demonstrates that it was given by the accused notwithstanding certain minimum, specific procedural safeguards designed to assure its voluntariness, that is, advice to the accused of his right to remain silent and a warning that his statements can and will be used against him in court. Estelle v. Smith, supra; Miranda v. Arizona, supra.
d. The right of persons to be free from the "Cruel Trilemma." We regard it as fundamentally unfair and inhumane for the government to manipulate an accused's instinct for self-preservation; that is, the government's subjecting an accused to the "cruel trilemma or self-accusation, perjury or contempt." Murphy v. Waterfront Commission, 378 U.S. 52, 84 S. Ct. 1594, 12 L. Ed. 2d 678 (1964).
These fundamental values are not at risk, or the risk attenuates enormously, when an accused concedes a criminal act, pleads insanity, and introduces psychological testimony, based upon examination by his own expert witnesses, to prove that defense. See generally, R. Aronson, "Should the Privilege Against Self-incrimination Apply to Compelled Psychiatric Examinations?," 26 Stanford L.Rev. 55 (1973). While the waiver of a constitutional right should not be lightly inferred, we are unable to imagine a stronger case for it than the one now before us. Without its own examination of appellant, the State would be unable either to introduce its own expert testimony or effectively cross-examine those expert witnesses who testified for the appellant. We may not allow an accused to be the sole judge of his claim of insanity; the temptation for fraud to avoid punishment, in that case, would be as obvious as the opportunity. In comparison, the fundamental values expressed in the Fifth Amendment are slight indeed in a case such as the present. We need not, in the present case, concern ourselves with whether a similar waiver should be inferred when an accused pleads insanity but introduces no testimony of expert witnesses which is based upon their interviews with the accused or tests they have administered to him.
We do, however, hold that appellant's chosen course in this case removed from the proceedings any purpose designed to be served by a court-made exclusionary rule intended to assure the forceful protection of the Fifth Amendment, Estelle v. Smith, supra, Demouchette v. State, 633 S.W.2d 879 (Tex.Cr.App.1982); and any purpose designed to be served by a statutory exclusionary *65 rule such as Tex.Code Crim.Pro. Ann. art. 46.02 § 3(g) and Tex.Rev.Civ.Stat. Ann. art. 5561h, each of which must be interpreted in conjunction with the specific provision of Tex.Code Crim.Pro.Ann. art. 46.03 § 3(a), which authorizes court-appointed psychological experts to testify as to the sanity of an accused "at any trial or hearing on this issue."
The provisions of Tex.Code Crim. Pro.Ann. art. 46.02 § 3(i) specifically authorize the same psychological expert to conduct both competency and sanity examinations. When that occurs, as it did in the present case, the competency and sanity examinations are in practical effect combined and the expert may base his opinion upon the entirety of his examination of the accused. De Russo v. State, 579 S.W.2d 224 (Tex.Cr.App.1979). This is so because we know of no effective way to require an individual who conducts both examinations to compartmentalize his intellectual function so that his opinion as to the accused's sanity or insanity rests exclusively upon impressions which he received in a sanity examination, exclusive of any impressions he may have received previously in the course of a competency examination. Although De Russo v. State, supra, dealt with a single order of the trial court directing an expert to conduct a "dual purpose examination," that is, an examination into appellant's sanity at the time of the offense as well as his competency to stand trial, the rationale of the decision is equally applicable when the trial court by separate orders directs the same expert to conduct both examinations: the accused's mental state at one stage may be manifested by his conduct at the other or his perceptions at either.
Moreover, the holding in Estelle v. Smith, supra, does not require the exclusion of any expert testimony on the basis that the first psychiatrist, appointed by the State to conduct the competency examination, expanded the scope of his initial interview with appellant to inquire into appellant's mental state at the time of the offense. What Estelle condemns is the introduction of affirmative evidence to establish an issue upon which the State has the burden of proof, when that evidence has been obtained from the accused without a Miranda warning and advice and in an expansion of the ostensibly neutral examination into an accused's mental state. Hence, the Supreme Court of the United States took care to distinguish the contrary situation, implying that the Fifth Amendment is not implicated if the State uses testimony derived from such an examination to meet contrary evidence first introduced by the accused to prove a crucial issue upon which he has the burden of proof, insanity for example. The psychological expert who examines an accused becomes an agent of the State only when he expands the examination to include a crucial issue upon which the State has the burden of proof, such as future dangerousness. 451 U.S. at 468, 469, 101 S. Ct. at 1876. Incompetency to stand trial and insanity at the time of the offense are issues upon which the accused has the burden of proof. Tex.Code Crim.Pro.Ann. art. 46.02 § 1(b); Tex.Penal Code Ann. § 8.01(a). Therefore, the Fifth Amendment was not implicated in the present case when the court-appointed psychiatrist inquired, in a competency interview, about appellant's mental state at the time of the homicide, even in the absence of an order which directed the psychiatrist to make a sanity examination. We turn, then, to appellant's claim that the trial court violated his Sixth Amendment right to meaningful assistance of counsel.
It is rather plain that there was error in the trial court's directing a competency examination without advance notice to appellant's counsel. Such advance notice was required in order that appellant's right to counsel, under the Sixth Amendment, could be meaningfully exercised at a critical stage of the proceedings. Estelle v. Smith, supra; Massiah v. United States, 377 U.S. 201, 84 S. Ct. 1199, 12 L. Ed. 2d 246 (1964). While condemning the procedure, we hold the error harmless, owing to appellant's agreement in the psychiatrist's determination that appellant was competent to stand trial, foregoing his right to a hearing before *66 a separate jury with respect to that issue. (We have discussed above the Fifth Amendment consequences of the psychiatrist's expansion of the competency examination to include an inquiry relative to appellant's mental state at the time of the offense.) Did appellant suffer a violation of his Sixth Amendment right by reason of not having his counsel present at the interviews conducted by the psychological experts appointed by the Court?
In Estelle v. Smith, supra, the Court noted but did not comment on the proposition that an attorney's presence during a psychological examination by court-appointed experts contributes little to the neutral statutory purpose of the examination, and might seriously frustrate that purpose. The Court of Criminal Appeals had made the same observation earlier in holding that such an examination was not a "critical stage" of a criminal proceeding, at which point the Sixth Amendment right to counsel becomes effective. Stultz v. State, 500 S.W.2d 853 (1973); Gholson v. State, 542 S.W.2d 395 (1976); Livingston v. State, 542 S.W.2d 655 (1976). Estelle held to the contrary such an examination does constitute a "critical stage" of the proceedings. 451 U.S. at 467, 101 S.Ct. at 1875. See Wilder v. State, 583 S.W.2d 349, vacated 453 U.S. 902, 101 S. Ct. 3133, 69 L. Ed. 2d 987, aff'd on other grounds after remand, 623 S.W.2d 650 (Tex.Cr.App.1981). Estelle did not criticize the observation of the Court of Appeals in that case that "an attorney present during the psychiatric interview could contribute little and might seriously disrupt the examination." 602 F.2d 694, 708.
We hold the Sixth Amendment did not entitle appellant to have his counsel present at a psychological examination conducted by a court-appointed expert, first to determine appellant's competency to stand trial and, thereafter, his mental state at the time of the homicide. Tex.Code Crim.Pro. Ann. arts. 46.02, 46.03. In either case, the purpose of the examination was neutral and the statutes consequently make no provision for counsel to be present at an examination. Id. An examination of an accused by a court-appointed psychological expert does, nevertheless, present an opportunity for transactions wherein the accused may make self-incriminating statements or otherwise prejudice his right to a fair trial should one follow. An accused's Fifth, Sixth, and Fourteenth Amendment rights are therefore inextricably intertwined when the trial court directs an examination into his mental state. In the case of a competency examination, however, these rights need not be exposed to invasion by the State, for in consultation with his counsel, an accused may elect not to submit to the examination. In the case of an insanity examination, the power of the trial court to order the examination exists only when the accused files a notice in the proceedings that he will offer evidence of his insanity. In either case, an examination into an accused's mental state can result only from his own election, taken with the advice of counsel; even then he is protected from unfairness in the examination by his right to have the assistance of his counsel in preparing for an examination and in his right afterwards to receive a copy of the resulting report, his right to depose the examiner, his right to suppress before trial any prejudicial admissions or other evidence which results from the examiner's threats, trickery, or other unfairness, and by the obligation of the court to appoint disinterested experts to conduct the examinations. We conclude, therefore, that the Sixth Amendment, whether to assure a fair trial under the Fourteenth Amendment or to protect appellant's Fifth Amendment privilege, did not require the presence of counsel at any of the psychological examinations.
We have carefully examined appellant's remaining grounds of error and find them to be without merit. They are, accordingly, overruled and the judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1684161/ | 976 So. 2d 15 (2008)
STATE of Florida, Appellant,
v.
Anthony BUSCIGLIO, Appellee.
No. 2D06-2415.
District Court of Appeal of Florida, Second District.
January 23, 2008.
Rehearing Denied March 17, 2008.
*17 Bill McCollum, Attorney General, Tallahassee, and Marilyn Muir Beccue and Chandra Waite Dasrat, Assistant Attorneys General, Tampa, for Appellant.
Eilam Isaak, Tampa, for Appellee.
VILLANTI, Judge.
The State appeals a trial court order granting suppression of the arresting officer's request and Anthony Busciglio's refusal to take a breath test. The breath test request was made after Busciglio's lawful arrest for felony driving under the influence (DUI). Because his driving privileges had been previously suspended for a prior refusal to submit to a breath test, Busciglio's current refusal constituted a first-degree misdemeanor pursuant to section 316.1939, Florida Statutes (2005). We have jurisdiction pursuant to Florida Rule of Appellate Procedure 9.140(c)(1)(B), which allows the State to appeal orders granting suppression of confessions or admissions. Because the trial court predicated its ruling on the denial of Busciglio's right to counsel at a time when he was not legally entitled to counsel, we reverse.
The underlying facts in this appeal are not in dispute. On the evening of July 5, 2005, Officer McKendree stopped a vehicle driven by Busciglio after he cut through a parking lot presumably in order to avoid stopping for a red light and failed to use his turn signal when making a turn onto another road. Busciglio does not contest the validity of the traffic stop in this appeal.[1] During the stop, Officer McKendree observed Busciglio having significant trouble handling his wallet, he smelled alcohol, and he heard glass clanging in the vehicle when he first approached it. These observations led Officer McKendree to call for a DUI officer. Officer Portman arrived on the scene and noticed that Busciglio's eyes were bloodshot, that he smelled of alcohol, and that he swayed from side to side while standing. Officer Portman conducted field sobriety exercises, and Busciglio showed a number of signs of impairment. At that point, Officer Portman read Busciglio his Miranda[2] rights and arrested him for driving under the influence of alcoholic beverages.
After being transported to the police station, it is uncontested that Officer Portman *18 read Busciglio the "Florida Implied Consent Law" from a form provided at Central Breath Testing; this warning is required by section 316.1939(1).[3] Thus Busciglio was specifically informed of the penalty provision for a second or subsequent refusal: "It is a first degree misdemeanor to refuse to submit [to testing]." He was further advised, "[Y]our right to have a lawyer present before making any statements or during any questioning has nothing to do with taking this chemical test for the purpose of determining the content of your breath." After responding that he understood everything read to him, Busciglio was asked, "Are you willing to take a breath test, yes or no?" Busciglio replied, "No." It is also undisputed that at no time before or after the implied consent warning did Busciglio invoke any Miranda rights, including his "right" to counsel.
At the hearing on the motion to suppress, it was stipulated that Busciglio's driver's license was previously suspended for one year for "refusal to submit to breath/urine/blood test" on February 15, 2001. After considering the testimony presented and argument of counsel, the trial court granted suppression of any evidence that Busciglio was asked to submit to the breath test or that he refused to submit to the breath test on the sole basis that as a matter of law, "[Busciglio] was entitled to counsel prior to the breath test as a result of the criminalization of his refusal."[4] It is from this order that the State appeals.
Appellate review of a ruling on a motion to suppress is a mixed question of law and fact. See State v. Tanner, 915 So. 2d 762, 764 (Fla. 2d DCA 2005). The trial court's findings of fact are presumed correct and will be reversed only if they are not supported by competent, substantial evidence. Id. However, "the standard of review for the trial court's application of the law to its factual findings is de novo." Cillo v. State, 849 So. 2d 353, 354 (Fla. 2d DCA 2003). Our reversal is not based upon any erroneous factual findings made by the trial courtits factual findings are not in disputebut upon the trial court's misapplication of controlling legal principles to those facts.
The parties on appeal agree there is no question that prior to the enactment of section 316.1939 on July 1, 2002, a person did not have a right to counsel prior to submitting to a breath test. See, e.g., State v. Burns, 661 So. 2d 842 (Fla. 5th DCA 1995). However, Busciglio argues that any precedent predating the criminalization of a refusal to take a breath test is no longer good law. The flaw with this assertion is that the enactment of the subject statute does not change the analysis of when the right to counsel under Miranda is applicable. The fact that a second or subsequent refusal can now be a first-degree *19 misdemeanor under certain circumstances, as opposed to merely subjecting the defendant to license suspension, is not the relevant inquiry. Rather, the relevant inquiry is whether there is a right to counsel at all prior to deciding to refuse to take the test.
Initially, we note that Busciglio admirably bases his right-to-counsel argument as arising only from article I, section 9, of the Florida Constitution. He contends the Florida Constitution creates a greater right to counsel than that provided by the United States Constitution. See State v. Hoch, 500 So. 2d 597, 599 (Fla. 3d DCA 1986) (holding (1) that administering a breath test is not a critical stage of the proceedings to which a Sixth Amendment right to counsel attaches and (2) that the results of a breath test are physical evidencenot testimonialand thus, no Fifth Amendment right to counsel attaches).
Article I, section 9, provides that "[n]o person shall be deprived of life, liberty or property without due process of law, or be twice put in jeopardy for the same offense, or be compelled in any criminal matter to be a witness against oneself." (Emphasis added.) Specifically, Busciglio contends that he had a right to counsel under article I, section 9, prior to refusing to take the breath test because "his refusal exposed him to criminal charges" and, thus, he had a right not to be compelled to incriminate himself. We disagree.
The protections of the self-incrimination clause of article I, section 9, apply only to "custodial interrogations." See Traylor v. State, 596 So. 2d 957, 966 (Fla.1992). "Custody" occurs when "a reasonable person placed in the same position would believe that his or her freedom of action was curtailed to a degree associated with actual arrest." Id. at 966 n. 16 (citing Berkemer v. McCarty, 468 U.S. 420, 440-42, 104 S. Ct. 3138, 82 L. Ed. 2d 317 (1984)). An "interrogation" occurs when "a person is subjected to express questions, or other words or actions, by a state agent, that a reasonable person would conclude are designed to lead to an incriminating response." Id. at 966 n. 17 (citing Rhode Island v. Innis, 446 U.S. 291, 300-01, 100 S. Ct. 1682, 64 L. Ed. 2d 297 (1980)).
The parties both concede that Busciglio was in "custody" at the time he was asked to submit to the breath test because he had already been arrested for DUI and transported to the police station. However, the parties dispute whether Busciglio was subjected to an "interrogation." Officer Portman, a state agent, clearly asked an express question of Busciglio when he asked Busciglio whether he was "willing to take a breath test." Therefore, the only remaining issue is whether a reasonable person would conclude that Officer Portman's question was "designed to lead to an incriminating response." See id.
Busciglio argues that the officer's question was designed to elicit either a "yes" or "no" response. He further concludes that a "no" response is "clearly incriminatory" because the State intends to use such a response "to show consciousness of guilt" and "as an element of the crime of refusing [to take the breath test] pursuant to [section] 316.1939." We will now address why this logic fails.
First, "a main focus of Florida confession law has always been on guarding against one thingcoercion." Traylor, 596 So.2d at 964. Asking a defendant to comply with conduct he has no "right" to refuse does not invoke any degree of coercion associated with impermissible interrogation. Section 316.1932(1)(a)(1)(a) provides: "Any person who accepts the privilege extended by the laws of this state of operating a motor vehicle within this state is, by so operating such vehicle, deemed to have given his or her consent to submit to an approved chemical *20 test. . . ." Thus a driver is statutorily preordained to have already consented to take a breath test, and coercion cannot be a factor when an officer prompts an arrestee to perform the test he already agreed to take.
Second, while the officer's prompt may be in the form of a question, it does not jeopardize Busciglio's constitutional right to counsel because no interrogation of constitutional proportion is involved. "`[I]nterrogation can extend only to words or actions on the part of police officers that they should have known were reasonably likely to elicit an incriminating response.'" Timmons v. State, 961 So. 2d 378, 380 (Fla. 4th DCA 2007) (quoting Innis, 446 U.S. at 302, 100 S. Ct. 1682). In other words, even if coercion were a factor to consider, the question of whether Busciglio was willing to take a breath test "would not make [him] feel compelled to incriminate himself." See id. (explaining that questions which are not designed to lead to an incriminating response would not make a person feel compelled to incriminate himself or herself). There is no contention in this case that any officer knew Busciglio was a DUI/refusal recidivist or that any officer knew a "no" response from him would have been an incriminating response.[5]
From the officer's point of view, giving the implied consent warning is simply part of the performance of his duty and not part of any "interrogation."[6] From Busciglio's point of view, which is the more relevant inquiry, he may have felt compelled to choose the lesser of two evils: i.e., he could refuse and potentially violate section 316.1939 or he could take the test and potentially provide incriminating evidence to be used against him in a DUI trial. Of course, if unimpaired, the test result could provide exonerating evidence. However, there is a telling maxim that applies in this instance: no injury can be complained of by a consenting party. As discussed earlier, once Busciglio exercised his privilege to drive, he consented to taking a breath test. See § 316.1932. Therefore, Busciglio had already consented, and Officer Portman's question was merely an opportunity for Busciglio to withdraw that consentwith possible consequencesas opposed to an effort by Officer Portman designed to lead Busciglio to incriminate himself by refusing.
The choice to comply with the law confronts our citizenry on a daily basis. It is not a complex choice that generally evokes a right to counsel. The fact that criminal penalties apply when one chooses to break the law, such as the relatively recent criminalization of a refusal to take a breath test, should be an expected consequence. Regardless, any guesswork as to possible criminal consequences a refusal might entail was removed when the statutorily required implied consent proviso was read to Busciglio.
*21 Moreover, although the parties do not couch their arguments on appeal in terms of the Fifth Amendment, we find it helpful to briefly address it in order to shed further light on the logic inherent in our holding. The Fifth Amendment applies only when a defendant is compelled to make an incriminating "testimonial" communication. See Fisher v. United States, 425 U.S. 391, 408, 96 S. Ct. 1569, 48 L. Ed. 2d 39 (1976). Although the Supreme Court declined to define "testimonial" in Crawford v. Washington, 541 U.S. 36, 68, 124 S. Ct. 1354, 158 L. Ed. 2d 177 (2004), the Court has since provided some guidance on the subject. See Davis v. Washington, 547 U.S. 813, 126 S. Ct. 2266, 2273-74, 165 L. Ed. 2d 224 (2006). Specifically, statements are "testimonial" when "the primary purpose of [an] interrogation is to establish or prove past events potentially relevant to later criminal prosecution." Id. at 2274 (emphasis added). Under this logic, Busciglio's refusal to submit to a breath test could not qualify as a testimonial response because the primary purpose of any solicitation was not to establish or prove a past event. For example, Officer Portman's question did not pertain to whether Busciglio had a past DUI conviction or whether he had refused to take a breath test in the past. Rather, Officer Portman's yes/no question concerned merely a current event: i.e., whether Busciglio would take the test at that moment in time. At the point in time when Officer Portman asked the question, the crime concerning Busciglio's refusal had not yet occurred. Under Davis, future-looking statements not involving a conspiracy are generally not considered testimonial and thus the right to counsel should not attach.
Lastly, because the issue on appeal involves a question of first impression in Florida, we will now examine select cases from other jurisdictions for additional guidance. The Ninth Circuit Court of Appeals addressed a similar issue in Deering v. Brown, 839 F.2d 539 (9th Cir.1988). In Deering, the court concluded that a refusal to submit to a breath test is neither testimonial nor compelled, even when the refusal constitutes a crime. 839 F.2d at 544. The court noted that it has been widely held that a refusal used as evidence of a crime is not "testimonial." Id. at 542. The court explained that the refusal is not transformed into a testimonial response merely because it is used as a direct element of a crime. Id. Further, a refusal cannot be considered to be "compelled" because the criminalization increases "the compulsion to submit to the breathalyzer test, not the compulsion to refuse, and refusal is the conduct made criminal in the statute." Id. at 543.
Similarly, the Supreme Court of Vermont held that a refusal to submit to a breath test is not compelled testimony protected by the Fifth Amendment or Miranda, even though criminal penalties apply to the refusal. See State v. Morale, 174 Vt. 213, 811 A.2d 185, 186 (2002). In Morale, the Vermont Legislature had enacted an implied consent law very similar to Florida's section 316.1932. See id. at 188. Also similar to Florida, the court noted that the legislature chose to penalize refusal to take a breath test as opposed to compelling submission to the test. See id. In holding that a defendant's refusal does not fall under the protections of Miranda, the court explained that Miranda concerns are not relevant because an officer has no incentive to coerce the defendant into refusing; indeed, the officer hopes the defendant will submit, not refuse. Id. at 189. The court further explained that in asking whether a defendant will submit to the test, the officers are inquiring about a future act, not a past crime. Id.
Finally, the Virginia Court of Appeals also held that refusing to provide a breath *22 sample when a criminal penalty will apply to such a refusal is a nontestimonial act. See Rowley v. Commonwealth, 48 Va.App. 181, 629 S.E.2d 188, 190 (2006). We agree with the courts' logic detailed in Deering, Morale, and Rowley. Further, we have examined and rejected Busciglio's countervailing case law from other jurisdictions.
In conclusion, whether analyzed under article I, section 9, of the Florida Constitution or the Fifth Amendment of the United States Constitution, under the circumstances of Officer Portman's perfunctory performance of his duty which involved, if not required, a postarrest statutory explanation of Busciglio's obligation to take a breath test, neither the yes/no question nor its answer constituted a testimonial interrogation implicating Busciglio's right to counsel. Accordingly, it was legal error to suppress these statements, and the order granting their suppression must be reversed.
Reversed and remanded for further proceedings.
DAVIS, J., and BENNETT, ROBERT B., JR., Associate Judge, Concur.
NOTES
[1] Probable cause for the traffic stop was challenged below but is not contested on appeal. In fact, Officer McKendree testified that although he could have issued two traffic infraction tickets to Busciglio for failure to use a turn signal and for avoiding a traffic device by going through a parking lot and could also have impounded Busciglio's vehicle, he exercised officer "discretion" not to do so.
[2] Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966).
[3] To be guilty of violating section 316.1932, the defendant must have been "informed that, if he or she refused to submit to such test, his or her privilege to operate a motor vehicle would be suspended for a period of 1 year or, in the case of a second or subsequent refusal, for a period of 18 months." § 316.1939(1)(c). The defendant must also have been "informed that a refusal to submit to a lawful test of his or her breath, . . . if his or her driving privilege has been previously suspended for a prior refusal to submit to a lawful test . . . [constitutes] a misdemeanor." § 316.1939(1)(d).
[4] Busciglio also contended below that the Miranda warnings given at the scene were deficient because they did not properly advise him of his right to have counsel present "during" questioning. See Powell v. State, 969 So. 2d 1060 (Fla. 2d DCA 2007) (holding that "any time" is insufficient to warn accused of right to counsel "during" questioning). The trial court agreed and suppressed other statements in relation to the DUI charge, but that ruling is not the subject of this appeal.
[5] We note that Busciglio could not have committed a misdemeanor under section 316.1939 by the mere act of refusing the test. The other relevant elements of the crime are (1) previous suspension of his driving privilege for a prior refusal, (2) probable cause by the officer that Busciglio was driving under the influence, (3) lawful arrest for DUI, and (4) a properly administered warning that his driving privilege would be suspended and that he would be guilty of a misdemeanor if his driving privilege had been suspended previously for a prior refusal. See § 316.1939(1).
[6] Busciglio also argues that the State does not need the breathalyzer results or evidence of a refusal to take the test in order to prosecute for the crime of driving under the influence because impairment remains an available alternate method of proof. While this may be true, this is a strategy decisionwhich only the State, and not the defense, controls. Thus we reject without further discussion this contention as being irrelevant to the issue on appeal. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2419089/ | 393 S.W.2d 429 (1965)
UNITED FINANCE & THRIFT CORPORATION OF MESQUITE et al., Appellants,
v.
James BAIN et ux., Appellees.
No. 133.
Court of Civil Appeals of Texas, Tyler.
July 15, 1965.
Rehearing Denied September 16, 1965.
*430 Burt Berry, Irion, Cain, Cocke & Magee, James A. Williams, Bailey & Williams, Dallas, for appellants.
Edward C. Fritz, Fritz & Vinson, Dallas, for appellees.
DUNAGAN, Chief Justice.
Appellee, James Bain, instituted suit against the appellant, United Finance & Thrift Corporation of Mesquite and its parent corporation, State Loan & Finance Corporation, for damages allegedly resulting to Bain and his wife, Beverly Bain, from the efforts of the loan company to collect a delinquent obligation owed it by Bain.
Trial was had before a jury, upon Special Issues, and the jury found that United Finance & Thrift Corporation had made "unreasonable collection efforts" upon appellee's wife; that such collection efforts were a proximate cause of the mental or emotional pain and physical illness to her, and that she was entitled to $3,500.00 as actual damages for such pain and illness. The jury found no unreasonable collection efforts were made on James Bain.
Appellants' motion for judgment was overruled, and judgment was entered for appellee in the amount of $3,500.00. Appellants duly excepted and gave notice of appeal.
In its first point on appeal, United Finance & Thrift Corporation says that the trial court erred in basing judgment on the finding of "unreasonable collection efforts" whereas the proper test is whether the creditor or its agents intentionally or wantonly inflicted mental stress of such a kind or character as was likely to cause physical harm.
The jury found in answer to Special Issue No. 3 that United Finance, through its agents, servants and employees, made unreasonable collection efforts upon Beverly Bain.
The court defined the phrase "unreasonable collection efforts" as meaning: "* * * collection efforts, which a person of ordinary prudence, in the exercise of ordinary care, would not have made under the same or similar circumstances."
In answer to Special Issue No. 5 the jury found that such unreasonable collection efforts were not made with reckless disregard of the health and welfare of Beverly Bain.
In answer to Special Issue No. 7 the jury found that United Finance & Thrift Corporation, through its agents, servants *431 and employees did not act with malice towards Beverly Bain.
Appellants contend that in order for collection efforts to be actionable, it must be found that the creditor or its agents intentionally or wantonly inflicted mental distress of such a kind or character that was likely to cause physical harm.
An identical issue and instructions thereto were under attack in Moore v. Savage, 359 S.W.2d 95, (Tex.Civ.App.) 1962, (writ refused, n. r. e., 362 S.W.2d 298) and substantially the same contentions were made that appellants urge here. The court held:
"* * * Wilful and malicious conduct are prerequisites to plaintiff's recovery of exemplary damages, but not to actual damages. Negligent conduct of defendant which results in physical illness and mental or emotional pain, supports an award of actual damages. * * *
"It is our view that to make out a cause of action in `unreasonable collection effort' cases, it is unnecessary to plead or prove wilfulness or maliciousness, and that negligence causing physical illness will support recovery of actual damages. See: Wright v. E-Z Finance Co., Tex.Civ. App. (n. r. e.), 267 S.W.2d 602; Industrial Finance Ser. Co. v. Riley, Tex.Civ.App., 295 S.W.2d 498, affirmed 157 Tex. 306, 302 S.W.2d 652; Allison v. Simmons, Tex.Civ.App. (n. r. e.) 306 S.W.2d 206; Advance Loan Serv. v. Mandik, Tex.Civ.App., 306 S.W.2d 754; Western Guaranty Loan Co. v. Dean, Tex.Civ.App. (n. r. e.), 309 S.W.2d 857."
The appellants make no complaint that there is no evidence to support the jury findings of unreasonable collection efforts.
The appellants next complain in Point 2 that the court erred in submitting to the jury Special Issue No. 3 for the reason that said issue submitted in a global form an issue of ordinary negligence without separating and inquiring about the several particular elements that allegedly constituted the "unreasonable" collection efforts pleaded by appellee. This very contention was made in the case of Employee Finance Company v. Lathram, 363 S.W.2d 899, (Tex.Civ.App.) 1962, and the court held that the issues on an unreasonable collection effort did not have to be broken down into separate issues as to each of the numerous acts involved. The Supreme Court granted a writ of error on other points, but failed to grant error on the point in the application for writ of error as to global submission. This case was followed in Signature Endorsement Company v. Wilson, in an opinion delivered by the Texarkana Court of Civil Appeals on June 8, 1965, 392 S.W.2d 484.
Appellants contend in its Points 3 and 4: (1) that there is no evidence; (2) that the evidence is insufficient to support the jury finding to Special Issue No. 9 regarding proximate cause of the alleged mental and physical injuries of Beverly Bain. The appellants further contend that the jury's finding to Special Issue No. 9 that the unreasonable collection efforts of appellants were a proximate cause of the mental and physical injuries of Beverly Bain is against the great weight and preponderance of the evidence.
The appellants next contend in its Points 6 and 7: (1) there is no competent evidence; (2) that the evidence is insufficient to support the finding of the jury in response to Special Issue No. 11 that Beverly Bain had sustained $3,500.00 actual damages for her mental and physical injuries, and such finding is against the great weight and preponderance of the evidence.
There was testimony that United Finance participated in a course of harassment from March 29, 1961, to March, 1963, which particularly featured telephone calls as often as one a day (and sometime even more often) and personal visits as often as once a day (and on some occasions *432 up to three a day), frequently in a harsh and loud voice, including one incident of trespass in which the collector got his foot in the door of the plaintiffs' home against the instructions of plaintiff's wife. Some of the calls were as early as 6:00 a. m. and as late as 11:30 p. m. The collectors used such words as hell and damn and called plaintiff a deadbeat. They made insinuations to plaintiff's wife about plaintiff's business difficulties and value as a husband. The harassment included calls at the home of plaintiffs' neighbors. There were also written demands, including a special delivery letter and a telegram, threatening to take plaintiffs' furniture. On occasions when admitted into plaintiffs' home, the collectors would repeatedly check the furniture as a reminder to plaintiff and his wife that they were going to take it away if plaintiffs didn't pay immediately. The United Finance collectors continued these actions even on the day plaintiff and his wife brought their sick baby home from the hospital and even after the plaintiff's wife explained this to United Finance collectors and asked not to be bothered. The collectors persisted in bothering plaintiff's wife even though she repeatedly told them they were disturbing the children and she had no money and the husband handled the financial affairs.
The testimony further showed that as this course of harassment developed, Mrs. Bain became emotionally upset and contracted severe splitting headaches which became more and more frequent to the course of harassment until they were daily. She became nauseated and sick at her stomach most of the time to the extent she would vomit after phone calls and visits and began to have fainting spells and blackouts. She became numb all over. She became so sick that she could not do her housework, such as preparing meals and had to stay in bed most of the time.
The record here reflects ample evidence to support the verdict and judgment, and same are not against the great weight and preponderance of the evidence under the rule of In re King's Estate, 150 Tex. 622, 244 S.W.2d 660.
All of defendants' points and the contentions thereunder made are overruled and the judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2419141/ | 175 F. Supp. 2d 141 (2001)
UNITED STATES of America, Plaintiff,
v.
Wayne Clive BRIDGEWATER, Defendant.
No. 00-315 (DRD).
United States District Court, D. Puerto Rico.
November 16, 2001.
*142 *143 Epifano Morales-Cruz, Federal Public Defenders Office, San Juan, PR, for Defendant.
Matthew H. Thomas, U.S. Atty's Office, Criminal Div., San Juan, PR, for Plaintiff.
ORDER
DOMINGUEZ, District Judge.
Pending before the Court is a renewed Motion to Dismiss the Indictment, filed by Wayne Clive Bridgewater ("Defendant"). (Docket No. 57). Defendant initially filed the Motion to Dismiss the Indictment on January 15, 2001. (Docket No. 28). The Court referred the motion to the U.S. Magistrate Judge Justo Arenas for a Report and Recommendation. The Magistrate filed his corresponding Report and Recommendation ("MRR") on February 27, 2001, recommending that the Motion to Dismiss be denied. (Docket No. 33). Defendant filed his Objection to Magistrate's Report and Recommendation on April 19, 2001, disputing the contentions that the arrest was performed in international waters and that authorities of the Government of St. Kitts and Nevis aided in the arrest. (Docket No. 43). Following the ensuing evidentiary hearings, Defendant filed a Supplemental Memorandum of Law in support of Motion to Dismiss. (Docket No. 57).[1] The United States faxed to the Court and to Defendant a Reply on October 11, 2001. (Docket No. 59). After careful consideration, the Court finds that Defendant's allegations do not support the relief requested.
*144 I
FACTUAL BACKGROUND
The facts are presented essentially as recited by Special Agent James Agee ("Agent Agee") of the Drug Enforcement Administration ("DEA"). (Docket No. 50). There are facts that are in dispute which are discussed in the opinion. DEA agents planned a ruse in St. Kitts, with the pretense of arresting Mr. Wayne Clive Bridgewater ("Defendant") and Mr. Kendrick Simmonds. The mechanics of the operation were to lure both men to a chartered vessel to seek payment of drugs previously delivered on land. The drugs were to be delivered, on land, to a DEA informant in Frigate Bay, St. Kitts. Upon delivery of the drugs, the men would have to board the vessel in order to receive payment. Once on the vessel, the captain was instructed to move to international waters, where the arrest could ensue. The United States Coast Guard was on notice to make a "routine stop" and take everyone into custody, once the vessel entered international waters. The ruse was planned in this manner in order to protect the identity of the confidential informant.
The team assembled to execute the ruse included Agent Agee, three (3) other DEA agents and the informant. Also, aboard the vessel were the captain and one crew member. The DEA agents chartered a thirty-five (35) foot sport fisherman, in Antigua, under the pretense of being tourists on a day trip to St. Kitts. It was not until the vessel cleared customs in Nevis that the captain of the boat and the crew captain were informed, by the agents, of the drug operation. The captain, nevertheless, agreed to go forward with plan.
On the date of the ruse, June 2, 2000, once the boat reached Frigate Bay in St. Kitt's, the informant made several phone calls. The informant then went ashore and left in Mr. Simmonds' car. The informant later returned with Defendant Bridgewater, in the same vehicle. Mr. Simmonds did not participate in the transaction because by the time the DEA vessel arrived in Frigate Bay it was time for him to report to work. Upon the return of the informant with Defendant, the agents could see from the boat that they had parked in the nearby bar parking lot. It was in this parking lot that the drug exchange took place. Defendant handed the informant a cardboard box containing five (5) kilos of white powder, allegedly cocaine, and a small package containing a sample.[2] During the exchange, the informant noticed that Defendant was carrying a weapon. The informant coaxed the gun from Defendant by assuring him that they were dealing with businessmen, therefore, there was no need for a weapon. The informant proceeded to place the gun in the box containing the drugs and to board the DEA vessel, carrying the box. The informant reboarded the vessel in a jetty. Defendant also boarded the vessel, in order to receive payment.[3] When he boarded the vessel, Defendant was wearing loose clothing that could have concealed another weapon. As soon as Defendant was on board the vessel, the captain followed his instructions and headed at high speed to international waters.
*145 When he reboarded the vessel, the informant presented the undercover agent with the box and its contents. However, five kilos was only half of the amount of cocaine that had been requested. Soon after a heated discussion ensued between the undercover agent and Defendant, regarding the other five kilos. Defendant became extremely agitated and angry and began asking for his money. The change in Defendant's demeanor precipitated Agent Agee's decision to place him under arrest. When Defendant was placed under arrest, he had been on the DEA vessel anywhere from fifteen (15) to thirty (30) minutes. Meanwhile, the boat had been traveling at a high speed, from ten (10) to fifteen (15) knots. Furthermore, when the DEA vessel was able to contact the U.S. Coast Guard Cutter, the cutter marked them as being nineteen (19) nautical miles away. At that point the cutter was off the coast of Nevis and was tracking the DEA vessel by means of pings from a beacon. The beacon aboard the DEA vessel was used as a homing device.
Because the Coast Guard was nineteen (19) nautical miles away, the DEA vessel decided they would be unable to rendezvous with the cutter and therefore proceeded directly to Antigua. This determination was also prompted by the poor weather conditions and the fact the boat had no running lights. During the voyage to Antigua, Defendant remained in handcuffs, down below in the berth, surrounded by DEA agents. Throughout the journey back to Antigua, Defendant was well-treated; he was given slacks, a shirt, slippers and water. Defendant's only complaints about his treatment were that the handcuffs were too tight, that the agents didn't replace the plastic bag he was vomiting into and that the agents were slow in bringing him water. However, Defendant agrees that his uncomfortable conditions were primarily due to the then current extreme weather conditions. In addition, as soon as the vessel reached Antigua an agent procured a handcuff key from the Antiguan police and loosened the handcuffs. When they arrived in Antigua, it was impossible to transport Defendant to Puerto Rico, therefore, he was lodged in an Antiguan jail for the night. The following morning, a DEA plane transported Defendant to San Juan, Puerto Rico.
II
ANALYSIS
A. MANSFIELD AMENDMENT
Defendant first contends that his abduction/arrest was in violation of the Mansfield Amendment, 22 U.S.C. § 2291(c)(1). The Mansfield Amendment, states that "no officer or employee of the United States may engage or participate in any direct police arrest action in any foreign country with respect to narcotic controlled activity." 22 U.S.C. § 2291(c)(1).
The Court recognizes that, pursuant to the facts explained by Agent Agee, the question of whether there was "direct police action in any foreign country" here is close. International waters begin at twelve nautical (12) miles out from shore. (Docket No. 28). Nevertheless, the Government has stated that the boat was traveling between 10 to 15 knots during a period of approximately 15 to 30 minutes. (Docket No. 50). Furthermore, the Government supplements this evidence with the statement that, when the Coast Guard was monitoring the DEA vessel, the first ping the agents heard indicated that the DEA vessel was nineteen (19) miles away from the Coast Guard cutter. (Docket No. 30). This beacon emitting the pings was used as a homing device. (Docket No. 50). The ping suggests that the DEA vessel was in international waters because the *146 cutter was already traveling off the coast of Nevis when it received the ping. (Docket No. 30).
The Court need not make a factual determination as to the controversial fact at this stage. Even if the arrest was performed within the territorial waters of St. Kitts, the arrest may still have been permissible. The Mansfield Amendment provides an exception, whereby, under "exigent, threatening circumstances" agents may act "to protect life or safety." 22 U.S.C.A. § 2291(c)(3). Whether or not the circumstances of that evening warranted an arrest in order to control the situation is also a close question. Before Mr. Bridgewater even boarded the vessel he had already handed over a Byrco 9mm semi-automatic handgun to the DEA's informant. (See Dockets Nos. 30 & 50). Furthermore, Defendant was becoming increasingly agitated and angry as the DEA vessel moved out to sea; he repeatedly began demanding the money. (Docket No. 50). The approaching nightfall and the worsening of the weather contributed to the potentially volatile situation. Id. Additionally, Defendant was wearing loose clothing facilitating another concealed weapon. Id. Therefore, this combination of Defendant's agitated demeanor, the probability of another weapon, and an inability to control the forces of nature may have created exigent and threatening circumstances for not only to the DEA agents safety but also to the two civilians on board.
Nonetheless, the Court does not have to address whether or not the arrest was in international waters or whether or not there were "exigent circumstances" because District Courts shall retain jurisdiction even if the defendant is brought into the jurisdiction against his will. United States v. Alvarez-Machain, 504 U.S. 655, 661, 112 S. Ct. 2188, 119 L. Ed. 2d 441 (1992). "This Court has never departed from the rule that the power of a court to try a person for crime is not impaired by the fact that he had been brought within the court's jurisdiction by reason of a `forcible abduction.'" Alvarez-Machain, 504 U.S. at 661, 112 S. Ct. 2188, citing Frisbie v. Collins, 342 U.S. 519, 522, 72 S. Ct. 509, 96 L. Ed. 541 (1952); see also Ker v. Illinois, 119 U.S. 436, 7 S. Ct. 225, 30 L. Ed. 421 (1886). "There is nothing in the Constitution that requires a court to permit a guilty person rightfully convicted to escape justice because he was brought to trial against his will." Frisbie, supra, at 522, 72 S. Ct. 509. Furthermore, the Mansfield Amendment is not self-executing, wherefore, there are no sanctions for violations. 22 U.S.C.A. § 2291. The Mansfield Amendment regulates government action prescriptively; it does not provide repercussions for violations of the Amendment. United States v. Zabaneh, 837 F.2d 1249, 1261 (5th Cir.1988). A dismissal of the indictment is an unwarranted remedy under the Mansfield Amendment. "... Congress has not provided sanctions or penalties by way of relief for persons arrested in contravention of [The Mansfield Amendment] § 2291(c)(1)." Id. Furthermore, the facts of this case as to the arrest of Defendant do not rise to "outrageous" or "shocking to the conscience" as to constitute a violation of due process rights, under the Fifth Amendment. Frisbie, 342 U.S. at 521, 72 S. Ct. 509.
B. UNITED STATES-ST. KITTS & NEVIS MARITIME COUNTER-DRUG OPERATIONS AGREEMENT OF APRIL 13, 1995.
Second, Defendant claims that the DEA ruse is to be considered a counter-drug operation in the waters off St. Kitts and Nevis and executed without the permission of the Government of St. Kitts *147 and Nevis. Therefore, the DEA's activities were in violation of the United States-St. Kitts Maritime Counter-Drug Operations Agreement ("Agreement").[4] Again the question of where the arrest occurred is close, and the Court does not deem necessary to make a finding at this stage of the proceedings. However, the Court finds that the exchange of drugs clearly took place on land as well as the initial payment of the money advanced to Defendant as a good faith initial payment. (Sealed Transcript, Docket No. 50A, pp. 73-80). Therefore, the transaction cannot be considered a maritime counter-drug operation and thus, the Agreement was not violated. The DEA's informant boarded the vessel with the five (5) kilos of cocaine, provided by Defendant Bridgewater on land. (Docket No. 50, pg. 58). Furthermore, the arrest did not violate the Agreement because the St. Kitts police knew about and cooperated with the ruse.[5]
C. INTERNATIONAL COVENANT ON CIVIL AND POLITICAL RIGHTS
Defendant's third argument, seeking the protection of the International Covenant on Civil and Political Rights ("ICCPR"), is also easily dismissed.[6] The protection of Article 9 of the ICCPR is unavailable because the ICCPR is not self-executing, through express acknowledgment by Congress. The Senate's consent to the ICCPR was subject to the declaration that "the United States declares that the provisions of Articles 1 through 27 of the Covenant are not self-executing," 138 Cong.Rec. S4781, S4784. Since the ICCPR is not self-executing, it does not give rise to privately enforceable rights under United States law. Igartua De La Rosa v. United States, 32 F.3d 8, 10 n. 1 (1st Cir.1994), cert. denied, 514 U.S. 1049, 115 S. Ct. 1426, 131 L. Ed. 2d 308 (1995). Defendant may not rely upon the provisions of the ICCPR in the courts of the United States. Id. Defendant is thus seeking a remedy from a source which cannot provide relief.
D. SUPERVISORY POWER
Defendant's final argument rests on the allegation that the Court should exercise its Supervisory Power and grant a dismissal of the indictment in order to preserve "judicial integrity" and "deter illegal conduct." The Court rejects this argument for the reason that no illegal activity, on the part of the DEA, can be discerned from the record. Moreover, provided arguendo that such activity might have occurred, the record is deficient of any evidence showing an deliberate violation of law.[7] Defendant draws the attention of the Court to McNabb v. United States, 318 U.S. 332, 63 S. Ct. 608, 87 L. Ed. 819 (1945). Unlike the present case, in that case the defendants were held and questioned for extensive periods of time, rising to an egregious level of police misconduct. In the present instance, Defendant himself admitted that *148 he had very few complaints about his treatment by the DEA agents. (Docket No. 50). He attributes his lack of comfort mostly to the weather conditions. (Docket No. 50, pg. 29). Furthermore, Defendant concedes that the agents were not paying him much attention. (Docket No. 50, pg. 30). Defendant's only instances of ill treatment are handcuffs that were too tight, slow drinking water service and refusal to change the plastic bag in which he was vomiting. Id. Additionally, he admits that the agents were also having trouble with the rough weather and were also seasick. (Docket No. 50, pg. 26). Therefore, the McNabb holding is inapplicable to the case at hand. The Court holds that the DEA agents' treatment of Defendant did not rise to the level of "egregious police misconduct," and therefore, declines to exercise Supervisory Power.
III
CONCLUSION
In conclusion, Defendant seeks a remedy of dismissal of the indictment which is unavailable under the Mansfield Amendment, the United States-St. Kitts and Nevis Maritime Counter-Drug Operations Agreement and the International Covenant on Civil and Political Rights. None of these international agreements are self-executing, therefore, they do not provide for the requested remedy of the dismissal of the indictment. Lastly, it is within the Court's discretion to invoke its Supervisory power, and the Court does not find it appropriate to exercise its discretion in the present case. For the aforementioned reasons, Defendant's Motion for Dismissal of the Indictment is DENIED.
After reviewing this matter in a de novo fashion, including revisiting the evidence anew, the Court denies Defendant's Motion for Dismissal of the Indictment. The Court, therefore, Denies the Dismissal requests (Docket Nos. 28 & 57) and affirms the Report and Recommendation by Honorable Magistrate Judge Justo Arenas of February 27, 2001 (Docket No. 33).
IT IS SO ORDERED.
NOTES
[1] The Court held three hearings. An Argumentative hearing was held on May 21, 2001 and two Evidentiary Hearings were held on June 27, 2001 and July 10, 2001.
[2] Subsequent tests proved that the five (5) kilos were actually flour. However, there was 2.7 grams of cocaine in a small package, also within the box.
[3] The ruse and the ensuing exchange of drugs took place on June 2, 2000. However, DEA Agent Stonewall, also a participant in the ruse as an undercover agent, had previously paid Defendant Bridgewater a good faith down payment of eight thousand dollars ($8,000), on April 19, 2000. (Docket No. 13).
[4] Agreement between the United States of America and the Government of St. Kitts and Nevis concerning Maritime Counter-Drug Operations of April 13, 1995, entered into force June 27, 1996, State Dept. No. 95-106, KAV 4231, as amended on June 27, 1996, State Dept. No. 96-130, KAV No. 4690.
[5] The Government has presented evidence, under sealed record, supporting their contention that the St. Kitts police consented, cooperated and participated in the ruse. (Sealed Transcript, Docket No. 50A, pp. 73-80).
[6] International Covenant on Civil and Political Rights, Dec. 16, 1996, 999 U.N.T.S. 171, 6 I.L.M. 368 (1967) (entered into force Mar. 23, 1967).
[7] The original plan unquestionably called for an arrest by the United States Coast Guard in international waters. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2419143/ | 393 S.W.2d 700 (1965)
Jim PARKS, Appellant,
v.
The BENSON CO., BUILDERS, et al., Appellees.
No. 16636.
Court of Civil Appeals of Texas, Fort Worth.
July 16, 1965.
Rehearing Denied September 17, 1965.
*701 Bill Atkins, Arlington, for appellant.
Urban, Coolidge & Pennington, Houston, Cantey, Hanger, Gooch, Cravens & Scarborough, John McBryde and Estil Vance, Jr., Fort Worth, for appellees.
MASSEY, Chief Justice.
In this case the material defendant was a cross-plaintiff. Neither he nor the plaintiff was satisfied. All parties appealed.
Jim Parks, plaintiff below, was a paint sub-contractor. The defendant Benson Company, Builders, was a general contractor; Student Housing, Inc., also a defendant, was the owner for whom Benson Company erected a building. The Benson Company, hereinafter termed as defendant, had a contract to erect a dormitory in Arlington, Tarrant County, Texas. This defendant entered into a contract with plaintiff to do the painting necessary on the dormitory. The agreed consideration therefor was $22,643.00. Plaintiff's agreement was to paint the building exterior with two coats of paint and the interior with one coat, save columns in the interior which were to be given two coats. There were other obligations of the plaintiff which we may disregard.
Plaintiff engaged labor and purchased materials and proceeded. The defendant's general superintendent was a Mr. Bob Bales.
On or about April 17, 1963 plaintiff billed the defendant on the basis of a 90% job completion (as applied to the $22,643.00 contract), for which he was then entitled to be paid 90% (of said total amount) less a 10% "retainer"according to his understanding of the agreement. This meant that he billed the defendant for $20,378.70, less "retainer" of $2,037.87, or a total amount due of $18,340.83 with expectation he would be paid the last stated figure. Bob Bales understood that such was the agreement, for he "okeyed" the bill upon satisfying himself (as defendant's superintendent) that plaintiff had actually performed his contract to the extent of a 90% completion.
The defendant felt it wise to pay only 75%, or $16,982.00. This was the amount paid. Additional contracts were entered into between Bales, acting for defendant, and the plaintiff. Of these there were three, the first in the amount of $250.00, the second in the amount of $1,234.80, and the third in the amount of $143.00. In addition plaintiff delivered 18 cans of paint to the defendant, at a charge of $29.70.
The resulted in a total amount claimed by the plaintiff of $24,300.50, less the amount of $16,982.00 paid thereon, with a balance claimed of $7,318.50. (Under a jury finding that $250.00 was the amount remaining to be expended to complete the contract by plaintiff at time his work ceased, the amount of plaintiff's judgment was $7,068.50.)
As performance under the contract neared completion some inspectors for the defendant looked over plaintiff's work. A dispute arose at the time, in that the inspectors contended that plaintiff was obligated to paint the interior walls of the dormitory with two coats of paint. Seemingly, the dispute was resolved upon proof by plaintiff that his bid was on the basis of only one coat. When the "acceptance" of defendant came from Houston (through its superintendent, Bales) it had a provision for two coats. Pursuant to a long distance telephone conversation between Bales and an authorized official in the defendant's home office the signed instrument had been changed in ink to show only one coat. A meeting of the minds of the parties did not take place until this was done.
During course of the trial, a part of the defendant's theory of defense to the plaintiff's suit was that there had been a failure on the part of plaintiff to paint the interior *702 with two coats of paint. Defendant so plead. The proof utterly destroyed the defense.
At a time when, according to plaintiff, his performance under the original contract was more than 95% completed, Bales was removed as superintendent. In his place defendant employed a Mr. Cone. About the time Cone became superintendent, inspectors for defendant visited the "job site" and a disagreement between them and the plaintiff occurred in that they pointed out certain work they desired to be done. They were obviously of the opinion that plaintiff would either treat it as work falling within the contractual provisions, or would supply it at no cost as an accommodation. Plaintiff insisted it was not covered by the contract. If performed by him, he made it known that an additional payment would be demanded. The agents for the defendant were most unhappy. They returned to the home office where they discussed plaintiff's work in general. They agreed between themselves that it was unsatisfactory. They informed the new superintendent, Cone. Apparently Cone allowed plaintiff to work two or three days thereafter, but then confronted him with the defendant's dissatisfaction. Part of the discussion concerned plaintiff's refusal to put a second coat of paint on the interior of the dormitory. In any event, pursuant to this discussion and under authority conferred by his principal, Cone offered to "buy" the balance of plaintiff's contract for $4,000.00. Had plaintiff agreed to make such a deal he would have received $3,318.50 less than he claimed under the primary contract plus the three subsidiary transactions and the price charged for the 18 cans of paint. On trial plaintiff claimed that at the time of the aforesaid discussion his work was at least 98% completed, but that Cone refused any further performance of the contract and "terminated" his work in all respects.
Whether the discussion about the $4,000.00 "purchase" of the remainder of plaintiff's contract amounted to an offer in compromise by the defendant is a matter of dispute between the parties. Plaintiff contends that it was not, while defendant claims that it was. There is no question but that the trial court agreed with the defendant, for he ordered that testimony thereupon be excluded from the jury. The court granted the defendant's motion in limine when the offer of evidence was made outside the presence of the jury from the lips of plaintiff. Then, after the jury was brought in and trial proceeded, the plaintiffvoluntarily and not in response to any questiontestified that when he left the job the defendant "offered me $4,000.00".
When this occurredon cross-examinationthe attorney for the defendant continued with a few questions which he hoped would minimize the harm he believed had been caused, but at the earliest reasonable opportunity brought the matter before the court. He moved for a mistrialnot only because of the error, but because the plaintiff had committed intentional error in violating the court's order sustaining defendant's motion in limine. The plaintiff was questioned. He stated that he did not understand that the court had directed that he not testify about the offer of Cone. Holding its ruling in abeyance the court proceeded, though indicating to defendant's counsel his willingness to instruct the jury to disregard the improper testimony. Counsel decided that to so instruct the jury would likely do even further damage to the defendant's caseand declined to move for such instruction. Ultimately the court overruled the motion for mistrial.
The jury returned a verdict for the plaintiff. In its motion for new trial defendant assigned the reception by the jury of Cone's offer in compromise as reversible error. No affidavit of any juror was attached to defendant's motion. The plaintiff countered with an opposing motion. Thereto he attached, as an exhibit, a statement of one of the jurors to the effect that the juror did not recall that there was any testimony concerning an offer of compromise *703 or settlement and that during the deliberations of the jury no mention was made of any party having made an offer of this character.
Defendant's motion for new trial was heard and overruled. It does not appear that there was any tender of testimony at the hearing. In other words, if the defendant knew of any evidence which might have been presented, from which the court might find or conclude that the information erroneously imparted to the jury about the defendant's offer of compromise probably did cause it to return a verdict other than that it would have returned had the information not been so imparted, there was an election not to offer such and not to explain why it was not offered.
It is well settled that evidence which will show an offer in compromise upon the liability at issue between the parties is improper and inadmissible evidence. However, admitting that in a proper case an exception might apply, the error is usually curable and may be remedied by an instruction from the trial court to disregard it as evidence. Bituminous Casualty Corporation v. Jackson, 360 S.W.2d 900 (Beaumont Civ.App., 1962, writ, ref., N.R.E.); cases in 16 Tex.Digest. "Offers of compromise or settlement.In general."; McCormick & Ray, Texas Law of Evidence, 2nd Ed., p. 29, "Admissions of a Party", § 1142, "Offers of Compromise(a) Civil Cases".
Furthermore, "reversibility" because of such an error, as in other cases of erroneous admission of evidence, depends upon judicial decision made in light of Texas Rules of Civil Procedure, rules 434 and 503. In other words a reversal of the judgment in the case will not be required unless it appears from a consideration of the record as a whole that its admission was reasonably calculated to cause and probably did cause the rendition of an improper verdict. Dallas Railway & Terminal Co. v. Bailey, 151 Tex. 359, 250 S.W.2d 379 (1952); Shelton v. Belknap, 155 Tex. 37, 282 S.W.2d 682 (1955); 4 Tex.Jur.2d p. 566, et seq., "Appeal and ErrorCivil", § 941, "Evidence rulings".
In the instant case we believe that the error was reasonably calculated to cause the rendition of an improper verdict in that a juror of ordinary intelligence might thereby be persuaded to render a verdict other than that which he would have rendered but for the reception of the erroneous testimony. Even so, when we view the whole record as a whole we are not prepared to find that the reception of said testimony probably did cause the jury to render a verdict which it would not otherwise have returned. In so stating we do not disregard the fact that the defendant was apparently unprepared to show at the hearing of its motion for new trial that the jury did discuss the fact that an offer in compromise had been made.
From the whole record we are conscious of the fact that defendant appeared in an unfavorable light from the time it changed the written offer of the plaintiff in making his bid from a provision for one coat of inside paint to two coats; then, though there was evidence that it authorized its superintendent, Bales, to correct the contract in order that plaintiff would sign it, defendant went to trial with its defense predicated, in part at least, upon the failure of plaintiff to paint the inside of the dormitory with two coats of paint. Afterward, defendant remitted 75% of the amount of the contract for work done, though the evidence showed that both plaintiff and superintendent Bales expected that 90% of said amount would be paid at such time. Finally, there was evidence that after the decision was made by the defendant company to "terminate" plaintiff's work and secure another paint contractor or to perform the necessary additional work with its own employees, plaintiff was allowed to work a few more days before there was an actual "termination." *704 Hence, with the record viewed in its entirety and reversibility of the error tested under the provisions of T.R.C.P. 434 and 503 we have concluded that we should overrule defendant's point of error.
Other of defendant's points of error are based upon its contention that findings of the jury were against the great weight and preponderance of the evidence. We have reviewed the whole record. We do not believe that any of the findings of which complaint is made were against the great weight and preponderance of the evidence. We see no occasion for an extended discussion. Generally, the findings relate to the adequacy of plaintiff's work, authority of defendant's superintendent to bind it to pay for paint work admittedly necessary to be performed, and the cost to complete the work which plaintiff left unperformed because he was "terminated".
The plaintiff has two points of error. By one he contends that the court erred in refusing to award attorney's fees in addition to that he received by the judgment. The parties in the case stipulated the amount of reasonable attorney's fees in the event they were proper to be awarded, but were in disagreement upon the propriety of such an award. By the other point of error plaintiff contends that interest upon the amount of his recovery should have dated from a time prior to that of the judgment.
We overrule both of plaintiff's points of error.
On the matter of attorney's fees: Plaintiff did not contract to perform any labor himself. The labor performed was furnished pursuant to contract, by employees of plaintiff. The materials furnished by the plaintiff was pursuant to the performance of the labor necessary to incorporate said materials into the building as part of the work contracted. The parties are not in disagreement that plaintiff's contract was "terminated" without his being allowed to finish it according to his conception of the term. Defendant, of course, contends that plaintiff's performance was materially unperformed.
As stated by the trial court in its opinion the case is nothing more nor less than one for breach of contract for a painting job. The claim, essentially, is one based on a special contract which covered both the supplying of labor and material, and one in which attorney's fees are not recoverable. (We feel that the very insignificant part of the case represented by the charge for 18 cans of paint may be disregarded.) Vernon's Ann.Tex.Civ.St. Art. 2226, "Attorney's fees", is penal in nature and should be strictly construed. Davenport v. Harry Payne Motors, 256 S.W.2d 245 (Austin Civ. App.1953, no writ).
As was pointed out in Kirkwood & Morgan, Inc. v. Roach, 360 S.W.2d 173, 177 (San Antonio Civ.App.1962, writ ref. N.R.E.), "It is true that appellee performed some labor in dumping and spreading the sand which was furnished by appellant. However, this suit was for damages for breach of contract and not for labor done. Hicks v. Smith, Tex.Civ.App., 330 S.W.2d 641. The award for attorney's fees was not proper in this case. Meaders v. Biskamp, 159 Tex. 79, 316 S.W.2d 75." See also Ford Motor Company v. Davis Brothers, Inc., 369 S.W.2d 664, 668 (Eastland Civ.App.1963, no writ.), a case of similarity to the instant case, in which the court held that the plaintiff's cause of action was based upon special contract and did not come under the provisions of Art. 2226.
In view of what we have said, hereinabove, bearing upon the nature of the case as one for damages for breach of contract, it follows that the trial court properly awarded interest from the date of the judgment. The amount due plaintiff was not ascertainable by the contract of the parties, but was dependent upon extraneous proof.
Judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2419601/ | 947 S.W.2d 424 (1997)
Carl FUST and Rita Fust, Appellants,
v.
ATTORNEY GENERAL FOR THE STATE OF MISSOURI, Respondent.
No. 79416.
Supreme Court of Missouri, En Banc.
June 17, 1997.
*427 Alan G. Kimbrell, Richard C. Witzel, David A. Dimmitt, St. Louis, for Appellants.
Jeremiah W. (Jay) Nixon, Attorney General, John R. Munich, Deputy Attorney General, Gary L. Gardner, Assistant Attorney General, Jefferson City, for Respondent.
HOLSTEIN, Chief Justice.
Carl and Rita Fust are judgment creditors. They were awarded $330,000 in punitive damages in a malicious prosecution action in 1994. This judgment was affirmed on appeal. Fust v. Francois, 913 S.W.2d 38 (Mo. App.1995). Here, the Fusts seek a declaratory judgment that sec. 537.675[1], enacted as part of House Bill 700, Laws of 1987, p. 545, et seq. (HB 700), is unconstitutional. That section provides that 50% of any punitive damages judgment is deemed rendered in favor of the State of Missouri. The Circuit Court of Cole County found the statute constitutional. This Court has jurisdiction of the appeal. Mo. Const. art. V, sec. 3. The judgment of the trial court is affirmed.
I.
Missouri Constitution art. III, sec. 23, states: "No bill shall contain more than one subject which shall be clearly expressed in its title." The title of HB 700 states that it was enacted "to repeal sections [thereafter listed], and to enact in lieu thereof fifty-one new sections for the purpose of assuring just compensation for certain person's damages...." Section 40 of HB 700, codified at sec. 537.675, establishes the "tort victims' compensation fund." It provides:
1. There is created the "Tort Victims' Compensation Fund". Unexpended moneys in the fund shall not lapse at the end of the biennium as provided in section 33.080, RSMo.
2. Fifty percent of any final judgment awarding punitive damages after the deduction of attorneys' fees and expenses shall be deemed rendered in favor of the state of Missouri. The circuit clerks shall notify the attorney general of any final judgment awarding punitive damages rendered in their circuits. With respect to such fifty percent, the attorney general shall collect upon such judgment and may execute or make settlements with respect thereto as he deems appropriate for deposit into the fund.
3. The state of Missouri shall have no interest in or right to intervene at any stage of any judicial proceeding under this section.
4. No disbursement shall be made from the tort victims' compensation fund until procedures for disbursement are established by further action of the general assembly.
The Fusts make a two-pronged constitutional attack on HB 700 under article III, sec. 23, claiming that it contains more than one subject and that the subject matter of sec. 40 was not contained in the bill's title.
The Fusts have the burden of proving the statute's unconstitutionality. Westin Crown Plaza Hotel Co. v. King, 664 S.W.2d 2, 5 (Mo. banc 1984). Their burden here is substantial.
Attacks against legislative action founded on constitutionally imposed procedural limitations are not favored.... [T]his Court interprets procedural limitations liberally and will uphold the constitutionality of a statute against such an attack unless the act clearly and undoubtedly violates the constitutional limitation. *428 Hammerschmidt v. Boone County, 877 S.W.2d 98, 102 (Mo. banc 1994). The dispositive question in determining whether a bill contains more than one subject is "whether all provisions of the bill fairly relate to the same subject, have a natural connection therewith, or are incidents or means to accomplish its purpose." Akin v. Dir. of Revenue, 934 S.W.2d 295, 301 (Mo. banc 1996).
Appellants argue that HB 700 could not have one subject because this bill has numerous components: provisions relating to regulation of liability insurance carriers; provisions modifying tort liability for manufacturers; a provision relating to pre-judgment interest; provisions relating to the procedure in the trials involving cases of punitive damages; and a provision that establishes the tort victims' compensation fund.
However, the single subject test is not whether individual provisions of a bill relate to each other. The constitutional test focuses on the subject set out in the title. We judge whether a particular provision violates the single subject rule by examining the individual provision under consideration to determine if it fairly relates to the subject described in the title of the bill, has a natural connection to the subject, or is a means to accomplish the law's purpose.
All sections of this particular bill purport to do the same thingpromote compensation for certain tort victims. Unquestionably, this object may be accomplished by multiple means. First, it may be accomplished by regulating the liability insurance industry. Second, the purpose may be accomplished by the statutory modification of common law rules involving tort liability. Third, it may be accomplished by creating a fund for tort victims who otherwise would be uncompensated.
At no point in appellants' argument do they suggest that the regulation of the State's liability insurance industry, modification of our tort law, and creation of a fund for uncompensated tort victims are unrelated to assuring just compensation for a certain person's damages. Indeed, it is difficult to argue that the three classes of statutes are not closely related to just compensation of individuals who sustain damages to their property or person. The topics are not only naturally and reasonably related to the bill's stated subject but are inextricably intertwined as elements of our tort liability system.
There is no claim here that this bill was significantly amended during its progress through the legislature so as to change its original purpose. Neither will this Court speculate that some legislators were unfamiliar with the purpose or details of the bill or that news media would have had difficulty summarizing the bill because of its technical detail. The dispositive question is whether all provisions fairly relate to the same subject expressed in the title of the bill. It is sufficient to say that appellants have not sustained their burden of proving the unconstitutionality of HB 700 on the basis that it contains more than one subject.
A.
Article III, sec. 23 also requires that the subject be "clearly expressed" in a bill's title. This provision may be violated in two ways. First, the subject may be so general or amorphous as to violate the single subject requirement. See Hammerschmidt, 877 S.W.2d at 102 n. 3. Second, the subject may be so restrictive that a particular provision is rejected because it falls outside the scope of the subject. See Carmack v. Dir., Missouri Dept. of Agriculture, 945 S.W.2d 956 (Mo. banc 1997) (bill on "economic development" cannot include livestock indemnification provisions). The point relied on and argument focus on a claim that the title is too restrictive to permit a provision touching on punitive damages.
The essence of the Fusts' argument is that because the words "punitive damages" and "tort" do not appear in the title and the words "just compensation" do appear in the title, the title of HB 700 is too restrictive to permit any particular provision touching on punitive damages for tort. As with other constitutional challenges, the one asserting the unconstitutionality of the statute has the burden of showing the constitutional procedural limitation has "clearly and undoubtedly" been contravened. Carmack, 945 S.W.2d *429 at 959; Lincoln Credit Co. v. Peach, 636 S.W.2d 31, 39 (Mo. banc 1982).
The "clear title" provision, like the "single subject" restriction, was designed to prevent fraudulent, misleading, and improper legislation, by providing that the title should indicate in a general way the kind of legislation that was being enacted. Vice v. City of Kirksville, 280 Mo. 348, 358, 217 S.W. 77, 79 (1920). If the title of a bill contains a particular limitation or restriction, a provision that goes beyond the limitation in the title is invalid because such title affirmatively misleads the reader. Hunt v. Armour & Co., 345 Mo. 677, 679-80, 136 S.W.2d 312, 314 (1940).
Appellants assert that because certain sections involving insurance, interest, or pleadings were repealed, and "in lieu thereof," fifty-one new provisions were enacted, that the subject of the bill is limited to insurance, interest and pleadings. This argument would require us to ignore the stated purpose of the enactment of the fifty-one new sections: to assure "just compensation for certain person's damages." The words "in lieu thereof" do not restrict. They simply inform the reader what is being substituted for the repealed provisions and introduce a statement as to why the substitution is being made.
A reasonable person reading the title would understand that the bill relates to "certain persons" who have sustained "damages." Nothing in the title restricts the subject to persons who sustained actual but not punitive damages. The title of the bill also puts the reasonable reader on notice that the act relates to "assuring just compensation" for damages. But the words "just compensation" are not so restrictive a term of art as to mean the bill excludes reference to tort cases where the plaintiff seeks both compensatory and punitive damages, as suggested by appellants.
It is true that assuring payment of compensatory damages is the purpose of the bill. To that end, sec. 537.675 creates a tort victims' compensation fund. It is hard to imagine a provision more closely and naturally related to the topic of assuring just compensation for damages to persons than one creating a fund to pay otherwise uncompensated tort victims. Merely because that fund is generated by money collected in cases where plaintiffs obtained a judgment for more than was necessary to justly compensate them for their injuries does not mean the provision is unrelated to "assuring just compensation for certain person's damages." It is sufficient that the funding mechanism is reasonably necessary to accomplish the purpose of the bill.
The title need not describe every detail contained in the bill. The title to the act is valid if it indicates the general contents of the act, and mere generality of title will not prevent the act from being valid unless it is so obscure or amorphous as to tend to cover up the contents of the act. Lincoln Credit Co. v. Peach, 636 S.W.2d 31, 39 (Mo. banc 1982), appeal dismissed, 459 U.S. 1094, 103 S. Ct. 711, 74 L. Ed. 2d 942 (1983). The argument here does not attack the title as being too general, per se. Thus we do not address the issue. See Carmack, 945 S.W.2d at 961. In sum, appellants have failed to sustain their burden of establishing that the title contains a restriction or limitation that would affirmatively mislead either a legislator or a member of the public regarding the content of the bill.
II.
The Fusts argue that the State unconstitutionally attempted to grant public money to private persons, in contravention of Missouri Constitution article III, sec. 38(a). Subject to certain exceptions, that section provides, "The general assembly shall have no power to grant public money or property, or lend or authorize the lending of public credit, to any private person, association or corporation."
If a grant serves a public purpose, then it does not violate the constitutional prohibition against granting public monies to private entities. Menorah Medical Ctr. v. Health & Educ. Facilities Auth., 584 S.W.2d 73, 78 (Mo. banc 1979). "The primary object of a public expenditure is to subserve a public municipal purpose." Curchin v. Missouri Indus. Dev. Bd., 722 S.W.2d 930, 934 (Mo. *430 banc 1987). The constitutionality of the grant depends on the ultimate use, purpose and object for which the fund is raised. Id. The determination of what constitutes a public purpose is primarily for the legislative department, and it will not be overturned unless it is found to be arbitrary and unreasonable. Menorah, 584 S.W.2d at 79.
The elasticity of the words "public purpose" is demonstrated by the case of Americans United v. Rogers, 538 S.W.2d 711 (Mo. banc), cert. denied, 429 U.S. 1029, 97 S. Ct. 653, 50 L. Ed. 2d 632 (1976). There, a law requiring tuition grants to be directly disbursed to college students was upheld because it served a public purpose, namely, education. Id. at 719. Here, the public purpose of sec. 537.675 is to create a fund to compensate certain tort victims who might otherwise be forced to rely on public assistance, while other tort victims, particularly those receiving large punitive damages awards, receive more than is necessary to pay for their injury. Reduction of uncompensated tort victims requiring public assistance and limitations of windfall recoveries to other tort victims are valid public purposes.
III.
The Fusts assert that sec. 537.675.2 directs money received by the State to go into a fund other than "the treasury" and authorizes its distribution other than by appropriation, in violation of article III, sec. 3, of the Missouri Constitution.
Appellants presented no evidence that the attorney general has not been depositing all monies collected pursuant to sec. 537.675.2 into the state treasury. Appellants' brief seems to concede the accuracy of the attorney general's statement in argument before the trial court that "moneys collected under the statute are deposited into a fund of the state treasury." The statute does not specifically state whether the monies collected are or are not to be deposited in the state treasury.
The constitution does not specifically prohibit the legislature from creating special funds within the treasury. Indeed, the constitution requires certain special funds. For example, the constitution mandates a fund known as the "Cash Operating Reserve Fund." Mo. Const. art. IV, sec. 27(a). Absent a prohibition, the general assembly's legislative power is plenary. Akin, 934 S.W.2d at 299. No prohibition is cited or found preventing the legislature from requiring money from a particular source to be put into a particular fund. Indeed, the legislature has exercised that power in several respects. See sec. 33.285 (creating the Budget Stabilization Fund), sec. 33.543 (creating the General Revenue Fund), sec. 33.563 (creating the State Institutions Gift Trust Fund), and sec. 33.564 (creating the International Trade Show Revolving Fund). The legislature has the authority to create special funds within the state treasury without violating article III, sec. 3.
The Fusts are correct in arguing that an appropriation is necessary for the expenditure of any money in the tort victims' compensation fund. However, the legislature has yet to appropriate such funds, and the attorney general is making no threat to expend such funds without an appropriation. Until that occurs, a claim regarding expenditures of state funds for which there has been no appropriation is premature.
IV.
Appellants argue that sec. 537.675.2 violates the constitutional separation of powers prescribed in article II, sec. 1, and article V, sec. 1, because the statute deprives the courts of the power to enforce judgments as they are rendered. In related arguments, the Fusts argue that sec. 537.675.2 deprives them of their remedy for malicious prosecution and the enjoyment of the gains of their own industry, in violation of Missouri Constitution article I, secs. 2 and 14. It is also argued that sec. 537.675.2 violates due process under the state and federal constitutions.
Nothing in the text of the statute at hand interferes with the judicial function. Rather, the statute is a limitation on a common law cause of action for punitive damages. Placing reasonable limitations on common law causes of action is within the discretion of the legislative branch and does *431 not invade the judicial function. See Simpson v. Kilcher, 749 S.W.2d 386, 391 (Mo. banc 1988). There is no violation of the separation of powers provisions of article II, sec. 1, or article V, sec. 1.
For essentially the same reason, the "certain remedy" provision of Missouri Constitution article I, sec. 14, was not violated by the adoption of sec. 537.675.2. The statutory modification of the substantive common law limiting the amount of noneconomic damages that may be recovered does not offend the "certain remedy" requirement. The only authority cited to the contrary is State ex rel. National Refining Co. v. Seehorn, 344 Mo. 547, 127 S.W.2d 418 (1939). There, referring to the "certain remedy" provision, the Court stated, "[I]t was designed to protect the citizen in the use of the courts to enforce such rights and remedies as were recognized by the law at the time of its adoption and as might thereafter be created by law." Id. 127 S.W.2d at 424.
However, the issue in Seehorn was quite different than that raised here. The question there was whether the "certain remedy" provision created any new causes of action not recognized by the common law. The question here is whether the "certain remedy" provision forbids modification of a common law cause of action. That question has been answered in the negative on at least two recent occasions. Wheeler v. Briggs, 941 S.W.2d 512, 514-15 (Mo. banc 1997); Adams v. Children's Mercy Hosp., 832 S.W.2d 898, 905-06 (Mo. banc), cert. denied, 506 U.S. 991, 113 S. Ct. 511, 121 L. Ed. 2d 446 (1992). The claimed constitutional violation is again denied.
The Fusts also claim that sec. 537.675.2 denies them their "natural right to... the enjoyment of the gains of their own industry." Mo. Const. art. I, sec. 2. No Missouri authority is cited in support of this claim. The Fusts' complete argument is that creating a fund by filing suit, assisting their attorneys, giving depositions, and testifying at trial constitutes "industry" within this constitutional protection. Assuming, without deciding, that this qualifies as "industry" subject to the constitutional protection, sec. 537.675 provides for reimbursement. This constitutional claim is also denied.
The Fusts further claim that they are being denied a property right in their cause of action without due process of law. As noted in the above paragraph, when their claim for punitive damages for malicious prosecution arose, they acquired no more than a 50% interest in such judgment as would be entered for punitive damages. "A person has no property interest, no vested interest, in any rule of the common law... The Constitution does not forbid the creation of new rights, or the abolition of old ones recognized by the common law." Duke Power Co. v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 88 n. 32, 98 S. Ct. 2620, 2638 n. 32, 57 L. Ed. 2d 595 (1978). Further, this Court has specifically held that no vested right exists in a remedy for a tort yet to happen. See Simpson, 749 S.W.2d at 393-94.
In reaching this conclusion, this Court is mindful of the holding, relied on by the Fusts, of Kirk v. Denver Publishing Co., 818 P.2d 262 (Colo.1991) (en banc). The Colorado statute under consideration there provided that the State was entitled to exemplary damages once they were collected. The Colorado Supreme Court noted that a judgment for exemplary damages qualifies as a property interest and the legislature could not take away such rights "once vested by a judgment." Id. at 268. The Missouri statute is somewhat different in that a Missouri plaintiff never acquires a proprietary interest in more than one-half of a punitive damages judgment. Moreover, this Court does not agree with the implicit conclusion in Kirk that a plaintiff has a greater property interest in a judgment upon a tort claim than the interest recognized by law when the claim accrued.
V.
Appellants' final contention is that sec. 537.675.2 violates equal protection of the law and is a special law prohibited by article III, sec. 40 of the Missouri Constitution. Appellants argue that the statute unconstitutionally discriminates against plaintiffs who do not settle because sec. 537.675.2 only gives the State a share of punitive damages awarded *432 by final judgment. Appellants further argue that the statute unconstitutionally discriminates against plaintiffs whose actions are heard in state court. Appellants assert that plaintiffs in federal court under diversity jurisdiction "may keep the entirety of any punitive damages the jury gives them."
A.
Social and economic legislation like sec. 537.675.2 "that does not employ suspect classifications or impinge on fundamental rights must be upheld against equal protection attack when the legislative means are rationally related to a legitimate governmental purpose." Hodel v. Indiana, 452 U.S. 314, 331, 101 S. Ct. 2376, 2387, 69 L. Ed. 2d 40 (1981). "Moreover, such legislation carries with it a presumption of rationality that can only be overcome by a clear showing of arbitrariness and irrationality." Id. at 331-32, 101 S. Ct. at 2387. Appellants have not carried this heavy burden here.
There are legitimate reasons for the legislature to distinguish between punitive damages awarded by court judgment and punitive damages recovered through settlement. The legislature may have sought to encourage settlement so as to avoid the burden litigation imposes on the parties and the judicial system. The legislature may also have determined that it would be easier for the State to collect its portion where the punitive damage award was part of a final judgment. The legislature may have sought to avoid enforcement difficulties that could arise from the State's attempt to collect a portion of a party's settlement, which may not accurately apportion compensatory and punitive damages. Clearly, these considerations provide a rational basis for the treatment of punitive damages awarded by court judgment in a manner different from punitive damages recovered through settlement.
As to appellants' contention that sec. 537.675.2 unconstitutionally discriminates against plaintiffs whose actions are heard in state court, the statute does not distinguish between state and federal litigants. By its terms, sec. 537.675.2 applies to all final judgments awarding punitive damages. Appellants cite to Finley v. Empiregas, Inc., 28 F.3d 782 (8th Cir.1994), for the proposition that plaintiffs that are awarded punitive damages under Missouri tort law by federal court judgment may keep the entirety of any punitive damage award. But this was not the holding of Finley. In that case, the court determined that sec. 537.675.3 prohibited the State from prevailing on a motion under Federal Rule of Civil Procedure 69 to disburse a portion of a federal punitive damage award to the State. The Court of Appeals did not hold that the State's claim under the statute was wholly unenforceable. Id. at 785-86. Appellants cite no other authority for its assertion that the statute distinguishes between state and federal litigants. In this regard, appellants have failed to satisfy their burden of demonstrating that sec. 537.675 draws an improper classification.
B.
Appellants' argument that sec. 537.675 is a special law prohibited by article III, sec. 40 of the Missouri Constitution also lacks merit. A "special law" is a law that "includes less than all who are similarly situated... but a law is not special if it applies to all of a given class alike and the classification is made on a reasonable basis." Batek v. Curators of the Univ. of Missouri, 920 S.W.2d 895, 899 (Mo. banc 1996) (omission in original). "In essence, the test for `special legislation' under article III, sec. 40, of the Missouri Constitution, involves the same principles and considerations that are involved in determining whether the statute violates equal protection in a situation where neither a fundamental right nor suspect class is involved, i.e., where a rational basis test applies." Blaske v. Smith & Entzeroth, Inc., 821 S.W.2d 822, 832 (Mo. banc 1991).
As discussed in the equal protection analysis above, the legislature acted reasonably in drawing a distinction between tort plaintiffs who recover punitive damages through settlement and those who receive punitive damages by court judgment. Section 537.675 is not special legislation prohibited by article III, sec. 40.
*433 CONCLUSION
For the foregoing reasons, the judgment of the trial court is affirmed.
All concur.
NOTES
[1] All references to statutes are to RSMo 1994, unless stated otherwise. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2419649/ | 102 F. Supp. 2d 431 (2000)
McDONALD'S CORP., a Delaware Corp., Plaintiff,
v.
CITY OF NORTON SHORES, a Michigan municipal corporation; and City of Norton Shores Planning Commission, Defendants.
No. 1:99CV814.
United States District Court, W.D. Michigan, Southern Division.
June 26, 2000.
*432 Ellen S. Carmody, Law, Weathers & Richardson, Grand Rapids, MI, for McDonald's Corporation, plaintiff.
Joel E. Krissoff, Farr & Oosterhouse, Grand Rapids, MI, Steven Floyd Stapleton, Plunkett & Cooney, PC, Grand Rapids, MI, for City of Norton Shores, Norton Shores Planning Committee, defendants.
*433 OPINION
ENSLEN, Chief Judge.
This matter is before the Court on the parties' several cross-motions for summary judgment concerning all claims pending in this matter. These motions have now been fully briefed and there is no need for oral argument on the motions. For the reasons which follow, the Court will dismiss all federal law claims and remand state law claims to state court.
PROCEDURAL BACKGROUND
Plaintiff McDonald's Corporation filed suit in May 1999 against Defendants City of Norton Shores and City of Norton Shores Planning Commission in the Circuit Court for the County of Muskegon, Michigan. On or about September 28, 1999, the Complaint was served upon Defendants. Defendants then removed the action to this Court on November 18, 1999 as containing federal law claims.
In addition to state law claims, Plaintiff's Complaint originally stated three federal law claims against Defendants: Count II for violation of substantive due process; Count III for violation of equal protection; and Count IV for the taking of property without just compensation. After removal, the Complaint was re-alleged in substantially the same form in Plaintiff's First Amended Complaint, which was allowed pursuant to a Stipulation and Order approved December 3, 1999 (Dkt. No. 12).
FACTS
Interpreting the record in a light most favorable to the Plaintiff, the factual record is as follows: Plaintiff is the lessee of real property located in Norton Shores, Michigan (as more particularly described in the map exhibits filed by the parties). (See leaseDkt. 59, Exhibit 5.) The real property in question is an asphalt parking lot approximately one acre in size. It is located within the K-Mart Shopping Plaza at the corners of Henry Street and Seminole Road. The property is bordered by Henry Street, a bank, a Rite Aid store, and a K-Mart Store. Seminole Road is south of the Rite Aid store. South of Seminole Road is a residential area. (See aerial photographsDkt. No. 14, Exhibit 6.)
This property is zoned "C-2 General Retail District." The C-2 zoning permits "principal uses" such as "restaurants including fast food." (City of Norton Shores Zoning Ordinance, Section 5.113.) To obtain a building permit in a C-2 district, an applicant must obtain site plan approval from the Norton Shores Zoning Commission as stated in Section 11.101 of the Zoning Ordinance. (Id.) The Ordinance states a number of factors which the Commission may consider in determining whether to approve a site plan. (Id. at Section 11.102.) These standards do not explicitly include traffic flow or aesthetics. (Id.)
On or about September 22, 1998, Plaintiff submitted a site plan to the City of Norton Shores' city planner, Robert W. Bilkie, for approval of the construction of a McDonald's restaurant with drive-through window on the subject property. (Dkt. No. 14, Exhibit 2.) Just prior to the submission, the City of Norton Shores had approved a site plan for a sit-down restaurant to be operated adjoining the McDonald's site at the K-Mart store. (Dkt. No. 14, Exhibit 5.) Between September 1998 and February 1999, Bilkie and Plaintiff exchanged correspondence on issues pertaining to the site. (Dkt. No. 14, Exhibit 2.) On February 19, 1999, Plaintiff submitted a revised site plan for review. (Id.) The site plan was considered at a meeting of the Planning Commission on March 9, 1999 and denied because of: "1. The increase in traffic on Henry Street. 2. Transition to the residential area beginning at Henry Street and Seminole Road. 3. This use is not aesthetically desirable." (Dkt. No. 14, Exhibits 3 and 8.) The precise concerns of the Planning Commission at that meeting are expressed in a transcript of the meeting and include concerns over vehicle and pedestrian traffic, the *434 proximity of the traffic to residential areas, and the compounding of traffic problems due to visits from students at Mona Shores High School. (Dkt. No. 31, Exhibit 3.)[1] The Commission's long-term plan for development of Henry Street calls upon it to limit traffic congestion. (Dkt. No. 56, Exhibit 3.)
Prior to the above finding, the only traffic study completed as to the proposed development was completed by independent experts for McDonald's Corporation. These experts concluded that the restaurant would cause an additional 188 car trips during the noon hour (94 inbound and 94 outbound); 66 new trips during the mid-afternoon hours (33 inbound and 33 outbound); and 89 trips during the peak p.m. hours (46 inbound and 43 outbound). (Dkt. No. 14, Exhibit 4.) The study concluded that the surrounding roads could accommodate the projected traffic with only minor increases in delay and adjustments to the signal timing at the Henry Street and Seminole Road traffic light. (Id.) The study did not comment on pedestrian traffic, off-hours traffic, or litter associated with the use. The aesthetics of the McDonald's site plan are explained in the Plaintiff's site plan drawings. (Dkt. No. 14, Exhibit 9.)
According to city records, this denial of site plan was only one of three denials by the Planning Commission in the last five years. The other denials were issued to Hradsky Brothers regarding a proposed construction yard and to a proposed site for a senior housing project. (Dkt. No. 38, Exhibit A; Dkt. No. 32, Exhibit 2.) According to information provided by the Commission, there are some nine other fast-food restaurants in Norton Shores with drive-through windows, including a few others located on Henry Street. (Id.) Also, according to published information, the Planning Commission later approved a site plan for a Chili's (sit-down) restaurant across from the proposed McDonald's site. (Dkt. No. 32, Exhibit 6.)[2]
STANDARD FOR SUMMARY JUDGMENT
These parties' motions for summary judgment are brought pursuant to Federal Rule of Civil Procedure 56. Under the language of Rule 56(c), summary judgment is proper if the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The initial burden is on the movant to specify the basis upon which summary judgment should be granted and to identify portions of the record which demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The burden then shifts to the non-movant to come forward with specific facts, supported by the evidence in the record, upon which a reasonable jury could find there to be a genuine fact issue for trial. Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). If, after adequate time for discovery on material matters at issue, the non-movant fails to make a showing sufficient to establish the existence of a material disputed fact, summary judgment is appropriate. Celotex Corp., 477 U.S. at 323, 106 S. Ct. 2548.[3]
*435 Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences are jury functions. Adams v. Metiva, 31 F.3d 375, 382 (6th Cir.1994). The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in the non-movant's favor. Celotex Corp., 477 U.S. at 323, 106 S. Ct. 2548 (quoting Anderson, 477 U.S. at 255, 106 S. Ct. 2505). The factual record presented must be interpreted in a light most favorable to the non-movant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986).
Rule 56 limits the materials the Court may consider in deciding a motion under the rule: "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits." Copeland v. Machulis, 57 F.3d 476, 478 (6th Cir.1995) (quoting Federal Rule of Civil Procedure 56(c)). Moreover, affidavits must meet certain requirements:
[A]ffidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith.
Fed.R.Civ.P. 56(e). The Sixth Circuit has held "that documents submitted in support of a motion for summary judgment must satisfy the requirements of Rule 56(e); otherwise, they must be disregarded." Moore v. Holbrook, 2 F.3d 697, 699 (6th Cir.1993). Thus, in resolving a Rule 56 motion, the Court should not consider unsworn or uncertified documents, id., unsworn statements, Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962, 968-969 (6th Cir.1991), inadmissible expert testimony, North American Specialty Ins. Co. v. Myers, 111 F.3d 1273, 1280 (6th Cir.1997), hearsay evidence, Hartsel v. Keys, 87 F.3d 795, 799 (6th Cir.1996); Wiley v. United States, 20 F.3d 222, 225-226 (6th Cir.1994), or legal conclusions asserted in affidavits, Bender v. Southland Corp., 749 F.2d 1205, 1210-11 (6th Cir.1984); Avirgan v. Hull, 932 F.2d 1572, 1577 (11th Cir.1991).
ANALYSIS
Plaintiff has alleged three federal law claims: violation of the Just Compensation Clause; violation of substantive due process; and violation of the Equal Protection Clause.
1. Taking Claim
Plaintiff's First Amended Complaint (in Count IV) asserts a taking claim under the Fifth Amendment's Just Compensation Clause.[4] The Just Compensation Clause applies to the States because of its incorporation under the Fourteenth Amendment. Chicago, B. & Q.R. Co. v. Chicago, 166 U.S. 226, 241, 17 S. Ct. 581, 41 L. Ed. 979 (1897); San Diego Gas & Electric Co. v. San Diego, 450 U.S. 621, 623, n. 1, 101 S. Ct. 1287, 67 L. Ed. 2d 551 (1981).
As to this claim, the United States Supreme Court held in Williamson County Regional Planning Commission v. Hamilton Bank, 473 U.S. 172, 105 S. Ct. 3108, 87 L. Ed. 2d 126 (1985), that the federal courts should only adjudicate ripe taking claims. In its words,
A ... taking claim is not yet ripe [because] respondent did not seek compensation *436 through the procedures the State has provided for doing so. The Fifth Amendment does not proscribe the taking of property; it proscribes taking without just compensation.... Nor does the Fifth Amendment require that just compensation be paid in advance of, or contemporaneously with, the taking; all that is required is that a "`reasonable, certain and adequate provision for obtaining compensation'" exist at the time of the taking.... If the government has provided an adequate process for obtaining compensation, and if resort to that process "yield[s] just compensation," then the property owner "has no claim against the Government" for a taking.... Thus, we have held that taking claims against the Federal Government are premature until the property owner has availed itself of the process provided by the Tucker Act, § 28 U.S.C. 1491.... Similarly, if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation.
* * * * * *
In sum, respondent's claim is premature, whether it is analyzed as a deprivation of property without due process under the Fourteenth Amendment, or as a taking under the Just Compensation Clause of the Fifth Amendment. We therefore reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.
Williamson, 473 U.S. at 189-200, 105 S. Ct. 3108 (citations and footnotes deleted).
In this case, the federal taking claim arose from action by a Michigan municipal planning commission. There is no dispute that Michigan provides an adequate remedy for such a takingin the form of an action for inverse condemnationand that Plaintiff has not yet exhausted such state law remedy. As such, the federal taking claim will be dismissed without prejudice because it is not ripe for adjudication.[5]
2. Substantive Due Process Claim
Count II of the First Amended Complaint alleges a violation of substantive due process. A zoning claim premised on a denial of substantive due process requires a showing of irrational governmental action or action unrelated to a legitimate governmental purpose. As the Sixth Circuit Court of Appeals explained in Pearson v. City of Grand Blanc, 961 F.2d 1211, 1215 (6th Cir.1992), this standard is not easily met:
Where a substantive due process attack is made on state administrative action, the scope of review by the federal courts is extremely narrow. To prevail, a plaintiff must show that the state administrative agency has been guilty of "arbitrary and capricious action" in the strict sense, meaning "that there is no rational basis for the ... [administrative] decision."
The use of the term "arbitrary and capricious" in this context causes considerable confusion, because these same terms are also used to describe the scope of review by state courts of state administrative action. Therefore, it must be emphasized that the state court scope of review of a decision of a state administrative agency is far broader than the federal scope of review under substantive due process.
*437 In some states, a state court may set aside state administrative action as being "arbitrary and capricious" on the ground, among others, that it is not supported by substantial evidence. No such ground may be used by the federal court in reviewing state administrative action in connection with a federal substantive due process attack, however. In the federal court the standard is a much narrower one. The administrative action will withstand substantive due process attack unless it "`is not supportable on any rational basis'" or is "`willful and unreasoning action, without consideration and in disregard of the facts or circumstances of the case.'"
The federal court may make only the most limited review of the evidence before the state administrative agency. This review is limited to determining whether the agency has paid attention to the evidence adduced and acted rationally upon it. The state decision may not be set aside as arbitrary and capricious if there is "some factual basis" for the administrative action. Plaintiff here would have a jury rehear the evidence. However, we hold that the application of this deferential standard of review is a matter of law for the court. Otherwise, federal juries would sit as local boards of zoning appeals.
In other words, the appropriate scope of substantive due process review for state and local land use actions is the same as that accorded by the Supreme Court for state academic actions. That is, the federal courts should "show great respect" for the local authority's "professional judgment. Plainly, they may not override it unless it is such a substantial departure from accepted ... norms as to demonstrate that the [decisionmaker] ... did not actually exercise professional judgment."
When this court stated recently in G.M. Eng'rs [ & Assoc. v. West Bloomfield Township, 922 F.2d 328, 332 (6th Cir. 1990) ] that local zoning actions would fall to substantive due process attack only if they shocked the conscience, it referred to the deferential review of local administrative zoning actions delineated above.
Although the "shocks the conscience" terminology, as another panel later observed, is more apt for cases involving physical force, it is useful in the zoning context too, to emphasize the degree of arbitrariness required to set aside a zoning decision by a local authorityand to underscore the overriding precept that "arbitrary and capricious" in the federal substantive due process context means something far different than in state administrative law.
Pearson, 961 F.2d at 1221-22 (citations and footnotes omitted). The decision in Pearson also found that the regulation of traffic congestion is a legitimate governmental objective. Id. at 1224; see also Village of Belle Terre v. Boraas, 416 U.S. 1, 94 S. Ct. 1536, 39 L. Ed. 2d 797 (1974); Village of Euclid v. Ambler Realty, 272 U.S. 365, 47 S. Ct. 114, 71 L. Ed. 303 (1926).
Based on the above legal standards, the Pearson court determined that a denial of a zoning application for a McDonald's drive-through restaurant based on citizen concerns for additional traffic was not a denial of substantive due process as a matter of law. Similarly, the zoning decision at issue here does not "shock the conscience" of this Court as an irrational decision or one directed toward illegitimate objectives. The decision was made because of a rational concern for additional traffic near a residential neighborhood. The Commission was not irrational to be concerned about additional traffic near a residential neighborhoodeven if McDonald's traffic engineers believed that the additional traffic could be accommodated.[6] Accordingly, the Defendants are entitled to summary judgment as a matter of law.
*438 3. Equal Protection Clause Claim
Count III alleges violation of the Equal Protection Clause of the Fourteenth Amendment. In the context of zoning decisions, when a suspect classification is not at issue, the Equal Protection Clause claim tends to merge with the substantive due process analysis. Berger v. City of Mayfield Heights, 154 F.3d 621, 624, (6th Cir. 1998); Pearson v. City, of Grand Blanc, 961 F.2d 1211, 1216 (6th Cir.1992).
Plaintiff's Equal Protection Clause claim is not based on its participation in a protected class. Rather, the claim is a "class of one" type of claim like that discussed recently in Village of Willowbrook v. Olech, ___ U.S. ___, ___, 120 S. Ct. 1073, 1074, 145 L. Ed. 2d 1060 (U.S.2000). Thus, to prevail on this claim, the Plaintiff must show that the government treated the Plaintiff "differently from others similarly situated and that there [was] no rational basis for the difference in treatment." Id. at 1074.
Upon review of the record, the Court believes that the Defendants had a rational basis for denying the site plan in light of concerns for traffic. The only applicant for site plan approval by a restaurant near Henry Street near the time of the denial of McDonald site planthe request by K-Mart was not "similarly situated" since the K-Mart restaurant did not involve a drive-through. Additionally, the other drive-through restaurants in the City that had obtained zoning approval either were not located on Henry Street or had obtained their approval substantially before McDonald's Corporation's request such that they were not similarly situated zoning requests. Overall, it was rational to decide that an additional drive-through restaurant operated by McDonald's Corporation would cause too much traffic even if previous drive-through restaurants had been allowed because each zoning decision affecting traffic must be made in light of the traffic concerns then posed by the proposed use.[7] Therefore, Defendants are entitled to summary judgment as a matter of law.
4. State Law Claims
This leaves unresolved Plaintiff's state law claimswhich the Court regards as interesting, important, and quintessentially matters of state law. As to those claims, the Court has supplementary jurisdiction pursuant to 28 U.S.C. Section 1367. Nevertheless, since the only federal law claims asserted will be dismissed, federal law authorizes this Court to decline to exercise jurisdiction over the state law claims and remand those claims to state court. Carnegie-Mellon University v. Cohill, 484 U.S. 343, 357, 108 S. Ct. 614, 98 L. Ed. 2d 720 (1988); Long v. Bando Mfg. of America, Inc., 201 F.3d 754 (6th Cir. 2000). The Court believes that the interests of justice would be best served by the state court's resolution of the remaining state law issues and therefore declines to exercise jurisdiction over the remaining claims. Accordingly, the remaining claims shall be remanded to the Circuit Court for the County of Muskegon, Michigan.
CONCLUSION
Accordingly, Defendants' Motion for (Partial) Summary Judgment (Dkt. No. 43) shall be granted and Plaintiff's Cross-Motion for Partial Summary Judgment (Dkt. No. 48) shall be denied. All federal claims shall be dismissed pursuant to Federal Rule of Civil Procedure 56. All state law claims shall be remanded to the Circuit Court for the County of Muskegon, Michigan. *439 A Partial Judgment and Order of Remand shall issue consistent with this decision.
NOTES
[1] Commission members Janet Day and Donald Trygstad, as well as Richard Maher, Norton Shores Community Development Director, have also explained the opposition to the site plan in their depositions. (Dkt. No. 43, Exhibits 1-3.) Other exhibits relevant to these facts are included in Plaintiff's Cross-Motion for Partial Summary Judgment regarding its Constitutional Claims, Defendants' Responses, and Plaintiff's Reply. (Dkt. No. 48, Exhibits 1-15; Dkt. Nos. 56, 59 and 60, Exhibits 1-7; and Dkt. No. 62, Exhibits 1-8.)
[2] Plaintiff has failed to reference proper evidence under Rule 56(c) establishing this fact. Nevertheless, the Court will assume this fact as true for the purpose of this analysis.
[3] The Court notes that Plaintiff responded in part to Defendants' Motion for Summary Judgment by filing a Rule 56(f) affidavit stating that it was awaiting further discovery on the issues discussed. The Court has delayed decision on the Motion to the end of the discovery period so as to allow Plaintiff to supplement its filings in light of the further discovery. In the opinion of this Court, the Plaintiff has now had more than an ample opportunity for discovery and further delay in resolving these motions would be inappropriate.
[4] Plaintiff does not dispute that a Fifth Amendment taking claim is not ripe. (Plaintiff's Reply, Dkt. 62, at n. 9.) While Plaintiff denies asserting such a claim in the first place, the First Amended Complaint (like the original Complaint) contains reference to a Fifth Amendment taking claimwhich necessitates the Court's discussion.
[5] The Williamson Court also analogized its decision to that in Parratt v. Taylor, 451 U.S. 527, 101 S. Ct. 1908, 68 L. Ed. 2d 420 (1981) which denied relief concerning a procedural due process claim as to a random and unauthorized act of state actors where the complaint failed to allege that state remedies were unavailable or inadequate. This ruling has been applied by the Sixth Circuit Court of Appeals to circumstances like the present case. G.M. Engineers & Assoc. v. West Bloomfield Township, 922 F.2d 328, 331-32 (6th Cir.1990). The Court understands that the First Amended Complaint does not allege a procedural due process claim. To the extent, though, that the Plaintiff might have intended such a claim, it is precluded by this case law.
[6] While the Court determines that the decision was not irrational or unconstitutional, the Court takes no position regarding Plaintiff's state law claims.
[7] While McDonald's Corporation is probably correct that an additional restaurant would not be the straw that broke the camel's back in terms of traffic congestion on Henry Street, it must acknowledge that its proposed use would cause a large number of vehicle trips on the Street and at some point in development the Commission must limit development to maintain traffic safety. While the line drawn in the sand by the Commission does not strike McDonald's as a rational one, the Court believes that it is the type of decision that federal law gives local officials broad discretion to make. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2419753/ | 102 F.Supp.2d 72 (1999)
John L. GRAHAM, Plaintiff
v.
Kenneth S. APFEL, Commissioner of Social Security, Defendant
No. 3:98CV887 AWT.
United States District Court, D. Connecticut.
September 1, 1999.
*73 Michael J. Weisman, Bridgeport, CT, for plaintiff.
Deidre Anne Martini, U.S. Attorney's Office, Bridgeport, CT, for defendant.
RECOMMENDED RULING ON PENDING MOTIONS
MARTINEZ, United States Magistrate Judge.
The plaintiff, John L. Graham, seeks review of the decision of the Commissioner denying the plaintiff's claim for disability insurance benefits and Supplemental Security Income ("SSI") benefits under the Social Security Act. See 42 U.S.C. § 405(g). The plaintiff filed a motion for order reversing the decision of the Commissioner and the defendant moved for an order affirming the decision of the Commissioner. Upon consideration of the motions filed by the plaintiff and defendant, the court concludes that the plaintiff's motion should be denied and the defendant's motion should be granted.
BACKGROUND
The plaintiff was born on April 23, 1946. (See R. 80, 180.)[1] He graduated from high school and received additional training as a machine operator. (See R. 116.) He has worked as a machine operator in two factories and for a cleaning service. (See R. 33-36.) He also ran a variety or small grocery store for approximately *74 three years.[2] (See R. 31-32.) The plaintiff closed his store and stopped working after he was involved in several automobile accidents. (See R. 33.)
The plaintiff's period of insured status for Title II purposes expired on June 30, 1992. (See R. 83.) The plaintiff states that he became disabled on January 1 or June 1, 1991, and claims that he is entitled to disability income benefits and SSI benefits because of a back disorder and seizures. (See R. 80, 112.)
The plaintiff filed applications for SSI and disability insurance benefits on April 22, 1996. (See R. 80-82, 180-81.) The applications were denied on July 9, 1996. (See R. 55-59, 183-87.) On August 28, 1996, the plaintiff filed a request for reconsideration. (See R. 60-68.) On November 19, 1996, the agency issued notices of reconsideration upholding the denial of benefits. (See R. 69-72, 183-87.) The hearing before the administrative law judge ("ALJ") was held on June 10, 1997. (See R. 22-52.) The plaintiff appeared with counsel at the hearing. (See R. 24.)
At the beginning of the hearing the plaintiff's attorney conceded that the facts did not support the alleged onset date of June 1, 1991 because the plaintiff operated a variety store after that date. The attorney stated that a more appropriate onset date would be the date of the plaintiff's first automobile accident in 1994. (See R. 29.) The ALJ informed the attorney that unless he could provide additional earnings information that would extend the plaintiff's last insured date beyond the revised onset date, the plaintiff would not be able to assert a claim for disability insurance benefits. (See R. 30.) Although the record was left open to enable the plaintiff to provide additional earnings information, no information could be located. (See R. 20-21.)
The plaintiff testified at the hearing about his pain. He said that he suffers from headaches two or three time per month and from neck, back and leg pain. He described the pain as constant, aching and sharp and indicated that he obtained relief from Tylenol with codeine. He said that the headaches were worse immediately following the 1994 automobile accident. (See R. 37.) The plaintiff went on to say that his lower back pain becomes worse if he stands or sits for too long. He began using a cane two years earlier. (See R. 38.) He said that he used the cane primarily outside of his home. Inside the house he could get around by holding onto furniture or the walls for support. His chiropractor prescribed a corset which he has been wearing since 1994. (See R. 39.) The plaintiff stated that he has obtained most of his therapy from his chiropractor and agreed with the ALJ's statement that his treating physician did not recommend therapy.[3] (See R. 40.) The plaintiff said that he used heat on his back at home and tried to do exercises. (See R. 41.)
The plaintiff testified that he has lived with his sister in her house for eighteen years. His sister and niece do all of the housework and laundry including caring for his room. His sister cooks and he eats his meals with the family. The plaintiff said that before the accident he never cooked for himself but did his own laundry. (See R. 42-43.) The plaintiff described his daily activities as lying down, sleeping, reading, watching television and walking onto the porch. He said that he shoveled snow and did yard work before the accident. (See R. 43-44.) Although he has a driver's license, the plaintiff stated that he rarely drove because he could not sit behind the steering wheel for very long. When he had to go to the chiropractor, his sister or niece took him. (See R. 46.) The plaintiff stated that he was able to care for *75 his personal needs, but occasionally needed help putting on his shoes. (See R. 51.)
The plaintiff said that he could stand for only ten to fifteen minutes at a time and could sit for "a little longer." (R. 47.) He thought he would be unable to do a job with a sit/stand option because he cannot stay in one spot for very long. (See R. 46.) The plaintiff stated that when he stands, he must lean against the wall or on his cane. If he stands too long, his legs "give out." (R. 47.) Although the plaintiff acknowledged that on the day of the hearing he had been alternating between standing and sitting from 6:00 until 11:00 a.m., he stated that he only did it because he had no choice. He would have preferred to be lying down. (See R. 47-48.) The plaintiff estimated that, on a normal day between the hours of 8:00 a.m. and 5:00 p.m., he spent approximately seven hours lying down. (See R. 48.)
In addition to the testimony at the hearing, the ALJ considered several reports and questionnaires completed by the plaintiff. In a disability report completed in April 1996, the plaintiff reported that no doctor had restricted his physical activities. (See R. 115.) The plaintiff stated that his sister did all of the housework and cooking while he spent his days reading, watching television and sometimes going to church. (See id.) The agency reviewer observed that the plaintiff experienced no difficulties during the interview but noted that the plaintiff's eyes appeared "bloodshot." (See R. 119.) In a reconsideration disability report completed in August 1996, the plaintiff described his pain as getting worse. Although he indicated that he walked with a cane, he again stated that no doctor had restricted his physical activities. (See R. 120.) The plaintiff noted that he visited his chiropractor weekly. (See R. 121.) When the plaintiff requested a hearing before an ALJ, the plaintiff described his pain as constant, especially in the morning. He said that it took three hours to be able to move about and that he experienced blurred vision. (See R. 126.)
In May 1996, the plaintiff completed pain and activities questionnaires. In the pain questionnaire, he stated that the pain began after he was involved in automobile accidents in September 1994, January 1995 and July 1995. The pain began in his low back and neck and spread to his mid-back and head. He said that constant pain is brought on by any activity. (See R. 128.) The plaintiff noted that the medication prescribed by his physician in 1994 sometimes relieved his pain. He also stated that he wore an orthopedic support belt and visited his chiropractor. (See R. 129.) In the activities questionnaire, the plaintiff stated that the only household chore he performed was taking out "the small trash." (See R. 131.)
In August 1996, the plaintiff completed a seizure questionnaire. He stated that each month he experienced two blackouts lasting two to three minutes each. He said that the seizures made him feel shaky and weak. He indicated that he took Dilantin to control the seizures. (See R. 134.)
The ALJ reviewed residual functional capacity assessments completed by the agency in July and November 1996. In both assessments, the evaluator rated the plaintiff as able to lift and carry fifty pounds occasionally, twenty-five pounds frequently, to stand or walk for six hours in an eight hour workday, sit for six hours and engage in unlimited pushing and pulling. (See R. 95, 103.) The plaintiff was restricted from climbing a ladder, rope or scaffold, and from working around hazards. (See R. 96, 98, 104, 106.) In November 1996, the evaluator also indicated that the plaintiff could crouch or stoop only occasionally. (See R. 104.)
The July evaluator noted that the medical records contained no evidence of seizures, while the November evaluator indicated that there was no evidence of any recent seizures and no indication that the plaintiff was taking any medication to control seizures. (See R. 96, 109.) The November evaluator opined that the plaintiff's *76 symptoms were attributable to a medically determinable impairment and stated: "This RFC most likely applies to the time prior to DLI of 6/92." (R. 109.)
A vocational analysis performed in November 1996, indicated that although he could not return to his previous employment and was approaching advanced age, the plaintiff could make an adjustment to other jobs such as cafeteria attendant, security guard or fast food worker. (See R. 110-11.)
The plaintiff also submitted two letters to the ALJ. (See R. 63-68, 141-45.) In the letters, the plaintiff described his condition as back and neck problems with pain radiating down his legs and arms, an ulcer, epigastric pain, pancreatitis and seizures. (See R. 63-64, 142.) He stated that he operated the variety store for approximately ten years, but had to close the store after the second automobile accident because he suffered seizures while in the store alone. (See R. 64-65.) Although the plaintiff states that he was taken to the hospital after one such seizure, no medical records of treatment are included in the record.
The ALJ had before him medical evidence covering the period from September 1994 through April 1997. A summary of the evidence follows.
On September 2, 1994, the plaintiff was involved in a motor vehicle accident when the car in which he was a passenger collided with a bus. (See R. 169.) The plaintiff initially consulted his physician who observed tenderness in the paracervical area on the left and decreased range of motion of the neck. The physician recommended anti-inflammatories, muscle relaxants and therapy. He also suggested that the plaintiff take time off from his store. (See R. 171.) The physical therapist noted cervical, thoracic and lumbar strain. (See R. 172.) Although the physical therapist indicated that he would keep the treating physician informed of the plaintiff's progress, no records referring to the physical therapy are provided.
In October 1994, the plaintiff also sought chiropractic treatment for complaints of generalized neck pain with headaches, left hand numbness and left leg and knee pain. (See R. 169.) The chiropractor diagnosed the plaintiff as exhibiting cervical sprain or strain with post traumatic headaches and lumbar sprain or strain with radiculitis. (See R. 167, 169.) The plaintiff was treated with spinal manipulation and physical therapy and was encouraged to use a home stretching and strengthening exercise program. (See R. 169.) The chiropractor noted that the plaintiff reached maximum medical improvement with a 5% permanent partial impairment of the cervical and lumbar spine. (See R. 168.)
On January 15, 1995, the plaintiff was involved in a second automobile accident in which he struck his head on the rear view mirror and was thrown into the dashboard. (See R. 148.) Following the accident, he was treated for complaints of neck, head, shoulder and back pain at St. Vincent's Medical Center. (See R. 146-47.) An x-ray of the cervical spine revealed a narrowing of the C5-6 interspace which appeared longstanding. No acute traumatic or destructive abnormalities were observed. (See R. 147.) On February 21, 1995, the plaintiff's treating physician noted that the plaintiff's neck and lower back pain were improved from his initial visit on January 23, 1995. The treating physician also noted that the plaintiff's knee still bothered him, but that he exhibited no new symptoms. The plaintiff did not keep a May 22, 1995 follow-up appointment. (See R. 149.)
On February 15, 1995, the plaintiff sought chiropractic treatment. (See R. 164.) He was diagnosed as experiencing cervical sprain or strain with post traumatic headaches and lumbar sprain or strain. (See R. 165.) As of the final examination on July 14, 1995, the chiropractor noted that although the plaintiff continued to complain of moderate neck and low back pain with two or three headaches each *77 week, he had reached maximum medical improvement with a 7% permanent partial impairment of the cervical and lumbar spine. (See R. 163-64.)
The same day he completed chiropractic treatment for injuries from the second accident, the plaintiff was involved in a third automobile accident. On July 17, 1995, he sought treatment from his chiropractor for generalized complaints of neck, midback and low back pain. The chiropractor diagnosed the plaintiff as suffering from cervical, thoracic and lumbar sprain or strain and recommended a course of chiropractic manipulation accompanied by physical therapy. (See R. 153-55.) The plaintiff underwent chiropractic treatment from July 17, 1995 through August 23, 1996. (See R. 161.) The chiropractor's final assessment was that the plaintiff's thoracic sprain or strain had resolved, but that he experienced a 3-5% permanent partial impairment of the cervical and lumbar spine. (See R. 162.)
In June 1996, the plaintiff underwent a consultative examination. (See R. 150-52.) The plaintiff reported that he suffered from back pain and headaches caused by many motor vehicle accidents. He stated that he did not take any medication because he could not afford to pay for it, but that he did visit a chiropractor. He began using a cane two years earlier on his own initiative. The plaintiff reported that he could stand for "a fair length of time" as long as he did not have to remain in one position for a long time. The consultative physician estimated that the plaintiff could stand for at least 15-20 minutes. The physician noted no impairments of speech, vision or hearing, but observed that the plaintiff had difficulty bending and carrying heavy objects. (See R. 150.) The plaintiff stated that he lived alone or, at times, with his sister. He spent his time watching television and reading and could manage light activities of daily living. The consultative physician opined that the plaintiff's seizures, last documented in 1980, were related to a drinking problem. The plaintiff reported no recent seizures and indicated that he took no medication for seizures. (See R. 151.)
Upon examination, the consultative physician noted that the plaintiff's lumbosacral flexion and straight leg raising were limited to 60 and that he had a normal range of motion in his hands, elbows and shoulders. The physician observed that the plaintiff limped mildly with the cane and showed no motor or sensory deficit. Upon reviewing an x-ray of the plaintiff's lumbosacral spine, the consultative physician noted evidence of decreased disc space at L5-S1 and osteophyte formation over the anterior vertebral edges. (See R. 151-52.)
The consultative physician concluded that the plaintiff exhibited low back pain syndrome of moderate intensity and atypical headaches arising out of trauma from motor vehicle accidents. He demonstrated no problem with seizures at the time of the examination. The physician opined that the plaintiff's condition could be improved with medical and physical therapy but noted that the plaintiff lacked the means to get the required therapy. (See R. 152.)
In October 1996, the plaintiff underwent a second consultative examination with the same physician. (See R. 156-58.) The physician noted that the plaintiff could walk a distance of one-half block and sit normally for five or six minutes at a time. The plaintiff now reported that he used a cane on the recommendation of his chiropractor and stated that he had not attempted walking without the cane. (See R. 156.) The plaintiff said that he lived alone and had not worked since he closed his variety store three or four years earlier. (See R. 157.) The physician described the plaintiff's gait as slow with no significant limping. (See R. 158.)
The consultative physician described the plaintiff as exhibiting low back syndrome with exact etiology undetermined. Previous x-rays were consistent with osteoarthritis. He opined that the plaintiff would be moderately limited in strenuous physical *78 activity like excessive walking, bending and standing because of the low back discomfort. (See id.)
In January 1997, the plaintiff visited an orthopedic surgeon for a second opinion on his condition. The orthopedist described the plaintiff as suffering from continued problems of the low back with pain radiating into both calves. He noted that x-rays showed mild degenerative disease and recommended that the plaintiff undergo an MRI. At a second visit in April 1997, the orthopedist noted that the MRI revealed some degenerative changes but no disc problem. The orthopedist recommended that the plaintiff return to work. (See R. 160.)
On July 17, 1997, the ALJ issued his ruling denying benefits. (See R. 10-19.) On February 20, 1998, the Appeals Council denied the plaintiff's August 13, 1997 request for review. (See R. 4-5, 6-9.) The plaintiff timely filed this appeal within the sixty day period after receipt of the decision of the Appeals Council.
STANDARD OF REVIEW
The scope of review of a social security disability determination involves two levels of inquiry. The court must first decide whether the Commissioner applied the correct legal principles in making the determination. Next, the court must decide whether the determination is supported by substantial evidence. See Balsamo v. Chater, 142 F.3d 75, 79 (2d Cir. 1998). Substantial evidence is evidence that a reasonable mind would accept as adequate to support a conclusion; it is more than a "mere scintilla." Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971); Yancey v. Apfel, 145 F.3d 106, 110 (2d Cir.1998). The substantial evidence rule also applies to inferences and conclusions that are drawn from findings of fact. See Gonzalez v. Apfel, 23 F.Supp.2d 179, 189 (D.Conn.1998); Rodriguez v. Califano, 431 F.Supp. 421, 423 (S.D.N.Y.1977). The court may not decide facts, reweigh evidence or substitute its judgment for that of the Commissioner. See Dotson v. Shalala, 1 F.3d 571, 577 (7th Cir.1993). The court must scrutinize the entire record to determine the reasonableness of the ALJ's factual findings. Furthermore, "`[w]here there is a reasonable basis for doubt whether the ALJ applied correct legal principles, application of the substantial evidence standard to uphold a finding of no disability creates an unacceptable risk that a claimant will be deprived of the right to have her disability determination made according to correct legal principles.'" Schaal v. Apfel, 134 F.3d 496, 504 (2d Cir.1998) (quoting Johnson v. Bowen, 817 F.2d 983, 986 (2d Cir.1987)).
Under the Social Security Act, every individual who is under a disability is entitled to disability insurance benefits. See 42 U.S.C. § 423(a)(1). Additionally, indigent individuals may be entitled to disability benefits under the Supplemental Security Income program. 42 U.S.C. §§ 1381-1383(c). "Disability" is defined under both programs as an "inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months." 42 U.S.C. §§ 423(d)(1), 1382c(a)(3).
Determining whether a claimant is disabled requires a five-step process. See 20 C.F.R. § 404.1520. First, the court must determine whether the claimant is currently working. See 20 C.F.R. §§ 404.1510(b), 404.1572(b). If the claimant is currently employed, the claim is disallowed. See 20 C.F.R. § 404.1520(b). If the claimant is not working, as a second step, the agency must make a finding as to the existence of a severe mental or physical impairment; if none exists, the claim is denied. See 20 C.F.R. § 404.1520(c). Once the claimant is found to have a severe impairment, the third step is to compare the claimant's impairment with those in appendix 1 of the regulations (the "Listings"). See 20 C.F.R. § 404.1520(d); Bowen v. Yuckert, *79 482 U.S. 137, 141, 107 S.Ct. 2287, 96 L.Ed.2d 119 (1987); Balsamo v. Chater, 142 F.3d at 79-80. If the claimant's impairment meets or equals one of the impairments in the Listings, the claimant is automatically considered disabled. See 20 C.F.R. § 404.1520(d); Balsamo v. Chater, 142 F.3d at 80. If the claimant's impairment does not meet or equal one of the listed impairments, as a fourth step, he will have to show that he cannot perform his former work. See 20 C.F.R. § 404.1520(e). If the claimant cannot perform his former work, he must show, as a fifth and final step, that he is prevented from doing any other work. A claimant is entitled to receive disability benefits only if he cannot perform any alternate gainful employment. See 20 C.F.R. § 404.1520(f).
The initial burden of establishing disability is on the claimant. See 42 U.S.C. §§ 423(d)(5), 1382c(a)(3)(G). Once the claimant demonstrates that he is incapable of performing his past work, however, the burden shifts to the Commissioner to show that the claimant has the residual functional capacity to perform other substantial gainful activity in the national economy. See Balsamo v. Chater, 142 F.3d at 80 (citing cases). This may require the application of the Medical-Vocational Guidelines ("the grid") which places claimants with severe exertional impairments who can no longer perform past work into grid categories according to their residual functional capacity, age, education and work experience, and dictates a conclusion of disabled or not disabled. See 20 C.F.R. § 404.1520(f). A proper application of the grid makes vocational testing unnecessary.
The grid covers only exertional impairments; nonexertional impairments, including psychiatric disorders are not covered. See 20 C.F.R. § 200.00(e)(2). If the grid cannot be used, i.e., when nonexertional impairments are present or when exertional impairments do not fit squarely within grid categories, the testimony of a vocational expert is generally required to support a finding of residual functional capacity for substantial gainful activity. See Pratts v. Chater, 94 F.3d 34, 39 (2d Cir.1996)(citing Bapp v. Bowen, 802 F.2d 601, 605 (2d Cir.1986)).
DISCUSSION
Applying the five step evaluation process, the ALJ determined that the plaintiff has not engaged in substantial gainful activity since April 22, 1996, the date he filed his applications. (See R. 18.) The ALJ found that the medical evidence established that the plaintiff suffered from recurrent back injuries which were sustained in a series of motor vehicle accidents. The ALJ further noted that the record does not contain objective medical evidence that would demonstrate the existence of a disability on or before June 20, 1992, the plaintiff's last insured date. (See id.)
The ALJ found that the plaintiff failed to demonstrate that he suffered from a severe impairment.
After a careful review of the record, it is concluded that there is no medical evidence corroborating the alleged onset date of disability, and the claimant's allegations of pain and functional limitations are not entirely credible, apart from his recurring motor vehicle accidents (Social Security Ruling 96-7p). There basically is very little documentation of on-going treatment or diagnosis of any back condition and no documentation or diagnosis of a seizure disorder, ulcers or high blood pressure. There are minimal objective medical findings, particularly from treating and examining sources, who have consistently reported generally normal examinations with no neurological deficits (20 C.F.R. §§ 404.1529 and 416.929 and Social Security Ruling 96-3p).
The record does not provide objective medical findings which demonstrate significant work related limitations for a continuous period of twelve months. The claimant effectively recovered within *80 a few months from each of his motor vehicle accidents. Progress notes document that the claimant was only seen twice by Dr. Boone and received minimal treatment in 1994 .... In 1995, Dr. Micalizzi stated that back x-ray showed no apparent traumatic abnormalities .... In 1996, Dr. Thompson diagnosed cervical, thoracic, and lumbar strain/sprain, and assessed only a minimal impairment rating for insurance purposes .... In 1997, Dr. Schlein reported that there was no evidence of any apparent back condition that would prevent the claimant from returning to work .... The claimant's assertion of inability to work since September 1994, based on a back condition and seizures is inconsistent with the evidence of record including his reported business activity until April 1996.
For all the foregoing reasons the Administrative Law Judge concluded that the claimant has no severe impairment, or combination of impairments, lasting 12 consecutive months that precluded his ability to perform basic work-related activity.
(R. 17-18.) Thus, the ALJ found that the plaintiff was not disabled at any time through the date of the decision. (See R. 18.)
In support of his motion the plaintiff argues that the ALJ erred in failing to find a severe impairment. In response, the defendant contends that substantial evidence supports the ALJ's determination that the plaintiff failed to provide evidence that his impairment lasted or was expected to last twelve continuous months.
In this case, the ALJ found the plaintiff not disabled at step two of the five-step evaluation process. To satisfy step two, the plaintiff must present medical evidence demonstrating that he suffers from a severe impairment. To be disabling, the severe impairment must have lasted or be expected to last for a continuous period of not less than twelve months. See 20 C.F.R. §§ 404.1505(a), 404.1509, 404.1520(c). To satisfy the duration requirement the plaintiff must demonstrate that his disability prevented him or would prevent him from performing any substantial gainful activity for twelve continuous months. See Neal v. Bowen, 829 F.2d 528, 530-31(5th Cir.1987).
The burden is on the plaintiff to provide medical evidence to support his claim that he suffers from a disabling impairment. See 42 U.S.C. §§ 423(d)(5), 1382c(a)(3)(G). To meet this burden, he must provide reports about his impairment from "acceptable medical sources." 20 C.F.R. §§ 404.1513(a), 416.913(a). Although physicians are included within the definition of acceptable medical sources, chiropractors are not. Instead, chiropractors are listed in a section of the regulations describing "other sources" whose "[i]nformation ... may also help us to understand how your impairment affects your ability to work." 20 C.F.R. §§ 404.1513(e), 416.913(e). Thus, a chiropractor cannot provide a medical opinion concerning disability. See Diaz v. Shalala, 59 F.3d 307, 313 (2d Cir.1995).
In his memorandum, the plaintiff argues that the severity requirement is a minimal standard and that the ALJ erred in finding the plaintiff's recurrent back injuries did not constitute a severe impairment. The plaintiff, however, does not address the durational requirement.
The record contains minimal evidence from treating physicians. The plaintiff saw his treating physician twice after the 1994 accident. In the treatment notes, the physician did not indicate that the plaintiff's injury was disabling or would last for twelve months. The plaintiff provides no evidence that he attended the physical therapy ordered by his physician. Further, the plaintiff was released from chiropractic treatment for these injuries after a few months. Following the second accident, the plaintiff was seen by a second treating physician. The plaintiff visited the physician twice and failed to keep a *81 follow-up appointment. Again, the treating physician did not indicate that the injuries were disabling or would last for twelve months.
In addition to the evidence from treating physicians, the record contains reports of three consultative examinations. Two of the examinations were performed at the request of the agency. The consultative physician who performed both examinations determined that the plaintiff suffered from low back syndrome of moderate intensity which was consistent with osteoarthritis and stated that the plaintiff's condition could be improved with medical and physical therapy. The orthopedist consulted by the plaintiff recommended that the plaintiff return to work. Although the opinions of the agency consultative physician may support a finding that the plaintiff suffers from an impairment of the requisite level of severity, there is no opinion regarding the durational requirement. Thus, the court concludes that the plaintiff failed to meet his burden of demonstrating that he suffers from an impairment lasting or expected to last for at least twelve months. See Johnson v. Chater, 969 F.Supp. 493, 507 n. 8 (N.D.Ill.1997) (noting that finding of disability must be premised on impairment lasting at least twelve months and that no objective medical evidence in record indicated that claimant met durational requirement). The court also concludes that the decision of the ALJ that the plaintiff is not disabled is supported by substantial evidence.
CONCLUSION
For the reasons stated above, the defendant's Motion for Order Affirming the Decision of the Commissioner [Doc. # 12] should be GRANTED. The plaintiff's Motion for Order Reversing the Decision of the Commissioner [Doc. # 9] should be DENIED.
Any objections to this recommended ruling must be filed with the Clerk of the Court within ten (10) days of the receipt of this order. Failure to object within ten (10) days may preclude appellate review. See 28 U.S.C. § 636(b)(1); Rules 72, 6(a) and 6(e) of the Federal Rules of Civil Procedure; Rule 2 of the Local Rules for United States Magistrates; Small v. Secretary of H.H.S., 892 F.2d 15 (2d Cir.1989)(per curiam); F.D.I.C. v. Hillcrest Assoc., 66 F.3d 566, 569 (2d Cir.1995).
NOTES
[1] The administrative record filed by the Commissioner shall be referred to as "R.".
[2] Elsewhere in the record, the plaintiff stated that he ran the variety store for ten years. (See R. 64.)
[3] The treating physician's notes, however, indicate that the plaintiff was referred to a physical therapist for treatment. (See R. 171.) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2419764/ | 102 F. Supp. 2d 1280 (2000)
Peter H. BURKE et al., on behalf of themselves and all others similarly situated, Plaintiffs,
v.
Harold RUTTENBERG, et al., Defendants.
George W. Massey, on behalf of himself and all others similarly situated, Plaintiff,
v.
Harold Ruttenberg, et al., Defendants.
Nos. CV99-BU-3097-S, CV99-BU-3129-S.
United States District Court, N.D. Alabama, Southern Division.
April 7, 2000.
*1281 *1282 *1283 Thomas L Krebs, J Michael Rediker, Patricia Diak, Ritchie & Rediker LLC, Birmingham, AL, Vincent F Kilborn, III, Kilborn & Roebuck, Mobile, AL, John W Haley, Bruce J McKee, Hare Wynn Newell & Newton, Birmingham, AL, David A McDonald, Mobile, AL, for Peter H Burke, Gregory L Horn, Jerome H Fiorella, Jerry B Schilleci, Sound Deals, Inc., plaintiffs.
Thomas L Krebs, J Michael Rediker, Patricia Diak, Ritchie & Rediker LLC, Birmingham, AL, Vincent F Kilborn, III, Kilborn & Roebuck, Mobile, AL, John W *1284 Haley, Bruce J McKee, Hare Wynn Newell & Newton, Birmingham, AL, David A McDonald, Mobile, AL, Stuart M Grant, Grant & Eisenhofer PA, Wilmington, DE, for Wisconsin Investment Board, State of, plaintiff.
Thomas L Krebs, Ritchie & Rediker LLC, Birmingham, AL, M Clay Ragsdale, IV, M Clay Ragsdale PC, Birmingham, AL, Samuel H Rudman, Milberg Weiss Bershad Hynes & Lerach LLP, New York City, Stuart M Grant, Grant & Eisenhofer PA, Wilmington, DE, for Kenneth Bush, Edward Eubank, John Michael, plaintiff.
M Clay Ragsdale, IV, M Clay Ragsdale PC, Birmingham, AL, Samuel H Rudman, Milberg Weiss Bershad Hynes & Lerach LLP, New York City, for Louise Bush, plaintiff.
N Lee Cooper, Luther M Dorr, Jr, Maynard Cooper & Gale, Birmingham, AL, Jason M Halper, Dennis J Block, Cadwalader Wickersham & Taft, New York City, for Harold Ruttenberg, Don-Allen Ruttenberg, defendants.
N Lee Cooper, Luther M Dorr, Jr, Maynard Cooper & Gale, Birmingham, AL, David C Newman, Smith Gambrell & Russell, Atlanta, GA, Jason M Halper, Dennis J Block, Cadwalader Wickersham & Taft, New York City, for Eric L Tyra, Peter Berman, Cooper Evans, Patrick Lloyd, defendants.
N Lee Cooper, Luther M Dorr, Jr, Maynard Cooper & Gale, Birmingham, AL, James W Gewin, Joseph B Mays, Jr, Dylan C Black, Bradley Arant Rose & White, Birmingham, AL, Jason M Halper, Dennis J Block, Cadwalader Wickersham & Taft, New York City, John B Missing, Andrew M Herscowitz, Mandy Jones, Brobeck Phleger and Harrison, Washington, DC, for Michael P Lazarus, Randall L Haines, Bart Starr, Sr, defendants.
N Lee Cooper, Luther M Dorr, Jr, Maynard Cooper & Gale, Birmingham, AL, James W Gewin, Joseph B Mays, Jr, Dylan C Black, Bradley Arant Rose & White, Birmingham, AL, James R Carroll, George J Skelly, Skadden Arps Slate Meagher & Flom LLP, Boston, MA, Jason M Halper, Dennis J Block, Cadwalader Wickersham & Taft, New York City, John B Missing, Andrew M Herscowitz, Brobeck Phleger and Harrison, Washington, DC, for David F Bellet, Edward S Croft, III, Warren C Smith, Jr, John A Berg, defendants.
N Lee Cooper, Luther M Dorr, Jr, Maynard Cooper & Gale, Birmingham, AL, Jason M Halper, Dennis J Block, Cadwalader Wickersham & Taft, New York City, Paul A Straus, Michael J Malone, Battle Fowler, New York City, for Helen Rockey, defendant.
Michael L Edwards, Lee H Zell, Balch & Bingham LLP, Birmingham, AL, Jason M Halper, Dennis J Block, Cadwalader Wickersham & Taft, New York City, Michael R Young, Antonio Jr Yanez, Willkie Farr & Gallagher, New York City, for Deloitte & Touche LLP, defendant.
Michael L Edwards, Lee H Zell, Balch & Bingham LLP, Birmingham, AL, N Lee Cooper, Luther M Dorr, Jr, Maynard Cooper & Gale, Birmingham, AL, Jason M Halper, Dennis J Block, Cadwalader Wickersham & Taft, New York City, Antonio Jr Yanez, Willkie Farr & Gallagher, New York City, for Steven H Barry, Karen Baker, defendant.
David C Newman, M Clay Ragsdale, IV, M Clay Ragsdale PC, Birmingham, AL, Samuel H Rudman, Milberg Weiss Bershad Hynes & Lerach LLP, New York City, William S Lerach, Travis E Downs, III, Amber L Eck, Milberg Weiss Bershad Hynes & Lerach LLP, San Diego, CA, Steven E Cauley, Cauley & Geller, Little Rock, AR, for Just for Feet Plaintiffs Group, movant.
William T Stephens, Retirement Systems of Alabama, Montgomery, AL, for Retirement Systems of Alabama, movant.
James L North, James L North & Associates, Birmingham, AL, for Florida State Board of Administration, movant.
Thomas L Krebs, J Michael Rediker, Patricia Diak, Ritchie & Rediker LLC, Birmingham, AL, for Public Employees Retirement Systems of Ohio, movant.
*1285 Memorandum Opinion
BUTTRAM, District Judge.
The present consolidated actions involve claims of securities fraud in the purchase and sale of common stock of Just for Feet, Inc., ("Just for Feet" or "Feet") proscribed by section 10(b) of the Securities Exchange Act (the "Exchange Act"), 15 U.S.C. § 78j(b) and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission ("SEC"), 17 C.F.R. § 240.10b-5; claims of aiding and abetting violation of the Exchange Act in contravention of section 20 of the Exchange Act, 15 U.S.C. § 78t; and claims of insider trading prohibited by section 20A of the Exchange Act, 15 U.S.C. § 78t-1. Claims of fraud and professional negligence arising out of the same purchase and sale of Just for Feet common stock are raised under the law of the State of Alabama. There exists jurisdiction over the federal claims in these actions pursuant to 15 U.S.C. § 78aa and 28 U.S.C. § 1331. Supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367 is asserted.
Pending before the Court are the motions of competing parties, the State of Wisconsin Investment Board ("SWIB") and the self-styled "Just for Feet Plaintiffs Group" ("the Group"), for appointment as lead plaintiff in the instant securities fraud action pursuant to section 21D(a)(3)(B)(i) of the Exchange Act, as amended by the Private Securities Litigation Reform Act of 1995 ("the Reform Act"), 15 U.S.C. § 78u-4.[1] The Court's original conclusion, after reviewing the materials initially filed by the contenders for the lead plaintiff position, was that each contender had advantages and disadvantages with regard to issues of typicality, adequacy, cohesiveness and amount of loss and that, as a consequence, the Court should flip a coin to decide who to appoint lead plaintiff. Rather than toss a coin in the privacy of chambers and inform the parties of its decision in a short order, the Court gave the contenders foreknowledge of its intention to have a public toss of the coin, along with the opportunity to negotiate an arrangement among themselves. This, the Court presumed, would be a fairer way of resolving the matter, all things being equal. In accord with its stated intention, the Court scheduled a public coin toss in its courtroom; however, as the appointed day approached, the contenders filed further motions, requesting that the Court reconsider its decision to hold a coin toss, or, at least, put the coin toss on hold for a brief amount of time. Upon receipt of these motions, the Court found more to consider in resolving the issue of lead plaintiff. As such, on the date of the coin toss and in the interest of making no decision in haste, the Court informed the contenders that the toss would be continued, pending resolution of the motions for reconsideration. It is to these motions for reconsideration that the Court now turns.[2]
*1286 BACKGROUND
Allegations Derived from the Complaints.[3]
The claims stated in the complaints stem from the actions of various individuals in the sale and purchase of Just for Feet common stock. Throughout the alleged class period, Just for Feet, although incorporated in Delaware, was principally an Alabama corporation, headquartered in Pelham, Alabama, and running its operations from there.[4] Until trading was halted on November 2, 1999, shares of Feet common stock were publicly traded on the NASDAQ National Market System.
At the opening of the class period, Feet was a paradigmatic operator of large-scale specialty storeslarge warehouse stores focusing on the sale of a single type of goods, such as casual clothing, books or housewaresthe primary business of which was the sale of athletic and outdoor footwear to end-line customers. It operated fifty-four company-owned and eight franchised superstores in seventeen states and, after acquiring two smaller companies in March of 1997, it ran thirty company-owned and forty-eight franchised specialty stores in eighteen states and Puerto Rico. Allegedly, at this time, the overall market for the sale of athletic footwear was flagging; however, for the most part, Feet had purportedly managed, prior to the opening of the class period, to outperform the poor market and increase its sales and profits. Nonetheless, the complaints allege, the officers and directors of Feet were keenly aware of the continuing pressures of the market upon Feet's business and allegedly decided, in order to remain buoyed atop the shrinking market for the athletic footwear, to expand Feet's share of that market.[5] The complaints aver that the officers and directors of Just for Feet decided to mask any losses incurred in the expansion through the use of fraudulent accounting practices, in order that the expansion occur with a minimum of dissent from shareholders.
In essence, the complaints allege that in each Form 10-Q or 10-K filed with the SEC, along with public releases touting Feet's performance, the Defendants made or participated in the making of several fraudulent misrepresentations by overstating the total sales of Feet, its gross and net income, and income per share, from April 1, 1997, until, apparently, the filing on September 15, 1999, of a Form 12B-25 statement of late filing which noted the forthcoming issuance of a statement reporting unfavorable second quarter performance.[6] According to the complaints, in *1287 order to disguise the falsity of Feet's assertions regarding profitability and cash flow during this time period, the directors and officers of Feet engaged in a number of improper accounting practices. For example, both complaints allege the following, in nearly identical terms:[7]
Feet entered into agreements with certain vendors which due to its improper accounting, resulted in overstating quarterly net income throughout the Class Period. Rather than donate the vendor fixtures to new stores, which is the standard industry practice, Feet would have vendors remit monies up front for the value of the store fixtures, and include that in current income. Then, Feet would buy the fixtures (shelving, displays, etc.) from the vendors for the same amount, capitalize the amounts as an asset, and depreciate the asset over time. The sham transactions were not income to Feet as required by [Generally Accepted Accounting Principles ("GAAP")] as Feet had not earned the income.
Massey Complaint at ¶ 66. Among other intentional accounting mishaps attributed to Just for Feet are the false accrual of income credits for cooperative advertising from vendors; the understatement of operating expenses and overstating of accounts receivable by $500,000.00 related to uncollectible accounts from CheckCare, its check validation vendor; overstatement of inventory through improper capitalization of operating costs; and improper calculation of the value of inventory by determining its worth based upon the greater, rather than the lesser, of the cost of that inventory or its market value.
The complaints also state two particular incidents of fraud committed by the officers and directors of Just for Feet that are confined to particular moments within the class period. As stated in the Massey complaint:
Just for Feet management ... concealed the Company's performance by improper use of acquisition accounting entries relating to the Sneaker Stadium acquisition. These unjustified entries causing the inventory reserves of Sneaker Stadium to be set greatly in excess of the necessary amounts, then reducing those reserves in subsequent quarters as needed to allow the Company to report inflated earnings. Per the 10-Q for the quarter ended July 31, 1998 the defendants caused the company to show an estimate of inventory value for the inventory acquired from Sneaker Stadium to be $36.4 million. In the 10-Q for the quarter ended October 31, 1998 the amount was adjusted downward to $27.6 million. Defendants caused Feet to adjust the inventory reserve by increasing its acquisition-related inventory reserve, with an offsetting increase to goodwill (which is being amortized over thirty years). The defendants then offset cost of sales against the excess Stadium Sneaker inventory [re]serves causing Just for Feet's profit margins and net profits to be overstated. This treatment effectively masked poor operational results by reducing cost of sales, postponing recognition of costs that should have been charged to income currently.
Massey Complaint at ¶ 61. It is also alleged that six weeks prior to the announcement by Just for Feet that it would file a petition of bankruptcy under Chapter 11, the officers and directors of Feet knew of such an intention, but did not disclose such to the public, in order to arrange a secret repayment plan with certain of Feet's creditors unfavorable to the shareholders.
The complaints attribute this wrongdoing to a host of officers and directors of *1288 Just for Feet, averring that each either participated in the wrongdoing or permitted it to happen, with his or her knowledge and blessing, despite the presence of duty to intervene in and correct the wrongdoing. These officers and directors include Ruttenberg,[8] Eric L. Tyra ("Tyra"),[9] Peter Berman ("Berman"),[10] Cooper Evans ("Evans"),[11] Patrick Lloyd ("Lloyd"),[12] Michael Lazarus ("Lazarus"),[13] Randall L. Haines ("Haines"),[14] David F. Bellet ("Bellett"),[15] Bart Starr, Sr. ("Starr"),[16] Edward S. Croft, III ("Croft"),[17] Warren C. Smith, Jr. ("Smith"),[18] Helen Rockey ("Rockey"),[19] John A. Berg ("Berg"),[20] and Don-Allen Ruttenberg ("D. Ruttenberg").[21]
With regard to Deloitte & Touche ("Deloitte"), the Burke complaint alleges that it was derelict in its duty to expose the improper accounting practices of Just for Feet. In particular, the Burke complaint avers that Deloitte, while issuing audit reports on the company's financial statements for the fiscal year ending January 1998 through the end of the class period, failed to insure that the underlying audit tests conformed to generally accepted auditing standards ("GAAS"). Among other things, the complaint alleges that Deloitte violated GAAS in that its senior personnel did not adequately supervise junior personnel; that it did not develop an audit plan that would screen for management irregularities; that Deloitte's auditors had an inadequate understanding of Feet's operations; that the auditors insufficiently examined collected evidence to make informed opinions about the financial statements audited by it; and that it failed to *1289 report problems to the audit committee of Feet's board of directors. These failures, allege the Burke complaint, were of such a degree as to be actionable both under section 10(b) of the Exchange Act and rule 10b-5 promulgated pursuant thereto and under state law for the torts of professional negligence and common law fraud and deceit. These claims are also leveled against Steven H. Barry ("Barry"), who was, during the class period, the Birmingham office managing partner of Deloitte and the audit partner on Deloitte's audit of Just for Feet, and against Karen Baker ("Baker"), who was, during the class period, the senior manager in the audit of Just for Feet.
Lead Plaintiff Competitors.[22]
There are two competitors for lead plaintiff in the instant case, SWIB and the Group. While the former is a clearly demarcated entity, there is some difficulty in describing precisely what the contours of the Group are. This is the case because, at different points in its motions and briefs and depending on how beneficial a given definition is to its arguments, the Group defines itself either as the sum total of all persons who filled out the two hundred ninety-eight (298) certifications allegedly pursuant to 21D(a)(2)(A) that are attached to the motion to appoint the Group lead plaintiff or as the twelve-person "steering committee" selected from those attached certifications. For purposes of clarification, the relevant features of the broader group, as well as the salient characteristics of each member of the "steering committee," will be set forth herein.
State of Wisconsin Investment Board.
SWIB acts in a fiduciary capacity as investment manager for the Wisconsin Public Employee Retirement System (the "System"), among other Wisconsin entities, in which nearly 450,000 state and local employees of the State of Wisconsin participate. The System for which SWIB invests is the ninth largest public pension fund in the United States, with over $69 billion in retirement and other public funds under its management. With the funds at its disposal, SWIB began purchasing Just for Feet stock in 1997. Its purchases of Just for Feet common stock occurred in two separate periods, broken by an approximate four month period of sale of that stock. The first period, lasting from May 29, 1997, until August 22, 1997, encompassed the following purchases at the listed prices:[23]
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
05/27/97 50,000 $17.625000 $881,250.000000
---------------------------------------------------------------------------------------
06/12/97 25,000 $18.530000 $463,250.000000
06/13/97 100,000 $18.370000 $1,837,000.000000
---------------------------------------------------------------------------------------
06/13/97 25,000 $18.313000 $457,825.000000
---------------------------------------------------------------------------------------
06/16/97 60,000 $18.188000 $1,091,280.000000
---------------------------------------------------------------------------------------
06/16/97 5,000 $18.155000 $97,775.000000
---------------------------------------------------------------------------------------
06/16/97 40,000 $18.281250 $731,250.000000
---------------------------------------------------------------------------------------
06/17/97 125,000 $17.875000 $2,234,375.000000
---------------------------------------------------------------------------------------
06/18/97 50,000 $17.750000 $887,500.000000
---------------------------------------------------------------------------------------
06/18/97 6,200 $17.643000 $109,386.600000
---------------------------------------------------------------------------------------
06/19/97 100,000 $17.750000 $1,775,000.000000
---------------------------------------------------------------------------------------
06/19/97 5,800 $17.767000 $103,048.600000
---------------------------------------------------------------------------------------
06/23/97 90,000 $17.229000 $1,550,610.000000
---------------------------------------------------------------------------------------
*1290
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
06/23/97 62,100 $17.422000 $1,081,906.200000
---------------------------------------------------------------------------------------
06/24/97 45,000 $17.236000 $775,620.000000
---------------------------------------------------------------------------------------
06/24/97 75,000 $17.600000 $1,320,000.000000
---------------------------------------------------------------------------------------
06/24/97 7,900 $17.405000 $137,499.500000
---------------------------------------------------------------------------------------
06/24/97 20,000 $17.395000 $347,900.000000
---------------------------------------------------------------------------------------
06/25/97 65,000 $16.875000 $1,096,875.000000
---------------------------------------------------------------------------------------
06/25/97 35,000 $16.807000 $588,245.000000
---------------------------------------------------------------------------------------
06/27/97 250,000 $16.750000 $4,187,500.000000
---------------------------------------------------------------------------------------
08/11/97 150,000 $17.875000 $2,681,250.000000
---------------------------------------------------------------------------------------
08/14/97 75,000 $15.875000 $1,190,625.000000
---------------------------------------------------------------------------------------
08/14/97 80,000 $16.562500 $1,325,000.000000
---------------------------------------------------------------------------------------
08/14/97 20,000 $16.030000 $320,600.000000
---------------------------------------------------------------------------------------
08/18/97 25,000 $15.875000 $396,875.000000
---------------------------------------------------------------------------------------
08/21/97 100,000 $12.750000 $1,275,000.000000
---------------------------------------------------------------------------------------
08/22/97 80,000 $12.625000 $1,010,000.000000
---------------------------------------------------------------------------------------
TOTALS 1,772,000 $29,947,445.900000
---------------------------------------------------------------------------------------
From August 23, 1997, until August 13, 1998, a period of nearly one year, SWIB made no purchases of Just for Feet common stock. However, in a four month period beginning on March 16, 1998, and ending on July 6, 1998, SWIB sold every share of Just for Feet stock that it had acquired during the Summer of 1997. During this time period in 1998 the following sales were made:
---------------------------------------------------------------------------------------
DATE SHARES SOLD PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
03/16/98 10,000 $20.765600 $207,656.000000
---------------------------------------------------------------------------------------
03/16/98 75,000 $20.666600 $1,549,995.000000
---------------------------------------------------------------------------------------
03/16/98 50,000 $20.500000 $1,025,000.000000
---------------------------------------------------------------------------------------
03/16/98 75,000 $20.583300 $1,543,747.500000
---------------------------------------------------------------------------------------
03/17/98 25,000 $21.000000 $525,000.000000
---------------------------------------------------------------------------------------
04/14/98 10,000 $21.125000 $211,250.000000
---------------------------------------------------------------------------------------
04/14/98 37,000 $21.406500 $792,040.500000
---------------------------------------------------------------------------------------
04/14/98 25,000 $21.625000 $540,625.000000
---------------------------------------------------------------------------------------
04/14/98 28,000 $21.625000 $605,500.000000
---------------------------------------------------------------------------------------
04/15/98 5,000 $22.218800 $111,094.000000
---------------------------------------------------------------------------------------
04/15/98 25,000 $22.250000 $556,250.000000
---------------------------------------------------------------------------------------
04/17/98 1,000 $22.437500 $22,437.500000
---------------------------------------------------------------------------------------
04/17/98 10,000 $22.375000 $223,750.000000
---------------------------------------------------------------------------------------
04/20/98 25,000 $22.500000 $562,500.000000
---------------------------------------------------------------------------------------
04/20/98 10,000 $22.812500 $228,125.000000
---------------------------------------------------------------------------------------
04/20/98 8,000 $22.687500 $181,500.000000
---------------------------------------------------------------------------------------
04/21/98 16,000 $22.781300 $364,500.800000
---------------------------------------------------------------------------------------
04/22/98 25,000 $23.000000 $575,000.000000
---------------------------------------------------------------------------------------
05/04/98 699 $24.017900 $16,788.512100
---------------------------------------------------------------------------------------
05/04/98 5,798 $24.017900 $139,255.784200
---------------------------------------------------------------------------------------
05/04/98 12,003 $23.500000 $282,070.500000
---------------------------------------------------------------------------------------
05/21/98 20,000 $22.375000 $447,500.000000
---------------------------------------------------------------------------------------
05/22/98 10,000 $22.218800 $222,188.000000
---------------------------------------------------------------------------------------
05/22/98 40,000 $22.531300 $901,252.000000
---------------------------------------------------------------------------------------
05/26/98 9,988 $22.250000 $222,233.000000
---------------------------------------------------------------------------------------
05/26/98 40,012 $22.250000 $890,267.000000
---------------------------------------------------------------------------------------
05/28/98 10,000 $22.406300 $224,063.000000
*1291
---------------------------------------------------------------------------------------
DATE SHARES SOLD PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
05/28/98 23,500 $22.500000 $528,750.000000
---------------------------------------------------------------------------------------
05/28/98 40,000 $22.500000 $900,000.000000
---------------------------------------------------------------------------------------
05/29/98 45,000 $22.344000 $1,005,480.000000
---------------------------------------------------------------------------------------
05/29/98 5,000 $22.406300 $112,031.500000
---------------------------------------------------------------------------------------
06/03/98 40,011 $22.343800 $893,997.781800
---------------------------------------------------------------------------------------
06/03/98 9,989 $23.343800 $233,181.218200
---------------------------------------------------------------------------------------
06/08/98 9,989 $23.187500 $231,619.937500
---------------------------------------------------------------------------------------
06/17/98 25,000 $25.375000 $634,375.000000
---------------------------------------------------------------------------------------
06/17/98 10,000 $25.125000 $251,250.000000
---------------------------------------------------------------------------------------
06/22/98 24,007 $26.770800 $642,686.595600
---------------------------------------------------------------------------------------
06/22/98 13,995 $26.770800 $374,657.346000
---------------------------------------------------------------------------------------
06/22/98 22,004 $26.475000 $582,555.900000
---------------------------------------------------------------------------------------
06/22/98 4,994 $26.475000 $132,216.150000
---------------------------------------------------------------------------------------
06/23/98 15,000 $27.750000 $416,250.000000
---------------------------------------------------------------------------------------
06/23/98 10,000 $27.156300 $271,563.000000
---------------------------------------------------------------------------------------
06/23/98 10,000 $27.250000 $272,500.000000
---------------------------------------------------------------------------------------
06/23/98 30,000 $27.250000 $817,500.000000
---------------------------------------------------------------------------------------
06/25/98 16,005 $27.625000 $442,138.125000
---------------------------------------------------------------------------------------
06/25/98 3,995 $27.625000 $110,361.875000
---------------------------------------------------------------------------------------
06/29/98 4,995 $28.500000 $142,357.500000
---------------------------------------------------------------------------------------
06/29/98 20,005 $28.500000 $570,142.500000
---------------------------------------------------------------------------------------
07/06/98 20,006 $28.937500 $578,923.625000
---------------------------------------------------------------------------------------
07/06/98 4,994 $28.937500 $144,513.875000
---------------------------------------------------------------------------------------
TOTALS 1,772,000 $42,025,549.087900[24]
---------------------------------------------------------------------------------------
By the end of the day on July 6, 1998, SWIB held no remaining shares in Just for Feet. In selling its shares, SWIB not only recovered its investment in the Just for Feet common stock bought in the Summer of 1997, it profited considerably from the sale of said stock. First, on not a single share purchased between May 29, 1997, and August 22, 1997, did SWIB lose money. The highest price that SWIB paid for a share of stock during that summer was $18.53, an amount that included commissions. The lowest price at which SWIB sold that stock was $20.50. The total profit made by SWIB on these transactions was $ 12,106,071.1879.
On August 13, 1998, over a month after dispossessing itself of its earlier shares of Just for Feet stock, SWIB made two purchases of Just for Feet stock:
*1292
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
08/13/98 80,023 $14.750000 $1,180,339.250000
---------------------------------------------------------------------------------------
08/13/98 19,977 $14.750000 $294,660.750000
---------------------------------------------------------------------------------------
TOTALS 100,000 $1,475,000.000000
---------------------------------------------------------------------------------------
SWIB purchased no more shares of Just for Feet stock until January 22, 1999, when SWIB made four more large block purchases:
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
01/22/99 45,947 $13.168500 $605,053.069500
---------------------------------------------------------------------------------------
01/22/99 193,043 $13.168500 $2,542,086.745500
---------------------------------------------------------------------------------------
01/22/99 153,874 $13.800800 $2,123,584.299200
---------------------------------------------------------------------------------------
01/22/99 472,136 $13.800800 $6,515,854.508800
---------------------------------------------------------------------------------------
TOTALS 865,000 $11,786,578.623000
---------------------------------------------------------------------------------------
SWIB then owned a total of 965,000 shares of Just for Feet common stock. On May 11, 1999, SWIB went on another spate of summer buying of Just for Feet stock. During that period, SWIB made the following purchases:
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
05/11/99 50,000 $10.406300 $520,315.000000
---------------------------------------------------------------------------------------
05/12/99 19,977 $10.437500 $208,509.937500
---------------------------------------------------------------------------------------
05/12/99 80,023 $10.437500 $835,240.062500
---------------------------------------------------------------------------------------
05/14/99 125,000 $11.255000 $1,406,875.000000
---------------------------------------------------------------------------------------
05/17/99 4,994 $11.187500 $55,870.375000
---------------------------------------------------------------------------------------
05/17/99 20,006 $11.187500 $223,817.125000
---------------------------------------------------------------------------------------
05/25/99 80,023 $8.718800 $697,704.532400
---------------------------------------------------------------------------------------
05/25/99 40,011 $8.718800 $348,847.906800
---------------------------------------------------------------------------------------
05/25/99 19,977 $8.718800 $174,175.467600
---------------------------------------------------------------------------------------
05/25/99 9,989 $8.718800 $87,092.093200
---------------------------------------------------------------------------------------
05/27/99 21,500 $7.446600 $160,101.900000
---------------------------------------------------------------------------------------
05/27/99 25,000 $7.500000 $187,500.000000
---------------------------------------------------------------------------------------
05/27/99 59,500 $7.500000 $446,250.000000
---------------------------------------------------------------------------------------
06/04/99 100,000 $6.937500 $693,750.000000
---------------------------------------------------------------------------------------
06/07/99 4,994 $6.410600 $32,014.536400
---------------------------------------------------------------------------------------
06/07/99 20,006 $6.390000 $127,838.340000
---------------------------------------------------------------------------------------
06/07/99 3,995 $6.437500 $25,717.812500
---------------------------------------------------------------------------------------
06/07/99 5,602 $6.436300 $36,056.152600
---------------------------------------------------------------------------------------
06/07/99 16,005 $6.437500 $103,032.187500
---------------------------------------------------------------------------------------
06/07/99 1,398 $6.406300 $8,956.007400
---------------------------------------------------------------------------------------
06/08/99 500 $6.467500 $3,233.750000
---------------------------------------------------------------------------------------
06/09/99 2,997 $6.562500 $19,667.812500
---------------------------------------------------------------------------------------
06/09/99 3,836 $6.519900 $25,010.336400
---------------------------------------------------------------------------------------
06/09/99 12,003 $6.562500 $78,769.687500
---------------------------------------------------------------------------------------
06/09/99 15,364 $6.519900 $100,171.743600
---------------------------------------------------------------------------------------
06/10/99 10,643 $6.437500 $68,514.312500
---------------------------------------------------------------------------------------
06/10/99 2,657 $6.437500 $17,104.437500
---------------------------------------------------------------------------------------
06/15/99 15,000 $5.250000 $78,750.000000
---------------------------------------------------------------------------------------
06/15/99 50,000 $4.995100 $249,755.000000
---------------------------------------------------------------------------------------
06/16/99 68,020 $5.294100 $360,104.682000
---------------------------------------------------------------------------------------
06/16/99 16,980 $5.294100 $89,893.818000
---------------------------------------------------------------------------------------
07/09/99 61,929 $5.625000 $348,350.625000
---------------------------------------------------------------------------------------
07/09/99 248,071 $5.625000 $1,395,399.375000
---------------------------------------------------------------------------------------
07/23/99 14,983 $5.187500 $77,724.312500
---------------------------------------------------------------------------------------
*1293
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
07/23/99 60,017 $5.187500 $311,338.187500
---------------------------------------------------------------------------------------
07/27/99 28,008 $4.919600 $137,788.156800
---------------------------------------------------------------------------------------
07/27/99 6,992 $4.919600 $34,397.843200
---------------------------------------------------------------------------------------
07/30/99 100,000 $3.687500 $368,750.000000
---------------------------------------------------------------------------------------
TOTALS 1,426,000 $10,144,388.516400[25]
---------------------------------------------------------------------------------------
After July 30, 1999, SWIB ceased buying shares of Just for Feet stock and by the end of the class period, November 2, 1999, the total shares of Just for Feet stock owned by SWIB totaled 2,391,000.[26] The total amount paid for these shares was $23,405,967.1394, an amount SWIB declares to be its total loss.
Just for Feet Plaintiffs Group & Steering Committee.
In the opening paragraph of its motion to be appointed lead plaintiff in the present litigation, the Group introduces itself in the following terms:
Movants, who collectively suffered damages of $6,530,197.59 as a result of their purchase of Just for Feet, Inc., publicly traded securities, including common stock, submit this motion, pursuant to § 21D(a)(3)(B) of the Securities Exchange Act of 1934 for: (1) appointment of lead plaintiffs; and (2) approval of lead plaintiffs' selection of co-lead counsel. Movants proffer for appointment as lead plaintiffs the Just for Feet Plaintiffs Group, which consists of a group of 12 class members who together lost $2,554,802.12 as a result of their purchase or acquisition of Feet securities. Because the Just for Feet Plaintiffs Group includes institutions and individuals who purchased or otherwise acquired Feet securities, including Feet common stock, the Just For Feet Plaintiffs Group is also the most diverse lead plaintiff group and best able to represent the interest of all class members. In order to facilitate the efficient management and oversight of this litigation, the Just For Feet Plaintiffs Group has formed a Steering Committee of 12 members to provide a vehicle to efficiently and effectively oversee and manage the litigation going forward.
Memorandum of Law in Support of Motion to Appoint the Just for Feet Plaintiffs Group as Lead Plaintiffs Pursuant to § 21D(a)(3)(B) of the Securities Exchange Act of 1934 and to Approve Lead Plaintiff's Choice of Counsel ("Group Memorandum I") at 1 (emphasis added and internal citations omitted). Thus begins the Groups's varying attempts at self-definition. In places, as at the beginning of the *1294 introductory paragraph, the Group defines itself as twelve members of the class whose total losses amount to $2,554,802.12. However, at other points, for example, in the last sentence of the introductory paragraph, the Group appears to define itself as the whole set of individuals who lost nearly $6.5 million, referring to the twelve class members as merely the "steering committee." Before attempting to muddle this problem out, the Court will describe the relevant features of the members of the purported steering committee.
George Burman.
Beginning on March 5, 1998, George Burman ("Burman") made the following purchases of Just for Feet common stock:
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
03/05/98 2,000 $17.880000 $35,760.000000
---------------------------------------------------------------------------------------
08/28/98 3,000 $14.000000 $42,000.000000
---------------------------------------------------------------------------------------
03/05/99 5,000 $12.060000 $60,300.000000
---------------------------------------------------------------------------------------
05/11/99 5,000 $10.440000 $52,200.000000
---------------------------------------------------------------------------------------
06/01/99 5,000 $7.750000 $38,750.000000
---------------------------------------------------------------------------------------
07/28/99 10,000 $4.250000 $42,500.000000
---------------------------------------------------------------------------------------
TOTALS 30,000 $271,510.000000
---------------------------------------------------------------------------------------
Burman sold none of the shares purchased by him. He alleges a loss of the total amount paid by him for the Just for Feet stock, $ 271,510.00.
Kenneth P. Bush and Louise M. Bush.
Kenneth P. Bush ("Mr. Bush") and Louise Bush ("Ms. Bush" and, collectively, the "Bushes") apparently share joint ownership of 23,200 shares of Just for Feet common stock purchased during the class period. These shares were purchased between May 19, 1997, and August 19, 1999, inclusive:
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
05/19/97 100 $18.750000 $1,875.000000
---------------------------------------------------------------------------------------
05/19/97 100 $18.500000 $1,850.000000
---------------------------------------------------------------------------------------
05/19/97 100 $18.625000 $1,862.500000
---------------------------------------------------------------------------------------
05/19/97 100 $18.275000 $1,827.500000
---------------------------------------------------------------------------------------
08/20/97 200 $12.312500 $2,462.500000
---------------------------------------------------------------------------------------
08/20/97 800 $12.625000 $10,100.000000
---------------------------------------------------------------------------------------
08/20/97 200 $12.375000 $2,475.000000
---------------------------------------------------------------------------------------
08/20/97 300 $12.687500 $3,806.250000
---------------------------------------------------------------------------------------
08/20/97 700 $15.562500 $10,893.750000
---------------------------------------------------------------------------------------
08/20/97 1,225 $12.500000 $15,312.500000
---------------------------------------------------------------------------------------
05/14/98 500 $19.500000 $9,750.000000
---------------------------------------------------------------------------------------
05/15/98 300 $19.250000 $5,775.000000
---------------------------------------------------------------------------------------
05/15/98 500 $19.375000 $9,687.500000
---------------------------------------------------------------------------------------
05/15/98 200 $19.375000 $3,875.000000
---------------------------------------------------------------------------------------
07/21/98 100 $23.625000 $2,362.500000
---------------------------------------------------------------------------------------
07/21/98 100 $23.625000 $2,362.500000
---------------------------------------------------------------------------------------
07/21/98 500 $23.750000 $11,875.000000
---------------------------------------------------------------------------------------
12/22/98 100 $14.625000 $1,462.500000
---------------------------------------------------------------------------------------
12/22/98 600 $14.250000 $8,550.000000
---------------------------------------------------------------------------------------
12/22/98 100 $15.375000 $1,537.500000
---------------------------------------------------------------------------------------
12/22/98 100 $15.250000 $1,525.000000
---------------------------------------------------------------------------------------
12/22/98 100 $15.437500 $1,543.750000
---------------------------------------------------------------------------------------
01/15/99 450 $17.375000 $7,818.750000
---------------------------------------------------------------------------------------
*1295
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
01/15/99 100 $17.437500 $1,743.750000
---------------------------------------------------------------------------------------
01/15/99 150 $17.312500 $2,596.875000
---------------------------------------------------------------------------------------
01/15/99 300 $17.187500 $5,156.250000
---------------------------------------------------------------------------------------
01/15/99 100 $17.250000 $1,725.000000
---------------------------------------------------------------------------------------
01/22/99 50 $14.375000 $718.750000
---------------------------------------------------------------------------------------
01/22/99 150 $14.000000 $2,100.000000
---------------------------------------------------------------------------------------
01/22/99 100 $13.875000 $1,387.500000
---------------------------------------------------------------------------------------
01/22/99 150 $14.500000 $2,175.000000
---------------------------------------------------------------------------------------
01/22/99 100 $14.875000 $1,487.500000
---------------------------------------------------------------------------------------
01/22/99 100 $13.625000 $1,362.500000
---------------------------------------------------------------------------------------
01/22/99 50 $14.937500 $746.875000
---------------------------------------------------------------------------------------
02/22/99 500 $11.625000 $5,812.500000
---------------------------------------------------------------------------------------
02/22/99 100 $11.375000 $1,137.500000
---------------------------------------------------------------------------------------
02/25/99 100 $11.250000 $1,125.000000
---------------------------------------------------------------------------------------
02/25/99 125 $10,937500 $1,367.187500
---------------------------------------------------------------------------------------
02/25/99 100 $11.312500 $1,131.250000
---------------------------------------------------------------------------------------
02/25/99 100 $11.375000 $1,137.500000
---------------------------------------------------------------------------------------
02/25/99 200 $11.500000 $2,300.000000
---------------------------------------------------------------------------------------
02/25/99 100 $11.000000 $1,100.000000
---------------------------------------------------------------------------------------
02/25/99 50 $10.875000 $543.750000
---------------------------------------------------------------------------------------
02/26/99 150 $10.250000 $1,537.500000
---------------------------------------------------------------------------------------
02/26/99 50 $10.125000 $506.250000
---------------------------------------------------------------------------------------
02/26/99 200 $10.187500 $2,037.500000
---------------------------------------------------------------------------------------
02/26/99 200 $10.500000 $2,100.000000
---------------------------------------------------------------------------------------
03/02/99 300 $10.875000 $3,262.500000
---------------------------------------------------------------------------------------
03/02/99 100 $10.817500 $1,081.750000
---------------------------------------------------------------------------------------
03/05/99 500 $11.875000 $5,937.500000
---------------------------------------------------------------------------------------
03/05/99 200 $11.812500 $2,362.500000
---------------------------------------------------------------------------------------
03/16/99 100 $11.812500 $1,181.250000
---------------------------------------------------------------------------------------
03/16/99 150 $11.000000 $1,650.000000
---------------------------------------------------------------------------------------
03/16/99 150 $11.937500 $1,790.625000
---------------------------------------------------------------------------------------
03/17/99 100 $20.625000 $2,062.500000
---------------------------------------------------------------------------------------
03/17/99 100 $20.562500 $2,056.250000
---------------------------------------------------------------------------------------
03/17/99 2,000 $20.750000 $41,500.000000
---------------------------------------------------------------------------------------
03/17/99 200 $20.875000 $4,175.000000
---------------------------------------------------------------------------------------
03/18/99 350 $11.750000 $4,112.500000
---------------------------------------------------------------------------------------
03/18/99 200 $11.687500 $2,337.500000
---------------------------------------------------------------------------------------
03/23/99 50 $10.562500 $528.125000
---------------------------------------------------------------------------------------
03/23/99 100 10.750000 $1,075.000000
---------------------------------------------------------------------------------------
03/23/99 150 $10.625000 $1,593.750000
---------------------------------------------------------------------------------------
03/23/99 100 $10.500000 $1,050.000000
---------------------------------------------------------------------------------------
04/19/99 500 $12.000000 $6,000.000000
---------------------------------------------------------------------------------------
04/19/99 200 $11.875000 $2,375.000000
---------------------------------------------------------------------------------------
04/21/99 400 $11.875000 $4,750.000000
---------------------------------------------------------------------------------------
04/21/99 500 $11.750000 $5,875.000000
---------------------------------------------------------------------------------------
04/21/99 500 $11.937500 $5,968.750000
---------------------------------------------------------------------------------------
05/21/99 500 $10.250000 $5,125.000000
---------------------------------------------------------------------------------------
05/21/99 100 $10.313000 $1,031.300000
---------------------------------------------------------------------------------------
05/25/99 100 $8.906300 $890.630000
---------------------------------------------------------------------------------------
05/25/99 100 $8.687500 $868.750000
---------------------------------------------------------------------------------------
05/25/99 50 $8.875000 $443.750000
*1296
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
05/25/99 100 $8.937500 $893.750000
---------------------------------------------------------------------------------------
05/25/99 300 $8.750000 $2,625.000000
---------------------------------------------------------------------------------------
5/25/99 300 $8.812500 $2,643.750000
---------------------------------------------------------------------------------------
05/25/99 300 $8.625000 $2,587.500000
---------------------------------------------------------------------------------------
05/25/99 50 $8.718800 $435.940000
---------------------------------------------------------------------------------------
05/28/99 100 $7.500000 $750.000000
---------------------------------------------------------------------------------------
05/28/99 350 $7.562500 $2,646.875000
---------------------------------------------------------------------------------------
06/17/99 500 $6.375000 $3,187.500000
---------------------------------------------------------------------------------------
06/17/99 500 $6.437500 $3,218.750000
---------------------------------------------------------------------------------------
08/03/99 50 $4.218800 $210.940000
---------------------------------------------------------------------------------------
08/03/99 100 $4.281800 $428.180000
---------------------------------------------------------------------------------------
08/03/99 150 $4.187500 $628.125000
---------------------------------------------------------------------------------------
08/03/99 100 $4.250000 $425.000000
---------------------------------------------------------------------------------------
08/03/99 250 $4.125000 $1,031.250000
---------------------------------------------------------------------------------------
08/12/99 200 $4.531300 $906.260000
---------------------------------------------------------------------------------------
08/12/99 300 $4.500000 $1,350.000000
---------------------------------------------------------------------------------------
08/12/99 500 $6.187500 $3,093.750000
---------------------------------------------------------------------------------------
08/12/99 200 $5.968800 $1,193.760000
---------------------------------------------------------------------------------------
08/12/99 50 $4.562500 $228.125000
---------------------------------------------------------------------------------------
08/19/99 200 $5.937500 $1,187.500000
---------------------------------------------------------------------------------------
TOTALS 23,200 $304,382.822500[27]
---------------------------------------------------------------------------------------
From the certification filed, it does not appear that the Bushes ever sold any of the shares of Just for Feet common stock purchased by them. In addition to standard purchases of Just for Feet common stock, the Bushes also bought and sold Just for Feet stock options during the class period. Their alleged losses in the *1297 purchase and sale of the options during the class period total $31,137.50.
Mr. Bush alleges that he has attended all shareholder meetings of Feet since the company's inception. In addition, Mr. Bush asserts that he was present at the Court's hearing on March 6, 2000, and has taken, to the extent presently possible, an active role in the litigation pending.
Edward E. Eubank.
Beginning on February 26, 1999, Edward E. Eubank ("Eubank") made the following purchases of common stock:
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
02/26/99 1,300 $10.875000 $14,137.500000
---------------------------------------------------------------------------------------
02/26/99 6,600 $10.937500 $72,187.500000
---------------------------------------------------------------------------------------
05/27/99 1,000 $7.437500 $7,437.500000
---------------------------------------------------------------------------------------
TOTALS 8,900 $93,762.500000
---------------------------------------------------------------------------------------
It appears that Eubank continues to hold his 8,900 shares of Just for Feet stock and has, consequently, lost $ 93,637.50. Eubank filed a financial statement with the Court indicating that his losses in Just for Feet common stock far exceed his net worth and filed an affidavit with the Court stating the same. As with the Bushes, Eubank asserts that he was present for the Court's March 6, 2000, hearing and has taken an active interest in the present litigation.
Larry Fallek.
Larry Fallek ("Fallek") made the following purchases of Just for Feet stock during the class period:
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
08/25/97 2,000 $12.500000 $25,000.000000
---------------------------------------------------------------------------------------
12/29/97 1,000 $13.187500 $13,187.500000
---------------------------------------------------------------------------------------
08/14/98 2,000 $16.000000 $32,000.000000
---------------------------------------------------------------------------------------
09/25/98 2,000 $13.750000 $27,500.000000
---------------------------------------------------------------------------------------
10/12/98 2,000 $11.750000 $23,500.000000
---------------------------------------------------------------------------------------
02/18/99 1,000 $13.000000 $13,000.000000
---------------------------------------------------------------------------------------
03/01/99 2,000 $10.500000 $21,000.000000
---------------------------------------------------------------------------------------
06/07/99 1,000 $7.312500 $7,312.500000
---------------------------------------------------------------------------------------
07/27/99 1,000 $5.000000 $5,000.000000
---------------------------------------------------------------------------------------
TOTAL 14,000 $167,500.000000
---------------------------------------------------------------------------------------
Having purchased 14,000 shares of Just for Feet common stock, none of which he has sold, Fallek has an alleged total loss of $ 167,500.00.
Glen Guthrie.
Glen Guthrie ("Guthrie") made two purchases of Just for Feet stock on January 20, 1999, one for 10,000 shares and another for 2,000 shares, paying, in each transaction $ 18.125 per share. Guthrie has not sold his shares in Just for Feet. He claims a total loss of $ 217,500.00.
Michael Jamison.
Michael Jamison made the following purchases of Feet common stock:
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
08/20/97 1,000 $12.500000 $12,500.000000
---------------------------------------------------------------------------------------
08/28/97 1,000 $13.635000 $13,635.000000
---------------------------------------------------------------------------------------
11/07/97 600 $15.875000 $9,525.000000
---------------------------------------------------------------------------------------
06/15/99 2,400 $5.750000 $13,800.000000
---------------------------------------------------------------------------------------
*1298
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
09/13/99 3,000 $3.750000 $11,250.000000
---------------------------------------------------------------------------------------
09/17/99 3,000 $3.063000 $9,189.000000
---------------------------------------------------------------------------------------
09/17/99 3,000 $3.131000 $9,393.000000
---------------------------------------------------------------------------------------
09/22/99 5,000 $1.874000 $9,370.000000
---------------------------------------------------------------------------------------
09/22/99 15,000 $1.889000 $28,335.000000
---------------------------------------------------------------------------------------
09/27/99 10,000 $2.463000 $24,630.000000
---------------------------------------------------------------------------------------
09/28/99 10,000 $2.834000 $28,340.000000
---------------------------------------------------------------------------------------
TOTALS 54,000 $169,967.000000[28]
---------------------------------------------------------------------------------------
Jamison sold no shares of Just for Feet and claims a total loss of $ 169,967.00.
James Mailon Kent III.
James Mailon Kent III ("Kent") made the following purchases of Just for Feet stock during the class period:
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
01/19/99 10,000 $17.750000 $177,500.000000
---------------------------------------------------------------------------------------
03/02/99 10,000 $11.062500 $110,625.000000
---------------------------------------------------------------------------------------
TOTALS 20,000 $288,125.000000
---------------------------------------------------------------------------------------
From the materials provided to the Court, there is no indication that Kent ever rid himself of the 20,000 shares purchased by him. His contended loss therefore totals $288,125.00.
David Laurents.
From late May of 1999 until mid-September of the same year, David Laurents ("Laurents") purchased 29,000 shares of Just for Feet common stock. These purchases are as follows:
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
05/20/99 1,000 $10.500000 $10,500.000000
---------------------------------------------------------------------------------------
05/20/99 1,000 $11.000000 $11,000.000000
---------------------------------------------------------------------------------------
05/20/99 1,000 $10.625000 $10,625.000000
---------------------------------------------------------------------------------------
05/21/99 1,000 $10.250000 $10,250.000000
---------------------------------------------------------------------------------------
05/24/99 1,000 $10.562500 $10,562.500000
---------------------------------------------------------------------------------------
05/25/99 1,000 $8.875000 $8,875.000000
---------------------------------------------------------------------------------------
05/25/99 1,000 $9.125000 $9,125.000000
---------------------------------------------------------------------------------------
05/25/99 500 $9.437500 $4,718.750000
---------------------------------------------------------------------------------------
05/26/99 1,000 $8.312500 $8,312.500000
---------------------------------------------------------------------------------------
05/26/99 2,000 $7.625000 $15,250.000000
---------------------------------------------------------------------------------------
*1299
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
05/28/99 500 $7.500000 $3,750.000000
---------------------------------------------------------------------------------------
06/04/99 1,000 $6.750000 $6,750.000000
---------------------------------------------------------------------------------------
06/04/99 1,000 $7.000000 $7,000.000000
---------------------------------------------------------------------------------------
06/07/99 1,000 $6.187500 $6,187.500000
---------------------------------------------------------------------------------------
06/15/99 500 $5.937500 $2,968.750000
---------------------------------------------------------------------------------------
06/15/99 1,000 $6.000000 $6,000.000000
---------------------------------------------------------------------------------------
06/16/99 1,000 $5.468750 $5,468.750000
---------------------------------------------------------------------------------------
06/24/99 500 $5.937500 $2,968.750000
---------------------------------------------------------------------------------------
07/02/99 1,000 $6.031250 $6,031.250000
---------------------------------------------------------------------------------------
07/07/99 1,000 $5.875000 5,875.000000
---------------------------------------------------------------------------------------
07/08/99 1,000 $5.750000 $5,750.000000
---------------------------------------------------------------------------------------
07/08/99 1,000 $5.500000 $5,500.000000
---------------------------------------------------------------------------------------
07/20/99 2,000 $5.343750 $10,687.500000
---------------------------------------------------------------------------------------
07/28/99 2,000 $4.187500 $8,375.000000
---------------------------------------------------------------------------------------
08/20/99 1,000 $5.500000 $5,500.000000
---------------------------------------------------------------------------------------
08/24/99 1,000 $4.875000 $4,875.000000
---------------------------------------------------------------------------------------
08/30/99 1,000 $3.937500 $3,937.500000
---------------------------------------------------------------------------------------
09/16/99 1,000 $3.750000 $3,750.000000
---------------------------------------------------------------------------------------
TOTALS 29,000 $200,593.750000[29]
---------------------------------------------------------------------------------------
On September 27, 1999, Laurents decided to sell four thousand (4,000) shares of his Just for Feet stock for the price of $ 1.875 per share, for a total of $ 7,500.00. Based on the amounts attached to his lead plaintiff certification, Laurents claims a total loss of $ 193,093.75.[30]
John Michael.
John Michael ("Michael"), like SWIB, can be represented as having purchased Just for Feet common stock in blocks, divisible by periods during which he shed himself of any interest in the company. On March 1, 1999, Michael began his first buying period, during which he purchased 21,850 shares of Just for Feet common stock, all but 2,700 shares of which he sold at a profit during approximately the same period and none of which he sold at a loss.
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
03/01/99 3,500 $10.375000 $36,312.500000
---------------------------------------------------------------------------------------
03/01/99 1,300 $10.375000 $13,487.500000
---------------------------------------------------------------------------------------
03/01/99 500 $10.312500 $5,156.250000
---------------------------------------------------------------------------------------
03/01/99 200 $10.312500 $2,062.500000
---------------------------------------------------------------------------------------
03/02/99 200 $11.125000 $2,225.000000
---------------------------------------------------------------------------------------
03/02/99 1,300 $11.125000 $14,462.500000
---------------------------------------------------------------------------------------
*1300
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
03/24/99 1,500 $10.437500 $15,656.250000
---------------------------------------------------------------------------------------
03/24/99 2,000 $10.437500 $20,875.000000
---------------------------------------------------------------------------------------
03/24/99 1,000 $10.437500 $10,437.500000
---------------------------------------------------------------------------------------
03/24/99 1,000 $10.437500 $10,437.500000
---------------------------------------------------------------------------------------
03/24/99 1,500 $10.437500 $15,656.250000
---------------------------------------------------------------------------------------
03/24/99 500 $10.437500 $5,218.750000
---------------------------------------------------------------------------------------
04/13/99 1,500 $11.625000 $17,437.500000
---------------------------------------------------------------------------------------
04/13/99 1,400 $11.625000 $16,275.000000
---------------------------------------------------------------------------------------
04/13/99 450 $11.625000 $5,231.250000
---------------------------------------------------------------------------------------
04/13/99p 4,000 $11.625000 $46,500.000000
---------------------------------------------------------------------------------------
TOTALS 21,850 $237,431.250000
---------------------------------------------------------------------------------------
From March 22, 1999, until April 23, 1999, he sold each of these shares, apparently in the same blocks in which he purchased them. These sales are detailed below:
---------------------------------------------------------------------------------------
DATE SHARES SOLD PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
03/22/99 3,500 $11.312500 $39,593.750000
---------------------------------------------------------------------------------------
03/22/99 1,300 $11.312500 $14,706.250000
---------------------------------------------------------------------------------------
03/22/99 500 $11.250000 $5,625.000000
---------------------------------------------------------------------------------------
03/22/99 200 $11.500000 $2,300.000000
---------------------------------------------------------------------------------------
03/22/99 200 $11.500000 $2,300.000000
---------------------------------------------------------------------------------------
03/22/99 1,300 $11.125000 $14,462.500000
---------------------------------------------------------------------------------------
03/29/99 1,500 $13.500000 $20,250.000000
---------------------------------------------------------------------------------------
04/08/99 2,000 $11.625000 $23,250.000000
---------------------------------------------------------------------------------------
04/08/99 1,000 $11.562500 $11,562.500000
---------------------------------------------------------------------------------------
04/12/99 1,000 $11.187500 $11,187.500000
---------------------------------------------------------------------------------------
04/12/99 1,500 $11.125000 $16,687.500000
---------------------------------------------------------------------------------------
04/14/99 500 $11.687500 $5,843.750000
---------------------------------------------------------------------------------------
04/14/99 1,500 $11.687500 $17,531.250000
---------------------------------------------------------------------------------------
04/14/99 1,400 $11.625000 $16,275.000000
---------------------------------------------------------------------------------------
04/23/99 450 $11.687500 $5,259.375000
---------------------------------------------------------------------------------------
04/23/99 4,000 $13.500000 $54,000.000000
---------------------------------------------------------------------------------------
TOTALS 21,850 $260,834.375000
---------------------------------------------------------------------------------------
On the sale of these shares, Michael realized an overall gain of $ 23,403.125.
Beginning on April 13, 1999, Michael made the following further investments in Feet stock, none of which turned out to be profitable.[31]
---------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
---------------------------------------------------------------------------------------
04/13/99 50 $11.625000 $581.250000
---------------------------------------------------------------------------------------
04/21/99 1,300 $11.875000 $15,437.500000
---------------------------------------------------------------------------------------
05/06/99 650 $10.437500 $6,784.375000
---------------------------------------------------------------------------------------
05/13/99 4,250 $11.125000 $47,281.250000
---------------------------------------------------------------------------------------
05/13/99 450 $11.125000 $5,006.250000
---------------------------------------------------------------------------------------
05/20/99 200 $10.500000 $2,100.000000
---------------------------------------------------------------------------------------
06/02/99 550 $7.687500 $4,228.125000
---------------------------------------------------------------------------------------
*1301
------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
------------------------------------------------------------------------------------
06/24/99 800 $8.843700 $7,074.960000
------------------------------------------------------------------------------------
06/24/99 4,200 $8.843700 $37,143.540000
------------------------------------------------------------------------------------
06/30/99 500 $6.375000 $3,187.500000
------------------------------------------------------------------------------------
06/30/99 4,500 $6,437500 $28,968.750000
------------------------------------------------------------------------------------
07/08/99 1,800 $5,875000 $10,575.000000
------------------------------------------------------------------------------------
07/08/99 2,200 $5.937500 $13,062.500000
------------------------------------------------------------------------------------
07/22/99 15,000 $5.250000 $78,750.000000
------------------------------------------------------------------------------------
07/29/99 12,000 $3.437500 $41,250.000000
------------------------------------------------------------------------------------
07/29/99 3,000 $3.406200 $10,218.600000
------------------------------------------------------------------------------------
08/16/99 500 $5.375000 $2,687.500000
------------------------------------------------------------------------------------
08/16/99 1,900 $5.343700 $10,153.030000
------------------------------------------------------------------------------------
08/16/99 4,900 $5.125000 $25,112.500000
------------------------------------------------------------------------------------
08/17/99 3,500 $5,375000 $18,812.500000
------------------------------------------------------------------------------------
08/17/99 1,000 $5.343700 $5,343.700000
------------------------------------------------------------------------------------
08/23/99 1,100 $5,375000 $5,912.500000
------------------------------------------------------------------------------------
08/23/99 1,400 $5.375000 $7,525.000000
------------------------------------------------------------------------------------
08/23/99 2,000 $5.375000 $10,750.000000
------------------------------------------------------------------------------------
08/23/99 6,000 $5.500000 $33,000.000000
------------------------------------------------------------------------------------
TOTALS 73,750 $430,946.330000
------------------------------------------------------------------------------------
From September 10, 1999, through September 22, 1999, Michael sold all of these shares, at an alleged substantial loss.
------------------------------------------------------------------------------------
DATE SHARES SOLD PRICE PER SHARE TOTAL
------------------------------------------------------------------------------------
09/10/99 50 $4.000000 $200.000000
------------------------------------------------------------------------------------
09/10/99 1,300 $4.000000 $5,200.000000
------------------------------------------------------------------------------------
09/10/99 650 $4.000000 $2,600.000000
------------------------------------------------------------------------------------
09/10/99 4,250 $4.000000 $17,000.000000
------------------------------------------------------------------------------------
09/22/99 450 $1.937500 $871.875000
------------------------------------------------------------------------------------
09/22/99 200 $1.937500 $387.500000
------------------------------------------------------------------------------------
09/22/99 550 $1.937500 $1,065.625000
------------------------------------------------------------------------------------
09/22/99 800 $1.937500 $1,550.000000
------------------------------------------------------------------------------------
09/22/99 4,200 $1.875000 $7,875.000000
------------------------------------------------------------------------------------
09/22/99 500 $1.875000 $937.500000
------------------------------------------------------------------------------------
09/22/99 4,500 $1.875000 $8,437.50000
------------------------------------------------------------------------------------
09/22/99 1,800 $1.875000 $3,375.000000
------------------------------------------------------------------------------------
09/22/99 2,200 $1.875000 $4,125.000000
------------------------------------------------------------------------------------
09/22/99 15,000 $1.875000 $28,125.000000
------------------------------------------------------------------------------------
09/22/99 12,000 $1.875000 $22,500.000000
------------------------------------------------------------------------------------
09/22/99 3,000 $1.875000 $5,625.000000
------------------------------------------------------------------------------------
09/22/99 500 $1.875000 $937.500000
------------------------------------------------------------------------------------
09/22/99 1,900 $1.875000 $3,562.500000
------------------------------------------------------------------------------------
09/22/99 4,900 $1.875000 $9,187.500000
------------------------------------------------------------------------------------
09/22/99 3,500 $1.875000 $6,562.500000
------------------------------------------------------------------------------------
09/22/99 1,000 $1.875000 $1,875.000000
------------------------------------------------------------------------------------
09/22/99 1,100 $1.875000 $2,062.500000
------------------------------------------------------------------------------------
09/22/99 1,400 $1.875000 $2,625.000000
------------------------------------------------------------------------------------
09/22/99 2,000 $1.875000 $3,750.000000
------------------------------------------------------------------------------------
09/22/99 6,000 $1.875000 $11,250.000000
------------------------------------------------------------------------------------
TOTALS 73,750 $151,687.500000
------------------------------------------------------------------------------------
*1302 In all from the purchase and sale of these shares of Feet stock, Michael lost $ 279,258.83.
This loss apparently did not cool Michael's enthusiasm for Just for Feet stock, however, as one month later, Michael made two purchases of Feet stock totaling 20,200 shares, all of which he continues to hold.
------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
------------------------------------------------------------------------------------
10/28/99 2,700 $1.531200 4,134.240000
------------------------------------------------------------------------------------
10/28/99 18,500 $1.500000 $27,750.000000
------------------------------------------------------------------------------------
TOTALS 21,200 $31,884.240000
------------------------------------------------------------------------------------
In total, Michael currently possesses 20,200 shares of Just for Feet stock and has losses amounting to $ 311,133.07.[32]
William T. Moor.
William T. Moor ("Moor") made the following purchases of Just for Feet common stock during the class period:
------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
------------------------------------------------------------------------------------
08/19/97 1,000 $15.750000 $15,750.000000
------------------------------------------------------------------------------------
08/27/98 1,000 $13.000000 $13,000.000000
------------------------------------------------------------------------------------
09/25/98 1,000 $13.000000 $13,000.000000
------------------------------------------------------------------------------------
12/29/98 1,000 $14.500000 $14,500.000000
------------------------------------------------------------------------------------
01/15/99 1,000 $17.375000 $17,375.000000
------------------------------------------------------------------------------------
02/26/99 1,000 $10.250000 $10,250.000000
------------------------------------------------------------------------------------
05/06/99 2,000 $10.625000 $21,250.000000
------------------------------------------------------------------------------------
10/18/99 3,000 $1,843750 $5,531.2500000
------------------------------------------------------------------------------------
TOTALS 11,000 $110,656.250000
------------------------------------------------------------------------------------
During the relevant period, then, Moor purchased 11,000 shares of stock. He claims losses of $110,656.25.
James A. Taylor.
James A. Taylor ("Taylor") has, since January 20, 1999, twice purchased Just for Feet common stock.
------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
------------------------------------------------------------------------------------
01/20/99 10,000 $18.125000 $181,250.000000
------------------------------------------------------------------------------------
02/26/99 10,000 $10.125000 $101,250.000000
------------------------------------------------------------------------------------
TOTALS 20,000 $282,500.000000
------------------------------------------------------------------------------------
Taylor apparently never sold any of this stock. As such, he claims losses of $ 282,500.00.
Woods Hardware, Inc., Pension Plan.
On January 23, 1998, the Woods Hardware, Inc., Pension Plan ("WHIPP") *1303 bought two thousand (2,000) shares of Feet common stock at a per-share price of $ 13.437, paying a total of $ 26.874.00. On March 20, 1998, WHIPP sold those shares at $ 15.00 per share, gaining a profit of $ 3,126.00 on the sale. On September 24, 1998, WHIPP again invested in Feet common stock, this time purchasing two thousand (2,000) shares at a price of $ 13.75 per share, paying in total $ 27,500.00. On November 20, 1988, WHIPP sold these shares, realizing a gain of $ 2,500.00.
Beginning on January 22, 1999, WHIPP made further purchases of Feet stock, but this time never sold any of its shares.
------------------------------------------------------------------------------------
DATE SHARES PURCHASED PRICE PER SHARE TOTAL
------------------------------------------------------------------------------------
01/22/99 3,000 $14.688000 $44,064.000000
------------------------------------------------------------------------------------
02/22/99 2,000 $11.688000 $23,376.000000
------------------------------------------------------------------------------------
05/21/99 5,000 $10.313000 $51,565.000000
------------------------------------------------------------------------------------
07/20/99 4,000 $5.313000 $21,252.000000
------------------------------------------------------------------------------------
TOTALS 14,000 $140,257.000000
------------------------------------------------------------------------------------
The total amount paid in these later purchases constitutes WHIPP's total losses.[33]
The Group, broadly conceived, consists of almost three hundred individuals and institutions. Other than the fact that they have all purchased shares of Just for Feet common stock, nothing unites them into a common whole. There is nothing to indicate that all three hundred have ever communicated among themselves regarding this litigation or that the three hundred have, with unanimous or majority voice, directed proposed counsel for the Group to perform or not perform any act. There is no indication that the three hundred have elected the twelve-person "steering committee" to represent their unified interest. The Group, defined as consisting of the three hundred purchasers, is simply an agglomeration consisting of those individuals who either responded to newspaper articles about this action or to a notice broadcast by purported counsel concerning this litigation. In short, the Group is a welter, and nothing more.
Contentions & Analysis
The motions presently under consideration require application of one of a number of amendments to the Exchange Act put in place by the 1995 Reform Act. As has been consistently noted by the circuit and district courts endeavoring to apply those amendments, the Reform Act was enacted in 1995 in response to observed widespread abuses of the federal securities laws in the filing of class actions. See Greebel v. FTP Software, Inc., 194 F.3d 185, 191 (1st Cir.1999) ("The enactment of the [Reform Act] in 1995 marked a bipartisan effort to curb abuse in private securities lawsuits. . . ."); In re Comshare Inc. Securities Litigation, 183 F.3d 542, 548 (6th Cir.1999) (reiterating that the purpose of the Reform Act was to put anti-abuse mechanisms in place in federal securities fraud litigation); In re Silicon Graphics Inc. Securities Litigation, 183 F.3d 970, 978 (9th Cir.1999) (noting that "Congress designed the [Reform Act] to deter non-meritorious lawsuits by creating procedural barriers" to suit); Mitchell v. Complete Management, Inc., 1999 WL 728678 at *2 (S.D.N.Y.1999) ("In 1995, Congress enacted the [Reform Act] in response to perceived abuses in securities fraud class actions."); King v. Livent, Inc., 36 F.Supp.2d *1304 187, 190 (E.D.N.Y.1999) ("According to its legislative history, the [Reform Act] was enacted in response to perceived abuses of the class action procedure."); In re Oxford Health Plans, Inc. Securities Litigation, 182 F.R.D. 42, 43 (S.D.N.Y.1998) (same); and Fischler v. AMSouth Bancorporation, 1997 WL 118429 at *1 (M.D.Fla.1997) (same). To Congress, the 1980's and the early 1990's had seen a proliferation of "strike suits"class actions initiated and driven by attorneys, the principle goals of which were to obtain settlements favorable to those attorneys, rather than to benefit arguably aggrieved shareholders.[34] See Greebel v. FTP Software, Inc., 194 F.3d at 191; In re Network Associates, Inc., Securities Litigation, 76 F. Supp. 2d 1017, 1032 (N.D.Cal.1999); Harford County, MD v. Mid-State Bank & Trust, 1999 WL 704116 at *2 (W.D.Pa.1999); and Tyrone Area School District v. Mid-State Bank & Trust Co., 1999 WL 703729 at *3 (reciting testimony of the Committee on Banking, Housing and Urban Affairs that "`today certain lawyers file frivolous `strike' suits alleging violations of Federal securities laws in the hope that defendants will quickly settle to avoid the expense of litigation.'" (internal citations omitted)). Congress noted that often, when the release of news that misfortune had befallen a target company caused an drop in the value of that company's stock, one or more strike suits would be filed within the same day, containing superfluous allegations that demonstrated little prior investigation by counsel. See Harford County, MD v. Mid-State Bank & Trust, 1999 WL 704116 at *2; and Lirette v. Shiva Corp., 27 F. Supp. 2d 268, 274 (D.Mass.1998). See also the Senate Report on the Reform Act, S.Rep. No. 98, 104th Congress, 1st Sess. 8, reprinted in 1995 U.S.C.C.A.N. 679, 687 (the "Senate Report") ("One study concluded that, in the early 1980's, every company in one business sector that suffered a market loss of $ 20 million or more in its capitalization was sued."). A telling example of this practice is recounted by a pair of commentators writing on the heels of the Reform Act's passage:
A typical example involved Philip Morris. On the morning of Friday, April 2, 1993, Philip Morris announced a forty-cent reduction in the price of a pack of Marlboro cigarettes. It anticipated that, as a result, operating earnings for 1993 would be down as much as forty percent. Less than five hours later, at 1:25 p.m., a class suit was filed. Four more suits were filed the same day. On Monday, April 5, five additional suits were commenced, bringing the total number of class actions to ten within three days. The court noted caustically that in the few hours counsel devoted to getting the initial complaints to the courthouse, overlooked was the fact that two of them contained identical allegations, apparently lodged in counsel's computer memory of `fraud' form complaints, that the defendants here engaged in conduct `to create and prolong the illusion of [Philip Morris'] success in the toy industry.'
Richard M. Phillips and Gilbert C. Miller, The Private Securities Litigation Reform Act of 1995: Rebalancing Litigation Risks and Rewards for Class Action Plaintiffs, Defendants and Lawyers, 51 BUS.LAW. 1009, 1011-12 (1996).
Thus the perception had developed that securities plaintiffs' attorneys had hijacked the law governing securities fraud, see Greebel v. FTP Software, Inc., 939 F. Supp. 57, 58 (D.Mass.1996), turning the federal courts into instruments through which to *1305 extract large settlements. The process of extraction was viewed by Congress as being relatively cost-free for plaintiffs' counsel hastily drafted and barely researched complaints would cost such counsel little and settlement, often cheaper for the defendant companies than discovery and legal fees, would normally be forthcoming long before any costly work commenced. Indeed, it appeared that the only prerequisite to being a successfulthat is, profitable plaintiffs' attorney specializing in securities litigation was the ownership of a good pair of running shoes, as generally only the first attorney to file at the courthouse would win the "privilege" of maintaining the securities class action. See In re Milestone Scientific Securities Litigation, 183 F.R.D. 404, 412 (D.N.J.1998); and Conference Report on Securities Litigation Reform, H.R.Rep. No. 369, 104th Congress, 1st Sess. 31, reprinted in 1995 U.S.C.C.A.N. 679, 689 (the "Conference Report").
The absolute control exercised by plaintiffs' attorneys over the class securities litigation process was apparent at each stage of litigation. Further, because of their extensive control over class actions, counsel could wrest from target companies bloated settlements that were strong on attorneys' fees, but light on shareholder compensation. The Senate Report highlighted Congress's concern over this problem:
Under the current system, the initiative for filing 10b-5 suits comes almost entirely from the lawyers, not from genuine investors. Lawyers typically rely on repeat, or "professional," plaintiffs who, because they own a token number of shares in many companies, regularly lend their names to lawsuits. Even worse, investors in the class usually have great difficulty exercising any meaningful direction over the case brought on their behalf. The lawyers can decide when to sue and when to settle, based largely on their own financial interests, not the interests of their purported clients.
Numerous studies show that investors recover only 7 to 14 cents for every dollar lost as a result of securities fraud. Indeed, a 1994 Securities Subcommittee Staff Report found "evidence *** that plaintiffs' counsel in many instances litigate with a view toward ensuring payment for their services without sufficient regard to whether their clients are receiving adequate compensation in light of evidence of wrongdoing." The comment by one plaintiffs' lawyer"I have the greatest practice of law in the world. I have no clients."aptly summarizes this flaw in the current system.
Senate Report at 6, 1995 U.S.C.C.A.N. at 685 (internal footnotes omitted). Thus, as stated by one district court, class securities litigation had become "typically initiated and controlled by plaintiff's counsel, bark to core, start to finish." In re Network Associates, Inc., Securities Litigation, 76 F.Supp.2d at 1020. In arguably meritorious cases, the shareholders were ill-represented by attorneys whose recoveries were adequate only to compensate the attorneys themselves. In the more frivolous actions, the harm caused to shareholders was more egregious, as those shareholders were indirectly required to foot the substantial legal bills of counsel retained only nominally on their behalf.[35]
One cause of the ascendance of counsel-driven securities class litigation was seen to be the relative inability or unwillingness of named plaintiffs in such cases to oversee the activities of their attorneys. See Sakhrani v. Brightpoint, Inc., 78 F. Supp. 2d 845, 850 (S.D.Ind.1999) and In re Milestone Scientific Securities Litigation, 187 F.R.D. 165, 174 (D.N.J.1999) ("Milestone II") (stating that "[o]ne objective of the [Reform Act] was to ensure more effective *1306 representation of the interests of investors in private securities class actions"). This lack of oversight was largely attributed to attorneys' "employment" of so-called "professional plaintiffs," the proliferation of whom "made it particularly easy for lawyers to find individuals willing to play the role of wronged investor for purposes of filing a class action lawsuit." Senate Report at 10, 1995 U.S.C.C.A.N. at 689.[36] See King v. Livent, Inc., 36 F. Supp. 2d 187, 190 (S.D.N.Y.1999); Milestone I, 183 F.R.D. at 411; and Greebel v. FTP Software, Inc., 939 F.Supp. at 61. The district court in In re Telxon Corporation Securities Litigation, 67 F.Supp.2d at 814, described the problems caused by permitting "professional plaintiffs" to act as representative plaintiffs in securities fraud litigation:
Reference to the academic literature in existence at the time the [Reform Act] was passed is useful in understanding the evil Congress perceived and the problems it sought to address with the Act. The problem with "professional plaintiffs" stems from their relatively nominal interest in securities class action litigation vis a vis the relatively large interest at stake for their attorney. Whereas the plaintiff with only a few shares of stock might have suffered losses amounting to no more than one hundred dollars, even less in some instances, the attorney's interest generally is much greater because of the aggregation of all claims in the class. This divergence of financial interests creates significant agency costs on a lead plaintiff with respect to his ability to monitor the attorney's conduct during the prosecution of a securities class action. As professors Weiss and Beckerman explain:
[A] named plaintiff who has only a nominal financial interest in a class action, especially a plaintiff that an attorney has "recruited," is unlikely to monitor effectively her attorney's prosecution of the action or the terms on which her attorney recommends that the action be settled. Indeed, attorneys generally can influence strongly, if not control, the terms on which their clients agree to settle suits other than class actions because an attorney's knowledge about the law and how it applies to the facts almost always is superior to that of her client. In other kinds of litigation, however, a lawyer's ability to succeed often will depend to some degree on her client's cooperation. Moreover, the client, in principle if not in fact, retains the power to accept or reject any settlement her lawyer recommends. The client also has the power to bargain with her lawyer, in advance, about the terms on which the lawyer will be compensated.
None of these constraints is present when class actions are settled. Plaintiff's attorneys typically do not rely on named plaintiffs for vital testimony, do not bargain with named plaintiffs over the fees they will be paid, and do not require named plaintiffs' approval of the terms on which they propose to settle class actions.
[Elliot J. Weiss and John S. Beckerman, Let the Money Do the Monitoring: How Institutional Investors Can Reduce Agency Costs in Securities Class Actions, 104 YALE L.J. 2053, 2065 (1995) ] (internal footnotes omitted). In addition, "[m]embers of the plaintiff class in a large class action or shareholder's derivative *1307 suit often have claims so small that the litigation is a matter of relative unimportance to them. Even though the claims in the aggregate may be very large, the small size of the individual claims creates enormous free-rider effects: no rational plaintiff would take on the role of litigation monitor because she would incur all the costs of doing so but would realize only her pro rata share of the benefits." Jonathan R. Macey and Geoffrey P. Miller, The Plaintiffs' Attorney's Role in Class Action and Derivative Litigation: Economic Analysis and Recommendations for Reform, 58 U.CHI. L.REV. 1, 19-20 (1991). "These collective action and free-rider effects allow the plaintiffs' attorney in class and derivative cases to operate with nearly total freedom from traditional forms of client monitoring." Id. at 20. The Third Circuit echoed this concern in a pre-[Reform Act] derivative action, "[s]hareholders with well-diversified portfolios or small holdings lack the incentive and information to police settlements the costs of policing typically outweigh any pro rata benefits to the shareholder." Bell Atlantic Corp. v. Bolger, 2 F.3d 1304, 1309 (3d Cir.1993). See also id. at 1309 n. 9 ("Generally, the costs of monitoring will exceed the pro rata benefit to any single shareholder even though they may be lower than the benefits to all.").
In response to the problems apparently engendered by the presence of professional plaintiffs unable and unwilling to control class counsel in securities fraud litigation, Congress enacted the lead plaintiff provisions of the Reform Act. Section 21D of the Exchange Act, as amended by the Reform Act, requires that a district court "appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members...." 15 U.S.C. § 78u-4(a)(3)(B)(i). Rather than selecting as the governing plaintiff in a securities class action the first plaintiff to reach the courthouse door, the district court is to choose the most adequate plaintiff to oversee the litigation. Appointment of the most adequate plaintiff is meant to empower investors by placing behind the driver's seat on the plaintiffs' side an experienced investor or capable investors who have substantial and genuine interests in the outcome of the litigation. See In re Telxon Corporation Securities Litigation, 67 F.Supp.2d at 815 ("The effect of this provision is to place the leadership of the class in the hands of a plaintiff who has suffered a large enough pro rata loss that he will benefit from monitoring his attorneys' conduct."); and In re Party City Securities Litigation, 189 F.R.D. 91, 103 (D.N.J.1999) ("Specifically, the [Reform Act] provides a method for identifying the plaintiff or plaintiffs who are most strongly aligned with the class of shareholders, and most capable of controlling the selection and activities of counsel.").
However, the aftermath of the Reform Act's enactment has not seen the widespread changes hoped for by Congress. Rather, counsel, attempting to get around the barricades placed before them by the Reform Act, have taken to publishing notices imploring large numbers of class members to respond and utilizing those responses to create large plaintiffs' groups. The district court in In re Network Associates, Inc., Securities Litigation, 76 F.Supp.2d at 1021-22, provides an insightful description of this practice, which bears many similarities to the approaches taken by counsel in the instant action:
Since 1995 when the [Reform Act] was approved, there have, in fact, been some instances of large institutional investors advancing themselves and being selected as lead plaintiffs. E.g., Gluck v. CellStar Corporation, 976 F. Supp. 542 (N.D.Tex.1997) (appointing State of Wisconsin Investment Board). For the most part, however, a different pattern altogether has developed, one that remarkably resembles the old regime. As was true before the [Reform Act], in the wake of a substantial drop in any publically-traded *1308 stock, dozens of class suits are typically filed. Unlike before, however, the [Reform Act] requires the plaintiff in the first-filed suit to publish the statutory initial notice to invite lead plaintiff candidates to step forward. Although this notice was expected by Congress to be published once and to encourage uninvolved investors to come forward and to compete for the lead role, the notices in practice extol the lawyer filing suit, and invite the investor to fill out a form and return it to the lawyer. Each lawyer competes to accumulate as many forms as possible in order to amass the largest "group" possible. Not only does the first counsel to file give notice but so do many other lawyers filing suit, not once but over and again, all in an effort to compile the largest portfolio of investor names. The race to the courthouse has been replaced by a race to both the courthouse and thence to the publisher.
The [Reform Act] did not authorize or contemplate such a process. Instead, it called for notice to affected investors so they could decide whether to seek the role of lead plaintiff on their own. In practice, however, the real purpose and effect of the forms is to steer investors away from seeking the lead role on their own and to steer them toward registering with a lawyer who already has a lead plaintiff candidate. One of the forms used in this case, for example, states in part that the investor has reviewed the complaint and "If necessary, I authorize the filing of a similar complaint on my behalf. *** I am willing to serve as a representative party on behalf of the class, including providing testimony at deposition and trial, if necessary." The form does not specifically state that the investor wishes to take on the responsibility for being the lead plaintiff, nor does it specifically authorize and retain any particular counsel to seek such a responsibility on their behalf. To the extent an investor truly seeks the role of lead, a legitimate question arises whether one law firm (or single set of law firms) could represent all of them without irreconcilable conflicts, given that not every candidate could be advanced and counsel would have to dash the hopes of one or more seeking the job. The forms make no disclosure of this problem. Nor do they include a waiver of any conflict.
This form-submitting process bears a resemblance to the claim-submitting process that traditionally has occurred at the end of class litigation. The only information required to be written in by the investor in the form mentioned was the name of the investor and the number of shares purchased or sold, the price, and the date. The rest is boilerplate. In this connection, one class counsel candidate herein accuses another of disguising its notices so as to cause investors to believe that returning the form is a prerequisite to participation in any ultimate recoverywhen it plainly is not under the law. No doubt, many send in the forms thinking they need to in order to participate in any recovery.
When the motions to appoint lead counsel are made, as here, these forms are then bound into numerous thick booklets as alleged documentary support for counsel's motion on behalf of a group of movants, as has been done in this case. Counsel argue that the group as a whole has a large stake in the outcome therefore, the group should be the presumptive lead plaintiff.
The only thing the investors in any group have in common, however, is the lawyer. They have no link to each other. They are not organized with any group decisionmaking apparatus. They attended no organizing meetings. They have no cohesive identity. They have no name other than one arbitrarily selected by the lawyers. They do not, in all probability, even know they belong to a group or know its name or know how their form is being used. The group name is not on the published notice, nor in the form returned to counsel. The *1309 name is invented after the fact by counsel. In the present case, in the process of challenging each other's group, one side herein obtained declarations from several institutions recanting their forms, saying they were misled by opposing counsel. With thousands of forms submitted in heavy boxes to the Court, and with no discovery conducted as to the bona fides of any, the truth is that there is no way to check the accuracy of the forms or the accuracy of the claimed totals. Indeed, the Milberg volumes are accused of including numerous discrepancies, ranging from unsigned forms, to forms refusing to be a lead plaintiff, to trades that could not have occurred as represented (due to Sunday dates, etc.). These defects are only those that appear on the face of the forms without the benefit of discovery.
Counsel invariably insert the word "group" into the title of the ensemble, as in "Network Institutional Group" or the "Network Associates Lead Plaintiff Group." This usage lends an appearance of tying into the statutory wording that the lead plaintiff may be a "person or group of persons," a phrase to be discussed momentarily. Counsel then urge, as here, that the group with the largest aggregate losses should dictate the selection of lead plaintiff.
Id. at 1021-22 (emphasis added).
A district court must exercise exceptional care to insure that in applying the lead plaintiff provisions of the statute, the concerns that motivated Congress are carefully heeded, as the determination of lead plaintiff by the district court is, with probably little exception, not immediately subject to review. See Metro Services, Inc. v. Wiggins, 158 F.3d 162, 165 (2d Cir.1998) (concluding that the determination of lead plaintiff by a district court does not constitute an appealable final decision) and Pindus v. Fleming Companies Inc., 146 F.3d 1224, 1226-27 (10th Cir. 1998) (refusing to review a district court's determination of lead plaintiff as either a final order or on writ of mandamus). Likely, a district court's determination of lead plaintiff and lead counsel can be visited by the appellate court only after the district court has approved a contested settlement agreement or after trial, by which time a tremendous amount of money has been expended by both sides to the litigation.[37] As such, in determining lead plaintiff, this Court must be inordinately careful, making certain that the requirements of section 21D(a) are assiduously applied in line with the purposes of Congress in the enactment of the 1995 Reform Act.
Notice.
The domain of individuals and institutions from which a district court may draw the most adequate plaintiff to serve as lead plaintiff is a limited one, confined to those individuals or institutions that either filed a complaint in the action or properly responded to notice published pursuant to subsection 21D(a)(3)(A)(i). 15 U.S.C. § 78u-4(a)(3)(A)(i) & (B)(iii)(I). This notice is to be published by the first plaintiff to file an action in the district court and the publication is to be made "in a widely circulated national business-oriented publication or wire service...." 15 U.S.C. § 78u-4(a)(3)(A)(i). "The purpose of this is to enable investors to intervene in the litigation and take charge of it by, among other things, selecting the lawyers to represent the class and setting the terms of their compensation." Ravens v. Iftikar, 174 F.R.D. 651, 653 (N.D.Cal. 1997).
In the instant action, after filing their respective complaints, both the Burke plaintiffs and the Massey plaintiff published *1310 notice of the pending litigation in an attempt to comply with subsection 21D(a)(3)(A)(i). While each notice issued seems to have attracted the attention of the movants, neither satisfies the requirements of the subsection. The subsection provides that:
(i) In general
Not later than 20 days after the date on which the complaint is filed, the plaintiff or plaintiffs shall cause to be published, in a widely circulated national business-oriented publication or wire service, a notice advising members of the purported plaintiff class
(I) of the pendency of the action, the claims asserted therein, and the purported class period; and
(II) that, not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class.
15 U.S.C. § 78u-4(a)(3)(A)(i). Under this section, proper notice must (1) be properly published; (2) advise members of the putative class of the relevant details of (a) the pendency of the action, (b) the claims asserted therein, and (c) the period of the action; and (3) inform putative class members that they have the right to move the district court to serve as lead plaintiff in the class action.
"As a first principle, courts applying the [Reform Act] should draw on this legislative history and purpose in interpreting its provisions." R. Chris Heck, Comment: Conflict and Aggregation: Appointing Institutional Investors as Sole Lead Plaintiffs under the [Reform Act], 66 U.Chi.L.Rev. 1199, 1217 (1999). The obvious and primary goal with which subsection 21D(a)(3)(A)(i) was drafted was that of encouraging the most adequate plaintiff to step forward and control the litigation. Several things must be accomplished by any notice that is to fulfill this goal. First, it must reach the broadest number of possible investors, within reason, or, if it is not broadly-disseminated, its distribution must at least be sufficiently broad to attract the attention of regular investors with specialized knowledge of the market and a large stake in the litigation referred to in the notice. Either type of notice is of a kind likely to attract the attention of individuals who typify the most adequate plaintiffexperienced, large investors in securities of the subject company. Thus, notice published "in a widely circulated national business-oriented publication or wire service" must be of a sort likely to reach experienced, large investors, preferred as adequate plaintiffs, even if such notice is not fully broadthat is, calculated to reach every investor in the securities that are the subject of the litigation. The language of the subsection regarding publication of notice is an instruction on exactly what publication will fulfill the aim of notifying presumptively adequate plaintiffs.
Second, for the most adequate plaintiff to step forward and take control of the litigation as lead plaintiff, that institution or individual must be informed that he, she, or it enjoys a right to move the district court to serve as lead plaintiff. At the same time, any potential lead plaintiff may exaggerate his, her, or its claims and will be unable to weigh his, her, or its losses with respect to other potential lead plaintiffs, hampering that investor's ability to fully evaluate his, her, or its adequacy to serve as lead plaintiff. The requirement that published notice inform putative class members generally of a right to move the district court to serve as lead plaintiff attempts to address these aims.[38]
For an investor to make an intelligent determination of whether he, she, or it will move a court to be appointed lead plaintiff, that investor must have all relevant information that would inform such a *1311 choice. Further, attempts to minimize the costs associated with the provision of such information should be made, one, as high costs associated with information gathering may deter many potential lead plaintiff contenders from evaluating their competence to serve as lead plaintiff and, two, as multiple contenders must to evaluate much of the same information to determine whether they wish to serve as lead plaintiff, raising the possibility of redundant expenditures made to acquire relevant information. Third, therefore, notice, if it is to encourage the most adequate plaintiff to act as lead plaintiff in any litigation, must provide sufficient information to an investor through which that investor may determine his, her, or its ability to serve as lead plaintiff, and minimize the costs to each investor in obtaining and evaluating information relevant to the adequacy determination of the investor.
Section 21D(a)(3)(A)(i)(I) seeks to satisfy the demand that all investors have or be able to obtain information sufficient to make a minimal determination of adequacy by requiring that notice apprize members of the putative class "of the pendency of the action, the claims asserted therein, and the purported class period." In the absence of a clarifying principle, the obligations placed upon named plaintiffs by the subsection are, at best, sketchy. However, the general goals lying behind the notice provision informs the interpretation of the subsection, giving flesh to its bones.
Without further developing the meanings of the component phrases of this subsection here, there exist two comprehensive means of interpreting the subsection, consonant both with the notice provision's general goal of encouraging the most adequate plaintiff to step forward and assert control over the litigation and with its more specific aim of providing investors adequate information upon which to make the decision to move to be appointed as lead plaintiff. First, notice satisfying subsection 21D(a)(3)(A)(i)(I) can be interpreted broadly to require full disclosure of all of the information relevant to the pendency of the action, the claims in the action, and the period of the class. This interpretation would clearly satisfy the notice provision's aims, as any notice published would provide all of the information from which a prospective lead plaintiff could, to the best degree, evaluate his or her adequacy to serve as lead plaintiff. Robust notice is clearly the best notice, fully minimizing costs to all potential lead plaintiffs and thereby maximizing the number of investors who would evaluate their competence (and give interested investors better grounds from which they could reasonably qualify or disqualify themselves as potential lead plaintiffs). Nonetheless, because of the costs which named plaintiffs may have to incur in the publication of such notice, it seems more than is required by the language in the subsection.
Subsection 21D(a)(3)(A)(i)(I) could also be interpreted in such a way that information about the "the pendency of the action, the claims asserted therein, and the purported class period" merely be enough to permit reasonable investors to decide whether they wish to perform further investigation that is, sufficient information from which to make a minimal determination of adequacyand to direct them to further sources of information. Thus, for example, in determining whether a notice has satisfied the requirement that it advise putative class members of "the pendency of the action," that notice must, at a minimum, provide information about the pendency of the action that would be useful to an interested investor in making an initial evaluation of lead plaintiff suitability and/or in directing the investor to further information. This is accomplished by a notice containing information about who has filed the suit, who is being sued, the court in which the suit is taking place, and the civil action number of the case.[39] This *1312 interpretation would seem to accord with the purposes of the notice requirement, in that it gives members of the putative class sufficient information from which to make basic decisions about deciding whether to act as lead plaintiff while not requiring the named plaintiff, who may not be chosen lead plaintiff, to expend too many of his, her or its resources in publishing a notice that is wastefully extensive.[40]
SWIB and the Group (however defined) filed their motions to serve as lead plaintiff within sixty days of publication of the following by the Burke plaintiffs and their counsel:
BIRMINGHAM, Ala.(BUSINESS WIRE)Nov. 19, 1999Ritchie & Rediker, L.L.C., combined with Kilborn & Roebuck and David McDonald, Esq., announced that a securities class action lawsuit was filed today in the United States District Court for the Northern District of Alabama, Southern Division, against certain key officers and controlling personnel of Just for Feet, Inc. (the "Company") (Nasdaq: FEET) and the Company's auditors, Deloitte & Touche, L.L.P., on behalf of purchasers of the Company's common stock during the period of April 1, 1997, through and including *1313 November 1, 1999 (the "Class Period"). This action is not brought against the Company, who announced on November 2, 1999, that it was seeking Chapter XI bankruptcy protection.
If you have not already done so, you may wish to contact the undersigned in order to participate in this case. If you already contacted Ritchie & Rediker, you need do nothing further.
The securities class action complaint charges the defendants with violations of the federal securities laws (specifically, sections 10(b) and 20 of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder by the Securities Exchange Commission) by, among other things, misrepresenting and/or omitting material information concerning the Company's net earnings. The complaint further charges that these misrepresentations were the result of the combined defendants actions in, among other things, creating false billings for advertising and fixed asset costs to its vendors, understating its cost of sales through acquisition accounting, capitalizing inventory costs that should have been recorded as expenses, overstating inventory by failing to account for missing or obsolete inventory, and creating fictitious postings to both the inventory and expense accounts. The price of Just for Feet's shares were [sic] thereby artificially inflating [sic] during the Class Period.
Plaintiffs seek to recover damages on behalf of class members, and is [sic] represented by, among others, the law firm of Ritchie & Rediker, L.L.C., who have extensive experience and expertise prosecuting complex class actions on behalf of investors and shareholders. To find out more about the firms history and experience, please visit the web site at www.ritchie-rediker.com and feel free to contact the firm using the information posted on that site. Another firm participating in this action is Kilborn & Roebuck.... Also participating is David McDonald, Esq....
If you are a member of the class described above, you may seek to join in the above class action on or no later than sixty days from November 19, 1999.
If you would like to receive an information packet, you may call toll-free or otherwise contact [Ritchie & Rediker, L.L.C.]
While the attempted notice by the Burke plaintiffs is appropriately published,[41] it is nonetheless defective under *1314 section 21D(a)(3)(A)(i). First, the purported notice absolutely fails to inform class members of a right to move the district court to serve as lead plaintiff. The requirement that the notice inform putative class members of their right to move the district court to be appointed lead plaintiff is clearly stated in subsection 21D(a)(3)(A)(i)(II). See In re Olsten Corporation Securities Litigation, 181 F.R.D. 218, 219 (E.D.N.Y.1998). As discussed above, this requirement, along with other lead plaintiff provisions of the Reform Act, were put in place to prevent professional plaintiffs and self-serving counsel from hijacking securities actions and forcing unfair settlements down the throats of defendant companies and shareholders alike. Particularly, as previously stated, section 21D(a)(3)(A) furthers this goal by requiring the first-to-file plaintiff to provide diligent investors with knowledge of pending actions in which those investors have an interest and to explicitly invite them to come forward to take control of the litigation. For notice to satisfy this purpose, it must clearly inform class members of their right to move the district court to act as lead plaintiff. See In re Nice Systems Securities Litigation, 188 F.R.D. at 216.
The notice propounded by the Burke plaintiffs and, more specifically, their counsel, utterly fails to inform purported class members of a right to move to be appointed lead plaintiff. Rather, the notice published appears to have been drafted with the aim of directing clients to the law firms listed in it, thereby permitting the Burke plaintiffs and counsel associated therewith to avoid any lead plaintiff challenge. While the primary goal of the notice provisions is to encourage the most adequate plaintiff to present itself to be appointed the lead plaintiff in the action, the subsection has the further, secondary goal of preventing counsel in the case from taking a commanding role in the litigation. The adage "knowledge is power" has specific application here: Where information relevant to a class member's adequacy determination is held solely by counsel and can only be obtained from counsel, that counsel has tremendous power over the lead plaintiff determination of that class member. Inherent in this power is the possibility of abuse: In disbursing information, counsel may request that it be permitted to represent a class member; the disbursement of information may even be conditioned on an agreement to permit counsel to represent the class member. Counsel may only reveal so much information as is required to dissuade an investor from pursuing lead plaintiff status. Putative class members may be convinced by counsel, through the explanation of claims or of their right to move to be appointed lead plaintiff, that their only hope of recovery lies in joining an artificially designed plaintiffs' group that will, effectively, be managed by counsel.
Curbing attempts at counsel-driven litigation such as these were a large part of the motivation behind the Reform Act. Publication by counsel of notice that attempts to skirt this implicit goal by requiring members of the purported class to contact counsel is inherently defective, regardless of whether the demand is made explicitly, through extended exhortation to call counsel, or impliedly, by counsel's failing to include adequate information, such as the class members' right to move the court to be appointed lead plaintiff.
Fully three paragraphs of the attempted notice published by the Burke plaintiffs half of those contained in that notice directly importune putative class members to contact the listed law firms. The second longest paragraph in the notice is little but an advertisement, extolling the "experience and expertise" of the named firms. In one paragraph, the alleged notice even goes so far as to inform the putative class members that they "may seek to join in the above class action on or no later than *1315 sixty days from November 19, 1999," seemingly indicating that putative class members should contact the listed law firms or lose any right in class-wide relief. Not only does the published notice fail to encourage potential lead plaintiffs to come forward, it accomplishes the opposite result.
The attempted notice published by the Burke plaintiffs fails in another respect, though not nearly so much as the notice published by the Massey plaintiff and his counsel. While adequately informing putative class members of the class period and where the class action was filed, the notice does not fully inform potential lead plaintiffs either of the names of the plaintiffs, the names of the defendants or style of the case. Thus, while the notice adequately states the purported class period, it fails to indicate "the pendency of the action," as it does not indicate exactly what action is pending, only that one exists somewhere in the district court for Northern District of Alabama against some defendants who are officers and directors of Just for Feet. To learn the particulars of the action, potential lead plaintiffs must either search through the files of the district courts of the Northern District of Alabama or contact the law firms prominently listed in the purported notice. As such, the notice published by the Burke plaintiffs is defective.[42]
The notice published by the Massey plaintiff and his counsel is hardly better. This notice, published on November 24, 1999, nearly one hour after the Massey complaint was filed, states:
Milberg Weiss Announces Class Action On Behalf of Purchasers of Just For Feet, Inc. Common Stock
The Following is an Announcement by the Law Firm of Milberg Weiss:
NEW YORK(BUSINESS WIRE) Nov. 24, 1999Notice is hereby given that a class action lawsuit was filed on November 24, 1999, in the United States District Court for the Southern District of Alabama, on behalf of all persons who purchased or otherwise acquired the common stock of Just for Feet, Inc. ("Feet" or the "Company") (Nasdaq: FEETQnews) between May 5, 1997, and November 1, 1999, inclusive (the "Class Period"). If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact, at Milberg Weiss Bershad Hynes & Lerach ("Milberg Weiss"), Steven G. Schulman or Samuel H. Rudman at One Pennsylvania Plaza, 49th Floor, New York, New York XXXXX-XXXX, by telephone 1-800-320-5081 or via e-mail: [email protected] or visit our website at www.milberg.com. The complaint charges certain of Feet's senior officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's operations and financial condition. As a result of these materially false and misleading statements the price of Feet common stock was artificially inflated during the Class period. Prior to the disclosure of the adverse facts described above Feet completed a $200 million debt offering and certain Company insiders realized over $ 5.8 million in proceeds from the sale of Feet common stock to the general investing at artificially inflated prices.
Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Milberg Weiss, among others. Wilberg Weiss maintains offices in New York City, San Diego, Los Angeles, San Francisco and Boca Raton and is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in numerous *1316 important actions on behalf of defrauded investors, and is responsible for a number of outstanding recoveries which, in the aggregate, total approximately $ 2 billion. For more information about Milberg Weiss, please visit our website at www.milberg.com.
If you are a member of the class described above you may, not later than sixty days from November 19, 1999, move the Court to serve as lead plaintiff of the class, if you so choose. In order to serve as lead plaintiff, you must meet certain legal requirements.
(Emphasis added.)
While this notice is properly published and, unlike the Burke plaintiffs' notice, informs class members that they have the right to move the district court to be appointed lead plaintiff, it neither informs class members of "the pendency of the action" nor fairly apprizes them of "the claims asserted therein...." 15 U.S.C. § 78u-4(a)(3)(A)(i)(I). As stated above, to notify class members of "the pendency of the action," the plaintiff or plaintiffs publishing the notice must not only indicate that a case on behalf of a certain group of shareholders is pending, but where the action is pending and the full name and style of the pending action. The notice published by the Massey plaintiff not only neglects to provide this information, it provides inaccurate information. First, the notice published by the Massey plaintiff and his counsel fails to indicate who is seeking relief and against whom relief is sought, facts that would be revealed were the entire name of the action included in the notice.[43] A casual observer of the notice might even conclude that Just for Feet is a corporate defendant in the pending action. Without inclusion of the name or style of the action in the notice, an interested investor who even knew of the district in which the case was filed would have a difficult time searching for the action (particularly at a distance), in order that he, she or it might examine the complaint and determine if the case is one in which he, she, or it wished to assert control as lead plaintiff.
Second, beyond simply neglecting to include the name of the court in which the case was filed, the notice misstates the designation of the district containing this Court, referring to it as the "Southern District of Alabama." A member of the purported class attempting to locate where the suit is pending on the basis of this information would have no choice but to contact Massey plaintiff's counsel and potentially be subjected to attempts by that counsel to recruit the class member into the plaintiffs' group manufactured by that counsel.
Third, while the notice lists the sections of the Exchange Act upon which the class claims are founded and informs members of the putative class that the claims stem from misrepresentations made by directors and officers of Just for Feet, there is no explanation of these claims. The notice does not list each alleged misrepresentation or generally describe those misrepresentations such that an interested investor might be able identify the misrepresentations. The notice does not contain a general explanation of how the misrepresentations were manufactured or disguised. Finally, while the notice seems to assert differing sets of claims, there is hardly an attempt to divide the claims, so that an investor could faithfully evaluate his competence to act as lead plaintiff over some or all of those claims. This raises the issue of what information must be contained within the notice of the filing of the class action for it to satisfy the requirement that members of the purported class be therein advised "of the claims asserted [in the action]." 15 U.S.C. § 78u-4(a)(3)(A)(i)(I).
*1317 In its explanation of the phrase "claims asserted therein" contained in section 21D(a)(3)(A)(i)(I), the district court in Ravens v. Iftikar, 174 F.R.D. at 654-55, stated:
"Claims asserted therein" might refer to the nature and character of the class action or, alternatively, it might simply require a recitation of the statutory basis for the suit. To decide which of these constructions Congress intended, the court must consider the legislative history of the Act and the interpretations which courts have given such language in analogous contexts.
The overriding goal of the Reform Act is to displace figurehead plaintiffs with real investors in securities class actions. See Senate Rep. No. 104-98, 104th Cong., 1st Sess., 1996 U.S.C.C.A.N. 679, 685. To do this, Congress replaced the antiquated practice of selecting representative plaintiffs by "the race to the courthouse" with a more rational selection system. See id. at 689. Under the new system, it is expected that the most adequate representative of the class will emerge from a competition among all qualified investors. To ensure that all such investors make an informed decision whether to throw their hats into the ring, Congress implemented the notice requirements of sections 27 [of the Securities Act of 1933] and 21D.
The notice provisions are only effective, however, if qualified investors are notified of the nature and character, not just the existence, of the claims asserted. An investor can only make an informed determination whether intervention appropriate to protect his interests if he is provided information describing the legal and factual basis of the claims. A mere recitation of the statute, or statutes, under which the claim is brought is simply inadequate to give an investor the information necessary to make the decision to intervene or not.
An appropriate analog for what the Reform Act requires is the notice that has historically been required under Rule 23 of the Federal Rules of Civil Procedure. Rule 23(c)(2) mandates that, prior to class certification, the named plaintiff must provide potential class members with "the best notice practicable under the circumstances." The basic purpose of this notice requirement is to "present a fair recital of the subject matter of the suit and to inform all class members of their opportunity to be heard." In re Gypsum Antitrust Cases, 565 F.2d 1123, 1125 (9th Cir.1977). In furtherance of this goal, the Fifth Circuit set forth the following standard for Rule 23(c)(2) notice:
Not only must the substantive claims be adequately described but the notice must also contain information reasonably necessary to make a decision to remain a class member and be bound by the final judgment or opt out of the action. The standard then is that the notice required by subdivision (c)(2) must contain information that a reasonable person would consider to be material in making an informed, intelligent decision of whether to opt out or remain a member of the class and be bound by the final judgment.
In re Nissan Motor Corp. Antitrust Litigation, 552 F.2d 1088, 1104-05 (5th Cir. 1977); see also In re Domestic Air Transportation Antitrust Litigation, 141 F.R.D. 534, 553 (N.D.Ga.1992) ("Notice must not only reach the affected parties, but it must also convey its message in a meaningful way."). A qualified investor considering whether to challenge the named plaintiffs for lead plaintiff designation will need at least this much information to make a rational decision whether to commit the resources necessary to represent the class.
The Court finds the reasoning of the Iftikar court persuasive. See also In re Network Associates, Inc., Securities Litigation, 76 F.Supp.2d at 1024 n. 3 (stating the same). As previously concluded, notice must provide to an investor sufficient information from which that investor could make a reasonable determination whether he, she, or it could adequately represent the class with respect to any or all of the *1318 claims in the action. The mere recitation of the statutory grounds for relief, with the somewhat redundant assertion that the action involves securities fraud, fails to provide enough information to fulfill this aim. While this error easily could have been avoided by an explanation of the "alleged wrongdoing that forms the basis of the complaint" and the points in time at which each of the acts of wrongdoing occurred, no such attempt was made here. See Iftikar, 174 F.R.D. at 655.[44]
"The true character of the [notices] as puff pieces for the plaintiff law firms is evident from the extensive portions that they devote to aggrandizing the lawyers' capabilities." Id. at 659. Inherently, there is nothing improper about a law firm hawking its wares in a notice published pursuant to section 21D(a)(3)(A). In a properly drafted notice, such advertisement provides potential lead plaintiffs a genuine option in requesting appointment of lead counsel. It also informs interest investors of a viable source of information about the case. However, the uninformative and misleading notices published in the present action essentially required interested class members to contact the counsel named therein before taking any further action.
The Court need not go so far as to dismiss the class claims or lead plaintiff motions in the instant action because of the publication of defective notice. See In re Network Associates Securities Litigation, 76 F.Supp.2d at 1032. Rather, the Court will, as set out herein, appoint a temporary lead plaintiff. After counsel is appointed for the lead plaintiff, the Court will require, contemporaneous with the filing of an amended complaint, the filing of a proposed section 21D(a)(3)(A) notice. This notice shall follow the requirements of notice set forth in this opinion; where appointed counsel has a question about the amount of information to include in such notice, it is advised to err on the side of greater inclusion of information. After review (and, perhaps, alteration) by this Court, such notice will be published by counsel in accordance with section 21D(a)(3)(A)(i). From the responses, if any, to the republished notice, the Court will determine whether any member of the temporary lead plaintiff committee need be substituted or whether the temporary lead plaintiff may continue to serve as permanent lead plaintiff, without alteration.
Lead plaintiff certification.
Subsection 21D(a)(2)(A) of the Exchange Act requires that an institution or individual who desires to serve in a representative capacity in a securities class action provide to the district court certification that certain facts about he, she, or it are true and that certain requirements have been met, as enumerated in the subsection. This subsection states:
(A) In general
Each plaintiff seeking to serve as a representative party on behalf of a class shall provide a sworn certification, which shall be personally signed by such plaintiff and filed with the complaint, that
(i) states that the plaintiff has reviewed the complaint and authorized its filing;
(ii) states that the plaintiff did not purchase the security that is the subject of the complaint at the direction of plaintiff's counsel or in order to participate in any private action arising under this chapter;
(iii) states that the plaintiff is willing to serve as a representative party on behalf of a class, including providing testimony at deposition and trial, if necessary;
(iv) sets forth all of the transactions of the plaintiff in the security that is the subject of the complaint during the class period specified in the complaint;
*1319 (v) identifies any other action under this chapter, filed during the 3-year period preceding the date on which the certification is signed by the plaintiff, in which the plaintiff has sought to serve as a representative party on behalf of a class; and
(vi) states that the plaintiff will not accept any payment for serving as a representative party on behalf of a class beyond the plaintiff's pro rata share of any recovery, except as ordered or approved by the court in accordance with paragraph (4).
15 U.S.C. § 78u-4(a)(2)(A). The certification requirement is applicable not only to those who file complaints, but to those who move to be appointed lead plaintiff.[45] See Chill v. Green Tree Financial Corp., 181 F.R.D. 398, 410 (D.Minn.1998). Only those plaintiffs who satisfy the certification requirement of the subsection can serve as lead plaintiff. See In re Network Associates, Inc., Securities Litigation, 76 *1320 F.Supp.2d at 1047 (reproducing Memorandum of the Securities and Exchange Commission in which it is stated that "the Reform Act essentially bars from the lead plaintiff role a person who has been lead plaintiff in more than five securities class actions in three years (unless the court otherwise permits); a person who does not read the complaint before a lawsuit is filed in his or her name; a person who buys the stock at the direction of an attorney or to participate in litigation; or, most notably, a person who receives a bounty payment for serving as a class representative."). As such, the certification requirement forms the baseline for any party seeking to act as lead plaintiff in a securities class action.
Examination of subsection 21D(a)(2)(A), viewed in the light of the legislative history and the expressed purpose of the Reform Act, shows that certification serves three purposes: First, it insures that individuals or institutions requesting to serve as representative plaintiffs are not "professional plaintiffs," disfavored by Congress plaintiffs seeking to serve in a representative capacity are effectively required to state that they are not professional litigants. See 15 U.S.C. §§ 78u-4(a)(2)(A)(ii), (v) & (vi) and D'Hondt v. Digi International, Inc., 1997 WL 405668 at *2 (D.Minn.1997). Second, certification, if properly obtained, guarantees that the plaintiff put forward as a class representative authentically seeks to oversee the litigation and represent the class. For this reason, subsections 21D(a)(2)(A)(i) & (iii) require each class member filing a certification to state that he, she, or it "has reviewed the complaint and authorized its filing" and "is willing to serve as a representative party on behalf of a class...." 15 U.S.C. §§ 78u-4(a)(2)(A)(i) & (iii). Finally, certification requires a plaintiff seeking to serve in a representative capacity to put forward with his, her, or its motion such information from which the district court can evaluate the adequacy of that plaintiff against competitors under subsection 21D(a)(3)(B)(iii)(I). See 15 U.S.C. § 78u-4(a)(2)(A)(iv).
Certifications ostensibly comporting with the requirements of subsection 21D(a)(2)(A) have been filed by all movants seeking to be appointed lead plaintiff in the present action. In addition, such certifications have been filed by other movants not seeking to serve as lead plaintiff, but apparently desiring that SWIB be appointed lead counsel. While all certifications appear inviolate on their face, SWIB attacks the certifications attached to the motion by the Group to be appointed lead plaintiff not on the grounds that they fail to include some specific requirement of certification,[46] but on the grounds that many of those filing the certifications were unaware that in doing so, they were certifying to a willingness to act as lead plaintiff *1321 in the action. Rather, asserts SWIB, these persons were under the impression that they were required to file such certifications in order to obtain a portion of any class relief awarded. SWIB makes this charge on the grounds that an individual, Douglas Gilbert ("Gilbert"), who provided a certification to the Group, also provided a certification to counsel for SWIB in response to the notice published by the Burke plaintiffs. In an affidavit filed with the Court, Gilbert avers, first, that at no time did he authorize putative counsel for the Group to represent him; second, that he submitted the certification to preserve his rights in any claims that he might have against the Defendants; and, third, that he did not know either of his being put forward as member of a lead plaintiff group or that the Group of which he was purportedly a member was guided by a "steering committee" of twelve individuals.
The Group responds that Gilbert's affidavit was secured in a trolling exercise undertaken by counsel for SWIB through which it contacted the Group's clients and tried to persuade them to defect from the Group and support SWIB. In support of its allegation, the Group presents a signed declaration of Ryan Bowell ("Bowell"), in which Bowell states that although he never responded to the notice published by the Burke plaintiffs' counsel (presently serving as SWIB's counsel), he was contacted by SWIB counsel on March 9, 2000, and requested to defect from the Group and support SWIB's motion to be appointed lead plaintiff. The Group also presents, under seal, copies of retainer agreements between Milberg Weiss and both Gilbert and Bowell.
The issue before the Court is not so much whether certifications were filed, but whether alleged members of the Group have a genuine willingness to act as representative plaintiffs, a fact that the certification requirement is meant to determine.[47] If not, a central purpose of the certification requirement goes unserved and the motion to be appointed lead plaintiff filed by the Group is, at least in part, belied by the unwillingness of certain of its members to serve in such capacity.
The Court sees the assertions of Gilbert and Boswell as stemming both from the faulty published notices and from overreaching attempts by counsel for both SWIB and the Group to collect certifications in their respective attempts at obtaining lead plaintiff status. The purpose of the certification requirement is to put before a court for consideration those individuals or institutions both willing and able to act as lead plaintiff in the action; it is not to hold a petition drive. The Court houses deep reservations about appointing any body to act in a lead plaintiff capacity where there exist serious questions whether all of the purported members of that body are aware that they are to act as lead plaintiff or that they are spoken for by a "steering committee" chosen by counsel and unanswerable to the members of the supposed body. However, the Court is of the opinion that such problems cease to be genuine is appropriate strictures are placed on the formation of plaintiffs' groups. It is these strictures that the Court will next develop. As to the Court's concerns about the recruitment efforts of counsel for SWIB, the Court believes these are properly considered as reasons to object to the appointment of SWIB's present counsel as lead counsel, a matter not addressed herein.[48]
*1322 Can the Group serve as lead plaintiff?
As the Court has earlier noted, the Group has defined itself in two ways: first, as a combination of the twelve individuals who lost approximately $ 2.6 million in the purchase of Just for Feet common stock and, second, as an agglomeration of the nearly three-hundred individuals who lost approximately $ 6.5 million in transactions in Feet stock and who are led by the twelve-person steering committee. SWIB challenges the Group's qualifications to serve as lead plaintiff because the Group is not a "person or group of persons" as required in subsection 21D(a)(3)(B)(iii)(I) of the Exchange Act. The crux of SWIB's argument is that the Group is not a "group" under the subsection, as the members of the Group share no common interest as an entity beyond their shared losses resulting from the purchase of Just for Feet common stock. The Group responds that it is a sufficiently cohesive entity to serve as lead plaintiff and that the statute does not prohibit a "group" that simply aggregates its losses from serving as lead plaintiff.
The idea that a number of plaintiffs might aggregate themselves and their losses into a group for the purpose of demonstrating the largest financial interest and adequacy to serve as lead plaintiff derives from language in subsection 21D(a)(3)(B)(iii)(I) stating that "the court shall adopt a presumption that the most adequate plaintiff in any private action arising under this Act is the person or group of persons" who best meet certain criteria listed therein.[49] 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I) (emphasis added). However, the response of district courts to the suggestion that combinations of unrelated individuals and investors can be aggregated into lead plaintiff groups under this section has ranged from tepid acceptance to open hostility. Essentially, as stated by one commentator, "Courts have interpreted the [Reform Act's] aggregation language in three ways: (1) permitting any number of plaintiffs to aggregate, (2) aggregating only a limited number of individuals or institutions, or (3) refusing to permit aggregation." Heck, Conflict and Aggregation, 66 U.Chi.L.Rev. at 1214. The Court will first examine each of these interpretive "traditions" in evaluating whether the aggregation of plaintiffs into a group is appropriate under section 21D(a)(3)(B)(iii) in light of the Reform Act's language, structure, and purposes.
Permissive aggregation.
Absolute, permissive aggregation has had few active proponents; in the majority of cases in which large plaintiffs' groups were permitted to have charge of the litigation, the aggregation problem went unaddressed.[50] The first court to affirmatively permit aggregation was the court in D'Hondt v. Digi International, Inc., 1997 WL 405668. In that action, the court was confronted with a motion to appoint as lead plaintiff a group of twenty-one plaintiffs objected to by the defendants in the *1323 action. The district court determined that aggregation was permissible and that the plaintiffs' group could serve as lead plaintiff; however, it drew that conclusion hesitantly:
[T]he Defendants express concern that the expansive number of Lead Plaintiffs, which the Movants propose, predisposes the putative class to the control of Lead Counsela prospect which directly contravenes the Congressional purposes behind the Reform Act. In addition, the Defendants underscore that, by merely mimicking the requisites of the Reform Act, the Movants' certifications fail to adequately inform the Court as to their individualized qualifications to serve as Lead Plaintiffs. Indeed, the Defendants make much of the concession of Plaintiffs' counsel that, should the Court believe that the number of proposed Lead Plaintiffs is excessive, then a lesser number of Lead Plaintiffs can be proposed for selection. In the Defendants' view, this concession abundantly demonstrates that counsel for the putative class continue to control the actions of the class members in ways that the Reform Act attempted to halt.
* * * * * *
While the assertion can legitimately be made that the larger the number of proposed Lead Plaintiffs, the greater the dilution of the control that those Plaintiffs can maintain over the conduct of the putative class action, an equally cogent assertion can be broached that, when more greatly numbered, the Lead Plaintiffs can more effectively withstand any supposed effort by the class counsel to seize control of the class claims. In our view, when, as here, the putative class may total in the hundreds of thousands, if not millions, an arbitrary limit on the number of proposed Lead Plaintiffs would be unrealistic, if not wholly counterproductive. Counsel for the Plaintiffs have canvassed those putative class members, who have expressed an interest to appear as Lead Plaintiffs, using criteria of selection which are facially valid, and we are not convinced that, in promulgating the remedies of the Reform Act, Congress intended a substantial departure from the ordinary application of the attorney client relationship....
Id. at *3. The court then remarked on its power to oversee counsel's conduct in the action as a grounds for not investigating the composition of the plaintiffs' group.
[I]n declining the Defendants invitation to invasively investigate the Lead Plaintiffs, we do not abdicate our proper role in the supervision of class actions. First, if we had any doubts as to the capacity of a Lead Plaintiff to fairly and adequately represent the class, or if we perceived that the interests of a Lead Plaintiff were subject to a unique defense, then we would have no hesitation in focusing the requisite inquiry that the putative class members should be conducting and, should they default, in undertaking the Court's own investigation. No such showings have been made here, however. More importantly, in relying upon the investigative efforts of the putative class members, we do not yield our responsibility to properly supervise the conduct of class actions. Should irregularities occur in the class members' nomination of Lead Plaintiffs, they are subject to the Defendants' discovery in preparation for any Motion for Class Certification, and the Court's obligation to conduct a mandatory review of any proposed settlement of the case, inclusive of attorneys' fee requests, and to review, and to make specific findings concerning the parties' compliance with Rule 11(b), Federal Rules of Civil Procedure. See, Greebel v. FTP Software, Inc., 939 F. Supp. 57, 60 (D.Mass.1996) (Court concludes that its determination to appoint a person or persons as Lead Plaintiff "must be without prejudice to the possibility of revisiting that issue in considering a motion for class certification."); Title 15 U.S.C. § 78u-4(a)(7) and (c).
Id. at *4. (Footnotes omitted). Soon thereafter, in Gluck v. CellStar Corp., 976 *1324 F.Supp. 542, 546 (N.D.Tex.1997), a case involving both SWIB and the Group's counsel and arising in the Northern District of Texas, the district court, while denying the plaintiffs' group lead plaintiff status, nonetheless stated, without qualification, that "aggregating the shares of several plaintiffs for purposes of [the largest financial interest] calculation is proper under the statutory language...."
In Reiger v. Altris Software, Inc., 1998 U.S.Dist. LEXIS 14705 at *13 (S.D.Cal. 1998), the district court was confronted with competing plaintiffs' groups seeking to serve as lead plaintiff. One of the groups, while having the least loss in the aggregate, contained an institutional investor who had, individually, sustained the greatest alleged financial loss. The other aggregate group contained no institutional investors but suffered, in the aggregate, the greater loss between the groups. The district court chose as lead plaintiff the group with the greater aggregate loss. Coming to its conclusion, the district court asserted reliance on the express meaning of the subsection: "By using the phrase `group of persons,' Congress made clear that a court can consider the aggregate group's losses in determining which group has the largest financial interest." Id. Further, the district court rejected the argument that one group was to be preferred over another because of the presence of an institutional investor:
The statutory presumption applies to "the person or group of persons" with the greatest financial interest in the relief sought. While legislative history mentions the goal of increasing the involvement of institutional investors in securities litigation, there is no express provision in the Act limiting the rebuttable presumption to investors. It is well settled that the plain language of the Act is controlling.
Id. at 13-14.
Limited aggregation.
The limited aggregation approach shares with the permissive aggregation approach the position that an unrelated group of persons can aggregate into a plaintiffs' group to serve as lead plaintiff. However, citing the control problems likely to ensue from fully permissive aggregation, courts taking the limited aggregation approach circumscribe the number of investors who can serve in such a capacity through the employment of a "rule of reason." This position received its first articulation in Chill v. Green Tree Financial Corp., 181 F.R.D. 398. In Chill, the court that authored the D'Hondt opinion revisited its reasoning regarding appointment of lead plaintiff. The plaintiffs' group proposed in Chill, the Maguire Group, presented to the court a two-tiered structure under which it sought to serve as lead plaintiff. The first tier of group in Chill consisted of nearly three hundred individuals, governed by the second tier, a group of only seven. The court concluded that the appointment of a plaintiffs' group approaching three hundred individuals and investors "would threaten the interests of the class, would subvert the intent of Congress, and would be too unwieldy to allow for the just, speedy and inexpensive determination of this action," even if, in some sense they were "governed" by the group of seven. Id. at 408. In coming to this conclusion, the court referred to the Congressional history and to its earlier opinion in D'Hondt.
If, as we understand its intent, the [Reform Act] was enacted to transfer "primary control of private securities litigation from lawyers to investors," Senate Rep. No. 104-98, at 685, then the Lead Plaintiff procedure should focus on the selection of a select committee to manage and direct the litigation, as opposed to management through a Committee of the Whole. "The lead plaintiff should actively represent the class." Id. at 689. In an effort to delimit the number of Lead Plaintiffs, the Maguire Group proposes that only seven of the suggested three hundred would have an active role in the litigation with, apparently, the remaining members serving some less *1325 active role. Whether the Maguire Group intends, as they have represented, to offer the bulk of its members no meaningful active role in the litigation, or to allow each of them to serve, in practice, as a Lead Plaintiff, we are faced with a prospectthat of an over or a potentially under represented grouping of Lead Plaintiffswhich is inconsistent with the intent of Congress.
* * * * * *
As we have previously stated, "the assertion can legitimately be made that the larger the number of proposed Lead Plaintiffs, the greater the dilution of the control that those Plaintiffs can maintain over the conduct of the putative class action, [while] an equal cogent assertion can be broached that, when more greatly numbered, the Lead Plaintiffs can more effectively withstand any supposed effort by the class counsel to seize control of the class claims." D'Hondt v. Digi Int'l Inc., 1997 WL 405668 *3 (D.Minn.1997). We do not suggest that either Rule 23, or the [Reform Act], warrants an arbitrary limit on the number of proposed Lead Plaintiffs, for we only hold that, in a case-by-case inquiry, a rule of reason prevails. If the proposed group of Lead Plaintiffs will not "actively represent the class," and the profusion of Lead Plaintiffs would threaten to unnecessarily complicate the proceedings, then the Court may exercise its supervisory authority to restrict the number of Lead Plaintiffs. Such a restriction is warranted here. Therefore, we reject the Maguire Group's proposition that, as currently constituted, it is the most capable of adequately representing the class.
Id. at 408-09 (emphasis added).
The Court then examined the certifications of the Maguire Group and picked six of the members of that group to serve as lead plaintiffs. In arriving at this result, the court reasoned that the defect of overabundance was a fault of the group as an entity and did not count as a strike against the six individuals chosen to potentially act a lead plaintiffs. Id. at 409.
The district court in In re Advanced Tissue Sciences Securities Litigation, 184 F.R.D. 346, 352 (S.D.Cal.1998), followed the lead of the Chill court and reduced a group of approximately 250 plaintiffs to six. In so doing, the district court concluded:
The idea of appointing over 250 unrelated, individual investors as lead plaintiffs runs afoul of Congress's intent in enacting the [Reform Act]. The very purpose of the [Reform Act] was to curtail the influence of professional, figurehead plaintiffs by transferring "primary control of private securities litigation from lawyers to investors." S.Rep. No. 104-98 (1995), reprinted in 1995 U.S.C.C.A.N. 679, 683, 685. Although the [Reform Act] expressly contemplates the appointment of more than one lead plaintiff, see, e.g., 15 U.S.C. § 78u-4(a)(3)(B)(i) (stating that the court "should appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be the most capable of adequately representing the interests of the class members") (emphasis added), the courts have repeatedly rejected motions for the appointment of large amalgamations of unrelated persons as lead plaintiffs as being directly contrary to the [Reform Act], see, e.g., Chill v. Green Tree Fin. Corp., 181 F.R.D. 398 (D.Minn.1998) (rejecting the appointment of a group of over 300 investors as lead plaintiff as subverting the intent of Congress and as being "too unwieldy to allow for the just, speedy and inexpensive determination of this action"). Instead, courts that have aggregated financial losses for the purpose of designating the lead plaintiff have tended to confine their appointments of lead plaintiff to small groups of individuals. In deciding how many lead plaintiffs to appoint in a given case, the courts have applied a "case-by-case inquiry" and "a rule of reason" approach. *1326 Id. at 409. Where the courts have found that a proposed group of lead plaintiffs is too large to actively represent the interests of the purported class, the courts have exercised their supervisory authority to restrict the number of lead plaintiffs. Id.
Id. (internal footnotes omitted and emphasis added).
In re Milestone Scientific Securities Litigation, 183 F.R.D. at 417, involved a group of seven investors who sought to be appointed lead plaintiff. The district court found no difficulty in appointing a group of plaintiffs of the limited size proposed, explaining that:
The fact that a group, as opposed to a single individual, is proposed as lead plaintiff does not necessarily render [that group] inadequate. The [Reform Act] expressly provides a "group of plaintiffs" may be deemed most adequate plaintiffs. See 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). It has also been held that the appointment of more than one lead plaintiff does not violate the [Reform Act]. See Oxford, 182 F.R.D. at 46-47; In re Cephalon Secs. Litig., 1996 WL 515203, at *1 (E.D.Pa. Aug.27, 1996).
While the [Reform Act] does not limit the number of proposed lead plaintiffs, a "rule of reason prevails." See Chill, 181 F.R.D. at 409.
The assertion can legitimately be made that the larger the number of proposed Lead Plaintiffs, the greater the dilution of the control that those Plaintiffs can maintain over the conduct of the putative class action....
D'Hondt, 1997 WL 405668, at *3. The inevitable dilution of control stemming from the appointment of multiple lead plaintiffs may result in weakened bargaining power of the lead plaintiffs. In particular, multiple lead plaintiffs may be hampered in their collective ability to effectively negotiate retention agreements and supervise the conduct of counsel. See Cendant, 182 F.R.D. at 147 ("[R]epresentation by a disparate group of plaintiffs, each seeking only the protection of its own interests, could well hamper the force and focus of the litigation."). In this regard, the appointment of multiple lead plaintiffs may
detract from the [Reform Act's] fundamental goal of client control, as it would inevitably delegate more control and responsibility to the lawyers for the class and make the class representative more reliant on the lawyers.
Gluck, 976 F.Supp. at 549-50; see Steiner v. Frankino, No. 1:98 CV 0264, slip op. at 12 (N.D.Ohio July 16, 1998); Donnkenny, 171 F.R.D. at 157-58.
Id. at 417 (emphasis added). The district court then took issue with the suggestion that a group consisting of a variety or diversity of investors would best serve in a lead plaintiff capacity, noting the problem of faction likely to result from permitting full-fledged diversity to be deemed a benefit to representation of a class.
One court, in appointing co-lead plaintiffs, reasoned that multiple lead plaintiffs allows for "diverse representation." See Oxford, 182 F.R.D. at 49. Diverse representation is, however, an insufficient rationale justifying the appointment of multiple lead plaintiffs. See Cendant, 182 F.R.D. at 148 (rejecting [on a motion to appoint lead plaintiff filed in a Securities Act action] "the argument that additional plaintiffs bring to the litigation other counsel capable of advancing additional funds" as a basis for appointing multiple lead plaintiffs). Focusing on considerations such as diverse representation and additional financing overlooks the fundamental goal of the [Reform Act], that of empowering a unified force to control the litigation. See Conference Report at 683, 685; Gluck, 976 F.Supp. at 549-50.
Where multiple lead plaintiffs have divergent interests, the leadership of a class may be divided, and rendered factious. While the [Reform Act] refers to "a person or group of persons" as capable *1327 of serving as the lead plaintiff, the surrounding statutory language forecloses the appointment of multiple groups or multiple persons not part of a cohesive group. Significantly, apart from the sole reference to a "group of persons," the [Reform Act] is worded in the singular, providing a mechanism for the appointment of "the most adequate plaintiff," not the most adequate plaintiffs. See 15 U.S.C. § 78u-4(a)(3)(B)(i) and (iii).
Id. at 417-18 (emphasis added).
In In re Baan Co. Securities Litigation, 186 F.R.D. 214 (D.D.C.1999), the district court was confronted with an unopposed motion to appoint as lead plaintiff a group of 466 investors led by a twenty-member subgroup. In addressing the motion, the district court first noted that "Congress envisioned that courts still would play an independent, gatekeeping role to implement the [Reform Act]." Id. at 215. The district court then discussed the differing approaches to the aggregation issue. It first disagreed with the blanket position that unrelated groups of individuals could not serve as lead plaintiff in a securities action.
While Congress provided flexibility for a "group of persons" to be lead plaintiff, "[t]he most important open question under the lead plaintiff section of the [Reform Act] is whether unrelated individuals or institutions may aggregate their shares in order to be deemed the `most adequate plaintiffs'...." John C. Coffee, Jr., Developments Under the Private Securities Litigation Reform Act of 1995: The Impact After Two Years, SC53 ALI-ABA 395, 423 (1997)[]. One court has suggested that unrelated individuals cannot be a "group of persons" under the [Reform Act]. See, e.g., In re Donnkenny Inc. Secs. Litig., 171 F.R.D. 156, 157-58 (S.D.N.Y.1997). This Court believes that suggestion goes too far. The text of the [Reform Act] does not limit the composition of a "group of persons" to those only with a pre-litigation relationship, nor does the legislative history provide a sound enough foundation to support such a gloss.
Id. at 216. The Baan court then discussed whether an unlimited number of investors could act in the aggregate as a group, or whether there existed a limit to the number of such individuals that could serve in a plaintiffs' group.
Courts trying to implement Congress's intention that clients rather than lawyers control the litigation have divided when considering how to treat a Lead Plaintiff motion by a large group of unrelated investors. On one view:
While the assertion can be made that the larger the number of proposed Lead Plaintiffs, the greater the dilution of control that those Plaintiffs can maintain over the conduct of the putative class action, an equally cogent assertion can be broached that, when more greatly numbered, the Lead Plaintiffs can more effectively withstand any supposed effort by the class counsel to seize control of the class claims.
D'Hondt v. Digi Int'l, Inc., 1997 WL 405668 *3 (D.Minn. Apr.3, 1997). On a related note, another court found that "diverse representation" of the plaintiff class was a value to be preserved in choosing a Lead Plaintiff. See In re Oxford Health Plans, Inc. Secs. Litig., 182 F.R.D. 42, 49 (S.D.N.Y.1998) (appointing unrelated individuals and two institutions as coLead Plaintiffs).
On the other side, courts have determined that multiple lead plaintiffs will be unable to control the litigation, effectively negotiate retention agreements, and supervise the conduct of counsel. See, e.g., In re Advanced Tissue Sciences Secs. Litig., 184 F.R.D. 346 (S.D.Cal.1998) ("The idea of appointing over 250 unrelated individual investors as lead plaintiffs runs afoul of Congress's intent in enacting the [Reform Act]"); In re Milestone Scientific Secs. Litig., 183 F.R.D. 404, 417 (D.N.J.1998). When determining how many plaintiffs *1328 is too many, courts thus far have opted for a "rule of reason" approach. E.g., Advanced Tissue, 184 F.R.D. at 351-53 (winnowing proposed group of 250 to six).
For its part, the SEC also does not suggest an interpretation of "group of persons" that would erect a per se bar against aggregating previously unrelated investors. However, in its view:
Construing the term `group of persons' in light of the language and purposes of the Act, a court generally should only approve a group that is small enough to be capable of effectively managing the litigation and the lawyers. The Commission believes that ordinarily this should be no more than three to five persons, a number that will facilitate joint decisionmaking and also help to assure that each group member has a sufficiently large stake in the litigation.
SEC Mem. at 16-17.
Id. at 216-17. The court concurred in the approach of the SEC. A plaintiffs' group of 466 investors, the court concluded, was simply too large. Noting that several courts, in appointing lead plaintiff, had trimmed plaintiffs' groups down to more manageable numbers, it observed that, as "a small committee will generally be far more forceful, effective and efficient than a larger aggregation," the determination of lead plaintiff "should be made under a rule of reason but in most cases three should be the initial target, with five or six as the upper limit." Id. at 217.[51] Concluding that even the restricted group of twenty plaintiffs would be incapable of managing the litigation, the district court denied the motion to appoint lead counsel.
In Yousefi v. Lockheed Martin Corp., 70 F. Supp. 2d 1061 (C.D.Cal.1999), a group consisting of 137 plaintiffs filed an unopposed motion to be appointed lead plaintiff. The district court, after reviewing the case law, concluded that "the Act clearly contemplates the appointment of multiple plaintiffs to manage the litigation." Id. at 1068. However, the court concluded, referring to the body of courts considering the issue that had refused to appoint plaintiffs' groups composed of a large number of plaintiffs, that it could not grant the unopposed motion, as permitting a group of the purported size to serve as lead plaintiff would run contrary to the purposes of the Reform Act. Id.
Given that it had denied the motion for lead plaintiff, the court then considered whether it had the authority to choose plaintiffs from among the members of the proposed group to serve as lead plaintiff. Concluding that it did, id. at 1070, the district court then chose two members of the plaintiffs' group and appointed them to act, together, as lead plaintiff, noting that "with the appointment of one lead plaintiff who is an individual private investor and one lead plaintiff that is an institutional investor, the lead plaintiffs will represent a broader range of shareholder interests than if the Court appointed an individual or an institutional investor alone." Id. (citing In re Oxford Health Plans, 182 F.R.D. at 47).
Takeda v. Turbodyne Technologies, Inc., 67 F. Supp. 2d 1129 (C.D.Cal.1999), involved two motions by competing plaintiffs' groups to serve as lead plaintiff. Each group contained hundreds of individuals, but each had put forward a smaller subgroup to serve as lead plaintiff in case the district court determined that the larger groups were too large. Reciting the pertinent cases and noting that several courts had "frequently construed [the phrase "group of persons" contained in the Reform Act] to mean a small group of manageable size that is capable of joint decisionmaking *1329 regarding the litigation," the district court concluded that the larger groups were, in fact, too large, and appointed one of the offered subgroups as lead plaintiff. Id. at 1136.
In In re Nice Systems Securities Litigation, 188 F.R.D. 206, a group consisting of nine apparently unrelated plaintiffs filed an unopposed motion to serve as the lead plaintiff in the pending action. The court first observed that, in spite of the fact that the motion to appoint lead plaintiff went unopposed, under the Reform Act, it bore "an obligation to review applications for the appointment of lead plaintiff and to appoint as lead plaintiff the member or members of the purported plaintiff class who are `most capable of representing the interests of the class members.'" Id. at 221. It then attended to the issue of whether the size of the plaintiffs' group rendered the group incapable of being lead plaintiff. In concluding that nine individuals were too many to participate in a plaintiffs' group, the court stated:
The fact that a group, as opposed to a single individual, is proposed as lead plaintiff does not necessarily render the Proposed Lead Plaintiffs inadequate. The [Reform Act] expressly provides a "group of plaintiffs" may be deemed most adequate plaintiffs. See 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). It has also been held that the appointment of more than one lead plaintiff does not violate the [Reform Act]. See Oxford, 182 F.R.D. at 48-49; In re Cephalon, 1996 WL 515203 at *1 (E.D.Pa. Aug.27, 1996).
Id. at 220. Stating that "[w]hile the [Reform Act] does not limit the number of proposed lead plaintiffs, a `rule of reason prevails,'" id. (citing Chill, 181 F.R.D. at 409), the district court determined that three of the nine individuals had losses so meager that they would likely have little reason to actively oversee the litigation. Id. at 221. Consequently, the district court reduced the number of members of the plaintiffs' group to six and appointed that group to serve as lead plaintiff. Id.
In In re Party City Securities Litigation, 189 F.R.D. 91, a proposed plaintiffs' group consisting of three members requested to be appointed lead plaintiff, without outside objection. Whereas one of the members of the proposed group had sold all of his shares of the stock of the defendant company, the other two plaintiffs retained shares in that company. In determining the lead plaintiff issue, the court considered whether it was appropriate to appoint all three group members lead plaintiff. First noting that the Reform Act does not rule out the appointment of multiple plaintiffs as lead plaintiff, the court reiterated that decisions to appoint multiple plaintiffs were guided by a rule of reason. Id. at 112. More than simply limiting the number of plaintiffs who could serve as lead plaintiff, however, the district court found that the "rule of reason" also applied in determining the kinds of small-group configurations that could be appointed lead plaintiff. As the district court reasoned:
One court, in appointing co-lead plaintiffs, reasoned that multiple lead plaintiffs allow for "diverse representation." See Oxford, 182 F.R.D. at 49. Diverse representation is, however, an insufficient rationale justifying the appointment of multiple lead plaintiffs. See Cendant, 182 F.R.D. at 148 (rejecting "the argument that additional plaintiffs bring to the litigation other counsel capable of advancing additional funds" as a basis for appointing multiple lead plaintiffs). Focusing on considerations such as diverse representation and additional financing overlooks the fundamental goal of the [Reform Act]the empowerment of a unified force to control the litigation. See Conference Report at 683, 685; Gluck, 976 F.Supp. at 549-50.
Where multiple lead plaintiffs have divergent interests, the leadership of a class may be divided, and rendered factious. While the [Reform Act] refers to "a person or group of persons" as being capable of serving as the lead plaintiff, the surrounding statutory language *1330 forecloses the appointment of multiple groups or multiple persons not part of a cohesive group. Significantly, apart from the sole reference to a "group of persons," the [Reform Act] is worded in the singular, providing a mechanism for the appointment of "the most adequate plaintiff," not the most adequate plaintiffs. See 15 U.S.C. § 78u-4(a)(3)(B)(i) and (iii).
Id. at 113 (emphasis added). Thus, for the district court, the "rule of reason" not only prohibited large groups from acting as lead plaintiff, it also prevented smaller groups with conflicting and divergent interests from serving in at capacity either. Id. at 114. While the court noted that each of the plaintiffs had a substantial financial stake in the litigation, the interests of the plaintiffs who retained shares of the defendant's stock had a divergence of interest from the plaintiff who did not. Id.[52] As such, the district court severed the plaintiff who failed to retain any shares in the defendant company from the plaintiffs' group and appointed the remaining two plaintiffs to be lead plaintiff.[53]
No aggregation of unrelated individuals.
The difference between those courts permitting limited aggregation and those opposed to aggregation is not whether more than one investor can serve in a lead plaintiff capacity. Both agree that certain small groups can serve in that capacity. Rather, the dispute centers on whether a small number of investors having no pre-existing affiliation, beyond their losses, can be aggregated to pursue lead plaintiff status as a group. While those in favor of limited aggregation assert that aggregation of a small group is permissible, within a rule of reason, those opposed to aggregation assert that there must be some pre-existing connection or confluence of interests among investors before they can combine to act as a group. The first of these cases staking out the anti-aggregation position, In re Donnkenny Inc. Securities Litigation, 171 F.R.D. 156, 158 (S.D.N.Y.1997), involved a motion to appoint as lead plaintiff "two unrelated institutional investors and four other individual class members." The district court refused to appoint the group of six investors and individuals to serve as lead plaintiff, stating:
To allow an aggregation of unrelated plaintiffs to serve as lead plaintiffs defeats the purpose of choosing a lead plaintiff. One of the principal legislative purposes of the [Reform Act] was to prevent lawyer-driven litigation. Appointing lead plaintiff on the basis of financial interest, rather than on a "first come, first serve" basis, was intended to ensure that institutional plaintiffs with *1331 expertise in the securities market and real financial interests in the integrity of the market would control the litigation, not lawyers. See H.R.Conf.Rep. No. 104-369, at 31-35 (1995), reprinted in 1995 U.S.C.C.A.N. 679, 730, 730-34. To allow lawyers to designate unrelated plaintiffs as a "group" and aggregate their financial stakes would allow and encourage lawyers to direct the litigation. Congress hoped that the lead plaintiff would seek the lawyers, rather than having the lawyers seek the lead plaintiff. Id. at 35, 1995 U.S.C.C.A.N. 679.
Id. (emphasis added).
In Tumolo v. Cymer, Inc., 1999 WL 1567741 (S.D.Cal.1999), the district court denied an unopposed motion by a plaintiffs' group consisting of 339 members to be appointed lead plaintiff. The court found permitting aggregation of unrelated plaintiffs into groups was altogether inappropriate and concluded that the massive size of the group made appointment of it as lead plaintiff at odds with the "the legislative intent behind the [Reform Act]" and a likely threat to "the interests of the purported future class." Id. at *2. The court explained its reasoning as follows:
One of the primary purposes of the lead plaintiff provisions of the [Reform Act] was to encourage a meaningful investor with a substantial stake in the litigation, preferably a large institutional investor, to initiate and control the litigation (and the lawyers who are behind it). See H.R.Rep. at 32 ("lead plaintiff mechanism is designed to increase the likelihood that parties with significant holdings in issuers ... will participate in the litigation and exercise control over the selection and actions of plaintiff's counsel."); Ravens v. Iftikar, 174 F.R.D. 651, 662 (N.D.Cal.1997). That is, Congress intended that the plaintiff with the "strongest financial interest will pursue the claims with the greatest vigor and will have both the interest and the clout to engage qualified counsel at the best rates for the class." In re Cendant Corp. Litig., 182 F.R.D. 144 (D.N.J. 1998); S.Rep. No. 104-98 (1995), reprinted in 1995 U.S.C.C.A.N. 679, 683, 685 ([Reform Act] seeks to transfer primary control of private securities litigation from lawyers to investors).
While the court is certainly aware that the [Reform Act] expressly permits the appointment of more than one lead plaintiff, courts have the discretion to reject motions for the appointment of a large assortment of unrelated persons if such an appointment would contravene the letter and spirit of the [Reform Act]. 15 U.S.C. § 78u-4(a)(3)(B)(i) (a court "should appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be the most capable of adequately representing the interests of the class members."); See also, Chill v. Green Tree Fin. Corp., No. 97-CV-2666[, 181 F.R.D. 398, 408] 1998 U.S.Dist. LEXIS 11427, at *23 (D.Minn. June 29, 1998) (rejecting the appointment of a group of over 300 investors as lead plaintiff finding such a proposal "too unwieldy to allow for the just, speedy and inexpensive determination of this action"). In fact, courts that have aggregated financial losses of several plaintiffs for the purpose of designating the lead plaintiff have tended to confine their appointments of lead plaintiff to small groups of individuals. See In re Donnkenny, Inc. Sec. Litig., 171 F.R.D. 156 (S.D.N.Y. 1997); Gluck v. CellStar Corp., 976 F. Supp. 542, 549 (N.D.Tex.1997) (appointment of large and diffuse group of investors detracts from the [Reform Act's] goal of client control over the lawyers litigating the action).
Id. In addition, the district court refused to permit a smaller group of seven individuals to act as lead plaintiff, finding that the smaller group had "failed to present sufficient evidence that ... [it was] ... any more qualified to serve as lead plaintiff than any of the other 332 proposed lead plaintiffs," reflecting concerns that permitting the unrelated individuals to act as a *1332 plaintiffs' group would give counsel too much control over the action. Id. at 3.
Switzenbaum v. Orbital Sciences Corp., 187 F.R.D. 246 (E.D.Va.1999), involved a contest between a group of seven unrelated investors and a group of five related New York City pension funds to serve as lead plaintiff. The district court concluded that the group of pension funds, despite lower aggregate losses, would better act as lead plaintiff, because, unlike the pension funds "little [was] known about the ties that the seven members [had] to each other or to the putative class." Id. at 250. The district court noted as a further pertinent defect in the motion of the group of seven individuals, which also defined the group (at parts) as consisting of some 200 individuals, that it "is unable to agree on who its members are, some of its proposed members are ineligible to act as the Lead Plaintiff in any event, one formulation of the Group would include more people than could possibly manage the case, and the Group has never been forthcoming about any of these conflicts at all." Id. at 251.
In re Telxon Corp. Securities Litigation, 67 F. Supp. 2d 803, presents the strongest argument for disallowing the aggregation of unrelated plaintiffs into a plaintiffs' group for purposes of acting as lead plaintiff, in the wake of which, district courts have taken anti-aggregation approaches to the lead plaintiff problem with some consistency. In Telxon, the court considered three motions for appointment as lead plaintiff, one by a plaintiffs' group consisting of eighteen individuals (the "Alsin Group"), another by a plaintiffs' group consisting of three individualstwo brothers and an investment advisor(the "Hayman Group") and, last, one by the Florida State Board of Administration ("FSBA"). Id. at 805. Each opposed the others' motions. A significant point of contention was whether the group consisting of eighteen individuals could serve as lead plaintiff under subsection 21D(a)(3)(B)(iii)(I). The court, drawing more from the statutory language and the overall scheme of the Reform Act that from its legislative history, concluded that the members of the Alsin Group could not aggregate into a plaintiffs' group. The court first surveyed the common meanings attributed to the term "group" to help determine its meaning within the confines of the statute.
While the meaning of "group" urged by the Alsin Group finds some support in the dictionary, it would be an exaggeration to say that it is the "usual," "plain," or "ordinary" meaning ascribed to the word. Indeed, the majority of dictionary definitions suggest that it would be a departure from the "usual and ordinary" meaning of the term to conclude that the disparate investors who make up the Alsin Group truly comprise a "group."
For instance, Webster's Third New International Dictionary defines "group" as follows:
1: two or more figures ... forming a distinctive unit complete in itself or forming part of a larger composition ... 2a: a relatively small number of individuals assembled or standing together ...compare CROWD b: an assemblage of objects regarded as a unit because of their comparative segregation from others (a of buildings) (a of towns ...) ... (1): a cluster of islands (the consists of four tiny islands) ... (2): a cluster of hits on a target fired with the same sight setting and the same point of aim 3: a number of individuals bound together by a community of interest, purpose, or function
WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 1004 (ed.1986).
Merriam Webster's Collegiate Dictionary similarly defines "group" as 1: two or more figures forming a complete unit in a composition 2a: a number of individuals assembled together or having some unifying relationship b: an assemblage of objects regarded as a unit ... 3a: an assemblage of related organisms....
MERRIAM WEBSTER'S COLLEGIATE DICTIONARY 515 (10th ed.1994).
*1333 The dictionary definitions attribute to "group" certain characteristics. A "group" is, for example, a smaller, identifiable subset of a larger population, sharing a common, defining characteristic which serves to distinguish them from that larger population. The word, thus, means more than a mere random collection of unrelated individuals or things. For instance, when one refers to a "group" of buildings in a city, one generally is not speaking about all of the buildings in a city, but to a specific subset of buildings, like those located in a certain area, or those sharing a certain architectural feature. Likewise, when one refers to a "group" of persons in a crowd, one generally would be understood to be referring to a specific subset of the crowd, for instance, individuals standing on a particular corner, or engaged in an activity in which the rest of the crowd is not participating.
Id. at 811-12 (footnotes omitted and emphasis added). After examining the common meaning of the term "group," the district court turned to an analysis of the structure of the Reform Act in an attempt to tease forth a meaning of the term "group" consonant with its provisions.
Examination of the lead plaintiff provisions of the [Reform Act] reveals that they speak in the singular in all instances save one: the reference to "group of persons." In all other instances, the statute uses the singular "person." For instance, the "Restrictions on professional plaintiffs" section of the statute states that "a person may be a lead plaintiff ... in no more than 5 securities class actions ... during any 3- year period," 15 U.S.C. § 78u-4(a)(3)(B)(vi), but does not expressly impose such a restriction on a "group of persons." Without exception, these provisions of the [Reform Act] speak of a single plaintiff; on their face, they do not contemplate multiple plaintiffs. Other courts have made this same observation. See, e.g., In re Milestone Scientific Securities Litigation, 183 F.R.D. 404, 416-17 (D.N.J.1998) ("Significantly, apart from the sole reference to `a group of persons,' the [Reform Act] is worded in the singular, providing a mechanism[][for] the appointment of `the most adequate plaintiff,' not the most adequate plaintiffs.").
At least one court has concluded that the statute's persistent use of the singular precludes both the appointment of co-lead plaintiffs and the appointment of a group comprised of a random assemblage of unrelated persons who are unable to function as a single, cohesive unit. "While the [Reform Act] refers to `a person or group of persons' as capable of serving as the lead plaintiff, the surrounding statutory language forecloses the appointment of multiple groups or multiple persons not part of a cohesive group." Id. This Court agrees that the context and structure of the [Reform Act] evince an intent that a "group" consist of more than a mere assemblage of unrelated persons who share nothing in common other than the twin fortuities that (1) they suffered losses and (2) they entered into retainer agreements with the same attorney or attorneys.
The [Reform Act] does allow more than one person to serve as the lead plaintiff; it would be inconsistent with the [Reform Act's] facial disapproval of multiple plaintiffs, and its persistent use of the singular terms person and plaintiff, however, to allow a melange of unrelated persons to serve as the lead plaintiff, especially if multiple law firms are to represent their interests. Such a "group" would be a "lead plaintiff" in name only; in substance, those individuals would essentially constitute a collection of lead plaintiffs, unbound by any allegiance to one another and unlikely to function as a unified whole. In such circumstances, the Court would be left with little assurance that the "group" speaks with a collective voice.
Id. at 813. Finally, the court noted the limitations on control of counsel resulting *1334 from permission of aggregation of unrelated plaintiffs into groups:
The larger the group, the less incentive any single member of the group and certainly the group as a wholewill have to exercise any supervision or control over the litigation. In the case of a single plaintiff, the agency costs are those costs associated with the monitoring of and communication with the plaintiff's attorney by the individual plaintiff. Where more than one person is involved whether it be in the context of a "group of persons" seeking to serve as lead plaintiff, or in the context of an attempt by various person to become co-lead plaintiffsthere is an additional cost associated with intragroup communication and monitoring. The greater the number of persons comprising the group, the more difficult it is for those persons to communicate with each other, and to speak with a single, coherent voice when making decisions about the conduct of the litigation, or, more precisely, the conduct of the attorney or attorneys in prosecuting the litigation. With the lead plaintiff group splintered and with no authoritative voice with which to exercise control over counsel, counsel is no more effectively controlled than in the pre-[Reform Act] era.
This is especially so if the group consists of not only a larger number of persons, but also of persons who bear no relation and have no connection with one another beyond the fact that they suffered financial loss as a result of a drop in the price of their shares of stock. Without some cohesiveness within the group, or something to bind them together as a unit, there is no reason for the individual members of the group to speak and act with a uniform purpose. Aggregating claims simply for the purpose of creating the largest financial loss would do nothing to reduce the agency cost and collective action problems associated with the former regime. Aggregation in such instances will not change the fact that no one member of the "group" will have the financial incentive to monitor, and, because there is no reason for the individual members to act collectively (no structure for decision making, etc), the group as a whole will not engage in monitoring. Thus, the problem sought to be remedied by the [Reform Act's] lead plaintiff provisions would remain unaddressed.
Id. at 815-16 (emphasis added).
Because the eighteen members of the Alsin group were too many to provide control of the litigation and because those members had no pre-existing relation, the district court refused to appoint the Alsin Group lead plaintiff. Id. at 816. The court next dispensed with FSBA as the most adequate plaintiff and turned its attention to the Hayman Group's motion for appointment as lead plaintiff. In severing the investment advisor from the Hayman Group and appointing the brothers lead plaintiff, the district court concluded the brothers "obviously have a pre-existing relationship and a basis for acting as a collective unit," with the consequence that they would "be able to speak with a single voice in their dealings with their chosen counsel." Id. at 823. This would not be the case if the investment advisor was left in the Hayman Group, the court determined, as "[h]e has no pre-existing relationship or association with the Hayman brothers." Id. The result in Telxon was completely followed in the later case of Aronson v. McKesson HBOC, Inc., 79 F. Supp. 2d 1146, 1154 (N.D.Cal.1999) ("The court adopts [the Telxon court's] narrow view of the `group' and `plaintiffs' language in Section 21D.").
Wenderhold v. Cylink Corp., 188 F.R.D. 577 (N.D.Cal.1999), involved an unopposed motion for appointment of lead plaintiff by a group of seven plaintiffs. In deciding to single one investor out of the seven to appoint as lead plaintiff, the district court first noted the strong policy of the Reform Act against permitting attorneys to take control of securities class litigation and the frustration of that policy that would result if plaintiffs' groups consisting of unrelated *1335 persons were to be appointed lead plaintiff. Id. at 586. However, the district court, altering somewhat the view of earlier courts that required a pre-existing relation prior to aggregation, set forth two alternate scenarios under which aggregation into a small plaintiffs' group would be required:
The first instance occurs if aggregation is necessary to address the existence of intra-class periods. If there is no single proposed plaintiff who has purchased in each intra-class period, a proposed plaintiff in one intra-class period may join with a class member or members who purchased in the other intra-class period(s) to form a group that would be entitled to the statutory presumption of superiority. Were aggregation not allowed in such an instance, the court would be forced to appoint as lead plaintiff an individual plaintiff whose limited interest in the litigation renders him incapable of fairly and adequately protecting the interests of the class as a whole. Thus, representational concerns may mandate aggregation.
The second instance concerns the question of adequate litigant control over the litigation. Aggregation may be permissible if it can be shown to serve the [Reform Act's] effort to shift control of the litigation away from the lawyers and to the investors. This might be true if the aggregation could be shown to be more capable than any single plaintiff of exercising effective control over the litigation independent of the lawyers. Likewise, if appointment of co-lead plaintiffs is necessary to achieve the transfer of power away from attorneys and to litigants, such appointment may be appropriate. See In re Oxford, 182 F.R.D. at 45-47.
Id. The district court in Aronson v. McKesson HBOC, Inc., 79 F.Supp.2d at 1154, considered Wenderhold an example of a limited aggregation case because of the two exceptions that the Wenderhold court attached to its anti-aggregation principle. However, this Court is of the opinion that Wenderhold is consonant with the anti-aggregation cases. Rather than permitting aggregation within reason, as the limited aggregation cases do, Wenderhold forbids aggregation except where it is necessary either to preserve representation of the class as a whole or when counsel can only be properly controlled by a group of investors. Essentially, Wenderhold permits aggregation of plaintiffs only in those cases where denial of aggregation would result in no fully adequate lead plaintiff being appointed.
In re Network Associates, Inc., Securities Litigation, 76 F. Supp. 2d 1017, follows the anti-aggregation trend. In Network Associates, two lead plaintiffs groups, each consisting of thousands of individuals, but led by relatively small "steering committees," and one individual investor filed opposing motions to appoint lead plaintiff, in a case characterized by invective and ill-will by both plaintiffs' groups. The district court, after a lengthy discussion of the Reform Act's purposes and history, concluded that neither group, or its "steering committee," should be permitted to serve as lead plaintiff. In deriving its conclusions, the court stated:
To be sure, the [Reform Act] ... contemplates that a "group of persons" may qualify as the lead. The [Reform Act], however, equally contemplates that the court will select "the most adequate plaintiff" as the lead. The whole point of the reform was to install a lead plaintiff with substantive decisionmaking ability and authority. For example, a group of mutual funds managed by a single organization might qualify. It would have an internal coherency and would be capable of acting as a unified decisionmaker. A mass of unrelated investors could not do so. Were it otherwise, then a qualified institutional investor with the single largest loss could be trumped by a collage of individual investors with greater aggregate losses but no ability to manage the case. Congress plainly rejected that proposition.
*1336 Too, an incoherent group with no decisionmaking apparatus would be far too unwieldy to satisfy Rule 23. In the present case, for example, the competing groups did not even vote on the memberships of the subgroups suggested for reasons of "administration and efficiency." The subgroups were simply hand-picked by counsel and dressed up with names. Such unorganized groups of unrelated investors with nothing in common other than the lawyer and with no clear-cut mechanism for making decisions could not "fairly and adequately" carry out the responsibility to protect the interests of the class.
Id. at 1025. The district court next quoted the Amicus Brief submitted by the SEC to the Eleventh Circuit Court of Appeals in Parnes, et al. v. Digital Lightwave, Inc., at 12, 15, No. 99-11293 (11th Cir. Aug. 25, 1999):
To enable the court to assess whether the proposed group is capable of performing the lead plaintiff function, it should provide appropriate information about its members, structure, and intended functioning. Such information should include descriptions of its members, including any preexisting relationships among them; an explanation of how it was formed and how its members would function collectively; and a description of the mechanism that its members and the proposed lead counsel have established to communicate with one another about the litigation. If the proposed group fails to explain and justify its composition and structure to the court's satisfaction, its motion should be denied or modified as the court sees fit.
Id. at 1026 (emphasis added). The district court, applying the criteria set forth by the SEC, then denied the motions of the two plaintiffs' groups to be appointed lead counsel. Id. 1026-27.
In the most recent published case, the district court in Sakhrani v. Brightpoint, Inc., 78 F.Supp.2d at 853, followed the trend started by Telxon, but appeared to accept the exceptions to the anti-aggregation principle set forth in Wenderhold:
[T]here may well be a few situations in which a small group might provide more effective oversight of class counsel than any single investor. The [Reform Act] gives courts the discretion to take such an approach if that seems reasonable based on the information the court has about the volunteers for lead plaintiff or perhaps because of significant differences of claims arising at different times in a longer class period. Nevertheless, this court sees no benefit in giving any weight to a mechanical aggregation of the losses of investors as a "group of persons" whose only connection is their common losing investment.
Id.
From an examination of the cases discussed above and the reasons given therein, it is clear that both the statutory language and goals of the Reform Act disallow agglomeration of large plaintiffs' groups to act as lead plaintiff. The phrase "group of persons," as informed by both common usage and statutory structure means something other than an unrelated mass of persons whose common features are loss and counsel. See In re Telxon Corp. Securities Litigation, 67 F.Supp.2d at 811-13.
Further, the exercise of control by plaintiffs over their counsel envisioned by Congress in enacting the Reform Act is defeated by permissive aggregation. Permissive aggregation limits incentives to monitor counsel, as most members of plaintiffs' groups have small losses in comparison with the costs of monitoring the attorneys. This incentive is lessened further through the free-rider problem, as many plaintiffs will expend little or no money monitoring their counsel and what money is spent in monitoring of counsel may be wasted on duplicative exercises of oversight. In addition, the larger the group, the greater the costs; monitoring of counsel requires that group members all have relevant information regarding actions of counsel and are able to make group decisions. However, communication and decisionmaking *1337 costs among plaintiffs rise tremendously as group size increases.
Aside from the problems raised by the lack of incentives for monitoring, there exists the problem that counsel can take advantage of the size of the group to insure that it controls the major decisions of the litigation. Intra-group conflicts are certain to arise. Counsel can seize upon those conflicts, choosing sides with the subgroup most favorable to its own interests, thereby adding "an extra imprimatur of authority to the position of the lead plaintiffs with whom the lawyers agree," and effecting the litigation in one direction or the other. Heck, Conflict and Aggregation, 66 U.Chi.L.Rev. at 1221. Also, with larger groups come fewer informed investors. Such investors are more likely to obtain information about the action through the filter of counsel's self-interest and would tend to rubber-stamp counsel's decisions.[54] A lead plaintiff group consisting largely of small, irregular investors would therefore be led by counsel that navigates the course, stands at helm and steers the rudder; the lead plaintiffs' group would merely pull the oars.
This being the case, the Court will not permit the Group, defined as the aggregation of almost three hundred investors led by a steering committee of twelve, to serve as lead plaintiff in the instant action. Beyond the reasons given, the court further notes that it is less than clear whether all of these two hundred and ninety-eight individuals are even aware that they are part of a lead plaintiffs' group. The Court has serious reservations about awarding the lead plaintiff mantle to an investor or body of investors where the veracity of the representations made in the certifications filed by that investor or body can be questioned. Arguable problems with the certifications appended to the Group's motion raise the question of whether each investor who filed a certification is willing to serve as lead plaintiff. To assure itself that every individual or investor who provided a certification actually desired to serve as lead plaintiff, the Court believes that it would be required to hale each investor submitting a certification or its representative into court to ask him or her whether the investor understands what the responsibilities of a lead plaintiff are and whether that investor is willing to perform those duties. This, pragmatically speaking, would be a nightmare exercise, postponing the lead plaintiff determination through months of hearings, all the while wasting valuable resources of both those investors and the court.
Even if the Group is defined simply as the twelve individuals who lost approximately $2.6 million dollars, this Court does not believe aggregation is appropriate, as under either a limited aggregation or anti-aggregation approach, there are simply too many unconnected investors among the twelve. Both approaches are concerned with insuring that the lead plaintiff controls its counsel and with maximizing that control, except when class representation is hampered. See Wenderhold v. Cylink Corp., 188 F.R.D. at 586; In re Telxon Corp. Securities Litigation, 67 F.Supp.2d at 815-16; In re Party City Securities Litigation, 189 F.R.D. at 114; and In re Baan Co. Securities Litigation, 186 F.R.D. at 217. Under either a limited aggregation or anti-aggregation approach, a proposed plaintiffs' group must, at a minimum, be capable of justifying how the benefits to be gained by aggregation offset any dilution of that group's control over the class. That is, for each additional class member added to a group over one (starting with the most qualified investor), there must be a benefit to the group or class that equals or outweighs any loss of control.
Here, the Group, narrowly conceived, has put forward nothing to assure this Court that the presence of twelve investors *1338 in the Group confers a benefit to the class rendering it better suited to represent the class than an eleven-investor group, nor that an eleven-investor group would be better than a ten-investor group, and so forth. Further, control problems are brutally apparent even in the structure of the narrower Group. First, that Group is spread across the country, making it somewhat troublesome and potentially expensive for Group members to communicate and discuss decisions to be made on behalf of the purported class. Second, there appears to be no means of resolving conflict among Group members, as would be necessary for those members to speak with a unified voice. Finally, there is no explanation of how the conduct of the attorneys is to be monitored by the Group and who is to bear the expense of that monitoring.
Mostly, the Group's arguments are negative; it attempts to demonstrate the presumptive inadequacy of SWIB, hoping thereby to be the only remaining choice. The only offered justification for appointment of the Group is that of "diversity." But, as has been often noted, diversity is not, in and of itself, a value inherent in the Reform Act. See In re Party City Securities Litigation, 189 F.R.D. at 113. Having diverse plaintiffs in a lead plaintiff group must serve a tangible goal that furthers the representative adequacy of that group. The Group, not having disclosed what the tangible goal of diversity in this action might be, will not be considered as an entity for purposes of determining most adequate plaintiff.
The Court will not refuse the individual members of the narrower Group consideration as most adequate plaintiff, however. It simply will not consider the adequacy of those individuals as summed together in a contrived plaintiffs' group.
Determination of adequacy.
"To encourage the selection of an institutional investor as the lead, the [Reform Act] ... creates a rebuttable presumption concerning which class member is most capable of adequately representing the interests of class members." In re Network Associates, Inc., Securities Litigation, 76 F.Supp.2d at 1021. Subsection 21D(a)(3)(B)(iii)(I) of the Exchange Act sets forth the manner in which this rebuttable presumption of adequacy is to be established:
(I) In general
Subject to subclause (II), for purposes of clause (i), the court shall adopt a presumption that the most adequate plaintiff in any private action arising under this chapter is the person or group of persons that
(aa) has either filed the complaint or made a motion in response to a notice under subparagraph (A)(i);
(bb) in the determination of the court, has the largest financial interest in the relief sought by the class; and
(cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.
15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). The presumption can be rebutted by proof offered by a class member that the presumptively most adequate plaintiff would not "fairly and adequately protect the interests of the class" or "is subject to unique defenses that render such plaintiff incapable of adequately representing the class." 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II).
Courts have struggled with the relation of subsection 21D(a)(3)(B)(iii)(I) of the Exchange Act to subsection 21D(a)(3)(B)(iii)(II) of that Act, particularly with respect to the interaction of the Rule 23 adequacy and typicality determinations to be made under subsection 21D(a)(3)(B)(iii)(I)(cc) and the adequacy and typicality determinations to be made under subsection 21D(a)(3)(B)(iii)(I). For example, the district court, in In re Telxon Corporation Securities Litigation, 67 F.Supp.2d at 817 n. 23, described the perplexing interrelation of the two provisions:
It is unclear why the drafters of the [Reform Act] included this precise same prerequisite at two different stages in the lead plaintiff analysis. Perhaps it *1339 was an oversight. Perhaps the first inquiry is merely a threshold inquiry and the second is meant to be a comparative inquiry (i.e., who among the proposed lead plaintiffs, who may have identical losses, is the most adequate). Whatever the reason, the fact of its repetition evidences the importance of the adequacy requirement.
The SEC, in its amicus brief filed in LaPerriere v. Vesta Insurance Group, Inc., et al, CV 98-AR-1907-S, on September 24, 1998, subsumed the adequacy and typicality determinations to be made under subsection 21D(a)(3)(B)(iii)(I)(cc) to those required under subsection 21D(a)(3)(B)(iii)(II), placing the full onus of demonstrating the inadequacy or atypicality of a presumptive lead upon a dissatisfied class member. In its brief, the SEC stated:
The Act establishes specific standards for an adequacy challenge. In relevant part, the Act provides that the presumption in favor of the most adequate plaintiff "may be rebutted only upon proof by a member of the purported plaintiff class that the presumptively most adequate plaintiff *** will not fairly and adequately protect the interests of the class." 15 U.S.C. [§] 78u-4(a)(3)(B)(iii)(II) (emphasis added). Thus, mere speculative allegations of inadequacy are not sufficient. As one court noted, "speculative assertions are insufficient to rebut the presumption that [a lead plaintiff movant] is the most adequate plaintiff. The statute requires the [challenger] to present `proof' of its assertions; or if it requires discovery to gather such proof, to `demonstrate a reasonable basis' for a finding of inadequacy." Gluck, 976 F.Supp. at 547-48 (citing 15 U.S.C. [§] 78u-4(a)(3)(B)(iii)(II) & (a)(3)(B)(iv)).
SEC Brief at 29-30 (emphasis in original).
Chill v. Green Tree Financial Corp., 181 F.R.D. at 408 & 411, departs with both the Telxon and SEC positions on the matter. In Chill, the district court treated subsections 21D(a)(3)(B)(iii)(I) and 21D(a)(3)(B)(iii)(II) as imposing two separate requirements upon lead plaintiff contenders. Under that court's rationale, the former subsection requires a lead plaintiff movant to affirmatively demonstrate that he, she, or it filed a complaint or motion to be appointed lead plaintiff, possesses the largest financial interest and sufficiently satisfies the requirements of Federal Rule of Civil Procedure 23. The later subsection the court treated as a rebuttal provision, requiring an opponent of a presumptive lead plaintiff to demonstrate that the presumptive lead plaintiff either is not a typical class member or is an inadequate representative of the purported class.
Resolving the interplay between subsections 21D(a)(3)(B)(iii)(I) and 21D(a)(3)(B)(iii)(II) is a difficult task and there exist fair arguments in support of each explicitly drawn position. However, the Court must make a decision on how to interpret these provisions if it is to apply them. Thus, this court, respectfully departing from the positions of the Telxon court and the SEC, will not read a redundancy into subsections 21D(a)(3)(B)(iii)(I) and 21D(a)(3)(B)(iii)(II) by interpreting those sections to pass only once over the issues of adequacy and typicality. See Connecticut National Bank v. Germain, 503 U.S. 249, 253, 112 S. Ct. 1146, 117 L. Ed. 2d 391 (1992); Mountain States Telephone & Telegraph Co. v. Pueblo of Santa Ana, 472 U.S. 237, 249, 105 S. Ct. 2587, 86 L. Ed. 2d 168 (1985) (citing Colautti v. Franklin, 439 U.S. 379, 392, 99 S. Ct. 675, 58 L. Ed. 2d 596 (1979), in recognition of "`the elementary canon of construction that a statute should be interpreted so as not to render one part inoperative ...'"); In re Griffith, 206 F.3d 1389, 1393-94, 2000 WL 305458 at *4 (11th Cir.2000) (noting, among canons of statutory interpretation, that courts should avoid interpreting statutes such as to render language in the statute superfluous); United States v. DBB, Inc., 180 F.3d 1277, 1281 (11th Cir. 1999) ("We assume that Congress used the words in a statute as they are commonly and ordinarily understood, and we read the statute to give full effect to each of its provisions."); and Doctors Hosp., Inc. of *1340 Plantation v. Bowen, 811 F.2d 1448, (11th Cir.1987) (noting the statutory canon of "giving effect, when possible, to every word Congress employs"). Rather, this Court views these two subsections as serving different, but complementary roles. As more specifically explained below, the subsections require a district court to consider the typicality and adequacy of a lead plaintiff contender as class representative in the first instance when it weighs those, among other, factors to choose the most adequate plaintiff, or to rank the contenders from least to most adequate plaintiff, and in the second instance when a class member seeks to knock out a presumptive most adequate plaintiff.
In light of the text of the statute and its purpose, as inferred from the structure of the statute and its legislative history, this Court concludes that, rather than acting as a set of absolute threshold requirements, subsection 21D(a)(3)(B)(iii)(I) is a comparative subsection, obligating the court to weigh the factors set forth therein in determining lead plaintiff. A lead plaintiff movant, to be presumed most adequate plaintiff, need not demonstrate that it satisfies each of the prerequisites, but merely that he, she, or it best satisfies the factors listed. Put differently, the subsection creates a multifactor test, rather than a bright-line test, for determining most adequate plaintiff. One reason for this conclusion is that there exists no fallback position from the subsection 21D(a)(3)(B)(iii)(I) presumption of adequacy. If the subsection required a presumptive lead plaintiff to meet a certain threshold, then, were no lead plaintiff contender capable of meeting all of the subsection requirements, there could be no lead plaintiff and, therefore, no one to prosecute the suit.[55] For example, if the requirements contained in subsection 21D(a)(3)(B)(iii)(I) were absolute threshold requirements, then a contender who suffered the greatest financial loss, but did not satisfy other of the requirements of that subsection could not be named lead plaintiff. Further, nor could anyone else, as no one else could have the largest financial interest.[56] Second, the provisions of subsection 21D(a)(3)(B)(iii)(I) are couched, either literally or of necessity, in comparative terms,[57] except arguably, subsection *1341 21D(a)(3)(B)(iii)(I)(aa).[58]
Subsection 21D(a)(3)(B)(iii)(II), by contrast, is a "knock-out" provision, permitting another class member to utterly disqualify the presumptively most adequate, or highest ranked, contender "upon proof that the presumptively most adequate plaintiff" is actually (rather than may be) an inadequate representative or "subject to unique defenses that render such plaintiff incapable of adequately representing the class." 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II).[59] In so concluding, this Court follows what it perceives to be the interpretation of this subsection by the SEC and other district courts.
With this in mind, this Court concludes that the "knock-out" provision of subsection 21D(a)(3)(B)(iii)(II) is inapplicable to the present action, as no party has presented proof that any other contender labors under a presently existing and ascertainable adequacy or typicality problem of a serious nature. Rather each movant points only to potential Rule 23 problems that the other may have. As such, potential adequacy and typicality problems are factors to be considered in determining which competitor is presumptively the most adequate plaintiff.
All that the statute requires of a court in determining the presumptive most adequate plaintiff (and, for purposes of this action, the most adequate plaintiff), is to weigh and balance the listed factors and choose the class member whose characteristics best comport with those factors. For pragmatic reasons, though, it will be helpful in some circumstances to rank the contenders from the most to least suited to assume the role of lead plaintiff. For example, where there exist attempts by various lead plaintiff contenders to knock-out higher-ranked lead plaintiff contenders, it is useful to rank movants in order that the court can find the most adequate plaintiff easily after the "knock-out" provision is applied. Other instances in which the employment of a ranking of adequate plaintiffs is useful occur when it is appears that no lead plaintiff contender best satisfies all of the requirements of subsection 21D(a)(3)(B)(iii)(I) or when it appears that no lead plaintiff contender can be representative plaintiff for all intra-class periods. This later concern motivates the Court's decision to rank the contenders in this action.
SWIB.
Four factors have been found commonly relevant to the determination of "largest financial interest" under subsection 21D(a)(3)(B)(iii)(I)(bb): (1) the number of shares purchased by the movant, (2) the number of net shares purchased by the movant, (3) the total net funds expended by the movant during the class period and (4) the losses suffered by the movant. See First Merchants Acceptance Corp., 1997 WL 461036 at *5 (N.D.Ill.1997). In the instant action, having purchased 2,391,000 shares on which it sustained a total loss of $23,405,967.14, SWIB clearly has the largest financial interest of the lead plaintiff *1342 competitors. Further, from the period extending from August 13, 1999, until September 15, 1999, SWIB clearly typifies the investor in Feet stock. While SWIB may owe primary allegiance to its beneficiaries, the Court does not see that primary loyalty as a strike against SWIB's ability to adequately represent the class during the above described time period. Nonetheless, the Court has reservations about permitting SWIB to act alone as lead plaintiff for the putative class. Given that it sustained no losses during the period prior to August 13, 1998, SWIB has a strong disincentive to prosecute this action for that earlier period. Fraud proven during the earlier period does not inure to SWIB's benefit; rather, for SWIB, attempting to prove earlier fraud will be a wasteful expenditure of resources. Further, SWIB has only limited interest in pursuing fraud claims arising from actions taken in the final six weeks of the class period, when the value of Feet stocks ranged from $2 to $1.50; its focus in the action would reasonably be on proving earlier instances of fraud, both because it will have an easier time demonstrating that the fraud caused its damages and because its earlier losses proportionally overwhelm the later losses.
Michael.
Michael is perhaps the second most adequate plaintiff. Among the members of the "steering committee" of the self-styled Group, he has, under a conventional approach, the largest financial interest, having suffered losses of $311,133.07 on a total of 94,950 shares purchased by him. While, for the most part, Michael's purchases overlap with those of SWIB, making many of his claims of adequacy subservient to those of it, Michael made several purchases during the last six weeks of the class period, when the value of the stock was low, and has the strongest interest in prosecuting claims during that period.
The Bushes.
The Bushes, also alleged members of the Group, are the next most adequate plaintiffs, having lost a total of $304,382.8225 on trades made throughout the class period, except during the last six weeks. Were it not that the Bushes had a financial interest substantially lower than SWIB, they would likely be most suited to serve as most adequate plaintiff in the action. There is nothing to indicate that they would not be typical and adequate representatives of the class for the extent of the class period, excluding the final six weeks. Finally, the Bushes have demonstrated a keen interest in the progress of this action, along with Eubank being the only member of the "Group" attending the Court's scheduled March 6, 2000, hearing.
Eubank.
After the above listed three, the qualifications of almost all the other lead plaintiff contenders drop off significantly, being eclipsed either by the losses sustained by the other contenders or by the other contenders' ability to better serve the class for a more comprehensive period of time. However, Eubank presents a peculiar case, for three reasons. First, as a percentage of net worth, he clearly has the largest financial stake in this litigation, supporting a strong desire to obtain a recovery that best recompenses him for his losses. In an unconventional sense based upon loss as a proportion of overall wealth, Eubank has the largest financial interest in the litigation, supporting an interest in receiving a substantial recovery. Also, because of his greater percentage losses, Eubank may be the class representative best suited to bring a claim to recover via joint and several liability for recklessness. Finally, as with the Bushes, Eubank has shown a strong interest in following the proceedings in this action.
The Court earlier noted that for a group or committee of investors to be appointed lead plaintiff, the benefits inuring to the class from aggregation for the addition of each new group member must outweigh any concurrent loss in control over lead plaintiff's counsel. Each addition of Michael, then the Bushes, then Eubank, to SWIB in a committee acting as lead plaintiff shores up holes in the representation *1343 of the class occurring without such addition. Further, each addition does not appear likely to result in a significant loss of control by plaintiffs over the litigation. Thus, the benefits to the class of requiring SWIB and these three individuals to act as a committee outweigh any attorney control problems that would ensue from the appointment. Therefore, the Court will appoint as lead plaintiff a committee consisting of SWIB, Michael, the Bushes (one vote), and Eubank. All decisions reached by the lead plaintiff committee must be made by consensusthat is, by unanimous decision. If the committee has consistent problems in reaching consensus decisions such that the benefits ensuing to the class from the joint representation are eroded, the Court will consider either paring the committee or restructuring it such that those problems cease to be. Further, members of the committee should be aware that permanent appointment to the committee is contingent upon no more adequate plaintiff coming forward to claim a position or positions on that committee after proper notice is published. Finally, at all committee meetings, there should be one, and at most two, representatives of SWIB present. Further, unless that individual leaves his or her position with SWIB, the representative(s) of SWIB shall be the same for every meeting.
All members of the committee are expected to closely follow this action and educate themselves in order that they may make informed and intelligent decisions about the progression of this action. The members of the committee are also required to hold, at least once a month, a meeting to discuss the progress of the litigation and make decisions about its direction. Except for a biannual meeting to be held in Birmingham, Alabama, all meetings after the appointment of lead counsel may be conducted by telephone.
On or before Friday, April 21, 2000, the members of the committee shall meet in person at a location of their choosing within the Birmingham, Alabama metropolitan area. If the members cannot decide on a locale, or if it is easier for the committee members to do so, they may meet in Courtroom 5B of the Hugo L. Black U.S. Courthouse. If the members wish to use the courtroom, they should call Frances Stimpson (my secretary) between 9:00 a.m. and 5:00 p.m., Monday through Friday to reserve an available time. Ms. Stimpson's telephone number is (205)278-1982.
At this meeting, committee members are first to elect a spokesperson for the committee and decide upon operating principles for the committee such as delegations of duties, formats for discussing issues of dispute, and the like. The Court would suggest that SWIB's representative at the meeting be appointed spokesperson, given SWIB's extensive past experience at overseeing securities class action litigation. After, and only after, resolving these matters, the committee is to decide its choice for lead counsel in the action. The Court advises that the committee choose no more than two law firms to actively prosecute the action and, if necessary, no more than two law firms to act as liaison counsel (i.e., local counsel). The committee is also advised to heed the overarching theme of this opinion, that it is to control the lawyers, not the other way around, in choosing counsel. The Court reiterates that any decision made by the committee is to be made unanimously.
The Court notes that this is a meeting of the committee members to consider and recommend to the Court appointment of lead counsel. It is a meeting of the committee and not a meeting of attorneys. However, if absolutely necessary, each of the individual committee members may choose one attorney to represent him or her at the meeting as well.
Within five days of making its choice of preferred lead counsel, the committee shall file a motion in support of its choice as lead counsel, along with a statement detailing the proposed billing arrangements of offered lead counsel, attorney or firm resume(s) of that counsel, and other materials detailing counsel's experience in securities class action matters. Within five days *1344 thereafter, any excluded attorney or law firm may file an objection to the committee's choice of lead counsel and file with the objection any supporting documentation. Upon making the determination of lead counsel, the Court will set forth a schedule under which an amended complaint is to be filed, notice is to be published, and answers or motions to dismiss are to be filed.
CONCLUSION
As set forth herein, the motion of SWIB to be appointed lead plaintiff filed on January 18, 2000 (Document 29), will be GRANTED in part and DENIED in part. The motion of the Just for Feet Plaintiffs Group to be appointed lead plaintiff filed on January 18, 2000 (Document 32), will be DENIED. The motion for reconsideration filed by SWIB on March 2, 2000 (Document 71), will be GRANTED, in part, and DENIED, in part. The motion in opposition to SWIB's motion for reconsideration will be DENIED (Document 73). SWIB (one vote), Kenneth P. Bush and Louise M. Bush (one vote), Edward E. Eubank (one vote), and John Michael (one vote) will hereby be APPOINTED to a lead plaintiff committee. Any person or institution not wishing to serve as a member of the committee shall so inform the Court on or before Friday, April 21, 2000.
Order
In accordance with a memorandum opinion filed contemporaneously herewith, the motion of SWIB to be appointed lead plaintiff filed on January 18, 2000 (Document 29), is GRANTED in part and DENIED in part. The motion of the Just for Feet Plaintiffs Group to be appointed lead plaintiff filed on January 18, 2000 (Document 32), is DENIED. The motion for reconsideration filed by SWIB on March 2, 2000 (Document 71), is GRANTED, in part, and DENIED, in part. The motion in opposition to SWIB's motion for reconsideration is DENIED (Document 73). SWIB (one vote), Kenneth P. Bush and Louise M. Bush (one vote), Edward E. Eubank (one vote), and John Michael (one vote) are hereby APPOINTED to a lead plaintiff committee.
Counsel presently purporting to represent the members of the committee shall, on or before Tuesday, April 11, 2000, provide to the committee members copies of this order and the Court's memorandum opinion and certify to the Court that the committee members have been provided these copies. Committee members shall certify that they have received and read the Court's order on or before Friday, April 21, 2000. Any person or institution not wishing to serve as a member of the committee shall so inform the Court on or before Friday, April 21, 2000.
All decisions reached by the lead plaintiff committee must be made by consensus. If the committee has consistent problems in reaching consensus decisions, the Court will consider either paring the committee or restructuring it such that those problems cease to be. Further, members of the committee should be aware that permanent appointment to the committee is contingent upon no more adequate plaintiff coming forward to claim a position or positions on that committee. Finally, at all committee meetings, there should be one, and at most two, representatives of SWIB present. Further, unless that individual leaves his or her position with SWIB, the representative(s) of SWIB shall be the same for every meeting.
All members of the committee are expected to closely follow this action and, if need be, educate themselves in order that they may make informed and intelligent decisions about the progression of this action. The members of the committee are also required to hold, at least once a month, a meeting to discuss the progress of the litigation and make decisions about its direction. Except for a yearly meeting to be held in Birmingham, Alabama, all meetings after appointment of lead counsel may be conducted by telephone.
On or before Friday, April 21, 2000, the members of the committee shall meet in person at a location of their choosing within *1345 the Birmingham, Alabama metropolitan area. If the members cannot decide on a locale, or if it is easier for the committee members to do so, they may meet in Courtroom 5B of the Hugo L. Black U.S. Courthouse. For information on how to request a courtroom, see the memorandum opinion accompanying this order.
At this meeting, committee members are first to elect a spokesperson for the committee and decide on operating principles for the committee such as delegations of duties, formats for discussing issues of dispute, and the like. Second, the committee is to decide its choice for lead counsel in the action.
The Court notes that this is a meeting of the committee members to consider and recommend to the Court appointment of lead counsel. It is a meeting of the committee and not a meeting of attorneys. However, if absolutely necessary, each of the individual committee members may choose one attorney to represent him or her at the meeting as well.
Within five days of making its choice of what attorneys or law firms it wishes to have serve as lead counsel, the committee shall file a motion in support of appointing those attorneys or law firms lead counsel, along with a statement detailing the proposed billing arrangement of proposed lead counsel, an attorney or firm resume, and other materials detailing counsel's experience in securities class action matters. Within five days thereafter, any excluded attorney or law firm may file an objection to the committee's choice of lead counsel and file with the objection any supporting documentation. Upon making the determination of lead counsel, the Court will set forth a schedule under which an amended complaint is to be filed, notice to be published, and answers or motions to dismiss to be filed.
NOTES
[1] The original motion of SWIB to be appointed lead plaintiff in the instant action was filed on January 18, 2000 (Document 29). The motion of the Group to be appointed lead plaintiff was filed the same day (Document 32). In response to an order of the Court determining that the contending parties for lead plaintiff status were equally qualified to assume that role and that the decision on lead plaintiff status would be made by a coin toss to be held on March 6, 2000, SWIB filed, on March 2, 2000, a motion for reconsideration of the Court's decision to hold a coin toss (Document 69). On March 3, 2000, the Group filed an opposition to SWIB's motion, which, given its content, the Court deems to be a motion on behalf of the Group for reconsideration of the Court's decision to hold a coin toss to decide lead plaintiff (Document 72).
[2] The Court, in its order scheduling a coin toss, had yet to decide the lead plaintiff issue, instead determining only the manner in which the issue would ultimately be decided. As such, the styled motions for reconsideration filed by SWIB and the Group are not motions for reconsideration in the typical sense of a motion to readdress an adverse decision of the Court, as no decision that can be considered adverse has previously been made. Instead, the Court, in this memorandum opinion, treats the matter of lead plaintiff as one raised on initial motions of the parties.
[3] The Court emphasizes that the facts utilized in narrative contained in this section of the background are simply culled from the complaints filed in the consolidated actions. At points in its discussion of the background, the Court makes reference to the filed Form 10-Q and 10-K reports of Just for Feet. As these materials are a matter of public record, obtainable from the Securities and Exchange Commission through its searchable Electronic Data Gathering, Analysis, and Retrieval ("EDGAR") system. See FEDERAL RULE OF EVIDENCE 201. The veracity of the factual allegations appearing in the complaints is a matter to be determined through discovery and demonstrated, ultimately, at trial, if the litigation proceeds to that point. To the extent that this narrative of facts is deficient, it is due to an absence of detail in the filed complaints. These complaints lack specifics as to what statements contained misrepresentations; the times at which various misrepresentations were made; who made or knowingly did not stop another from making misrepresentations; and what rendered each misrepresentation false. The complaints also do little to indicate market reaction to the allegedly misleading statements, when and how the falsity of those statements came to light, and the immediate and lasting consequences of those revelations.
[4] Just for Feet is not a party to the instant action. However, various officers and directors of the company, as well as others involved in the making of representations on behalf of Just for Feet are parties to this action, which arises out of their acts with respect to Just for Feet.
[5] The first of these expansion attempts involved the acquisition of Athletic Attic and Imperial Sports by Just for Feet, announced by then-president, CEO and chairman of the Feet's board of directors, Harold Ruttenberg ("Ruttenberg"), on March 18, 1997.
[6] The lead plaintiff contenders also posit the existence of other statements that were not misleading and had the effect of deflating Feet's stock, although the content and timing of these statements are not disclosed other than that one was made on January 21, 1999.
[7] The choice of quotation from the Massey complaint is merely a decision based upon the clarity of expression in that example. A (very) few word changes in the drafting of the quoted paragraph would yield the same allegation in paragraph 41 of the Burke complaint.
[8] Ruttenberg was the president, CEO and chairman of the board of directors of Just for Feet from the start of the alleged class period until March of 1999, when he stepped down from the positions of president and CEO. Ruttenberg remained board chairman throughout the class period. Ruttenberg signed each Form 10-K and Form 10-Q filed by Just for Feet, each annual report, each proxy statement, and each letter to shareholders issued during the class period. During the class period, on May 8, 1998, Ruttenberg allegedly sold 413,850 shares of Feet common stock and realized $5,897,362.50 from the sale, all the while knowledgeable that the price of Just for Feet stock was being buoyed by the disbursement of false financial data.
[9] Tyra was, from May of 1997 until the close of the class period, the executive vice president of Feet and its chief financial officer. Allegedly, Tyra signed each of Just for Feet's Forms 10-K and letters to shareholders issued in connection with the annual reports for the fiscal years ending in January 1998 and 1999.
[10] Throughout the class period, Berman was a controller and financial officer of Just for Feet. As such, avers the Burke complaint, he "was responsible for all accounting and data processing activities at Just For Feet." Burke Complaint at ¶ 17.
[11] Evans was Just for Feet's director of financial reporting, partially responsible for financial data reported to third parties.
[12] The complaints charge Lloyd as being the accounting manager for Feet and as being responsible for financial data reported to third parties.
[13] Lazarus was a director of Feet during the class period.
[14] Haines was a director of Just for Feet during the class period.
[15] During the class period, Bellet acted as a director of Just for Feet.
[16] Starr was a director of Just for Feet during the class period. It is alleged that on July 24, 1998, knowing of Just for Feet's financial troubles and the misrepresentations being made about those troubles, he also sold 4,833 shares of Just for Feet common stock, realizing proceeds of about $118,408.50.
[17] Croft was a director of Feet during the class period.
[18] During the class period, Smith was a director of Just for Feet.
[19] At all times during the class period, Rockey was a director of Just for Feet. After March of 1999, she became president and CEO of the company, a position she retained until the conclusion of the class period.
[20] Berg was a director of Feet during the class period.
[21] D. Ruttenberg was an officer and employee of Feet and the son of Ruttenberg.
[22] The facts contained in this section are drawn from the affidavits and certifications filed by the lead plaintiff contenders.
[23] The listed transactions may not fully conform to those prices listed by SWIB, as the Court, unlike SWIB, did not round total purchase prices to the nearest cent, nor did it deduct the cost of commissions.
[24] In calculating the total number of shares that it sold, the Court has discovered two discrepancies. The first is between the figures on the blocks of shares sold by SWIB on June 16, 1998, contained in the affidavit of John F. Nelson ("Nelson") accompanying the original motion to appoint SWIB lead plaintiff filed on January 18, 2000, and those contained in the affidavit of Nelson filed on March 17, 2000. In both sets of figures, the total number of shares sold on June 16, 1998, is 150,000, but the individual blocks of shares said to have been sold vary. Since the information contained in the later filing is accompanied by the amount paid per share, it is presumably the more accurate accounting.
The second discrepancy involves the number of shares purchased on June 22, 1998. In the list of transactions accompanying Nelson's January 18, 2000, affidavit, the number of Just for Feet common stock shares listed as sold in a particular block is 22,004. However, in the March 17, 2000, affidavit, that number is asserted to be 22,006. The Court finds the number of shares alleged to have been sold in the January 18, 2000, affidavit to be correct, as were the court to find the number recorded in the later affidavit correct, SWIB would have, by July 6, 1998, sold 1,772,002 shares of Just for Feet common stock, two more shares than it ever purchased.
[25] As with its list of sales, the amounts listed in the chart enumerating purchases of stock by SWIB during the summer of 1999 in the January 18, 2000, affidavit of Nelson and in the March 17, 2000, affidavit of Nelson contains a discrepancy. In the former affidavit, Nelson lists a single block purchase of 22,004 on June 7, 1999. However, in the later affidavit, he breaks this single block purchase into two block purchases, one of 20,006 shares of Just for Feet common stock purchased at a price of $ 6.39 per share and another of 1,398 shares at $ 6.4063 per share. The amounts of the two purchases vary; however, the difference for purposes of this motion is ultimately one without distinction, in that the total number of shares purchased remains the same, although the total loss may differ. This Court cannot calculate this possible loss, though, as the chart attached to the earlier affidavit of Nelson does not contain purchase prices.
[26] In its brief in support of its motion to be appointed lead plaintiff, SWIB makes the following declaration: "As of November 1, 1999, SWIB held 2,391,000 shares of Just for Feet, Inc., ... all of which were purchased between April 1, 1997 and November 1, 1999, the Class Period." In the broadest sense, this statement is true, as SWIB's shares were purchased in a period of time that exists between April 1, 1997 and November 1, 1999. However, the connotation of this statement is that at least some of the shares of Just for Feet owned by SWIB at the close of the class period were purchased at the beginning of that period, a fact that, as has been shown in the text, is demonstrably untrue.
[27] The Court notes that the Group, in reproducing the values of shares purchased by the Bushes, rounded all per-share sale amounts in the hundredths of a cent to tenths of a cent. Thus, amounts of $12.5625 were rendered $12.563 on the Group's recalculation. The Court has undone this and stated per-share purchase prices to the hundredths of a cent, where it has been possible to do so.
The purchases purportedly made on March 17, 1999, seem incongruous with other purchases made during that time and, in fact, in the Bushes' certification, those purchases are listed among the 1998 transactions, although bearing a 1999 designation. While the Court has listed the transactions as having taken place in 1999, they may have occurred in the previous year. Whether true or not, presumed counsel of the Bushes, in the exercise of diligent attention, should have attempted to clarify this matter for the Court. Presumed counsel did not do this in listing a December 22, 1998, transaction of the Bushes of one hundred shares of common stock which they recorded with their certification to have purchased at the price of $ 0.016, but which the Group represents as being purchased at $ 14.625. Given the severe incongruity of the price recorded by the Bushes with any other selling price of Feet stock, the correction is probably warranted, although the specific number given does not seem based upon anything provided by the Bushes.
In addition, the Court notes that there are two purchases not reproduced in the Group's chart that are listed by the Bushes in the shares purchased by them. Both purchases are allegedly made on "04/09/00," although this seems incorrect without further clarification. The amount of the first purchase at 100 shares is at a price of $ 5.875 per share. The second purchase, totaling 500 shares, is in an amount of $ 6.125 per share. The Court will not include these shares in its calculation of amount of loss.
Finally, the Court has listed as the total purchase amount its calculated sum rather than the amount of $302,282.77 listed by the Group as the Bushes' total loss. The difference in the two figures may be attributable equally to the Group's rounding practices, to variances in purchase amounts listed by the Bushes, or to unlisted gains by the Bushes. The Court will however, treat its calculations as stating the proper amount.
[28] The Court's calculation here differs in some ways from both that in Jamison's certification and the Group's recalculation of the amounts stated in the attachment to Jamison's certification. Jamison's certification only listed the total price, including commission paid for each entire block shares purchased. The Court has followed the Group's method of deducting those commissions and dividing the total amounts to obtain a per-share price. However, the Court differs with the Group on the final calculation of the total value of the shares purchased, which the Group calculates to be $ 169,956.90. The Court will use its calculation of the total value of the stocks at time of purchase. The figure computed by the Group may nonetheless be more accurate, utilizing figures that have not been rounded to the nearest tenth of a cent per share. The difference, however, is of such a small amount that it does not alter the Court's determination of lead plaintiff.
[29] The Group's calculations regarding Laurents' purchases of stock contains numerous errors. First of these is an over-calculation of the number of shares purchased by Laurents. In its chart detailing the purchases by Laurents, the Group double counts the August 30, 1999, entry, thereby increasing the total number of shares it records him as having purchased to 30,000. Further, the Group calculates a May 26, 1999, purchase of 1,000 shares to have been at the price of $ 8.625 per share (or 8 9/16 per share), when, Laurents having recorded the price at 8 5/16 per share, the appropriate dollar amount should have $ 8.3125 per share. The Court therefore will use its calculation to determine the total amount paid for the various shares and, ultimately, to determine Laurents' total loss, for purposes of this motion.
[30] For the reasons stated in the previous footnote, this amount differs from the $ 197,625.25 loss claimed by the Group in its calculation.
[31] The beginning dates of these purchases overlap with the last date of the profitable purchases by Michael and the dates of the profitable sales of Feet stock.
[32] This amount differs from the amount of loss posited by the Group. In calculating loss, the Group lumped together all of Michael's purchases and sales to come to an total figure of $ 287,739.95 in losses. This would only be appropriate if the purchases and sales of shares made at a profit could be offset from the loss calculated by the Court. However, a plaintiff's claim is determined on the basis of each individual share; just as a plaintiff is not required to offset the gain realized from a contract that has not been breached by a defendant against the losses accrued from those contracts actually breached by the defendant. Further, these purchases and sales occur at an earlier period in the class, during which time any purported deception of Feet would not have been revealed. Only those losses that accrue after the deception is revealed and injury is caused can be remedied. As such, Michael's alleged gains during the early period of his trading cannot be offset against his purported losses.
[33] Here, as with Michael, the Group attempts to state an amount lower than the losses on particular shares of stock purchased by WHIPP, instead attempting to amalgamate the entire amount of shares purchased during the class period for purposes of demonstrating a string of losses across the entire class period. However, those shares bought and sold while the price of the shares was purportedly buoyed by the alleged false representations of the Defendants cannot claim a cause of action based upon those sales. Nor do those amounts count as offsets to any recovery on those actual losses caused by the misrepresentations.
[34] As defined by BLACK'S LAW DICTIONARY, a strike suit is "[a] suit (especially a derivative action) often based on no valid claim, brought either for nuisance value or as leverage to obtain a favorable or inflated settlement." BLACK'S LAW DICTIONARY (7th deluxe ed.1999). Another, more pointed definition, propounded by a district court in the District of Puerto Rico, is that "[a] strike suit is a largely groundless claim brought by a plaintiff who later engages in extensive discovery to induce the defendant to settle rather than to discover relevant evidence of fraud." Rivera v. Clark Melvin Securities Corp., 59 F. Supp. 2d 280, 287 (D.Puerto Rico 1999).
[35] "victims" on whose behalf these lawsuits are allegedly brought often receive only pennies on the dollar in damages. Even worse, long-term investors ultimately end up paying the costs associated with the lawsuits.
S.Rep. at 9, 1995 U.S.C.C.A.N. at 688.
[36] The term "professional plaintiff" refers to an individual with few holdings in a targeted company who will, in exchange for a large share of the class recovery, allow his or her name to be associated with the lawsuit as a nominal representative plaintiff. Such plaintiffs often appeared in multiple actions over short periods of time. "The term professional plaintiff generally is used to refer to a plaintiff who is either a frequent filer (in the years before the [Reform Act], some plaintiffs would file upwards of twenty or thirty securities class action complaints in only a few years), or a `hired gun' (one who allows an attorney to sue in his name in exchange for a fee), or both." In re Telxon Corporation Securities Litigation, 67 F. Supp. 2d 803, 813 (N.D.Ohio 1999).
[37] Indeed, there is a case presently before the Eleventh Circuit Court of Appeals, Chalmers v. Digital Lightwave, Inc., No. 99-11293-FF, in which an approved settlement is being challenged because that settlement was arrived at by a lead plaintiff group and lead counsel that had been inappropriately appointed and overseen. While, on or about March 20, 2000, a portion of the action was dismissed by the Circuit Court, it appears that the matters related to the selection of lead plaintiff and lead counsel remain.
[38] Further, in line with these interests, notice that informs class members of a right to move to be appointed lead plaintiff such as to encourage more persons to apply to be appointed as lead plaintiff is to be favored over notice that encourages fewer persons to apply as lead plaintiff.
[39] Beyond the notice, there are few sources to which potential lead plaintiffs may turn in obtaining information about the litigation such that they may make an informed decision about assuming the role of lead plaintiff: Putative class members can examine the complaint, they can contact the attorneys handling the case, or they can engage in their own investigation of the matters undertaken by the company that sold the stated securities during the class period (or any combination of the three). The first and second means of obtaining further information are inexpensive and, given adequate information in these sources, are the best items from which information may be obtained. The third source of information will generally be cost-prohibitive at the lead plaintiff stage, as the costs of such investigation are excessive in light of the possibility that an investor may, after the investigation, chose not to move to be appointed lead plaintiff or, after making a motion, may not be chosen by the district court as a lead plaintiff. An interpretation of the subsection that limits waste of time and resources is to be favored. At a minimum, then, in addition to providing sufficient information from which a class member may evaluate whether further investigation is warranted, the notice must be sufficient to direct a member of the purported class to either the complaint or present counsel, which must, in turn, have sufficient information from which that investor can make a reasonable decision regarding moving to be appointed lead plaintiff.
Further, as between providing information directing a member of the purported class to the complaint and directing a member of the class to counsel publishing the notice on behalf of a named plaintiff, for reasons given in the text, infra, giving only information directing putative class members to contact counsel would not comport with the purposes of the subsection, although it is likely the least expensive means of obtaining further information from which the decision to move to be appointed lead plaintiff may be had. At a minimum, notice must inform putative class members of where the complaint is filed. Indeed, a putative lead plaintiff must certify to having examined the complaint prior to being considered for the lead plaintiff position. See 15 U.S.C. § 78u-4(a)(2)(A)(i).
Section 21D(a)(3)(A)(i)(I)'s requirement that class members be advised of the "pendency of the action" fulfills this goal and, at the same time, is informed by it. Therefore, notice that advises class members of the "pendency of the action" must provide information about the action pending that aids interested investors in finding the complaint, such as the location of the action, its full name and its style.
[40] An alleged third manner of interpreting subsection 21D(a)(3)(A)(i)(I) would require only minimal information regarding the action, namely information that a suit is pending, that the suit asserts claims under certain of the securities laws and that the class period extends between two dates. If the goal of the subsection is to provide sufficient information to interested investors to permit them, with minimal costs, to make an informed decision of whether to move to be appointed lead plaintiff, reading the subsection to require only absolutely minimal information would impose the further requirement that the notice provide a means of finding additional information that minimizes costs, either by directing putative class members to the complaint or to attorneys. However, this manner of interpreting the subsection is inadequate because it does not provide sufficient information from which potential lead plaintiffs can evaluate adequacy as an initial matter without either requiring each interested investor to redundantly and perhaps fruitlessly expend time and money on searching out and reviewing the complaint, or violating the requirement that plaintiffs in securities litigation be placed in a position to make all relevant decisions regarding the action rather than counsel.
[41] Publication in a national wire service such as the Business Wire, the service utilized by the Burke plaintiffs, is adequate for purposes of satisfying the requirements of section 21D(a)(3)(A)(i). See In re Nice Systems Securities Litigation, 188 F.R.D. 206, 216 (D.N.J. 1999) (specifically finding the Business Wire to qualify as a "widely-circulated" national business-oriented wire service). In Nice Systems, the district court made the following observations about the Business Wire, as a notification device:
The [Reform Act] does not define "widely-circulated" or "wire service." See 15 U.S.C. § 78u-4(a)(3)(A)(i). Congress, however, intended publication to "encompass a variety of mediums [sic], including wire, electronic, or computer services." See Conference Report at 733; see also Greebel v. FTP Software, Inc., 939 F. Supp. 57, 62 (D.Mass.1996). The Business Wire is a business-oriented wire service within the meaning of the [Reform Act]. See Greebel, 939 F.Supp. at 62 ("[T]he mere fact that Business Wire arrives at a print publication via an electronic signal, rather than in the manner of a traditional wire service, does not disqualify it as a `wire service' within the meaning of the statute."). Additionally, the Business Wire is subscribed to by "hundreds of print publications and wire services, encompassing news media in all fifty states," and is thus "widely-circulated." See id.; First Merchants Acceptance Corp., 1997 WL 461036 at *4 ("[T]he court must make its own interpretation as to what the term [`widely-circulated'] means."). The Business Wire has been recognized as a suitable vehicle for satisfying the notice and publication requirements of the [Reform Act]. See, e.g., Greebel, 939 F.Supp. at 62-64; Lax v. First Merchants Acceptance Corp., [] 1997 WL 461036 at *1 (N.D.Ill. 6 Aug. 1997).
Id. at 216 n. 8. Further, as this Court would define a "widely-circulated" publication or wire servicea publication or wire service the circulation of which is, at a minimum, sufficiently broad to be read or examined by most large, experienced investorspublication in the Business Wire satisfies the requirements of subsection 21D(a)(3)(A)(i).
[42] The Court does not address whether the Burke plaintiffs' notice satisfies the requirement that such notice advise putative class members of the claims asserted in the action.
[43] The notice also seems to acknowledge the existence of the earlier Burke action, filed on November 19, 1999, and assumes that the Massey case and it would eventually be consolidated, as it notifies investors to contact the Milberg Weiss firm within sixty days of the date the Burke complaint was filed, rather than sixty days from the filing of the Massey complaint. As such, the name and style of that case should also have been included.
[44] The notice of the Burke plaintiffs is similarly flawed, in that the time periods in which the alleged wrongs occurred is not included, denying interested investors of the ability to determine the degree to which they have claims in common with other putative class members.
[45] The district courts have disagreed on this issue, some taking the language of subsection 21D(a)(2)(A) requiring that certification be "filed with the complaint" by "[e]ach plaintiff seeking to serve as a representative party" as exclusive, not requiring individuals filing a motion to be appointed lead plaintiff, as opposed to a complaint, to include a certification pursuant to section 21D(a)(2)(A). See Aronson v. McKesson HBOC, Inc., 79 F. Supp. 2d 1146, 1155 (N.D.Cal.1999) and Greebel v. FTP Software, Inc., 939 F.Supp. at 61. However, the Court is persuaded by the reasoning of the district court in Chill v. Green Tree Financial Corp., 181 F.R.D. at 410:
With due respect [to district courts concluding otherwise], we disagree, and conclude that Congress intended the provision of certifications in conjunction with a Lead Plaintiff Motion. As pertinent, the legislative history of the [Reform Act] reveals that Congress intended all prospective Lead Plaintiffs to provide the information contained in the certifications:
The Committee recognizes that certain basic information about the lead plaintiff should be provided at the outset of litigation. Accordingly, the Committee requires that the lead plaintiff file a sworn certified statement with the complaint. The plaintiff must certify that he or she: (a) reviewed and authorized the filing of the complaint; (b) did not purchase the securities at the direction of counsel or to participate in a lawsuit; (c) is willing to serve on behalf of the class. To further deter professional plaintiffs, the plaintiff must also identify any transactions in the securities covered by the class period, and the other lawsuits in which the plaintiff has sought to serve as lead plaintiff in the last three years.
Senate Report No. 104-98, at 689.
It would be anomalous, if not perverse, to require sworn certifications from only the plaintiffs named in a complaint, but then allow others persons to be appointed as Lead Plaintiffs, without attesting to any of the information adjudged appropriate to that standing, by Congress.
In the absence of such certifications, the entire scheme of the [Reform Act] could be displaced, as inventive law firms would still be allowed to recruit "professional plaintiffs," and foist them on an unsuspecting, and uninformed Court, in the context of a Lead Plaintiff Motion. If Congress intended "that certain basic information about the lead plaintiff should be provided at the outset of litigation," in order to "mak[e] it harder for lawyers to invent a suit and then attach a plaintiff," we will not read the requirement, that the certification be filed with the Complaint, as preemptive, so as to preclude the supervising Court from requiring that the same information be provided in conjunction with a Lead Plaintiff Motion. If there is any benefit in appending a certification to the Complaint, it is only realized when the Court reviews the certification in the context of a Lead Plaintiff Motion. To limit the certification requirement would not only hamstring the effectiveness of the supervising Court, but would trivialize Congress' expressed concern for investing the control over Federal securities class actions in the hands of qualified litigants, as opposed to their lawyers. Even if we err in our reading of the [Reform Act], we conclude that, inherently, we have the authority to require the certifications, which the Maguire Group voluntarily filed, in order to assure the proper administration of the Act, and the integrity of the Court processes. Accordingly, were we to have concluded that such certifications were not required under the Act, we would have directed that such certifications be submitted as an integral part of Lead Plaintiff Motion.
Neither lead plaintiff contender raises the certification issue, although it would necessarily be an issue were the certifications filed in the instant action improperly made.
[46] SWIB comes close to making the argument that each certification of a proposed member of the Group does not comport with subsection 21D(a)(2)(A)(iii) because each "states only that the person listed is willing to serve as a representative party...." Supplemental Memorandum in Support of State of Wisconsin Investment Board's Motion for Appointment as Lead Plaintiff and Response to Milberg Weiss Group's March 3 Submission at 21. However, under the statute, no purported member of the Group was required to do more. See 15 U.S.C. § 78u-4(a)(2)(A)(iii) (stating that plaintiff must certify that "the plaintiff is willing to serve as a representative party on behalf of a class, including providing testimony at deposition and trial, if necessary"). Further, this "defect" only occurs in a certain few of the certifications; most contain an assertion that the signatory plaintiff is "willing to serve as lead plaintiff...."
The Court also notes, with favor, the following statement of the district court in D'Hondt v. Digi International, Inc., 1997 WL 405668 at *2:
Each of the persons, who now seek appointment as a Lead Plaintiff, has filed the requisite certification, but the Defendants urge that the Movants "cookie cutter" certificates merely parrot the preconditions of the Reform Act, and do not provide the Court with a genuine showing that they will properly fulfill their responsibilities as a Lead Plaintiff.
We recognize, as the Defendants have urged, that the Movants' certifications do no more than ministerially conform to the defined requirements of the Reform Act, but we are not impressed that either the Act, or our supervisory responsibility over class actions, demands more.
[47] There obviously exists the question as to whether all of the certifications filed by the Group were valid, given the assertions by Gilbert that he was unaware of its use as part of the Group's attempts to be appointed lead plaintiff. However, this question is secondary to whether the individuals filing certifications knew that those certifications were being used to bolster the Group's attempts at being appointed lead plaintiff. Nonetheless, the question of whether the Group filed certifications fulfilling the formal prerequisites of subsection 21D(a)(2)(A) is to be answered in the affirmative.
[48] This also applies to the issue of a conflict of interests between the representation by the proposed for counsel the Group in this case and its present representation of the class in the Drucker case before Judge Blackburn.
[49] What these criteria are and how they operate is explained, infra, in the Court's discussion of the adequacy prerequisites.
[50] The Court notes the existence of other actions, such as Lax v. First Merchants Acceptance Corporation, 1997 WL 461036 (N.D.Ill. 1997), Nager v. Websecure, Inc., 1997 WL 773717 (D.Mass.1997), In re Olsten Corp. Securities Litigation, 3 F. Supp. 2d 286, 295 (E.D.N.Y.1998), Squyres v. Union Texas Petroleum Holdings, Inc., 1998 WL 1144586 (C.D.Cal.1998), Knisley v. Network Associates, Inc., 77 F. Supp. 2d 1111 (N.D.Cal.1999), in which plaintiffs' groups were appointed lead plaintiff with little consideration by the district court whether plaintiffs' groups can appropriately serve as lead plaintiffs.
An odd case among these is In re Oxford Health Plans, Inc. Securities Litigation, 182 F.R.D. 42, 46 (S.D.N.Y.1998), in which the district court appointed a plaintiffs' group as a co-lead plaintiff with two other institutional investors, each having an equal vote in the conduct of the litigation, concluding that in so doing it would lessen future problems related to resources to pursue the litigation and ameliorate potential class conflicts. The district court did not discuss the potential problems inherent in appointing a plaintiffs' group as one of those co-lead plaintiffs.
[51] The Baan court also made the acute observation that the differing views of the district courts on the issue are a reflection of those courts' "speculat[ions] as to how a group of investor-plaintiffs and their counsel are likely to interact." Id. at 217 n. 3. Such speculation, the court observed, could be remedied by "social science data on how groups of lead plaintiffs, varying in size and with varying stakes in the litigation, interact with counsel regarding proposed settlements and other important strategic decisions." Id.
[52] In so concluding, the district court engaged in a thorough discussion of the "retention/seller conflict." Id. at 108. Briefly put, this conflict arises where some plaintiffs retain an interest in the defendant corporation (the retention plaintiffs) while others have divested themselves of all interest in the company (the in/out plaintiffs). As the district court explained:
The Retention Plaintiffs, in effect, are suing themselves. They seek recovery for their individual losses while maintaining a financial interest in the continued commercial viability and financial success of the defendant corporation. The In/out Plaintiffs, however, have no ongoing interest in either the continued commercial viability or financial success of the defendant corporation. The In/out Plaintiffs have one focus: maximizing their recovery from the defendant corporation.
Id. There is no such conflict in the instant suit, first, as this is an action against officers and directors of the company, not the company itself and second, stock of Feet is no longer being traded and Feet is seeking to discharge its entire debt on the shares.
[53] In Mitchell v. Complete Management, Inc., 1999 WL 728678 at *4 (S.D.N.Y.1999), the district court denied a motion by a group of 141 stock purchasers to be appointed lead plaintiff, stating that "such a large group of lead plaintiffs would prove unwieldy for making decisions about the litigation, thereby increasing the likelihood that attorneys would direct the action." However, it appeared, from the court's order, that it would permit appointment of a lesser group of plaintiffs, if supported by adequate justification. It is unclear, from the opinion, whether the district court had taken a limited aggregation or anti-aggregation stance.
[54] In some sense, this is a recharacterization of the problems related to costs of monitoring counsel, as among such costs are the costs to the class members of educating themselves about the action and the general extent of the relevant law.
[55] Although the argument could be made that the first plaintiff to file an action would be appointed lead plaintiff as a fallback if no other movant could satisfy absolute lead plaintiff criteria, this too would be in error. First, as is clear from the legislative history discussed, Congress did not want a first-to-file rule to govern the determination of lead plaintiff in any manner. Second, on the rejected threshold reading, subsection 21D(a)(3)(B)(iii)(I)(aa) includes those plaintiffs who file a complaint among those who may be disqualified for not meeting the presumptive requirements.
[56] This problem for the threshold position would arguably be resolved if the factors contained in subsection 21D(a)(3)(B)(iii)(I) were ranked such that greatest financial loss, or typicality, or adequacy, was the most important virtue of an adequate lead plaintiff, but no such lexical ordering is put forward in the language of the statute. However, it could be argued, Congress did consider largest financial interest to be the central part of any most adequate plaintiff analysis, as the plaintiff with the largest financial interest was presumed to be the investor most motivated to obtain relief beneficial to the class members. Nonetheless, were Congress's preference for the plaintiff with the largest financial interest in the litigation used to support a lexical ordering of the factors in the subsection, the other factors would only become important in the case of a tie between two competitors with an equally large financial loss. It is doubtful that Congress intended the other factors listed to act simply as tie-breakers in extremely rare cases. Rather, the largest financial interest factor is the centerpiece of any most adequate plaintiff analysis.
[57] Subsection 21D(a)(3)(B)(iii)(I)(bb) speaks of the "largest financial interest," requiring comparison among other lead plaintiff contenders. An argument could be made that the language in subsection 21D(a)(3)(B)(iii)(I)(cc) is absolute, requiring lead plaintiff contenders to meet the requirements of Rule 23. However, were that subsection to be read in absolute terms, it would render subsection 21D(a)(3)(B)(iii)(I) a nullity, in violation of accepted canons of statutory construction.
This Court further notes that it is not taking a controversial position. District courts have consistently appointed as lead plaintiff individuals who do not meet all of the requirements of the subsection. The Court here merely spells out the reasoning behind this practice.
[58] However, the Court is of the opinion that this provision is also comparative in nature. A putative class member who files a certification under subsection 21D(a)(2)(A) but who does not make a motion to be appointed lead plaintiff (such as the members of the Group, narrowly conceived), nonetheless may be deemed most adequate plaintiff under subsection 21D(a)(3)(B)(iii)(I). Although the investor did not file a motion or complaint, but only a certification, the Court may consider him, her, or it for the lead plaintiff position. The only negative consequence of failure to file a complaint or a motion to be appointed lead plaintiff is that the investor may not be evaluated as highly as a lead plaintiff contender who did file a complaint or motion to be appointed lead plaintiff.
[59] Under this Court's reading of section 21D(a)(3)(B)(iii)(I)(cc), the Court is to evaluate only whether possible Rule 23 problems exist or may develop, based upon a movant's filed certification and supporting documents, in the determination of most adequate plaintiff. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2420006/ | 22 F. Supp. 2d 832 (1998)
Ree CLAY and Ruby Chivers, Plaintiffs,
v.
Iver R. JOHNSON and, Marvin Bilfeld, doing business as Davenport Construction Company Defendants.
No. 97 C 6007.
United States District Court, N.D. Illinois, Eastern Division.
October 1, 1998.
*833 *834 Charles H. Lee, Edelman & Combs, Chicago, IL, for Plaintiffs.
Thomas G.A. Herz, Jr., The Law Offices of Thomas G.A. Herz, Jr., Chicago, IL, for Defendants.
MEMORANDUM OPINION AND ORDER
DENLOW, United States Magistrate Judge.
Ree Clay and Ruby Chivers (collectively "Plaintiffs") instituted this action under the Truth In Lending Act ("TILA"), 15 U.S.C. § 1601 et seq. (1998), against Iver R. Johnson and Marvin Bilfeld, d/b/a Davenport Construction Co. (collectively "Defendants"), alleging violations of TILA and seeking rescission of their transactions with Defendants. Plaintiffs now bring a motion for partial summary judgement on the issue of Defendants' liability under TILA. For the following reasons the Court holds that Defendants failed to properly disclose the payment schedule as required by TILA and grants Plaintiffs' motion for partial summary judgment.
I. BACKGROUND
A. The Parties.
Ree Clay ("Clay") and Ruby Chivers ("Chivers") are sisters who reside in a home at 4633 W. 177th St., Country Club Hills, IL, 60478. (Pls.' Local Rule 12(M) Statement of Material Facts ("Pls.' 12(M)") ¶ 2.) Clay is an owner of the home and Chivers had no ownership interest in the home at the time of the transaction. (Pls.' 12(M) ¶ 2; Defs.' Local Rule 12(N) Statement of Material Facts ("Defs.' 12(N)") ¶ 2.) Marvin Bilfeld ("Bilfeld") is an individual who does business as Davenport Construction Company ("Davenport"). (Pls.' 12(M) ¶ 3.) Plaintiffs executed a series of retail installment contracts and mortgages to finance the purchase of home improvements from Davenport. (Pls.' 12(M) ¶ 5.) Davenport was the obligee under the retail installment contracts, but promptly assigned them to defendant Iver Johnson ("Johnson"). Johnson was the mortgagee. (Pls.' 12(M) ¶ 4-5.)
B. The Transactions Between the Parties.
On or about February 11, 1995, Plaintiffs executed a retail installment contract and mortgage to finance the purchase of home improvements. (Pls.' 12(M) ¶ 5.) Davenport was the obligee under the retail installment contract, but promptly assigned it to Johnson. Johnson was the mortgagee. (Pls.' 12(M) ¶ 5.) Around July 10, 1995, Plaintiffs executed a second retail installment contract and mortgage to finance the remodeling of a bathroom and basement by Davenport. (Pls.' 12(M) ¶ 7.) Again, Davenport assigned this contract to Johnson. (Pls.' 12(M) ¶ 7.) A short time later on July 15, 1995, only plaintiff Clay executed a third retail installment contract and mortgage to finance the remodeling of Plaintiff's kitchen and other improvements. (Pls.' 12(M) ¶ 8.) Davenport also assigned this contract to Johnson. (Pls.' 12(M) ¶ 8.)
On each of the home improvement retail installment contracts there is a box labeled the "Federal Truth-In-Lending Disclosure Statement" which is known as the "Federal Box." In this box there are a number of blanks to be filled in, in order to comply with TILA. On each of the contracts, the blanks have all been completed. The critical issue in this case is the fact that Defendants filled in "30 days from completion" instead of an exact date in the blank left for "When Payments Are Due, monthly beginning." Plaintiffs *835 contend that Defendants' failure to provide a specific date, or an estimated date with the notation that it is an estimate, violates TILA. Defendants disagree and argue that the disclosure was sufficient.
At some point around completion, when the due dates of the first installments were established, they were typed into an area further down on the contract forms. (Defs.' 12(N) Ex. 2.). Plaintiffs also received a proposal outlining the work to be done and dated which Plaintiffs accepted. (Defs.' 12(N) Ex. 2.) Bilfeld also provided Plaintiffs with a Notice of Right to Cancel which informed Plaintiffs of their right to cancel the contract within 3 days of the transaction, disclosures, or receipt of notice; informed Plaintiffs of additional rights; and informed Plaintiffs of the steps that must be taken in order to cancel. (Defs.' 12(N) Ex. 2.) Plaintiffs also signed this. Upon completion of the work, Davenport obtained an executed completion certificate from Plaintiffs confirming the value of the work performed. (Defs.' 12(N) Ex. 2.) Approximately three weeks to a month after each contract, Johnson sent Plaintiffs a letter informing them that he had purchased the contract and mortgage from Davenport and informing the plaintiffs of the means by which they should make their monthly payments. This letter also informed Plaintiffs that they should begin making their payments 30 days after signing the completion certificates. (Defs.' 12(N) Ex. 2.) Along with the letter, Johnson provided the plaintiffs with a payment booklet. (Defs.' 12(N) Ex. 2.)
From April through October of 1995, Plaintiffs made their regular monthly payments on the first contract; however, after that time, they failed to make any payments on any of their contracts with Defendants.
C. Rescission and Bankruptcy.
On August 21, 1997, Plaintiffs' counsel notified Davenport and Johnson that Plaintiffs were rescinding the transactions. (Pls.' 12(M) ¶ 13.) This letter stated that "Ree Clay and Ruby Chivers rescind any obligation to you for failure to comply with the Truth in Lending Act." (Defs.' 12(N) Ex. C.) On August 26, 1997 Ree Clay filed for bankruptcy under Chapter 13 of the Bankruptcy Code. (Defs.' 12(N) Ex. A.)
II. SUMMARY JUDGMENT STANDARD
Summary judgment "shall be rendered forthwith 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 Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986).
When reviewing the record on summary judgment, the court must draw all reasonable inferences in the light most favorable to the nonmoving party. See Larimer v. Dayton Hudson Corp., 137 F.3d 497, 500 (7th Cir. 1998). To avert summary judgment, however, the nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986). A dispute about a material fact is genuine only if the evidence presented is such that a reasonable jury could return a verdict for the nonmovant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986).
III. THE TRUTH IN LENDING ACT
A. TILA Is Strictly Enforced.
TILA was enacted by Congress to "avoid the uninformed use of credit." Mourning v. Family Publications Serv. Inc., 411 U.S. 356, 365, 93 S. Ct. 1652, 1664, 36 L. Ed. 2d 318 (1973). "[T]he Truth In Lending Act was designed in large part to protect consumers from unscrupulous creditors and inaccurate and unfair billing and credit card practices." Streit v. Fireside Chrysler-Plymouth, Inc., 697 F.2d 193, 197 (7th Cir.1983). The language of TILA reveals its purpose as follows: "It is the purpose of this subchapter to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available *836 to him and avoid the uninformed use of credit and to protect the consumer against inaccurate and unfair credit billing and credit card practices." 15 U.S.C.A. § 1601 (1998).
The Seventh Circuit has enunciated a standard of "strict compliance" with TILA provisions.
It is not sufficient to attempt to comply with the spirit of TILA in order to avoid liability. Rather, strict compliance with the required disclosures and terminology is required. Many violations of TILA involve technical violations without egregious conduct of any kind on the part of the creditor. However, Congress did not intend that creditors should escape liability for merely technical violations. Thus, while it may be true, in some sense, as the creditors have argued, that the terminological violations here are inconsequential, the fact remains that they are violations. Any misgivings which creditors may have about the technical nature of the requirements should be addressed to Congress or to the Federal Reserve Board, not to the courts.
Brown v. Marquette Sav. & Loan Ass'n, 686 F.2d 608, 613 (7th Cir.1982). However, this standard of strict compliance has its limits. Streit, 697 F.2d at 196.
[I]t is not necessary or appropriate to hold creditors absolutely liable for every noncompliance and to disregard completely the factual situation out of which the claim has arisen. We believe that Congress would not have intended to impose liability on a creditor for a technical violation where there never was a transaction (beyond entering into the financing agreement) because of the consumer's complete failure to fulfill his obligations under the contract.
Id.
TILA "must be liberally construed in favor of the consumer." Rowland v. Magna Millikin Bank, 812 F. Supp. 875, 878 (C.D.Ill.1992)(citing Davis v. Werne, 673 F.2d 866, 869 (5th Cir.1982)). This means that "`TILA requirements are enforced by imposing a sort of strict liability in favor of consumers who have secured financing through transactions not in compliance with the terms of the Act. It is strict liability in the sense that absolute compliance is required and even technical violations will form the basis for liability.'" Rowland, 812 F.Supp. at 878 (citing Shepeard v. Quality Siding & Window Factory, 730 F. Supp. 1295, 1299 (D.Del. 1990)).
Plaintiffs need not show that they were misled or suffered any actual damages as a result of even a purely technical violation. Brown, 686 F.2d at 614. "It is well settled ... that a borrower need not have been so deceived to recover the statutory penalty." Id. (citing Smith v. Chapman, 614 F.2d 968, 971 (5th Cir.1980); Dzadovsky v. Lyons Ford Sales, Inc., 593 F.2d 538, 539 (3d Cir.1979)).
B. This Court Has Jurisdiction to Hear This Suit.
The parties agree that TILA governs the transactions at issue. Davenport and Johnson are creditors as defined by TILA because they engaged in at least the minimum number of transactions of five per year as required by TILA. (Defs.' 12(N) ¶¶ 9-10.) These transactions are consumer credit transactions as defined by TILA because credit was extended to an individual for home improvements to the individual's residence. (Pls.' 12(M) ¶ 11.) Through these agreements, Davenport and Johnson took a security interest in the principal residence of Clay and Chivers. (Pls.' 12(M) ¶ 13.)
As a threshold matter, the Court must address the argument that it does not have jurisdiction to hear this case. Defendants argue that the exclusive jurisdiction is in the bankruptcy court in which Clay has filed a Chapter 13 proceeding. Defendants cite two cases to support their argument. In re Pitre, 11 B.R. 777 (Bankr.N.D.Ill.1981), involved a TILA claim which the debtors filed in bankruptcy court. The court ruled on the merits of the claim without specifically addressing the jurisdictional issue. In Lausier v. Goodwin, 7 B.R. 476 (Bankr.D.Me. 1980), the court addressed the merits of the party's Maine Consumer Credit Code and TILA claims without addressing the jurisdictional issue. Id. Neither of these cases held that the bankruptcy courts have exclusive *837 jurisdiction over TILA claims related to the bankruptcy proceedings.
This Court has federal question jurisdiction under 28 U.S.C. § 1331 because Plaintiffs' claims arise under the Truth In Lending Act, 15 U.S.C. § 1640(1998). Furthermore, any claims in the bankruptcy court involving other federal laws are subject to withdrawal to a district court pursuant to 28 U.S.C.A. § 157(d)(1998). The Court is hard pressed to find that the bankruptcy court has exclusive jurisdiction of a claim possibly subject to withdrawal.
Furthermore, plaintiff Chivers has not filed for bankruptcy and thus was free to file her action in this court. Under these circumstances, the Court has jurisdiction to hear this case.
C. Ownership of the Property at Issue and Right to Rescind.
At issue in this case is a right that TILA provides to consumers, that is the right to rescind. TILA states in pertinent part:
Except as otherwise provided in this section ... the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter, whichever is later, by notifying the creditor, in accordance with the regulations of the Board, of his intentions to do so.
15 U.S.C. § 1635(a) (1998). The Code of Federal Regulations also discusses the right to rescind and relevant time limitations.
The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required ... or delivery of all material disclosures whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation ....
12 C.F.R. § 226.23(a)(3)(1998).
Defendants argue that Plaintiff Chivers cannot exercise her right of rescission because she does not own the property which is the subject of the security interest. Plaintiffs agree but argue that Clay is an owner and, therefore, she can exercise the right of recission.
Regulation Z of TILA provides
In a credit transaction in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind the transaction ....
12 C.F.R. § 226.23(a)(1)(1998).
Therefore, regardless of Ruby Chivers' ownership status at the time of the transaction, it is undisputed that Ree Clay was an owner who can seek recission if she prevails.
D. Payment Schedule Is a Material Disclosure.
Regulation Z of TILA also provides that "[t]he period within which the consumer may exercise the right to rescind runs for 3 business days from the last of 3 events: Consummation of the transaction. Delivery of all material disclosures. Delivery to the consumer of the required rescission notice." 12 C.F.R. pt. 226, supp. I, ¶ 23(a)(3)(1)(1998). The commentary goes on to discuss the material disclosures that must be made before the rescission period begins to run.
Footnote 48 sets forth the material disclosures that must be provided before the rescission period can begin to run. Failure to provide information regarding the annual percentage rate also includes failure to inform the consumer of the existence of a variable rate feature. Failure to give the other required disclosures does not prevent the running of the rescission period, although the failure may result in civil liability or administrative sanctions.
12 C.F.R. pt. 226, supp. I, ¶ 23(a)(3)(2)(1998). Footnote 48 provides a definition of "material disclosures."
The term "material disclosures" means the required disclosures of the annual percentage rate, the finance charge, the amount financed, the total payments, the payment *838 schedule, and the disclosures and limitations referred to in § 226.32(c) and (d).
12 C.F.R. § 226.23(a)(3) n. 48 (1998).
Defendants argue that material disclosures means only annual percentage rate and no other disclosures listed in footnote 48. They assert that because they provided the annual percentage rate in the Federal Box they complied with the Act.
Defendants point out that the regulations specifically discuss the annual percentage rate and then go on to state that "[f]ailure to give the other required disclosures does not prevent the running of the rescission period." 12 C.F.R. pt. 226, supp. I, ¶ 23(a)(3)(2)(1998). From this Defendants argue that annual percentage rate is the only material disclosure which, if made, trigger the running of the rescission period. Furthermore, Defendants argue that "other required disclosures" are the remaining required disclosures listed in footnote 48 aside from the annual percentage rate and these are not material disclosures which prevents the running of the rescission period if not provided. This Court rejects Defendants' reading of the regulations because it is contrary to the clear language of the regulations.
First, Defendants' reading is contrary to the plain meaning of the words "material disclosures." The word is plural which inherently suggests that there is more than one material disclosure. Further, if the Federal Reserve Board intended that the annual percentage rate be the only material disclosure they would have said so precisely.
Second, to find Defendants' reading at all logical, it is necessary to ignore the first sentence of paragraph 23(a)(3)(2), which states that "Footnote 48 sets forth the material disclosures that must be provided before the rescission period can begin to run." 12 C.F.R. pt. 226, supp. I, ¶ 23(a)(3)(2)(1998). This refers the reader back to footnote 48 which clearly defines the term material disclosures to include far more than the annual percentage rate but also payment period and so on. Reading these two provisions together clearly shows that the failure to provide any disclosures listed in Footnote 48 prevents the running of the rescission period.
Finally, there is another logical explanation of the structure and language of paragraph 23(a)(3)(2). 12 C.F.R. pt. 226, supp. I, ¶ 23(a)(3)(2)(1998). The second sentence is simply an elaboration of the definitions provided in footnote 48 and is to inform the reader that, in addition to the material disclosures listed in footnote 48, the "variable rate feature" is also a material disclosure that the agency considers as falling within the scope of the term "annual percentage rate." The third sentence, although its placement leaves something to be desired, then refers back to the first sentence when it says "other required disclosures" meaning disclosures besides the "material disclosures" defined in footnote 48. These "other required disclosures" are the disclosures listed in 12 C.F.R. § 226.18 which include disclosures different from those listed in footnote 48, disclosures such as the identity of the creditor, prepayment, late payment, the security interest, and so on. 12 C.F.R. § 226.18 (1998).
In sum, Plaintiffs' reading of the regulations is the more logical reading. Payment schedule is a material disclosure. Thus the failure to properly disclose the payment schedule leads to a stay on the running of the rescission period. See also Graves v. Tru-Link Fence Co., 905 F. Supp. 515, 521-22 (N.D.Ill.1995) (holding that payment schedule is a material disclosure; failure to disclose the payment schedule extended the rescission period).
E. The Payment Schedule Was Not Disclosed Properly.
1. "30 Days From Completion" Is Not a Disclosure Sufficient to Meet TILA's Requirement of the Disclosure of the Payment Schedule.
Defendants argue that they adequately disclosed the payment schedule in the Retail Installment Contract. In the Federal Boxes of the Retail Installment Contracts Defendants had written in that payments were due beginning "30 days from completion." Defendants argue that a disclosure in this form adequately complies with TILA.
*839 The regulations discuss the specificity required in the material disclosures.
If any information necessary for an accurate disclosure is unknown to the creditor, the creditor shall make the disclosure based on the best information reasonably available at the time the disclosure is provided to the consumer, and shall state clearly that the disclosure is an estimate.
12 C.F.R. § 226.17(c)(2)(i) (1998). Further, the regulations also elaborate on what is must be disclosed regarding the payment schedule. The regulations define the payment schedule as "[t]he number, amounts, and timing of payments scheduled to repay the obligation." 12 C.F.R. § 226.18(g)(1998).
Judge Gettleman of this district has addressed the issue of adequately disclosing the payment schedule in a factually analogous case. Graves v. Tru-Link Fence Co., 905 F. Supp. 515 (N.D.Ill.1995). In Graves, the plaintiff signed a proposal and a retail installment contract to purchase fencing. Id. at 518. The retail installment contract stated the annual percentage rate, finance charge, amount financed, total payments and cost. Id. It also specified a payment schedule as follows: "Your payment schedule will be a first payment of $124.78 and 35 payments of $124.78 beginning on [sic] 30 days from comp[letion]." Id.
The defendants in Graves made much the same argument relying on § 226.17 as the Defendants do in the present case. § 226.17 allows for an estimate in the event that the parties to the contract are unable to specify a exact date. 12 C.F.R. § 226.17(c)(2)(i)(1998). Judge Gettleman rejected the argument that "30 days from completion" is a sufficient estimate, stating:
To comply with the statute and the regulation, defendant must disclose when payments should begin or, if it cannot do so (as appears to be the case with respect to the installation of fences [and other home improvements]), it should provide an estimated date of completion and "state that the disclosure is an estimate."
Id. at 522 (quoting Rowland v. Magna Millikin Bank, 812 F. Supp. 875 (C.D.Ill.1992)).
Applying Graves to the case at hand, it is apparent that the two cases are indistinguishable. Defendants in the present case used the same language to disclose the payment schedule, "30 days from completion," which the court in Graves found to be an insufficient disclosure. Further, it does not meet the requirements to be an estimate under because 12 C.F.R. § 226.17(c)(2)(1998) requires such disclosures to be noted as estimates.
Rowland also held that providing payments to begin a certain number of days from completion instead of stating an exact date on which payments should begin does not comply with the Act's requirement that the payment schedule must be disclosed. In Rowland, the plaintiffs and defendants entered into a retail installment contract for the purchase of windows. Rowland, 812 F.Supp. at 877. The plaintiffs' copy of the contract was almost illegible. Id. Further, it stated that payments were due "45 days after installation," but no exact date was given. Id. While, it is true that the contract was followed by a letter with legible disclosures, the court noted that the disclosures in that letter were incomplete. Id. at 879. Further, the court found
that Defendant's failure to include a specific date stating when payments were due on Plaintiffs' copy of the contract, constitutes a failure to make a material disclosure. As previously noted, failure to disclose the payment schedule is a material non-disclosure, and the payment schedule disclosure requires that the timing of payments be revealed.
Id. at 880 (citing 12 C.F.R. § 226.18(g)). The Court holds that, as in Rowland and Graves, using "30 days from completion" instead of specifying an exact date as to when payments are to begin constitutes a failure to make a material disclosure.
2. Providing the Plaintiffs with a Specific Beginning Date of Payments in Separate Documents or in Later Documents Is Insufficient.
Defendants argue that Plaintiffs received all disclosures required by the TILA. At the time of the consummation of the *840 contracts Plaintiffs received a signed Proposal, a signed Retail Installment Contract, a signed Notice of Right to Cancel, and a signed Mortgage. Thereafter, Plaintiffs received a signed Completion Certificate, Payment Booklet, notification of the date when payments were to begin, and a Retail Installment Contract setting forth the date when the payments were to begin. However, the defendants' argument must fail for a number of reasons.
As noted above, one of the required disclosures under TILA is "number, amount, and due dates or period of payments scheduled to repay the total of payments." 15 U.S.C. § 1638(a)(6). Subsection (b) goes on to state that
[e]xcept for the disclosures required by subsection (a)(1) of this section, all disclosures required under subsection (a) of this section and any disclosure provided for in subsection (b), (c), or (d) of section 1605 of this title shall be conspicuously segregated from all other terms, data, or information provided in connection with a transaction, including any computations or itemization.
15 U.S.C. § 1638(b)(1)(1998). The regulations also have the same requirement. "The creditor shall make the disclosures required by this subpart clearly and conspicuously in writing, in a form that the consumer may keep. The disclosures shall be grouped together, shall be segregated from everything else, and shall not contain any information not directly related to the disclosures required under § 226.18." 12 C.F.R. § 226.17(a)(1) (1998). The regulations, however, have an additional requirement. "The terms `finance charge' and `annual percentage rate,' when required to be disclosed under § 226.18(d) and (e) together with a corresponding amount or percentage rate, shall be more conspicuous than any other disclosure, except the creditor's identity under § 226.18(a)." 12 C.F.R. § 226.17(a)(2) (1998).
Defendant argues that § 226.17(a)(1) only applies to the finance charge, annual percentage rate and amount financed because of § 226.17(a)(2). However, § 226.17(a)(1) would be redundant if it required no more than § 226.17(a)(2). The word "more" also reinforces § 226.17(a)(1), that all disclosures must be conspicuous. § 226.17(a)(2) provides only that the disclosures listed therein must be "more conspicuous than any other disclosure." 12 C.F.R. § 226.17(a)(2) (1998). This subsection does not limit the terms of all of § 226.17 to only those three disclosures listed in § 226.17(a)(2), but means what it says, that those three disclosures must be more conspicuous than any others. Furthermore, § 226.17 specifically states that it applies to all disclosures required by this subpart which include the payment schedule.
The form in which defendants provided the disclosures is inadequate to meet the requirements of § 226.17 which requires the disclosures to be provided, at a minimum, in a single document and without any unnecessary information. This Court's interpretation of the regulation, that it requires disclosures to be in a single document, is supported by Shepeard v. Quality Siding & Window Factory, 730 F. Supp. 1295, 1300-1301 (D.Del.1990). In Shepeard, the parties first signed a cash agreement for siding work. Id. at 1297. The disclosure areas on this form were left largely blank. Id. About two weeks later, the parties entered a Lien Contract which contained numerous required disclosures but omitted several disclosures that had been included in the cash agreement. Id. The court held that the disclosures could not be provided in separate documents in that manner. Id. at 1300-01. Providing disclosures in separate documents does not meet the "grouped together" and "segregated" requirements of both the Act and the Regulations. Defendants did not provide their disclosures in a form that satisfies the requirements of TILA because they were not contained in the Federal Box. See also Leathers v. Peoria Toyota-Volvo, 824 F. Supp. 155, 158 (C.D.Ill.1993) ("Compliance with these regulations is satisfied when the creditor places all the disclosures on one side of one document (unless there is not enough room) or groups the disclosures together within the Federal Box.").
In addition, typing the due date of the first installment into a separate area on the retail installment contract at a time after *841 consummation of the transaction also does not constitute compliance for several reasons. First, the language of § 226.17 requires the disclosures to be "grouped together" and "segregated." 12 C.F.R. § 226.17(a)(1)(1998). One court has had the opportunity to discuss the meaning of these requirements and their relation to the Federal Box. Marshall v. Security State Bank, 121 B.R. 814, 816 (Bankr.C.D.Ill.1990). In Marshall, the plaintiffs received a loan from the defendant and the defendant secured that loan with an interest in the plaintiffs' vehicle. Id. at 815. Later the plaintiffs consolidated all of their loans with the defendant bank into a single loan but the agreement did not specifically disclose the security interest in the vehicle. Id. The court discussed whether the disclosures made in the Federal Box on the agreement embodying the later, consolidated loan met the requirements of TILA. Id. at 816.
Section 226.17(a) of Regulation Z requires all the disclosures, including the disclosure of any security interest being given, to be in one location on the instrument. That location is commonly called the "Federal Box." Although the present requirements of Truth in Lending are the result of the Truth in Lending Simplification and Reform Act, they do not give creditors "Carte Blanche" to make the disclosures in any fashion a particular creditor may feel is appropriate. The Truth in Lending Act and Regulation Z, as simplified, still provide a format for disclosures to be used by all creditors so borrowers will be informed as to the nature of the transaction and be able to compare and shop for credit from various creditors. In this case the actual reference to the vehicle is outside the "Federal Box" and cannot be considered to be part of the required disclosures.
Id. Similarly, in the present case the disclosure of the payment beginning date was made outside the Federal Box. As such, in the words of the court in Marshall, it "cannot be considered to be part of the required disclosures." Id. See also Leathers v. Peoria Toyota-Volvo, 824 F. Supp. 155, 159-60 (C.D.Ill.1993) ("[T]he paragraph at the bottom of the contract ... is outside the disclosure statement within the Federal Box and thus does not comply with the requirement that disclosures be grouped together."). In sum, the disclosure of the payment beginning date outside the Federal Box did not comply with TILA.
Further, providing the necessary disclosures either by typing them into the contract at a later time or by providing a completion certificate at a later time is insufficient because of the Act's timing requirements. Defendants argue that they made all required disclosures by notifying Plaintiffs of the payment beginning date after consummation of the transaction. Plaintiffs are correct when they argue that this is not sufficient. The language of the regulations does not permit later disclosures. "The creditor shall make disclosures before consummation of the transaction." 12 C.F.R. § 226.17(b)(1998). The Act has a similar provision. "Except as otherwise provided in this part, the disclosures required under subsection (a) of this section shall be made before the credit is extended." 15 U.S.C. 1638(b)(1)(1998). See also Graves v. Tru-Link Fence Co., 905 F. Supp. 515, 519 (N.D.Ill.1995) ("TILA disclosures are required prior to the consummation of a credit transaction.") (citing Clark v. Troy, 864 F.2d 1261, 1263 (5th Cir.1989)). In sum, any disclosures made after the parties entered and signed the retail installment contract are not disclosures which meet the terms of TILA and its attendant regulations. Defendants' argument that, after consummation of the transaction, providing the Completion Certificate, Payment Booklet, notification of the date when payments were to begin, and revised Retail Installment Contract met the disclosure requirements of TILA must fail.
The Court is mindful that this may appear to be a harsh and ever technical result because at a later date Defendants did provide Plaintiffs with a retail installment contract which contained a precise first installment date in the body of the contract, an executed Completion Certificate which bears a precise completion date, and a payment booklet which sets forth exact payment due dates. Unfortunately for Defendants, these steps do not meet the regulations. As the Seventh Circuit has recently noted in Benion v. Bank *842 One, 144 F.3d 1056, 1059 (7th Cir.1998), the courts should defer to the Federal Reserve Board's highly detailed and technically precise regulations stating:
When an activity of a technical and specialized character is comprehensively regulated by an expert agency, as consumer credit disclosures are comprehensively regulated by the Federal Reserve Board (and no one doubts that this particular agency is a repository of genuine expertise), courts should generally leave the plugging of loopholes to the agency, lest the court's reparative efforts create confusion and disrupt the regulatory scheme.
Id. Therefore, Defendants are encouraged to raise this issue with the Federal Reserve Board to seek a revision of the regulatory scheme which is currently in place. Under the current regulations, Defendants have violated TILA and this Court defers to the Federal Reserve Board's comprehensive regulation of this issue.
F. Plaintiffs Adequately Rescinded Their Contracts.
Defendants argue that Plaintiffs did not adequately exercise their right of rescission because their rescission letter failed to specify which contract was being rescinded. However, 12 C.F.R. § 226.23(a)(2) allows for the consumer to exercise the right of rescission by simply notifying the creditor by written communication. "To exercise the right to rescind, the consumer shall notify the creditor of the rescission by mail, telegram or other means of written communication." 12 C.F.R. § 226.23 (1998). There are no further requirements in the regulations or the Act as to the form rescission must take.
There is limited case law which addresses the issue. Several cases have held that the filing of a complaint is proper written communication that fulfills the notice requirement of the Act. Elliott v. ITT Corp., 764 F. Supp. 102, 105-06 (N.D.Ill.1991) (citing Hunter v. Richmond Equity, No. CV 85-P-2734-S, 1987 WL 109703, Slip. op. at 9 (N.D.Ala. Nov. 23, 1987)). However, the defendants in Elliott also argued that the complaint did not make an adequate recission demand. Conversely, the court held that the language which demanded recission of "the transaction of each class member who elects rescission" was sufficiently clear for the purposes of TILA. Id. at 106. In the present case, Plaintiffs' letter stated that "You are hereby notified that Ree Clay and Ruby Chivers rescind any obligation to you for failure to comply with the Truth in Lending Act." As Plaintiffs point out, since they rescinded "any obligation" owed to Defendants, it would seem clear that this included all of the contracts they entered into with Defendants. This Court holds the "any obligation" language in the present case sufficiently met the notice requirements of the Act. Alternatively, the filing of plaintiffs' complaint was sufficient notice under TILA.
G. Defendants Assert No Viable Affirmative Defenses.
Defendants assert the equitable defense of unclean hands in that they allege that the Plaintiffs never had any intention of paying what they owed under the contract. TILA and the associated regulations provide for waiver of the consumer's right to rescind under only a very limited number of circumstances.
The consumer may modify or waive the right to rescind if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency. To modify or waive the right, the consumer shall give the creditor a dated written statement that describes the emergency, specifically modifies or waives the right to rescind, and bears the signature of all the consumers entitled to rescind.
12 C.F.R. § 226.23(e)(1)(1998). This is the only provision that allows for the waiver of any of the consumer's rights. There is no provision which allows for the waiver of the right to receive all disclosures. This implies that, under all circumstances except for the ones outlined in 12 C.F.R. § 226.23(e)(1), the consumer retains all of her rights under the Act including the right to rescind when she has not received all the required disclosures under the Act.
TILA explicitly provides for immunities and defenses as well. The delineated exempted *843 transactions are commercial transactions, transactions to securities or commodities accounts, credit transactions in excess of $25,000 which are not secured by real property or a person's principal dwelling, transactions under public utility tariffs, and transactions exempted by the Board on an individual case-by-case basis. 15 U.S.C.A. § 1603 (1998). As can be seen from that list, none of the exemptions apply to the case at hand. The Act also specifically lists the available defenses. Liability will not incur under the Act when a creditor corrects an error within sixty days of discovery and before an action is filed, when the violation was unintentional and as a result of a bona fide error, or when the creditor was acting in good faith compliance with a rule or regulation. 15 U.S.C.A. § 1640(b), (c), (f) (1998). Again, none of the defenses apply to the case at hand. The listing of defenses and exemptions would imply that no others are available. TILA also provides that all inconsistent state laws are preempted thus expressing that defenses based on state law are not available. 15 U.S.C.A. § 1610 (1998).
The cases that have had the opportunity to speak on the issue support this interpretation. In a Ninth Circuit case the defendants urged the court "to establish equitable discretion to vary the terms of TILA for borrowers less in need of protection." Semar v. Platte Valley Fed. Sav. & Loan Ass'n, 791 F.2d 699, 704 (9th Cir.1986). The court rejected this suggestion. Id. The court upheld the district court's holding that rescission was appropriate for technical violations of TILA and its regulations and held that courts should not assert equitable powers even in cases with unsympathetic facts. Id. See also Luczak v. General Motors Acceptance Corp., 494 F. Supp. 210, 215 (W.D.N.Y. 1980) (deferring consideration of the "extent of liability" until after defendants had an opportunity to present their equitable defenses but still finding a violation of TILA).
Further, equitable considerations will come into play at remedy phase, thus Defendants need not be concerned that the courts will ignore equitable considerations altogether. See, e.g., Rudisell v. The Fifth Third Bank, 622 F.2d 243, 254, (6th Cir.1980) ("Since rescission is an equitable remedy, the court may condition the return of monies to the debtor upon the return of property to the creditor.").
IV. CONCLUSION
The Truth In Lending Act requires technical precision to comply with its terms. Defendants failed to properly set forth the payment schedule in the Federal Box. Because the court finds that the defendants committed a violation of the Truth In Lending Act, the Court grants Ree Clay's and Ruby Chivers' motion for partial summary judgment against Iver R. Johnson and Marvin Bilfeld on the issue of liability. The parties are directed to meet and discuss how to proceed on the issue of the appropriate remedy prior to the next status conference. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2420012/ | 22 F. Supp. 2d 1368 (1998)
Joseph BARRON, an individual, Plaintiff,
v.
PUBLIC HEALTH TRUST OF DADE COUNTY, FLORIDA, d/b/a Perdue Medical Center, Terry Reardon, in her individual capacity and Sylvianne Ward, in her individual capacity, Defendants.
No. 97-1923-CIV.
United States District Court, S.D. Florida.
August 21, 1998.
*1369 Thomas H. Buscaglia, Miami, FL, for Plaintiff.
Lee Krafchick, Ass't County Atty, Miami, FL, for Defendants.
ORDER GRANTING INDIVIDUAL DEFENDANTS' MOTIONS TO DISMISS
MORENO, District Judge.
THIS CAUSE came before the Court upon Defendant Terry Reardon's Motion to Dismiss Amended Complaint (docket no. 17), and Defendant Sylvianne Ward's Motion to Dismiss Amended Complaint (docket no. 27).
THE COURT has considered the motions, responses and the pertinent portions of the record, and being otherwise fully advised in the premises, it is
ADJUDGED that the motions are GRANTED.
I. BACKGROUND
This action arises from Plaintiff Joseph Barron's refusal to take part in the alleged altering and discarding of patient care plans and other medical records while he was employed at Perdue Medical Center (which is part of the Public Health Trust) as an Activity Director. Barron alleges that Defendant Terry Reardon and Linda Brewer, the Director of Nursing at Perdue, told Barron to participate in the altering and discarding of the records to prepare for inspections by the Joint Commission on Accreditation of Health Care Organizations and the Agency for Health Care, but that Barron refused because such actions are illegal. Barron further claims that he wrote a memorandum highlighting his concerns about the altering and discarding of the records, and subsequently disseminated that memorandum to, among others, Defendant Sylvianne Ward, the Vice President of Satellite Services for the Public Health Trust. Barron claims that Defendant Reardon retaliated against him by transferring one of Barron's subordinates to another department, thereby placing greater stress on Barron and his department, and by threatening to change Barron's work schedule to require him to work at night.
Barron further maintains that he wrote a second memorandum directed to Ward, which again expressed concern over the alteration of the medical records and complained about alleged retaliation by Reardon. Barron also asserts that when he attempted to return to work following an approved medical leave for heart surgery, Reardon refused to permit a modification of Barron's job duties, even though other employees at Perdue worked with modified duties due to various ailments. Barron claims that Reardon refused to modify his job duties in retaliation for Barron's statements regarding the alteration and disposal of the medical records, and that Reardon's actions constituted a constructive *1370 discharge that forced Barron to resign from his job with the Public Health Trust on or about January 13, 1997.
Barron has filed a five-count Amended Complaint against the Public Health Trust, Terry Reardon, and Sylvianne Ward, alleging violations of 42 U.S.C. § 1983 and Article 1, § 4 of the Florida Constitution. Counts III and IV allege that Defendants Reardon and Ward, respectively, deprived Barron of his First Amendment rights based on the actions outlined above. Both Defendants have filed motions to dismiss the amended complaint based on the doctrine of qualified immunity.
II. LEGAL STANDARD AND ANALYSIS
A court will not grant a motion to dismiss unless the plaintiff fails to prove any facts that would entitle the plaintiff to relief. Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957). When ruling on a motion to dismiss, a court must view the complaint in the light most favorable to the plaintiff and accept the plaintiff's well-pleaded facts as true. Scheuer v. Rhodes, 416 U.S. 232, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974); St. Joseph's Hospital, Inc. v. Hospital Corp. of America, 795 F.2d 948 (11th Cir.1986).
A. Qualified Immunity
Qualified or "good faith" immunity shields government officials from liability for civil damages arising out of the performance of their discretionary functions "insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." L.S.T., Inc. v. Crow, 49 F.3d 679, 683 (11th Cir.1995) (citing Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982)). "That qualified immunity protects government actors is the usual rule; only in exceptional cases will government actors have no shield against claims made against them in their individual capacities." Lassiter v. Alabama A & M Univ., 28 F.3d 1146, 1149 (11th Cir.1994) (en banc). "For qualified immunity to be surrendered, pre-existing law must dictate, that is, truly compel (not just suggest or allow or raise a question about), the conclusion for every like-situated, reasonable government agent that what defendant is doing violates federal law in the circumstances." Id. at 1150. Qualified immunity thus attaches unless "a government agent's act is so obviously wrong, in the light of pre-existing law, that only a plainly incompetent officer or one who was knowingly violating the law would have done such a thing...." Id. at 1149.
In addition, Plaintiff "cannot carry [the] burden of proving the law to be clearly established by stating constitutional rights in general terms." Foy v. Holston, 94 F.3d 1528, 1532 (11th Cir.1996) (citing Dartland v. Metropolitan Dade County, 866 F.2d 1321, 1323 (11th Cir.1989)).
1. Reardon's Motion to Dismiss
Defendant Reardon argues that she is entitled to qualified immunity because it is not clearly established that: 1) Barron's speech raised a matter of public concern; 2) Barron's interest in speaking outweighs the employer's interest in maintaining an efficient workplace; and 3) the alleged acts of retaliation constitute adverse employment action under the First Amendment. Since the Court finds that it is not clearly established that the alleged acts of retaliation constitute adverse employment action under the First Amendment, the Court need not address Reardon's other asserted grounds for dismissal.
a. Whether Reardon's actions constitute adverse employment action
The Court agrees with Defendant Reardon's arguments that it is not clearly established that Reardon's alleged actions in response to Barron's speech constitute adverse employment action under the First Amendment. Reardon's threat to transfer Barron to the night shift and the transfer of one of Barron's subordinates, rather than Barron himself, to a different unit do not clearly constitute unlawful retaliation under the First Amendment. See, e.g., Rogers v. Miller, 57 F.3d 986, 991-93 (11th Cir.1995) (reversing district court's denial of qualified immunity to defendants on plaintiffs' First Amendment claims because it was not clearly established that transferring employees, embarrassing an employee in front of others, warning employees to stay out of a sheriff's *1371 reelection race and placing one employee on a chronic absentee list constituted adverse employment action).
The Court also concurs with Defendant's contention that it is far from clearly established that Reardon's action in requiring Barron to perform the physical duties of his job by not permitting him to return to work with a lifting restriction is an unlawful constructive discharge. Barron voluntarily resigned his position when his supervisor would not excuse him from performing certain physical duties. See, e.g., Hargray v. City of Hallandale, 57 F.3d 1560, 1568 (11th Cir.1995) (noting that "employee resignations are presumed to be voluntary" and that "resignations can be voluntary even where the only alternative to resignation is facing possible termination for cause or criminal charges") (citations omitted). However, the supervisor did not even ask Barron to resign or threaten to fire him, as often occurs in similar employment disputes. See, e.g., Barnette v. Folmar, 64 F.3d 598, 601 (11th Cir. 1995) (reversing district court's denial of qualified immunity to defendants on constructive discharge claim because "giving [plaintiffs] the opportunity to resign [rather than being brought up on formal charges] could have reasonably seemed, in the light of pre-existing law from other circuits and the lack of law in this circuit, to be no discharge at all"); Hargray, 57 F.3d at 1568; Hughes v. Alabama Dep't of Pub. Safety, 994 F. Supp. 1395, 1405-07 (M.D.Ala.1998) (granting defendants' qualified immunity on plaintiff's constructive discharge claim, noting that there was no coercion or duress to establish constructive discharge since "this was not a situation in which a resignation from public employment has been requested by an employer").
There were avenues available for Barron to challenge his supervisor's decision in order to preserve his job, and requiring Barron to perform the physical duties of his job does not clearly constitute a constructive discharge. In addition, the Court cannot find, nor does Barron allege, that his working conditions were so intolerable that he was forced to quit or that a reasonable person would have quit under the circumstances. See, e.g., Morgan v. Ford, 6 F.3d 750, 755 (11th Cir.1993) (establishing constructive discharge requires plaintiff to show that his "`working conditions were so intolerable that a reasonable person ... would be compelled to resign'") (quoting Steele v. Offshore Shipbuilding, Inc., 867 F.2d 1311, 1317 (11th Cir.1989)), cert. denied, 512 U.S. 1221, 114 S. Ct. 2708, 129 L. Ed. 2d 836 (1994); Hughes, 994 F.Supp. at 1405 (noting that "a constructive discharge occurs when an employer makes working conditions so intolerable that a reasonable person in the employee's position would have felt compelled to resign") (citation omitted).
Plaintiff counters that Reardon retaliated against Barron by threatening to transfer Barron to the night shift, by transferring one of Barron's subordinates, and by refusing to allow Barron to return to work with the lifting restriction even though other employees with serious ailments were allowed to return to work. Barron argues that these actions constitute unconstitutional retaliation because they are likely to chill the exercise of constitutionally protected speech. Plaintiff argues that "`[t]his chilling effect can be accomplished through an unwanted transfer as well as through outright discharge.'" Yoggerst v. Stewart, 623 F.2d 35, 39 (7th Cir.1980) (quoting McGill v. Board of Educ., 602 F.2d 774, 780 (7th Cir.1979)) Plaintiff further relies on various cases, most from outside this Circuit, to establish that transfers and reprimands can constitute adverse employment actions. However, as Reardon notes, Barron simply was not transferred, but rather one of his subordinates was, and Barron does not allege that anyone in this case received a reprimand. In addition, the Court notes that Barron's reliance on cases from other Circuits to show that the law is clearly established in this Circuit is misplaced. See D'Aguanno v. Gallagher, 50 F.3d 877, 881 n. 6 (11th Cir.1995) ("The remaining cases on which plaintiffs rely do not come from the U.S. Supreme Court, the Eleventh Circuit Court of Appeals, or the Florida Supreme Court and, therefore, cannot show that plaintiffs' right ... was clearly established.") (citing Courson v. McMillian, 939 F.2d 1479, 1498 n. 32 (11th Cir.1991)).
*1372 Plaintiff also relies on Cooper v. Smith, 89 F.3d 761, 764 (11th Cir.1996), in which the Eleventh Circuit found that a sheriff's refusal to renew a deputy's commission, resulting in his dismissal, following the deputy's cooperation with an investigation of corruption at the sheriff's department constituted adverse employment action for purposes of the First Amendment. However, the Cooper court framed the issue facing it as "whether a public official who terminates an employee for cooperating with law enforcement investigators is entitled to qualified immunity." Id. at 763. The court concluded that "[a]nanalysis of the case law reveals that it was clearly established at the time [the sheriff] refused to renew [the deputy's] commission that it was a violation of [the deputy's] First Amendment rights to take adverse action against him for cooperating with an official law enforcement investigation." Id. at 765. However, unlike in Cooper, here Barron was not "terminated," but rather he resigned when he was not allowed to return to work with a lifting restriction. The refusal to renew the deputy's commission at issue in Cooper is quite different from, and more severe than, Reardon's alleged actions in transferring one of Barron's subordinates, threatening to change Barron's schedule, and refusing to grant Barron the lifting restriction.
Barron further posits that the Eleventh Circuit has found that "[t]he First Amendment is implicated whenever a government employee is disciplined for his speech," Waters v. Chaffin, 684 F.2d 833, 837 (11th Cir. 1982) (citations omitted), and that it is a violation of clearly established law to discipline an employee for exercising his First Amendment right to speak. See Berdin v. Duggan, 701 F.2d 909, 913 (11th Cir.), cert. denied, 464 U.S. 893, 104 S. Ct. 239, 78 L. Ed. 2d 230 (1983). However, Plaintiff "cannot carry [the] burden of proving the law to be clearly established by stating constitutional rights in general terms." Foy, 94 F.3d at 1532 (citing Dartland, 866 F.2d at 1323). The issue here is whether, for purposes of qualified immunity, Reardon's actions clearly amount to adverse employment action under the First Amendment. The Court concludes that the alleged actions do not clearly rise to this level.
The Court notes that it "voice[s] no opinion on whether, under these facts, the plaintiff[ ] might be able to establish a violation of [his] First Amendment rights. [The Court] hold[s] only that [Reardon is] immune from damages because no caselaw existing at the time of these events clearly established that such conduct, under the circumstances, constituted `adverse employment action' prohibited under the First Amendment." Rogers, 57 F.3d at 992 (citation omitted).
2. Defendant Ward's Motion to Dismiss
Defendant Sylvianne Ward has also filed a motion to dismiss based on qualified immunity. Ward asserts that she was copied on one of the memoranda sent by Barron, and that Barron addressed another memo to her. The first memo expresses concern over the altering of records and complains about the reclassification of one of the employees in Barron's unit, and the second memo addresses numerous complaints including the alleged document alteration. Ward took no action in response to either memo.
Ward argues, and the Court agrees, that her entitlement to qualified immunity is even more compelling than Reardon's. Ward argues that neither Reardon's threat to reschedule Barron nor his resignation were mentioned in the memoranda. Ward asserts that Barron is improperly attempting to impose liability on the basis of respondeat superior. See Busby v. City of Orlando, 931 F.2d 764, 782 (11th Cir.1991) ("A supervisor cannot be held liable on the basis of respondeat superior for the acts of his inferiors under section 1983.") (citation omitted). Ward argues that she cannot be held liable merely because Barron sent her memos complaining about Reardon's conduct.
Barron counters that Ward had actual knowledge of the retaliation against Barron, and that Ward acted with reckless disregard for his federally protected rights by failing to stop the retaliation. Barron claims that a public official can be held liable for a decision that results in the deprivation of a person's constitutional rights where it was apparent that a constitutional deprivation would occur. Barron argues that the memoranda from *1373 Barron make untenable Ward's claim that she did not know that Barron's constitutional rights were about to be violated. Barron further maintains that the memoranda make clear that he was being retaliated against because of his protests regarding the destruction of the medical records.
However, the Court agrees with Ward's assertion that because Barron did not clearly suffer any adverse employment action as a result of any conduct by Reardon, Ward cannot be held responsible for Barron's injuries. Barron's claim against Ward relies in large part on Ward's alleged failure to end Reardon's challenged actions. Since the Court has found that Reardon is entitled to qualified immunity in that her treatment of Barron did not clearly amount to adverse employment action, the Court is led to the inescapable conclusion that Ward is also entitled to qualified immunity.
III. CONCLUSION
It is therefore
ADJUDGED that Defendant Terry Reardon's Motion to Dismiss Amended Complaint (docket no. 17), and Defendant Sylvianne Ward's Motion to Dismiss Amended Complaint (docket no. 27), are GRANTED. Counts III and IV of the Amended Complaint are therefore DISMISSED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2420229/ | 235 S.W.2d 1 (1950)
WOOD
v.
FOSTER & CREIGHTON CO. et al.
Supreme Court of Tennessee.
December 9, 1950.
*2 H. L. Barger and J. Walter Johnson, Chattanooga, for C. E. Wood, plaintiff in error.
Ellis K. Meacham, Chattanooga, for City of Chattanooga.
Miller, Martin, Hitching & Tipton, Chattanooga, for Foster & Creighton Co., defendants in error.
BURNETT, Justice.
The property owner, Wood, and contractor, Foster & Creighton Co., have heretofore applied to this Court for writs of certiorari which have been granted. The parties have briefed and argued the case before this Court.
The property owner, Wood, sued Foster & Creighton Co., and the City of Chattanooga to recover damages for the unlawful cutting and removing from Wood's property certain shade trees and the taking of soil from his property. Judgment was rendered against the contractor and in favor of the City. On appeal the Court of Appeals affirmed this judgment.
On July 15, 1946, the State of Tennessee made a contract with the City of Chattanooga for the widening of Rossville Boulevard, as authorized by Code Section 3242 et seq. by which the City obligated itself, among other things, to procure easements for right of way as shown by blue prints accompanying the proposal. The blue prints were drawn by the City engineer due to the fact that the State engineering office was short of manpower at the time.
The State of Tennessee contracted with the defendant, Foster & Creighton, to perform the work in widening Rossville Boulevard.
The plaintiff's property abutted on Rossville Boulevard and was some three or four feet higher than the street after it was paved making it necessary to either build a retaining wall in front of the plaintiff's property or slope the property back so that the dirt etc. from the plaintiff's property would not wash off on the sidewalk. The plans made no particular reference to this property, did not designate either method, that is, the building of the retaining wall or the sloping of the property back, and no easement was acquired within the plaintiff's front line beyond the uniform width of the street. About six feet inside his property line were several shade trees which he had placed there some twenty-five years before.
The State engineer went on the lots and placed stakes indicating the removal of the trees and the removal and sloping of the bank. The contractor followed the instructions of the State engineer but made no inquiry of the City engineer and did not refer to the plans and specifications. The contractor merely followed the directions of the State engineer under whom he was working.
The building of a retaining wall would have been somewhat more expensive than the sloping of the bank.
The State engineer testified that he acted under both a general provision to be found in all contractors' general specifications and under a general provision attached to the plans and specifications for this project to the effect that where a retaining wall is not indicated expressly, the earth shall be cut and sloped. The general specifications of contractors were not introduced in evidence.
The City engineer, testifying for the City, differed with the State engineer as to the interpretation of the actual contract and testified that it contained no authority for sloping; that they always expressly show when a tree is to be removed or a bank sloped, or a wall to be built, but that nothing was shown on these plans.
The contractor, Foster & Creighton Co., was doing the work under contract with the State, and the City was not a party to this contract. This contractor did what the State's representative in charge of the project ordered it to do. The contractor was clearly entitled to rely on such orders without being required to make an independent check, at its peril, on the State's authority to give the order. The contractor was guilty of no negligence in the manner in which it did this work, and the damage done to the plaintiff resulted from the work being done rather than from the contractor's negligence in *3 doing it. There is no claim in the record that the work was done negligently. The only claim of negligence, insofar as the contractor is concerned, is that the contractor was negligent in not specifically examining the plans to find whether or not the plans showed that the property was to be sloped back. This is the basis of the two lower courts holding that the contractor was negligent.
It seems to us that as a practical matter, in the construction of public improvement, that the contractor should be relieved from checking every order given it by the public authority. The State for whom the contractor works does the engineering, stakes out the project, tells the contractor what to grade and what to do and so long as the contractor complies with these instructions by its superior then the contractor is fulfilling its obligation. If the contractor was required, at its peril, to check and double check all plans given it and required to keep an engineering force for the purpose of interpreting these plans, and was not permitted to follow the orders of the engineering force of its superior, then the costs of public improvement would be so increased as to make them almost prohibitive. The purpose of having the State engineering department for these public improvements is to lay out these projects and to tell the contractor where to do its work. The contractor's work is not the engineering job of laying out the project but is merely in doing what it is instructed to do. So long as it does this work as it is instructed to do by its superior in a workmanlike manner, not negligently, then the contractor is not liable.
The contractor had no discretion as to whether it would build a retaining wall or slope the bank. That was a matter for the State engineering department to determine and the State having made the determination to slope the bank, the contractor had no alternative but to follow the State's orders.
It is a well settled rule in this State that a contractor constructing a public improvement for a public authority is not liable to a private property owner for the resulting damage where the contractor acts in accordance with the public authority's orders and is not itself guilty of negligence in the manner in which it does the work. 43 Am. Jur., 827-8, Public Words & Contracts, Sec. 83; Iron Mountain Railroad Co. v. Bingham, 87 Tenn. 522, 531, 11 S.W. 705, 4 L.R.A. 622; Chattanooga T.R. Power Co. v. Lawson, 139 Tenn. 354, 369-370, 201 S.W. 165; Lebanon v. Dillard, 155 Tenn. 448, 295 S.W. 60; Newberry v. Hamblen County, 157 Tenn. 491, 495, 9 S.W.2d 700, 701 and Trigg v. H. K. Ferguson Co., 30 Tenn. App. 672, 209 S.W.2d 525, 529 (certiorari denied).
In Newberry v. Hamblen Co., supra, it was said: "If the injury is a necessary incident of necessary blasting in construction of the highway, the damages are chargeable to the condemnor, here the county. But if the injury is not such a necessary incident, but is the result of negligence of the contractor, then the damages are chargeable to him."
The sloping of the bank, consequently the removal of the trees, or the building of the retaining wall was a necessary incident to the widening and improving of Rossville Boulevard. The decision as to whether or not a retaining wall should be built or the bank sloped was up to the engineering department of the State. Since the City obligated itself to acquire the rights of way for this improvement and did not specifically designate that a retaining wall would be built, it seems to us that it was perfectly logical and natural for the State engineering department to direct and stake out a sloping of this bank which was more economical on the part of either the State or the City. It is a logical and natural deduction that the costs of building this retaining wall or paying for the slope would fall on the City as this taking was a necessary incident and part of the City's obligation in securing the rights of way for the improvement of this property.
The contractor thus not being guilty of negligence and having merely followed the directions of its superior, the State, in doing this work is clearly not liable *4 herein. The result is that the judgment against the contractor will be reversed and the suit as to the contractor dismissed.
The suit against the City is predicated on Code Section 3404, which provides in substance that if the municipality shall do anything to change the natural or established grade of the highway etc., and thereby injure the property owner, that the owner "shall be paid all damages therefor by such municipality, which damages may be recovered by suit brought at any time in one year from the completion of or the cessation of such works, acts, or improvements; * * *."
It seems to us that the City having authorized this improvement and having accepted it would be answerable to Wood for the damages to his property which were necessarily occasioned by the improvement done. In City of Knoxville v. Harth, 105 Tenn. 436, 58 S.W. 650, it was held that a municipality, permitting a third person to grade its streets, was liable for resulting damages to the ingress and egress to the owners of abutting lots. The damage done in this case is more of a taking than the destruction of the ingress and egress to one's property. This was an actual taking necessarily incident to the improvement even though the street lines did not run over on the property but in order to properly pave the street it was necessary to enter the plaintiff's property and slope it back so as to prevent the sidewalk from becoming a mud walk.
The property of the plaintiff was taken here without condemnation or any effort to secure the property as taken. It seems to us that those cases which hold that the taking of one's property, without actually taking any property at all, but by the change in the grade of the street the access to the property is injured then the municipality is liable for this injury, are applicable here. City of Knoxville v. Hunt, 156 Tenn. 7, 299 S.W. 789; Coyne v. Memphis, 118 Tenn. 651, 102 S.W. 355. This was unquestionably a taking of the plaintiff's property which under the constitution cannot be done without compensation. The property owner has no right against the contractor who did the work in a workmanlike manner and without doing it negligently. The property owner had no right against the State because it was the City who was building the street in cooperation with the State and the Federal government. The obligation to secure these rights of way and the resulting damage to the property for property taken or for ingress and egress to the property by reason of this improvement was an obligation of the City. Therefore we think that clearly under Code Section 3404, above referred to, the City is obligated to the property owner for the resulting damage.
It results that the judgment of the Court of Appeals in favor of the City will be reversed and a judgment rendered here in favor of the property owner against the City of Chattanooga for $500, the amount of the damages fixed by the lower courts to the plaintiff's property. | 01-03-2023 | 10-30-2013 |
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