text
stringlengths 0
13M
|
|---|
Citation Nr: 0027229
Decision Date: 10/13/00 Archive Date: 10/19/00
DOCKET NO. 99-09 902 ) DATE
)
)
On appeal from the
Department of Veterans Affairs (VA) Regional Office (RO) in
Philadelphia, Pennsylvania
THE ISSUE
Entitlement to service connection for arthritis of both
wrists.
ATTORNEY FOR THE BOARD
Mary C. Suffoletta, Associate Counsel
INTRODUCTION
The veteran had active service from April 1979 to August
1982.
This matter comes to the Board of Veterans' Appeals (Board)
from a March 1998 RO rating decision that denied service
connection for arthritis of both wrists. The veteran
submitted a notice of disagreement in June 1998, and the RO
issued a statement of the case in February 1999. The veteran
submitted a substantive appeal in April 1999. A hearing
scheduled in September 2000 was canceled when the veteran
failed to report.
FINDING OF FACT
The veteran has not submitted competent (medical) evidence
linking a current arthritic disability of either wrist to an
incident of service or to a service-connected disability.
CONCLUSION OF LAW
The claim for service connection for arthritis of both wrists
is not well grounded. 38 U.S.C.A. § 5107(a) (West 1991).
REASONS AND BASES FOR FINDING AND CONCLUSION
The threshold question to be answered in this case is whether
the veteran has presented evidence of a well-grounded claim;
that is, evidence which shows that his claim is plausible,
meritorious on its own, or capable of substantiation.
38 U.S.C.A. § 5107(a) (West 1991); Murphy v. Derwinski,
1 Vet. App. 78 (1990). If he has not presented such a claim,
his appeal must, as a matter of law, be denied, and there is
no duty on the VA to assist him further in the development of
the claim. [email protected]. The United States Court of Appeals
for Veterans Claims (Court) has also stated that a claim must
be accompanied by supporting evidence; an allegation is not
enough. Tirpak v. Derwinski, 2 Vet. App. 609 (1992). In a
claim of service connection, this generally means that
evidence must be presented which in some fashion links a
current disability to a period of military service, or as
secondary to a disability which has already been service-
connected. 38 U.S.C.A. § 1110 (West 1991 & Supp. 2000); 38
C.F.R. §§ 3.303, 3.310 (1999); Rabideau v. Derwinski, 2 Vet.
App. 141, 143 (1992). "In order for a claim to be well-
grounded, there must be competent evidence of current
disability (a medical diagnosis) ...; of incurrence or
aggravation of a disease or injury in service (lay or medical
testimony), ...; and of a nexus between the inservice injury
or disease and the current disability (medical evidence)."
Caluza v. Brown, 7 Vet. App. 498 (1995).
The chronicity provisions of 38 C.F.R. § 3.303(b) are
applicable where evidence, regardless of its date, shows that
a veteran had a chronic condition in service, or during an
applicable presumptive period, and still has such condition.
Such evidence must be medical unless it relates to a
condition as to which under case law of the Court, lay
observation is competent. If chronicity is not applicable, a
claim may still be well grounded on the basis of continuity
of symptomatology, if the condition is noted during service
or during an applicable presumptive period, and if competent
evidence, either medical or lay, depending on the
circumstances, relates the present condition to that
symptomatology. Savage v. Gober, 10 Vet. App. 488 (1997).
The chronicity standard is established by competent evidence
of the existence of a chronic disease in service or during an
applicable presumption period, and present manifestations of
the same chronic disease. The continuity standard is
established by medical evidence of a current disability;
evidence that a condition was noted in service or during a
presumption period; evidence of post-service continuity of
symptomatology; and medical, or in some circumstances, lay
evidence of a nexus between the present disability and the
post-service continuity of symptomatology. This type of lay
evidence, for purposes of well groundedness, will be presumed
credible when it involves visible symptomatology that is not
inherently incredible or beyond the competence of a lay
person to observe. Id.
A lay person's opinion cannot alone provide a foundation for
a well-grounded claim when the opinion requires expert
knowledge, such as the medical knowledge necessary to
establish a causal link between a service-connected
disability and another post-service disability. In addition,
a medical statement that is speculative will not support a
well grounded claim. Franzen v. Brown, 9 Vet. App. 235
(1996); Johnson v. Brown, 9 Vet. App. 7 (1996); Gregory v.
Brown, 8 Vet. App. 563 (1996); Tirpak v. Derwinski, 2 Vet.
App. 609 (1992).
Where arthritis becomes manifest to a degree of 10 percent
within one year from date of termination of active service,
it shall be presumed to have been incurred in active service.
38 U.S.C.A. §§ 1101, 1112, 1113 (West 1991 & Supp. 2000).
Secondary service connection may be granted for disability
that is proximately due to or the result of a service-
connected disease or injury. 38 C.F.R. § 3.310(a) (1999).
Service medical records are negative for manifestations of
arthritis.
Service medical records reflect that the veteran fell from a
second-story window in September 1981 and fractured the ulnar
styloid of his left wrist, among other injuries. For
purposes of well-groundedness, the evidence of record is
presumed true and tends to show an in-service injury of the
veteran's left wrist.
The post-service medical records do not indicate the presence
of polyarthralgia or of rheumatoid arthritis (questionable)
until 1997, long after military service. A VA consultation
report reveals the presence of swollen hands and swollen
wrists. However, there is no medical evidence that links the
veteran's current arthritic disability of both wrists, first
found in 1997, to an incident of service, or more
particularly, to the left wrist injury in September 1981. A
claim is not well grounded where there is no medical evidence
showing a nexus between a current disability and service.
Caluza, 7 Vet. App. 498.
Nor is there competent medical evidence showing
manifestations of arthritis of either wrist to a degree of
10 percent within one year from the date of termination of
active service. Paulson v. Brown, 7 Vet. App. 466 (1995);
Espiritu v. Derwinski, 2 Vet. App. 492 (1992).
Statements from the veteran are to the effect that his
current arthritic disability of both wrists is due to his
fall from a second-story window in service, but this lay
evidence is not sufficient to support a claim for service
connection of a disability based on medical causation.
Espiritu v. Derwinski, 2 Vet. App. 492 (1992).
In this case, while the evidence shows a left wrist injury in
service, there is no medical record reflecting the presence
of any arthritic disability of either wrist thereafter, until
15 years had passed. Moreover, there is no competent
(medical) evidence linking the veteran's current arthritic
disability of both wrists, first found long after service, to
an incident of service or to any other service-connected
disability. Under these circumstances, the veteran's claim
for service connection for arthritis of both wrists is not
plausible, and must be denied.
The veteran is advised that he may reopen the claim for
service connection for arthritis of both wrists at any time
by notifying the RO of such an intention and submitting
supporting evidence. An example of supporting evidence is a
medical report with an opinion linking an arthritic
disability of both wrists to an incident of service or to a
service-connected disability. Robinette v. Brown, 8 Vet.
App. 69 (1995).
ORDER
The claim for service connection for arthritis of both wrists
is denied as not well grounded.
REMAND
A March 1998 RO rating decision denied the veteran's claim
for a total disability rating based on individual
unemployability (TDIU). In correspondence dated in June
1998, the veteran disagreed with that determination, thereby
placing this issue in appellate status. 38 C.F.R. §§ 20.200,
20.201 (1999). A review of the record does not show that
this issue has been made the subject of a statement of the
case, and it should be. Manlincon v. West, 12 Vet. App. 238
(1999); Godfrey v. Brown, 7 Vet. App. 398 (1995). The Board
may not address this issue until the veteran has been sent a
statement of the case. 38 C.F.R. § 20.200; Smallwood v.
Brown, 10 Vet. App. 93, 97 (1997).
In view of the above, the case is REMANDED to the RO for the
following action:
The RO should send the veteran a
statement of the case on the issue of
entitlement to a total disability rating
based on individual unemployability. The
veteran should be advised that he must
submit a VA Form 9 or substantive appeal
within 60 days in order to obtain
appellate consideration of this issue.
If a timely substantive appeal is received with regard to the
above issue, the case should be sent to the Board.
This claim must be afforded expeditious treatment by the RO.
The law requires that all claims that are remanded by the
Board of Veterans' Appeals or by the United States Court of
Appeals for Veterans Claims for additional development or
other appropriate action must be handled in an expeditious
manner. See The Veterans' Benefits Improvements Act of 1994,
Pub. L. No. 103-446, § 302, 108 Stat. 4645, 4658 (1994),
38 U.S.C.A. § 5101 (West Supp. 2000) (Historical and
Statutory Notes). In addition, VBA's Adjudication Procedure
Manual, M21-1, Part IV, directs the ROs to provide
expeditious handling of all cases that have been remanded by
the Board and the Court. See M21-1, Part IV, paras. 8.44-
8.45 and 38.02-38.03.
J. E. DAY
Veterans Law Judge
Board of Veterans' Appeals
|
Citation Nr: 0818429
Decision Date: 06/04/08 Archive Date: 06/12/08
DOCKET NO. 04-31 596 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Columbia,
South Carolina
THE ISSUE
Entitlement to an initial evaluation in excess of 70 percent
disabling for post traumatic stress disorder (PTSD).
REPRESENTATION
Appellant represented by: Disabled American Veterans
ATTORNEY FOR THE BOARD
S. Heneks, Associate Counsel
INTRODUCTION
The veteran served on active duty from August 1965 to
November 1971.
This matter comes before the Board of Veterans' Appeals (BVA
or Board) on appeal from a March 2004 rating decision of the
Department of Veterans Affairs (VA) Regional Office (RO) in
Columbia, South Carolina, which granted service connection
for PTSD and assigned a 50 percent rating.
In a June 2006 decision, the Board remanded the issue for
further development. The Board has reviewed the development
undertaken pursuant to the remand including the August 2007
VA examination and finds that VA has substantially complied
with the Board's June 2006 remand with regard to this appeal.
See Dyment v. West, 13 Vet. App. 141, 146-47 (1999) (remand
not required under Stegall v. West, 11 Vet. App. 268 (1998)
where Board's remand instructions were substantially complied
with).
Additionally, in an October 2007 decision, the RO increased
the veteran's PTSD disability rating to 70 percent. However,
in a November 2007 statement, the veteran appears to disagree
with the assigned 70 percent rating because it has not
resulted in an increase in his total amount of monthly
compensation. Additionally, in a claim for an increased
rating, the claimant will generally be presumed to be seeking
the maximum benefit allowed by law and regulation, and it
follows that such a claim remains in controversy where less
than the maximum available benefit is awarded. AB v. Brown,
6 Vet. App. 35, 38 (1993). Since the grant of the 70 percent
rating is not a full grant of the benefits sought on appeal,
and since the veteran did not withdraw his claim of
entitlement to a higher initial rating, the matter remains
before the Board for appellate review.
Additionally, the Board notes that the August 2007 VA
examiner indicated that total disability based on individual
unemployability (TDIU) might be feasible for the veteran.
The Board refers this contention to the RO for any further
development.
FINDINGS OF FACT
1. All relevant evidence necessary for an equitable
disposition of the veteran's appeal has been obtained.
2. The veteran's PTSD is not manifested by total social
impairment; gross impairment in thought processes or
communication; persistent delusions or hallucinations;
grossly inappropriate behavior; persistent danger of hurting
self or others; intermittent inability to perform activities
of daily living; or disorientation to time or place.
CONCLUSION OF LAW
The criteria for the assignment of an initial rating in
excess of 70 percent for PTSD have not been met. 38 U.S.C.A.
§§ 1155 (West 2002 & Supp. 2007); 38 C.F.R.
§§ 3.159, 3.321, 4.1, 4.7, 4.130, Diagnostic Code 9411
(2007).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
Upon receipt of a substantially complete application for
benefits, VA must notify the claimant what information or
evidence is needed in order to substantiate the claim and it
must assist the claimant by making reasonable efforts to get
the evidence needed. 38 U.S.C.A. §§ 5103(a), 5103A;
38 C.F.R. § 3.159(b); see Quartuccio v. Principi, 16 Vet.
App. 183, 187 (2002). The notice required must be provided
to the claimant before the initial unfavorable decision on a
claim for VA benefits, and it must (1) inform the claimant
about the information and evidence not of record that is
necessary to substantiate the claim; (2) inform the claimant
about the information and evidence that VA will seek to
provide; (3) inform the claimant about the information and
evidence the claimant is expected to provide; and (4) request
or tell the claimant to provide any evidence in the
claimant's possession that pertains to the claim.
38 U.S.C.A. §§ 5103(a); 38 C.F.R. § 3.159(b)(1); Pelegrini v.
Principi, 18 Vet. App. 112, 120 (2004).
In Dingess v. Nicholson, 19 Vet. App. 473 (2006), the Unites
States Court of Appeals for Veterans Claims held that, upon
receipt of an application for a service connection claim,
38 U.S.C. § 5103(a) and 38 C.F.R. § 3.159(b) require VA to
review the information and the evidence presented with the
claim and to provide the claimant with notice of what
information and evidence not previously provided, if any,
will assist in substantiating, or is necessary to
substantiate, each of the five elements of the claim,
including notice of what is required to establish service
connection and that a disability rating and an effective date
for the award of benefits will be assigned if service
connection is awarded.
For an increased compensation claim, section § 5103(a)
requires, at a minimum, that the Secretary notify the
claimant that, to substantiate a claim, the claimant must
provide, or ask the Secretary to obtain, medical or lay
evidence demonstrating a worsening or increase in severity of
the disability and the effect that worsening has on the
claimant's employment and daily life. Vazquez-Flores v.
Peake, 22 Vet. App. 37 (2008). Further, if the Diagnostic
Code under which the claimant is rated contains criteria
necessary for entitlement to a higher disability rating that
would not be satisfied by the claimant demonstrating a
noticeable worsening or increase in severity of the
disability and the effect that worsening has on the
claimant's employment and daily life (such as a specific
measurement or test result), the Secretary must provide at
least general notice of that requirement to the claimant.
Additionally, the claimant must be notified that, should an
increase in disability be found, a disability rating will be
determined by applying relevant Diagnostic Codes, which
typically provide for a range in severity of a particular
disability from noncompensable to as much as 100 percent
(depending on the disability involved), based on the nature
of the symptoms of the condition for which disability
compensation is being sought, their severity and duration,
and their impact upon employment and daily life. As with
proper notice for an initial disability rating and consistent
with the statutory and regulatory history, the notice must
also provide examples of the types of medical and lay
evidence that the claimant may submit (or ask the Secretary
to obtain) that are relevant to establishing entitlement to
increased compensation, e.g., competent lay statements
describing symptoms, medical and hospitalization records,
medical statements, employer statements, job application
rejections, and any other evidence showing an increase in the
disability or exceptional circumstances relating to the
disability. Vazquez-Flores, 22 Vet. App. 37.
Nevertheless, in this case, the veteran is challenging the
initial evaluation assigned following the grant of service
connection for PTSD. In this regard, once service connection
is granted and an initial disability rating and effective
date have been assigned, the claim is substantiated, and
additional 5103(a) notice is not required. See Dingess v.
Nicholson, 19 Vet. App. 473, 490-491 (2006); Hartman v.
Nicholson, 483 F.3d 1311 (Fed. Cir. 2007); Dunlap v.
Nicholson, 21 Vet. App. 112 (2007). Thus, because the notice
that was provided to the veteran in December 2003 before
service connection was granted was legally sufficient, VA's
duty to notify in this case has been satisfied.
In addition, the duty to assist the veteran has also been
satisfied in this case. The veteran's service medical
records as well as all available VA medical records and all
relevant private medical records pertinent to the years after
service are in the claims file and were reviewed by both the
RO and the Board in connection with the veteran's claim for
an increased rating for PTSD. The veteran was also afforded
VA examinations in January 2004 and August 2007 in connection
with his claim. In a July 2006 VA Form 21-4142,
Authorization and Consent to Release Information to the
Department of Veterans Affairs, the veteran indicated that he
was receiving Social Security Administration (SSA) benefits
in part for PTSD. However, in an October 2006 statement, the
SSA indicated that after an exhaustive and comprehensive
search, it was not able to locate the veteran's folder. VA
has further assisted the veteran and his representative
throughout the course of this appeal by providing them a SOC
and SSOC, which informed them of the laws and regulations
relevant to the veteran's claim. For these reasons, the
Board concludes that VA has fulfilled the duty to assist the
veteran in this case.
Additionally, the duty to assist includes, when appropriate,
the duty to conduct a thorough and contemporaneous
examination of the veteran. Green v. Derwinski, 1 Vet.
App. 121 (1991). In addition, where the evidence of record
does not reflect the current state of the veteran's
disability, a VA examination must be conducted. Schafrath v.
Derwinski, 1 Vet. App. 589 (1991); 38 C.F.R. § 3.327(a)
(2007). The RO provided the veteran appropriate VA
examinations in January 2004 and August 2007. There is no
objective evidence indicating that there has been a material
change in the severity of the veteran's service-connected
disorder since he was last examined. 38 C.F.R. § 3.327(a).
The duty to assist does not require that a claim be remanded
solely because of the passage of time since an otherwise
adequate VA examination was conducted. VAOPGCPREC 11-95.
Further, in particular, the August 2007 VA examination report
addresses the rating criteria and is adequate upon which to
base a decision.
As there is no indication that any failure on the part of VA
to provide additional notice or assistance reasonably affects
the outcome of this case, the Board finds that any such
failure is harmless. See Mayfield v. Nicholson, 19 Vet. App.
103 (2005), rev'd on other grounds, Mayfield v. Nicholson,
444 F.3d 1328 (Fed. Cir. 2006).
LAW AND ANALYSIS
Disability ratings are determined by applying the criteria
set forth in the VA Schedule for Rating Disabilities, found
in 38 C.F.R., Part 4. The rating schedule is primarily a
guide in the evaluation of disability resulting from all
types of diseases and injuries encountered as a result of or
incident to military service. The ratings are intended to
compensate, as far as can practicably be determined, the
average impairment of earning capacity resulting from such
diseases and injuries and their residual conditions in
civilian occupations. 38 U.S.C.A. § 1155; 38 C.F.R. § 4.1.
Where there is a question as to which of two evaluations
shall be applied, the higher evaluation will be assigned if
the disability picture more nearly approximates the criteria
for that rating. 38 C.F.R. § 4.7.
In considering the severity of a disability, it is essential
to trace the medical history of the veteran. 38 C.F.R. §§
4.1, 4.2, 4.41. Consideration of the whole-recorded history
is necessary so that a rating may accurately reflect the
elements of disability present. 38 C.F.R. § 4.2; Peyton v.
Derwinski, 1 Vet. App. 282 (1991). While the regulations
require review of the recorded history of a disability by the
adjudicator to ensure a more accurate evaluation, the
regulations do not give past medical reports precedence over
the current medical findings. Where an increase in the
disability rating is at issue, the "present level" of the
veteran's disability is the primary concern. Francisco v.
Brown, 7 Vet. App. 55, 58 (1994). However, where VA's
adjudication of an increased rating claim is lengthy, a
claimant may experience multiple distinct degrees of
disability that would result in different levels of
compensation from the time the increased rating claim was
filed until a final decision on that claim is made. Thus,
VA's determination of the "present level" of a disability
may result in a conclusion that the disability has undergone
varying and distinct levels of severity throughout the entire
time period the increased rating claim has been pending.
Hart v. Mansfield, 21 Vet. App. 505 (2007).
Similarly where a veteran appeals the initial rating assigned
for a disability at the time that service connection for that
disability is granted, evidence contemporaneous with the
claim and with the initial rating decision granting service
connection would be most probative of the degree of
disability existing at the time that the initial rating was
assigned and should be the evidence "used to decide whether
an original rating on appeal was erroneous . . . ."
Fenderson v. West, 12 Vet. App. 119, 126 (1999). If later
evidence indicates that the degree of disability increased or
decreased following the assignment of the initial rating,
"staged" ratings may be assigned for separate periods of
time based on facts found. Id.
The pertinent provisions of 38 C.F.R. § 4.130 relating to
rating mental disorders, including PTSD, read as follows:
100 percent Total occupational and social impairment, due to
such symptoms as: gross impairment in thought processes or
communication; persistent delusions or hallucinations;
grossly inappropriate behavior; persistent danger of hurting
self or others; intermittent inability to perform activities
of daily living (including maintenance of minimal personal
hygiene); disorientation to time or place; memory loss for
names of close relatives, own occupation or own name.
70 percent Occupational and social impairment, with
deficiencies in most areas, such as work, school, family
relations, judgment, thinking, or mood, due to such symptoms
as: suicidal ideation; obsessional rituals which interfere
with routine activities; speech intermittently illogical,
obscure, or irrelevant; near-continuous panic or depression
affecting the ability to function independently,
appropriately and effectively; impaired impulse control (such
as unprovoked irritability with periods of violence); spatial
disorientation; neglect of personal appearance and hygiene;
difficulty in adapting to stressful circumstances (including
work or a worklike setting); inability to establish and
maintain effective relationships.
38 C.F.R. § 4.130, Diagnostic Code 9411.
GAF scores are a scale reflecting the "psychological, social,
and occupational functioning on a hypothetical continuum of
mental health- illness." See Carpenter v. Brown, 8 Vet. App.
240, 242 (1995); see also Richard v. Brown, 9 Vet. App. 266,
267 (1996) (citing the American Psychiatric Association's
Diagnostic and Statistical Manual of Mental Disorders, Fourth
Edition (DSM-IV), p. 32).
GAF scores ranging from 51 to 60 reflect more moderate
symptoms (e.g., flat affect and circumstantial speech,
occasional panic attacks) or moderate difficulty in social,
occupational, or school functioning (e.g., few friends,
conflicts with peers or co- workers). Scores ranging from 41
to 50 reflect serious symptoms (e.g., suicidal ideation,
severe obsessional rituals, frequent shoplifting) or any
serious impairment in social, occupational or school
functioning (e.g., no friends, unable to keep a job). Scores
ranging from 31 to 40 reflect some impairment in reality
testing or communication (e.g., speech is at times illogical,
obscure, or irrelevant) or major impairment in several areas,
such as work or school, family relations, judgment, thinking,
or mood (e.g., depressed man avoids friends, neglects family,
and is unable to work; child frequently beats up other
children, is defiant at home, and is failing at school). See
38 C.F.R. § 4.130 (incorporating by reference the VA's
adoption of the DSM-IV, for rating purposes).
The use of the term "such as" in the general rating formula
for mental disorders in 38 C.F.R. § 4.130 demonstrates that
the symptoms after that phrase are not intended to constitute
an exhaustive list, but rather are to serve as examples of
the type and degree of symptoms, or their effects, that would
justify a particular rating. See Mauerhan v. Principi, 16
Vet. App. 436, 442 (2002). It is not required to find the
presence of all, most, or even some, of the enumerated
symptoms recited for particular ratings. Id. The use of the
phrase "such symptoms as," followed by a list of examples,
provides guidance as to the severity of symptoms contemplated
for each rating, in addition to permitting consideration of
other symptoms, particular to each veteran and disorder, and
the effect of those symptoms on the claimant's social and
work situation. Id.
Under the criteria when evaluating a mental disorder, the
rating agency shall consider the frequency, severity, and
duration of psychiatric symptoms, the length of remissions,
and the veteran's capacity for adjustment during periods of
remission. See 38 C.F.R. § 4.126 (2007). The rating agency
shall assign an evaluation based on all the evidence of
record that bears on occupational and social impairment
rather than solely on the examiner's assessment of the level
of disability at the moment of the examination. Id. When
evaluating the level of disability from a mental disorder,
the rating agency will consider the extent of social
impairment, but shall not assign an evaluation solely on the
basis of social impairment. Id.
In considering the evidence of record under the laws and
regulations as set forth above, the Board concludes that the
veteran is not entitled to a 100 percent evaluation for PTSD.
The veteran has not been shown to have total social
impairment or such symptoms commensurate with gross
impairment in thought processes or communication; persistent
delusions or hallucinations; grossly inappropriate behavior;
persistent danger of hurting self or others; intermittent
inability to perform activities of daily living;
disorientation to time or place. In this regard, although
the veteran was found to be unemployable due to his PTSD by
the August 2007 VA examiner and the evidence of record
reflected that the veteran had a severe degree of social
impairment, including GAF scores throughout the appeal period
ranged from 45 to 50, which indicate serious symptoms or any
serious impairment in social or occupational functioning, the
evidence when considered as a whole does not more nearly
approximate the criteria for a 100 percent rating.
Although the Board acknowledges the August 2007 VA
examination report in which the veteran informed the examiner
that his most recent marriage was not going so well, that he
had outbursts with family members, and that he had no social
relationships, the Board finds it significant that the
veteran has been married for the past 15 years.
Additionally, during his January 2004 VA examination, the
veteran indicated that he had a daughter that he called
periodically. As such, despite severe impairment in social
functioning, the veteran has not been shown to have total
social impairment.
The Board also finds it significant that VA treatment entries
dated from October 2003 to March 2007 reflected that the
veteran was working to manage his temper and anger more
effectively and improvement was noted. Additionally,
although it was noted in VA treatment entries dated in
October 2003, March 2004, and June 2004 that he had transient
psychotic symptoms, intermittent audiological hallucinations,
and it was possible that he experienced hallucinations and
illusions when having flashbacks, they were not described by
the veteran or by medical personnel as being persistent.
Importantly, the veteran was not found to have any
audiological or visual hallucinations, overt delusions, gross
impairment in thought processes or communication, or
disorientation to time or place. Importantly, during the
August 2007 VA examination, the veteran's thought processes
were goal directed and coherent with appropriate thought
content and he was oriented to person, place, time, and
situation.
The Board also notes the veteran's contention that he forgot
names of close relatives and his mother in an August 2006
statement and during the August 2007 VA examination, but
finds it significant that he had no notations of any memory
impairment. Further, although the veteran indicated that his
wife had to take his clothes from him to wash them, his
hygiene was found to be fair in 2007 VA treatment entries and
during his August 2007 VA examination.
The Board also acknowledges the veteran's most recent
September 2007 letter to VA in which he described his PTSD
symptoms including not going anywhere because of flashbacks,
difficulty sleeping, not changing his clothes, having a bad
temper and forgetting the names of close relatives. However,
the Board finds it significant that the veteran told the
August 2007 VA examiner just a month prior that he felt his
symptoms fell within the 70 percent, not 100 percent, rating
range for PTSD. Importantly, when the veteran disagreed with
the 70 percent assigned in his November 2007 statement, he
did not indicate any additional symptomatology consistent
with a 100 percent rating; he merely complained that he was
not getting any more money. As such, because the evidence
does not more nearly approximate the criteria for a rating in
excess of 70 percent rating, entitlement to a 100 percent
rating is denied. 38 C.F.R. § 4.7, 4.130, Diagnostic Code
9411.
In reaching this decision, the potential application of
various provisions of Title 38 Code of Federal Regulations
have been considered, whether or not they were raised by the
veteran. Schafrath v. Derwinski, 1 Vet. App. 589 (1991). In
particular, the Board has considered the provisions of 38
C.F.R. § 3.321(b)(1). In this case, however, there has been
no showing that the veteran's service-connected PTSD has
caused marked interference with employment beyond that
contemplated by the schedule for rating disabilities,
necessitated frequent periods of hospitalization, or
otherwise renders impractical the application of the regular
scheduler standards utilized to evaluate the severity of his
disability. In this regard, although the veteran has been
found to be unemployable by the August 2007 VA examiner, this
was already considered in the analysis above. As such, the
Board finds that the evidence of record does not show marked
interference with employment that has not already been
contemplated in the rating criteria. Therefore, the Board
finds that the requirements for an extraschedular evaluation
for the veteran's service-connected PTSD under the provisions
of 38 C.F.R. § 3.321(b)(1) have not been met. Bagwell v.
Brown, 9 Vet. App. 337 (1996); Shipwash v. Brown, 8 Vet. App.
218 (1995).
ORDER
Entitlement to an initial evaluation in excess of 70 percent
disabling for PTSD is denied.
____________________________________________
KATHLEEN K. GALLAGHER
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs
|
Title: Deadbeat dad wants visitation and rights after 8 years. Help!
Question:Hi Reddit, I really need some advice. I have an almost 10 year old son who I've solely taken care of his whole life. I had him when I was 20 with my middle/high school sweetheart..sadly he got mixed up with drugs, did a lot of awful things and I had to leave him, my home, and everything I knew pretty much when I was 22 ( my son had just turned 2 at the time). During the past 8 years he's continually abused drugs, committed multiple crimes and been in and out of jail and prison. He has never paid child support or made much of an attempt at cleaning up his act. 6 weeks ago he was released from an almost 3 year stay in prison. He's now trying to contact me and says he wants to see our son. After 8 years of not being there and doing nothing for him I'm not interested in making any agreements with him off the record l. I just do not trust him. I told him if his intentions are true then he needs to establish his paternity and basically take me to court. He says he's going to do that but I don't think he actually has the financial means to do all of that right now. We live in Florida. My question is does he have any rights after not being there or paying child support in over 8 years? Do I have a legal obligation to let him see our son? If he actually does get a lawyer, what can I expect next? Thanks for any feedback
Answer #1: Is there any sort of court order that gives him or you custody of any sort? If not I don't think you need to allow him access. To be sure though you probably need a family lawyer. |
847 S.W.2d 800 (1993)
In re Honorable Floyd R. BABER, Respondent.
No. 74372.
Supreme Court of Missouri, En Banc.
February 23, 1993.
Rehearing Denied March 23, 1993.
*801 James M. Smith, Paul J. Passanante, Joan M. Tanner, St. Louis, for informant.
Robert G. Duncan, Kansas City, for respondent.
ORIGINAL DISCIPLINARY PROCEEDING
PRICE, Judge.
I.
This case presents the Court with the unhappy task of deciding whether Floyd R. Baber, a twenty-one-year veteran associate circuit judge, should be removed from office. This proceeding was initiated when the Commission on Retirement, Removal and Discipline filed an eleven-count notice of hearing alleging that Judge Baber is not competent to handle the duties of the office of associate circuit judge. Judge Baber responded by "generally admit[ting] the charges and specifications." The notice was then amended to delete any reference to misconduct or to violations of the Code of Judicial Conduct.
After a formal hearing, Judge Baber explained that he intended to admit the factual allegations made by the commission but not the legal conclusion of his incompetency. This Court concluded that the record was ambiguous and incomplete, and directed the commission to either obtain an unambiguous response from respondent, or to conduct a second hearing and receive evidence that would provide a complete factual basis for its recommendation.
The commission's second amended notice reiterated the eleven charges and further alleged that the conduct charged constituted willful neglect as well as incompetency. Additional testimony was heard at a supplemental hearing, at which Judge Baber again denied being incompetent. Both the commission and respondent adduced reputation and opinion testimony at this hearing. In addition, the commission elicited expert testimony from a number of judges and attorneys, based upon their personal experiences with Judge Baber and upon their review of the charges and the responses thereto. The record also includes a report prepared by Retired Judge George C. Berry, who was retained by the commission to review the files listed in the notice.
The commission found that ten of the eleven charges had been proved by a preponderance of the evidence and that such conduct constituted incompetency and willful neglect of duty under article V, section 24.3, of the Missouri Constitution. However, the commission found credible Judge Baber's explanation that the incident described in Charge VII was an attempt at levity on his part, and concluded that the behavior charged therein did not constitute misconduct in any event. We do not consider *802 any charge of which the respondent was found not guilty. In re Elliston, 789 S.W.2d 469, 471 (Mo. banc 1990).
The commission concluded that respondent lacks the requisite ability, legal qualifications, and fitness to discharge the broad spectrum of duties and responsibilities inherent in the office of associate circuit judge, and that he consciously disregarded his duties as an associate circuit judge. The commission therefore recommended that he be removed from office.
II.
This Court is not required to adopt the recommendation of the commission in a judicial disciplinary proceeding. The ultimate responsibility to "remove, suspend, discipline or reprimand any judge of any court" is entrusted to this Court. Mo. Const., art. V, § 24.3; Matter of Buford, 577 S.W.2d 809, 821 (Mo. banc 1979). Accordingly, we conduct an independent review of the evidence and the commission's fact findings, and where credibility is at issue, we give substantial consideration and due deference to the commission's ability to judge the credibility of witnesses appearing before it. In re Voorhees, 739 S.W.2d 178, 181 (Mo. banc 1987); Buford, 577 [email protected]. Because a disciplinary proceeding is civil rather than criminal in nature, the charges must be proved by a preponderance of the evidence. Elliston, 789 [email protected].
Disciplinary action against a judge is authorized "for the commission of a crime, or for misconduct, habitual drunkenness, willful neglect of duty, corruption in office, incompetency or any offense involving moral turpitude, or oppression in office." Mo. Const., art. V, § 24.3. No discipline may be imposed absent a finding that the respondent has violated at least one of these constitutional standards. Voorhees, 739 [email protected]. An appropriate exercise of judicial discretion is not a violation of the standards and will not subject a judge to discipline. Elliston, 789 S.W.2d at 475; Voorhees, 739 [email protected]. In the case at bar, the sole grounds charged are incompetency and willful neglect of duty.
III.
No purpose would be served by a detailed discussion of the charges in the second amended notice.[1] The allegations may be summarized as follows:
Respondent's duties are limited by local court rule to traffic cases (excluding driving while intoxicated and driving while license revoked), small claims cases, and administrative and noncontested probate matters. Respondent is generally disqualified from contested probate matters, does not handle domestic or criminal cases, and is not assigned any jury trials.
Respondent has failed to take action on matters of concern in court files, even after they have been brought to his attention by the clerks.
Respondent has failed to follow the law in probate cases. For example, he has failed to require the filing of annual statements and reports by personal representatives and guardians, failed to require that proper notice be given to interested parties, and failed to hold hearings, all in contravention of the applicable probate statutes.
Respondent has offered ex parte legal advice to litigants who have subsequently appeared before him on the same matter.
Respondent has ordered defendants or wards of the court who did not exhibit symptoms of alcohol abuse to attend Alcoholics Anonymous meetings, even when the underlying offense was not alcohol-related.
Respondent allowed a Michigan lawyer to represent an estate and approved an attorney's fee in the matter, although the lawyer had not complied with the requirements of Supreme Court Rule 9 regarding nonresident attorneys.
*803 Respondent has made a number of rulings that are so far contrary to established law as to demonstrate a lack of understanding of the law, or an unwillingness to apply it.
Judge Baber has admitted the substance of these allegations, both by a general admission and by his responses to individual charges. The only question for us to consider, therefore, is whether these instances of judicial behavior indicate incompetency in the constitutional sense, and are severe and pervasive enough to necessitate his removal from the bench.
This Court's earlier decisions are not particularly helpful in this regard. No prior case has contemplated the imposition of discipline solely on the basis of incompetency. We have stated, however, that "[i]ntelligence, ability and diligence are minimum qualifications expected of every judge." Elliston, 789 [email protected].
A few other courts have had occasion to define incompetency as grounds for removal from office. The Supreme Court of Florida defined it as "any physical, moral, or intellectual quality, the lack of which incapacitates one to perform the duties of his office." State ex rel. Hardie v. Coleman, 155 So. 129, 133 (Fla.1934). The Supreme Court of Alabama found it is "mere incapacity for the performance of [official] duties." State ex rel. Brickell v. Martin, 180 Ala. 458, 61 So. 491, 494 (1913). The Supreme Court of Oregon held that a "general incompetent performance of judicial duties" was evidenced by "a lack of the knowledge and judgment necessary for the proper administration of justice in our courts." Matter of Field, 281 Or. 623, 576 P.2d 348, 354 (banc 1978). In a similar vein, the dictionary defines incompetency as the "[l]ack of ability, knowledge, legal qualification, or fitness to discharge the required duty or professional obligation." Black's Law Dictionary 765 (6th ed. 1990). Accordingly, when incompetency is alleged the Court's task is to determine whether the conduct at issue establishes that the respondent lacks the requisite ability, knowledge, judgment, or diligence to consistently and capably discharge the duties of the office he or she holds.[2]
The record below includes the expert opinions of a substantial number of judges and attorneys who testified at the supplemental hearing. It is clear from the transcript that this was a difficult process for many of these witnesses, and we commend their willingness to put aside their personal discomfort in the service of our judicial system.
We gave substantial consideration to the testimony of five active and retired judges, four of whom are past or current colleagues of respondent. Retired Circuit Judge John M. Yeaman served with respondent for twenty-one years. Judge Yeaman testified that he assigned respondent to a limited range of cases because respondent was unable to handle more complex litigation, including jury trials.[3] In Judge Yeaman's opinion, this limitation shows that respondent is not competent to hold office, because an associate circuit judge is expected to perform the same duties as a circuit judge.[4] However, Judge Yeaman denied that respondent willfully neglected *804 his duties, citing his industriousness, diligence, and integrity.[5]
Judge Ward Stuckey has been the Circuit Judge in Platte County since Judge Yeaman's retirement in February 1992, and had worked with respondent as Associate Circuit Judge for eleven years before that date. Associate Circuit Judge Owens Lee Hull has been on the bench with respondent for fourteen years. Both stated their opinion, based on their personal knowledge of respondent and on the nature of the charges, that respondent is not competent and has willfully neglected his duties.[6] Associate Circuit Judge Daniel Czamanske was newly elected at the time of the hearing and did not wish to state an opinion. However, he opined that, if true, the conduct charged in this case shows respondent is probably not competent.[7]
Finally, Retired Probate Judge George C. Berry expressed his opinion, formulated after a review of the probate files listed in the second amended notice and of the responses to the charges, that respondent is not competent to handle the duties of his office and has neglected those duties.[8]
In addition, the commission presented the testimony of ten lawyers who gave their opinion that respondent is not competent, based on their personal knowledge of respondent and the nature of the charges against him. Six of these witnesses stated that they felt respondent had willfully neglected his duties. Three other witnesses, however, felt that he had not. In particular, two attorneys thought that the nature of his incapacity is such that his neglect of duty could not be considered willful.
In rebuttal, respondent presented the testimony of eight attorneys who stated their opinion, based on their personal knowledge of respondent and the nature of the charges against him, that he is competent to handle the duties of his position and has not neglected them. The commission did not find their opinions persuasive. Although we do not dismiss the cumulative weight of these assessments, we also are not persuaded that they offset the weight of the testimony of the earlier witnesses. They do not negate or explain the troubling experience of the other witnesses, nor do they establish that such experience was the exception rather than the rule.
Incompetency is demonstrated by a pattern of inappropriate conduct over a period of time. See In re Conduct of Jordan, 290 Or. 669, 624 P.2d 1074, 1076 (banc 1981). It need not be shown that the judge's performance is substandard all of the time, or even most of the time. The fact that Judge Baber discharged his duties competently in his interactions with these particular witnesses does not preclude a finding that he cannot do so consistently, as evidenced by the testimony of other witnesses.
It is apparent from this recital that a considerable number of judges and attorneys who have worked with respondent feel that he cannot perform the duties of his office. Several witnesses, notably Judge Yeaman, indicated that respondent is able to handle the limited duties he has been assigned by local court rule. Nonetheless, the conclusion is inescapable that despite his diligent efforts, Judge Baber is *805 no longer capable of discharging all the responsibilities of his position. This assessment is supported by the charges contained in the second amended notice and admitted by respondent. Moreover, the number and extent of the charges, as well as their recurrence over a period of years, prevent us from concluding that we are dealing with isolated incidents that are unlikely to be repeated. Whether or not he could continue to function as a judge in some limited fashion, we find it has been proven by a preponderance of the evidence that Judge Baber is not capable of performing all the duties required by law to be performed by an associate circuit judge. Section 478.220, RSMo Supp.1992. Accordingly, we hold that Judge Baber has been shown to be incompetent under article V, section 24.3 of the constitution.
We arrive at a different determination on the issue of willful neglect. The expert testimony is inconclusive: Of those witnesses expressing an opinion on this issue, twelve felt that respondent had not willfully neglected his responsibilities, whereas nine others believed that he had. Moreover, a finding of willful neglect is inconsistent with the repeated testimonials in the record as to Judge Baber's honesty and good intentions.
We have carefully examined the record, and especially Judge Baber's testimony, for indications of intentional breach or abandonment of his official duties. Rather than neglect, we found abundant evidence of a heavy work load, hard work, and long hours. It also appears that respondent's habitual noncompliance with statutorily mandated procedures resulted from a lack of understanding of the law, or a misapprehension as to its significance. Therefore, we find that Judge Baber did not willfully neglect the duties of his judicial office.
Our holding does not imply that a judge must fear removal after every misstep. It would be unreasonable and unfair to expect every judge in our courts to be without occasional error or misjudgment, perfection not being typical of the human condition. See In re Jordan, 290 Or. 303, 622 P.2d 297, 316 (1981). We do not reach our conclusion in this case based on any one incident or charge, but rather on a recurrent pattern of mistaken rulings over a period of years. Accord, Conduct of Jordan, 624 [email protected].
A competency determination must remain focused on the judge's ability to consistently follow and apply the law over time. This is not a matter of incidental or isolated mistakes. Neither is it an issue of popularity. It is practically certain that every judge will err sometimes. It is also certain that many litigants and lawyers will be disappointed by a judge's decisions, even when he or she is not in error. Neither occasional error, nor unpopularity, is a ground for discipline.
Instead, when it is shown that one of our judges has grown unable to effectively discharge the duties of his or her office, and that there is no reasonable hope that the judge may regain that ability, we are compelled to act to preserve the public's confidence in our courts. As noted by Judge Welliver, "It is in the trial courtroom that the public has its direct contact with the judicial system and that the public formulates its opinion as to the fairness and the integrity of the system." Buford, 577 S.W.2d at 858 (Welliver, J., concurring in part and dissenting in part); see also Field, 576 [email protected]. In this case, the integrity of the system requires Judge Baber's removal from office.
IV.
We wish to emphasize that respondent has not been shown to be guilty of misconduct, corruption, or oppression in office. Many of the witnesses attested to Judge Baber's courtesy, diligence, sense of fairness, and genuine desire to help the people who come before his court. Their testimony indicates that he is held in high regard as a person, if not always as a jurist. Nor has it been proven by a preponderance of the evidence that Judge Baber willfully neglected his duties. In fact, the weight of the evidence establishes his desire to serve well.
The record simply demonstrates that respondent is no longer capable of carrying *806 out all of the duties of an associate circuit judge, and the nature and pervasiveness of the charges against him make it unlikely that he will be able to improve his performance after a period of suspension. Therefore, we concur in the commission's recommendation and hereby remove respondent from office for incompetency. Mo. Const., art. V, § 24.3.
V.
In consideration of the foregoing, it becomes appropriate to determine whether the retirement disqualification statutes are triggered by our decision. These statutes provide as follows:
476.480. Judges convicted, impeached or removed from office ineligibleSections 476.450 to 476.510 [election to become special commissioner] shall not apply to any person who has been convicted of a felony in any court or who has been impeached or removed from office for misconduct.
476.560. Disqualification by improper behavior.Except as provided in section 476.540, the benefits under sections 476.515 to 476.570 [retirement benefits] shall not apply to any judge who has been convicted of a felony in any court or who has been removed from office by impeachment or for misconduct or disbarred from the practice of law.
The only potential ground for disqualification in this case is misconduct. This term means a transgression, dereliction, unlawful or wrongful behavior, or impropriety that is willful in character. Black's Law Dictionary 889 (6th ed. 1990). This Court has previously used "misconduct" as a convenient collective term for several constitutional standards for removal that connote wrongdoing, including "oppression in office" and "willful neglect of duty." Voorhees, 739 [email protected].
Incompetency, on the other hand, denotes an inherent incapacity that need not be coupled with willful wrongdoing. Martin, 61 So. at 494. When unaccompanied by wrongful behavior or malicious intent, incompetency does not constitute misconduct. Accordingly, we hold that Judge Baber's removal from judicial office on the basis of incompetency alone does not trigger the disqualification statutes, §§ 476.480 and 476.560, RSMo 1986.
All concur.
NOTES
[1] The notice specifically refers to instances of inappropriate conduct in the handling of thirty-five probate files and one small claims file. Thirty-two of the probate files were reviewed by Judge Berry, as listed in his report to the commission. These incidents, all of which have been admitted by respondent, provide adequate factual support for our conclusion herein.
[2] It would be impractical to attempt to formulate a more concrete test of incompetency. After a review of prior case law, and the facts of this case, it has become evident that these cases are sui generis and must necessarily be decided in accordance with their particular facts and with due consideration to the gravity of the allegation and its potential consequences. Hopefully, such cases will never become so routine as to establish or require a more fixed rule of general applicability.
[3] Judge Yeaman was asked if there was any reason why respondent was not assigned any other types of cases. He answered: "I felt that[ ] what he was capable of doing was what I assigned to him." Tr. p. 57. When asked whether respondent was competent to handle jury trials, Judge Yeaman answered: "I don't think he was capable. I guess competence is as good a word." Tr. p. 58.
[4] When asked whether respondent is competent to perform the duties of an associate circuit judge, Judge Yeaman responded: "In this day and age, he's not because I feel that there shouldn't be any difference between an associate circuit judge and a circuit judge. In other words, that judge should be able to handle everything." Tr. p. 67.
[5] Tr. p. 68. When asked if respondent has willfully neglected his duties, Judge Yeaman answered: "I don't think he's, at any time, willfully. What he's done, he's felt in his heart was the right thing to do. It's like signing the order [in a specific case] without a hearing, he just didn't think." Id.
[6] Tr. pp. 95, 175. These witnesses also described experiences with respondent that support their assessment of his lack of competency. Judge Stuckey testified as follows: "My experience has been that [respondent'] knowledge of the law is not great.... [M]y experience is somewhat limited, but some of the cases that have been assigned to me after they were assigned to him, sometimes I had difficulty following his reasoning." Tr. p. 92.
Judge Hull was asked whether respondent consistently follows the law in traffic, small claims, and probate cases. He stated his opinion that respondent "does not consistently do that." Tr. p. 172. To a similar question, Judge Stuckey responded: "He's consistent in that sometimes he doesn'tmany times he doesn't follow the law as I have heard it." Tr. p. 94.
[7] Tr. p. 194.
[8] Tr. pp. 233-4.
|
149 Ill. App. 3d 128 (1986)
500 N.E.2d 657
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
WILLIE JOHNSON, Defendant-Appellant.
No. 84-1397.
Illinois Appellate Court First District (4th Division).
Opinion filed November 6, 1986.
Steven Clark, William Earl Glisson, and Kenneth L. Jones, both of State Appellate Defender's Office, of Chicago, for appellant.
Richard M. Daley, State's Attorney, of Chicago (Joan S. Cherry and Dean P. Karlos, Assistant State's Attorneys, of counsel), for the People.
Reversed and remanded.
PRESIDING JUSTICE LINN delivered the opinion of the court:
Following a jury trial, defendant, Willie Johnson, was convicted of three counts of aggravated indecent liberties with a child (Ill. Rev. Stat. 1983, ch. 38, par. 11-4.1) and three counts of indecent liberties with a child (Ill. Rev. Stat. 1981, ch. 38, par. 11-4). Johnson was sentenced to three consecutive 30-year terms (a total of 90 years of imprisonment) in the Illinois Department of Corrections.
On appeal Johnson raises numerous contentions of error concerning evidentiary rulings, proof, and sentencing. We do not find it necessary to address each of these contentions; however, we must remand *129 this case for a new trial based on: (1) the erroneous admission into evidence of the details of a complaint that the minor victim allegedly made to three key prosecution witnesses, and (2) the trial court's error in commenting during closing argument on the sufficiency of the evidence regarding penetration.
BACKGROUND
On January 24, 1983, Willie Johnson was arrested and charged with three counts of aggravated indecent liberties with a child (Ill. Rev. Stat. 1983, ch. 38, par. 11-4.1) and three counts of indecent liberties with a child (Ill. Rev. Stat. 1981, ch. 38, par. 11-4). The offenses allegedly occurred on June 25, 1982, December 15, 1982, and January 22, 1983. The alleged victim is a minor girl, age six, who is the daughter of the girlfriend with whom Johnson was living prior to his arrest.
At trial the State did not call the victim to testify against Johnson regarding the alleged sexual acts. Rather, the State's evidence consisted of testimony by four witnesses who related statements allegedly made to each of them by either the victim or Johnson.
Among the witnesses called to testify in the State's case in chief was Linda Shields, a community service officer with the Schaumburg police department. Shields testified that on January 24, 1983, two days after the alleged third attack, she discovered the victim on Clayton Circle, a street in Schaumburg. The victim was crying. Shields subsequently brought the victim to the victim's home. After speaking to the victim's mother, Shields brought the victim to the victim's school.
Shields also stated that, while in the mother's home, she entered one of the bedrooms and observed a motion picture projector and "pornographic" magazines. Later that day, Shields returned to the victim's school, picked up the victim, and brought her to the police station. Shields, over objection, testified that at the police station the victim complained to her that Johnson sexually violated her on several occasions. Over defense objections, Shields detailed how Johnson allegedly penetrated the child's vagina with his penis as described to her by the victim. Shields then accompanied the victim to the bathroom where she observed that the victim's vaginal area was red and that her buttocks were black and blue.
Cheryl Bogdanowski, a registered nurse at Humana Hospital in Hoffman Estates, states that she examined the victim in the emergency room on the night of January 24, 1983. At that time, she observed a rash on the victim's chest, abdomen, and buttocks, a redness *130 between the inner thighs, and a yellow discharge from the victim's vagina. There were also bruises on the victim's buttocks. Bogdanowski testified that she concluded that the victim was suffering from a staph infection.
Bogdanowski further testified, over objection, that the victim complained to her that her "step dad" had, on several occasions, sexually violated her. Over defense counsel's objections, Bogdanowski related the victim's statements to her that Johnson had rubbed himself against the victim and that he touched her between the thighs and buttocks with his body. According to Bogdanowski, she asked the victim if her "step dad" touched her in these places with the part of his anatomy "that he uses to go to the bathroom," and the victim responded, "Yes."
The State called Assistant State's Attorney Diane Ghaster, who also related the victim's statements to her that her "daddy" would push his "big, long thing" into her. This testimony was also objected to by defense counsel. According to Ghaster, the victim claimed these "attacks" occurred in the victim's mother's bedroom in their Schaumburg home. Ghaster also stated that the victim volunteered to her that she sometimes saw naked women in movies playing on the television screen in the bedroom Johnson shared with her mother. Ghaster finally testified that she also spoke to Johnson in the interrogation room on January 24, 1983, and that Johnson related to her a detailed description of two sexual encounters he had with the victim.
Detective Mickey Bromund testified in the State's case in chief. Bromund said Johnson admitted to him that he engaged in two sexual acts with the victim, one on June 25, 1982, and a second on December 15, 1982. Bromund, like Ghaster, testified to a version of the alleged admissions made by Johnson, however Bromund, also like Ghaster, did not take notes during the interview.
In his own defense, Willie Johnson denied either having sexual contact with the victim, whom he said he considered to be his daughter, or admitting to either Ghaster or Bromund that he was guilty of the acts charged against him. He also testified that he told Ghaster that the child spent the summer of 1982 in New Orleans. Johnson did admit that he was living with the victim and the victim's mother prior to his arrest.
During closing arguments, defense counsel objected to a statement in the State's rebuttal concerning proof of penetration. The trial court denied the objections stating, "The court finds that there is evidence." The jury subsequently found Johnson guilty of three counts of aggravated indecent liberties with a child and three counts of indecent *131 liberties with a child. The trial court later sentenced Johnson to three consecutive terms of 30 years' imprisonment for a total of 90 years. Johnson appeals from the convictions and sentences.
The jury found Johnson guilty of aggravated indecent liberties with a child based on the evidence recounted above. On appeal Johnson contends that he was prejudiced by the erroneous admission into evidence of the testimony of Officer Shields, Nurse Bogdanowski, and Assistant State's Attorney Ghaster relating the details of the victim's complaints against Johnson. Johnson contends that this testimony was inadmissible hearsay; whereas the State contends that the admission of the details of the victim's complaints was wholly appropriate under the spontaneous-declaration and prompt-complaint exceptions to the hearsay rule. We agree with the position taken by Johnson that admission of the details of the victim's statements to Shields, Bogdanowski, and Ghaster was improper.
OPINION
SPONTANEOUS DECLARATION
According to the State's witnesses, the statements referred to above were made two days after the alleged third "attack" upon the victim by defendant over a seven-month period. This two-day time lapse itself disqualifies the victim's statements from admissibility under the spontaneous-declaration (excited-utterance) exception to the hearsay rule.
1 The requirements for the admissibility into evidence of a spontaneous declaration are threefold: (1) the occurrence must be sufficiently startling to produce a spontaneous, unreflecting statement; (2) absence of time for fabrication; and (3) the statement must be relative to the circumstances of the occurrence. (People v. Poland (1961), 22 Ill. 2d 175.) Because the statements referred to here were two days removed from the third of the three incidents, in our view, any guarantee that the statements were spontaneous, unreflecting, or absent fabrication has been removed.
PROMPT COMPLAINT
Section 115-10 of the Code of Criminal Procedure of 1963 (Ill. Rev. Stat. 1983, ch. 38, par. 115-10) created a statutory "prompt complaint" exception to the hearsay rule in cases where sexual acts have been perpetrated on a child. (See People v. Powell (1985), 138 Ill. App. 3d 150, 485 N.E.2d 560.) Prior to the enactment of this provision, only the victim's prompt complaint of a rape was admissible and *132 the exception did not apply in a prosecution for indecent liberties. People v. Romano (1923), 306 Ill. 502, 138 N.E.2d 169; People v. Hernandez (1980), 88 Ill. App. 3d 698, 481 N.E.2d 883.
Section 115-10 became effective on January 1, 1983, and at the time of Johnson's trial provided:
"In a prosecution for a sexual act perpetrated upon a child under the age of 12, including but not limited to prosecutions for violations of Sections 11-1 through 11-5 of the Criminal Code of 1961, the following evidence shall be admitted as an exception to the hearsay rule:
(1) testimony by such child that he or she complained of such act to another; and
(2) testimony by the person to whom the child complained that such complaint was made in order to corroborate the child's testimony." (Ill. Rev. Stat. 1983, ch. 38, par. 115-10.)
Case law in existence prior to this section forbade recitation of the details of the victim's complaint, permitting only corroborative testimony as to the fact of the complaint under the prompt-complaint exception to the hearsay rule. (People v. Damen (1963), 28 Ill. 2d 464, 472-74, 193 N.E.2d 25, 30-31; People v. Leamons (1984), 127 Ill. App. 3d 1056, 1068, 469 N.E.2d 1137, 1146.) Although section 115-10 permits the expansion of the exception to cases involving prosecution for a sex act perpetrated on a child,[1] this provision has been held not to expand the prompt-complaint exception to allow the testimony of the details of such an act by any person other than the victim. People v. Powell (1985), 138 Ill. App. 3d 150, 485 N.E.2d 560; People v. Leamons (1984), 127 Ill. App. 3d 1056, 469 N.E.2d 1137.
2 Given the above, it is abundantly clear that the details of the victim's alleged statements to Shields, Bogdanowski, and Ghaster were improperly admitted under the statutory prompt-complaint exception found in section 115-10 of the Code of Criminal Procedure (Ill. Rev. Stat. 1983, ch. 38, par. 115-10). The question then becomes whether the admission of the details of the victim's statements as recounted by the witnesses named above was harmless error under the circumstances of this case. We do not believe this error was harmless.
Recently, in People v. Salas (1985), 138 Ill. App. 3d 48, 485 N.E.2d 596, the Second District Appellate Court held that the admission *133 of details of the victim's complaint to a police officer in a prosecution for sex acts perpetrated upon a minor under the age of 13 years was clearly erroneous and that the admission of the hearsay statements was not harmless error. There, defendant was convicted of indecent liberties with a child (Ill. Rev. Stat. 1983, ch. 38, par. 11-4(a)(1)), rape (Ill. Rev. Stat. 1983, ch. 38, par. 11-1), and armed violence (Ill. Rev. Stat. 1983, ch. 38, par. 33A-2) based on the predicate felony of indecent liberties with a child. Prior to trial on the rape and armed-violence charges, defendant moved in limine to exclude all evidence as to the victim's complaint as made to a police officer. Defendant specifically argued that the details of the victim's complaint were inadmissible hearsay. Defendant's motion in limine was denied, and the police officer's testimony was admitted pursuant to section 115-10 of the Code of Criminal Procedure (Ill. Rev. Stat. 1983, ch. 38, par. 115-10).
On appeal the appellate court held that admission of the details of the victim's complaint to the police officer was erroneous pursuant to section 115-10 (Ill. Rev. Stat. 1983, ch. 38, par. 115-10). The court also held that statements made by the victim to the officer detailing the alleged rape and armed-violence counts were not harmless where the state presented no evidence corroborating the testimony of the complaining witness. People v. Salas (1985), 138 Ill. App. 3d 48, 54-55, 485 N.E.2d 596, 601.
In determining the prejudicial nature of the erroneously admitted statements in Salas, the appellate court analyzed two previous decisions which found harmless the admission of the details of a minor's complaint of a sexual act. In both In re R.D. (1985), 131 Ill. App. 3d 612, 476 N.E.2d 62, and People v. Leamons (1984), 127 Ill. App. 3d 1056, 469 N.E.2d 1137, the erroneous admission of the details of the complaint was held to be harmless on the basis that the details were established by the testimony of the victim, who was subject to cross-examination. (People v. Salas (1985), 138 Ill. App. 3d 48, 54, 485 N.E.2d 596, 600-01.) Although the complaining witness also testified in Salas, the Salas court distinguished In re R.D. and Leamons, noting that in Leamons there was substantial evidence corroborating the victim's testimony other than the complaint itself, and in In re R.D. there was medical evidence confirming a sexual act. (138 Ill. App. 3d 48, 54, 485 N.E.2d 596, 601.) The court also distinguished the case upon which both In re R.D. and Leamons relied, People v. Robinson (1978), 73 Ill. 2d 192, 383 N.E.2d 164, as one where there was also substantial corroborative evidence of the testimony of the complaining witness. People v. Salas (1985), 138 Ill. App. 3d 48, 55, 485 N.E.2d *134 596, 601; see also People v. Jacobs (1977), 51 Ill. App. 3d 455, 366 N.E.2d 1064.
It is obvious that a fundamental difference between the Salas case, the cases discussed therein, and the case at bar is the fact that the complaining witness did not testify in this case. In In re R.D. and Leamons, the erroneously related facts were not only established by the minor victim's testimony, which was substantially similar to that of the recounting witnesses, but more importantly the inadmissible testimony was corroborated by evidence other than the testimony of the complaining witness. This avoids the difficult situation contemplated in People v. Andino (1981), 99 Ill. App. 3d 952, 425 N.E.2d 1333, where the court noted that the lack of substantial corroborative evidence creates the danger that the jury's verdict is the result of hearing the victim's version more than once. Only here the danger is greater given that the victim herself did not testify. Thus, any other properly admitted evidence was corroborative not of the victim's own testimony, but only of the inadmissible hearsay testimony of Shields, Bogdanowski, and Ghaster.
We note that, aside from the inadmissible details of the victim's complaint, the evidence before the jury in this case included: Johnson's alleged admissions to Ghaster and Bromund; testimony of redness on the victim's chest and between her legs, bruises on her buttocks and an abnormal discharge from her vagina; the nurses's diagnosis of the victim's staph infection; testimony that "pornographic" magazines and a movie projector were present in the bedroom Johnson shared with the victim's mother in the victim's home; and Johnson's denial of the State's contentions regarding his "admissions" and his relationship with the victim, and his contention that the victim was in New Orleans at the time of the alleged first attack.
Given the conflicting nature of the testimony of the State's witnesses in relation to that of Johnson in this case, matters of credibility become of vital importance. Solving such a conflict is for the jury, whose function it is to resolve factual disputes, assess the credibility of witnesses, and determine the weight and sufficiency of the evidence. (People v. Steffens (1985), 131 Ill. App. 3d 141, 475 N.E.2d 606.) Indeed, it would be difficult, if not impossible, for this court to gauge the extent to which the jury was influenced by the erroneous admissions of the details of the victim's statements to three of the State's key witnesses or whether the properly admitted evidence was sufficient to support the jury's finding of Johnson's guilt. This situation was seriously complicated when, during the State's rebuttal, the able and concerned trial judge stated that the prosecution had *135 proferred evidence of [email protected]. (See People v. Bernstein (1911), 250 Ill. 63, 95 N.E. 50 (where our supreme court long ago noted that expressions of opinion by the trial judge in a criminal case are likely to greatly influence the jury).) Though the jury was presented with the conflicting positions argued by the prosecution and defense, the defendant's credibility was severely undermined by the improper admission of the details of the victim's complaint and by the trial court's error in commenting on the evidence.
We believe that errors discussed above are sufficiently serious so as to require a new trial. We do not feel it necessary to address other contentions of error raised by defendant.
Accordingly, the judgment of the circuit court is reversed and remanded.
JIGANTI and McMORROW, JJ., concur.
NOTES
[1] Section 115-10 became effective on January 1, 1983, and at that time applied to sexual acts upon children under the age of 12. This section was later amended by Public Act 83-1067, sec. 3, effective July 1, 1984, which substituted the age "13" for "12." The statute appears in this opinion as it did at the time of Johnson's trial.
|
STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
FILED
NORMAN B. WORKMAN, November 18, 2013
RORY L. PERRY II, CLERK
Claimant Below, Petitioner SUPREME COURT OF APPEALS
OF WEST VIRGINIA
vs.) No. 12-0241 (BOR Appeal No. 2046270)
(Claim No. 2009085267)
ROCKHOUSE CREEK DEVELOPMENT, LLC,
Employer Below, Respondent
MEMORANDUM DECISION
Petitioner Norman B. Workman, by John C. Blair, his attorney, appeals the decision of
the West Virginia Workers’ Compensation Board of Review. Rockhouse Creek Development,
LLC, by Nathanial A. Kuratomi, its attorney, filed a timely response.
This appeal arises from the Board of Review’s Final Order dated January 30, 2012, in
which the Board affirmed an August 11, 2011, Order of the Workers’ Compensation Office of
Judges. In its Order, the Office of Judges affirmed the claims administrator’s November 18,
2009, decision granting a 0% permanent partial disability award. The Court has carefully
reviewed the records, written arguments, and appendices contained in the briefs, and the case is
mature for consideration.
This Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these
reasons, a memorandum decision is appropriate under Rule 21 of the Rules of Appellate
Procedure.
Mr. Workman worked as a roof bolter for Rockhouse Creek Development, LLC. On
February 19, 2009, he suffered an injury to his right knee when he was trying to push a three-
wheeler mantrip. The claim was held compensable for sprain/strain of the knee/leg but not
compensable for meniscus tear. The claims administrator granted a 0% permanent partial
disability award. On September 11, 2009, Dr. Mukkamala concluded that Mr. Workman had an
8% whole person impairment for all injuries to the right knee but had previously received a
permanent partial disability award of 2%. Ultimately, he rated Mr. Workman as having a 6%
whole person impairment attributable to this injury. On April 19, 2010, Dr. Guberman
recommended that Mr. Workman receive a 4% permanent partial disability award. On March 29,
1
2011, Dr. Short recommended that there was no additional impairment for the injury and
subsequent surgery because of the prior 10% permanent partial disability award in Claim
940018101. On April 4, 2011, Dr. Bachwitt concluded that Mr. Workman had been fully
compensated.
The Office of Judges affirmed the claims administrator’s decision, and held that based
upon the preponderance of the evidence, Mr. Workman failed to show that he is entitled to an
additional award for the right knee injury in this claim since he received a prior 10% permanent
partial disability award. On appeal, Mr. Workman disagrees and asserts that the Office of Judges
erred in stating that none of the evaluators of record found Mr. Workman had an impairment
greater than 10%. He further asserts that Dr. Guberman applied the American Medical
Association’s Guides to the Evaluation of Permanent Impairment, (4th ed. 1993) and found that
Mr. Workman had a 4% impairment attributable to this injury because the operation was
necessary as a result of the compensable injury.
The Office of Judges concluded that a preponderance of the evidence does not support an
additional permanent partial disability award because Dr. Guberman and Dr. Bachwitt found a
4% impairment for Mr. Workman’s right knee, which has been fully compensated by the prior
10% permanent partial disability award for an injury in 1993. Dr. Guberman opined that Mr.
Workman should receive an additional award of 4% in excess of the prior permanent partial
disability award because the surgery was entirely necessary as a result of the injury in this claim.
However, Dr. Guberman’s recommendation is not supported by the evidence because none of the
other evaluators found Mr. Workman’s impairment greater than 10%. Dr. Short found no
additional impairment based upon the knee injury and the subsequent surgery, and Dr. Bachwitt
determined Mr. Workman had been fully compensated. The Office of Judges held that Mr.
Workman was not entitled to an additional permanent partial disability award. The Board of
Review reached the same reasoned conclusions in its decision of January 30, 2012. We agree
with the reasoning and conclusions of the Board of Review.
For the foregoing reasons, we find that the decision of the Board of Review is not in clear
violation of any constitutional or statutory provision, nor is it clearly the result of erroneous
conclusions of law, nor is it based upon a material misstatement or mischaracterization of the
evidentiary record. Therefore, the decision of the Board of Review is affirmed.
Affirmed.
ISSUED: November 18, 2013
CONCURRED IN BY:
Chief Justice Brent D. Benjamin
Justice Robin J. Davis
Justice Margaret L. Workman
Justice Menis E. Ketchum
Justice Allen H. Loughry II
2
|
497 F.2d 218
In re GRAND JURY SUBPOENA TO CUSTODIAN OF RECORDS, MIDCITYREALTY COMPANY.
No. 73-1854.
United States Court of Appeals, Sixth Circuit.
Argued Dec. 14, 1973.Decided May 23, 1974.
N. C. Deday LaRene, Detroit, Mich., for appellant; Liberson, Fink, Feiler, Crystal & Burdick, Detroit, Mich., on brief.
Alan C. Harnisch, Asst. U.S. Atty., for respondent; Ralph B. Guy, Jr., U.S. Atty., Detroit, Mich., on brief.
Before PHILLIPS, Chief Judge, EDWARDS, Circuit Judge, and O'SULLIVAN, Senior Circuit Judge.
O'SULLIVAN, Senior Circuit Judge.
1
This case presents the question of whether a real estate broker can invoke the privilege against self incrimination in order to prevent disclosure of escrow deposit records which are required to be kept by state law. A grand jury subpoena duces tecum had been served upon Leonard Ciaffone, President of Mid-City Realty Company, a sole proprietorship owned by Peter Ficorelli, requiring Ciaffone to produce the escrow records of said company reflecting down payments made to such company by prospective buyers of homes, with mortgages thereon to be insured by the FHA. The records, so subpoenaed, are required to be kept under Michigan Law, Mich.Stat.Ann. 19.803 (Supp.1973) (Mich.Comp.Laws 451.213) which provides in pertinent part:
2
'The commission may upon its own motion, and shall upon the verified complaint in writing of any person, investigate the actions of an applicant for a real estate broker or real estate salesman license or any real estate broker or real estate salesman or any person who shall assume to act in either such capacity within this state and shall have the power to deny, suspend or revoke any license issued under the provisions of this act at any time where the applicant or licensee in performing or attempting to perform any of the acts mentioned herein, is deemed to be guilty of:
3
(j) Failing to deposit in a custodial trust or escrow account all moneys belonging to others coming into the hands of the licensee in compliance with the following requirements:
4
(5) Every real estate broker shall keep records of all funds deposited therein, which records shall indicate clearly the date and from whom he received money, the dates deposited, the dates of withdrawals, and other pertinent information concerning the transaction, and shall show clearly for whose account the money is deposited and to whom the money belongs. All such records shall be subject to inspection by the commissioner or his deputies and by employees of the commission. Such separate custodial or trust fund account shall designate the real estate broker as trustee, and such account must provide for withdrawal of funds without previous notice.
5
This act shall not be construed to relieve any person from civil liability or criminal prosecution under the general laws of this state.'
6
The said Ciaffone did not produce such records and thereafter an attorney for Mid-City Realty Company, N. C. Deday LaRene, advised the District Court that he would take, and keep, custody of such records until the Court determined the propriety of the requirement that such records be so produced. A grand jury subpoena for the production of such records was thereupon served upon the said attorney, and upon Ficorelli as owner of Mid-City Realty Company. The said attorney claimed justification for such refusal by averring:
7
They are not corporate records and therefore not subject to subpoena, and that the compelling of their production would violate my client's Fifth Amendment privilege against self-in-crimination.'
8
On July 16, 1973, Judge Freeman entered an order requiring Ficorelli to direct his attorney to deliver the said escrow records to the grand jury. Ficorelli advised the District Judge that he would refuse to obey such order. Thereupon, Ficorelli was held to be in contempt of the District Court and a fine of $100 for each day that Ficorelli would persist in such refusal was imposed. On the same day enforcement of the contempt order was stayed pending disposition of the appeal now before us.
9
Appellant's position is succinctly presented by the Statement of Issue set out in his address to us:
10
Can a Federal Grand Jury compel the production of non-corporate escrow deposit records, required by a state statute to be kept, notwithstanding the appellant's Fifth Amendment claim of privilege?'
11
We believe that the Supreme Court's decision in Shapiro v. United States, 335 U.S. 1, 68 S. Ct. 1375, 92 L. Ed. 1787 (1948), compels us to affirm the District Court. At issue is whether the 'required records exception' to the Fifth Amendment privilege against self incrimination as announced in Shapiro is applicable to appellant's escrow deposit records. That exception, as stated in Shapiro, is that:
12
'The privilege which exists as to private papers cannot be maintained in relation to 'records required by law to be kept in order that there may be suitable information of transactions which are the appropriate subjects of governmental regulation and the enforcement of restrictions validly established." 335 U.S. at 33.
13
In Grosso v. United States, 390 U.S. 62, 88 S. Ct. 709, 19 L. Ed. 2d 906 (1968), the Supreme Court found deprivation of Fifth Amendment rights where a gambler was convicted of failure to pay the occupational tax imposed on the business of placing wagers. It was held that to require payment of the tax was tantamount to an admission of guilt of violation of the anti-gambling laws. The Court distinguished Shapiro as follows:
14
'First, the purposes of the United States' inquiry must be essentially regulatory; second, information is to be obtained by requiring the preservation of records of a kind which the regulated party has customarily kept; and third, the records themselves must have assumed 'public aspects' which render them at least analogous to public documents.' 390 U.S. at 67-68.
15
To the same effect is Marchetti v. United States, 390 U.S. 39, 56-57, 88 S. Ct. 697, 19 L. Ed. 2d 889 (1968).
16
In the matter before us, the first and second elements of the Grosso test are met. Although the last sentence of Section 19.803 of the Michigan Statute states that the law is not to be construed 'to relieve any person from civil liability or criminal prosecution,' the statute when read as a whole is regulatory, non-criminal, in nature. Its focus is on investigating applicants, salesmen and real estate brokers on a variety of practices, and it provides a scheme whereby various records are required to be kept. Such records can become harmful-- criminal in nature-- only when the provisions of the statute are not complied with. There is also no doubt that the escrow deposit records are such as would be 'customarily kept' by a real estate organization.
17
Appellant contends, however, that the third requirement-- that the records must have assumed 'public aspects'-- is missing. He contends that the exclusive purpose of requiring the records is for the denial, suspension or revocation of real estate licenses. There is no specific statutory authorization for using the records for other purposes. We are unable, however, to accept such a restrictive view of the involved statute. While the section does not specifically state that other interested groups may have access to the records, it does not exclude others from obtaining such material. Furthermore, the fact that criminal prosecution is possible for those keeping the records supports the view that use of the records by the Commission is not exclusive. It is of no significance that the record keeping requirement is established by state law rather than federal law.
18
In United States v. Silverman, 449 F.2d 1341 (2d Cir. 1971), cert. denied, 405 U.S. 918, 92 S. Ct. 943, 30 L. Ed. 2d 788 (1972), the Second Circuit held that closing statements in contingent fee cases were subject to the required records exception. By a New York Court Rule, such closing statements were required to be filed, and the information therein could be divulged only upon written order of the Presiding Justice of the Appellate Division of the state court. In order to ascertain defendant's gross income, the Internal Revenue Service sought and was given the taxpayer's statements. The Court there said:
19
'Records required to be kept pursuant to a reasonable regulatory scheme have 'public aspects' and may be examined for evidence of criminal conduct. The documents involved here have no relevance to the revelation of criminal conduct. At the time they were filed they did not incriminate; they became harmful only after the filing of tax returns that failed to report certain income.' 449 [email protected].
20
We believe that there is sufficient public concern for the requirement of keeping records in the present case. As in Silverman, these records did not have to be open to the general public in order to meet the 'public aspects' requirement.
21
In Couch v. United States, 409 U.S. 322, 93 S. Ct. 611, 34 L. Ed. 2d 548 (1973), the Supreme Court held that the Fifth Amendment did not prevent the Internal Revenue Service from obtaining business and tax records which the taxpayer had turned over to her accountant. It stated:
22
'It is important to reiterate that the Fifth Amendment privilege is a personal privilege; it adheres basically to the person, not to information that may incriminate him . . .. It is extortion of information from the accused himself that offends our sense of justice.' , 409 U.S. at 328.
The Court concluded:
23
'Petitioner seeks extensions of constitutional protections against self-in-crimination in the very situation where obligations of disclosure exist and under a system largely dependent upon honest self-reporting even to survive. Accordingly, petitioner here cannot reasonably claim, either for Fourth or Fifth Amendment purposes, an expectation of protected privacy or confidentiality.
V.
24
'The criterion for Fifth Amendment immunity remains not the ownership of property but the "physical or moral compulsion' exerted.' Perlman (v. United States,) 247 U.S. (7) at 15 (38 S. Ct. 417, 62 L. Ed. 950.) We hold today that no Fourth or Fifth Amendment claim can prevail where, as in this case, there exists no legitimate expectation of privacy and no semblance of governmental compulsion against the person of the accused.' 409 U.S. at 335-336.
25
The required records exception as applied in this case is consistent with the Court's interpretation of the Fifth Amendment in Couch. Under the duty to disclose information pursuant to Section 19.803, there was no legitimate expectation of privacy, and therefore no privilege attached. We consider that our decision in United States v. Blank, 459 F.2d 383 (6th Cir.), cert. denied, 409 U.S. 887, 93 S. Ct. 111, 34 L. Ed. 2d 143 (1972), is consistent with the conclusion we reach.
26
The decision of the District Court is affirmed.
|
707 N.E.2d 176 (1998)
302 Ill. App. 3d 682
236 Ill. Dec. 331
The COUNTY OF COOK and Sheriff of Cook County, Petitioners-Appellants,
v.
ILLINOIS LOCAL LABOR RELATIONS BOARD and Teamsters, Local Union No. 714, Respondents-Appellees.
Lonnie L. Yancy, Plaintiff-Appellee,
v.
The Cook County Sheriff's Merit Board and its members, James P. Nally, Paula M. Daleo, Arthur Waddy, Terrence Hake, Michael Carey, and Michael P. Sheahan, Sheriff of Cook County, Defendants-Appellants.
Nos. 1-96-0465, 1-97-2612.
Appellate Court of Illinois, First District, Sixth Division.
December 28, 1998.
*177 Richard A. Devine, State's Attorney of Cook County, Chicago (Assistant State's Attorneys, Patricia Shymanski, Peter Fischer, John J. Murphy, Regina W. Calabro, Patricia M. Moser and Paul A. Castiglione, of counsel), for Appellants.
James E. Ryan, Attorney, Chicago (Solicitor and Assistant Attorney General, Barbara A. Preiner and Maniel M. Malato, of counsel); Law Office of Marvin Sacks, Chicago (Marvin Sacks and Robert Costello, of counsel) and Cornfield and Feldman, Chicago (Gail E. Mrozowski, of counsel), for Appellees.
Justice QUINN delivered the opinion of the court:
This case is brought on appeal from an order of the Illinois Local Labor Relations Board (Labor Board) finding that petitioners, the County of Cook and the sheriff of Cook County, breached their duty to bargain in good faith in violation of sections 10(a)(1) and 10(a)(4) of the Illinois Local Labor Relations Act (Labor Act) (5 ILCS 315/10 (West 1996)) by filing complaints before the Cook County Sheriff's Merit Board seeking to decertify 31 deputy sheriffs and correctional officers employed in the Cook County sheriff's office.
On appeal, petitioners contend that: (1) they did not violate sections 10(a)(1) and 10(a)(4) of the Labor Act by refusing to bargain with Local Teamsters Union No. 714; (2) they did not breach their duty to bargain in violation of sections 10(a)(1) and 10(a)(4) of the Labor Act by refusing to relinquish confidential information; (3) the Cook County Sheriff's Merit Board's decision to discharge Lonnie Yancy was not unreasonable, arbitrary or unrelated to the requirements of service; (4) the Labor Board acted beyond the scope of its authority in ordering costs and attorney fees against petitioners; and (5) they did not engage in frivolous *178 litigation and therefore should not be sanctioned under section 11(c) of the Labor Act (5 ILCS 315/11(c) (West 1996)).
For the following reasons, we reverse.
The pertinent facts are as follows. In 1992, the Federal Bureau of Investigation (FBI) and the United States Department of Justice conducted an extensive investigation into alleged fraud and corruption in the Cook County sheriff's office (Sheriff's Office) during the tenure of the former Cook County sheriff. The investigation revealed widespread corruption in the hiring process and led to the federal indictment of 11 employees of the Sheriff's Office and the Cook County Sheriff's Merit Board (Merit Board). The 11 employees pleaded guilty to falsifying the test scores of various applicants on the certification examination for appointment to the positions of correctional officer and deputy sheriff. Following the indictment and guilty pleas of the 11 employees, the current sheriff of Cook County conducted an investigation and review to determine which employees, if any, held jobs as a result of these corrupt practices. The sheriff's investigation revealed that numerous employees apparently received their positions as a result of these practices, which fall into two categories: (1) certification of employees through altered test scores, in which employees were assigned a passing score on their certification examination despite their failure to achieve a passing score; and (2) certification of employees despite their failure to meet the minimum educational requirements for the positions as set forth in the Merit Board rules and regulations.
Following the investigation, petitioners began the process of discharging numerous employees who apparently had received their positions through corrupt practices and filed complaints with the Merit Board seeking to discharge 30 correctional officers and deputy sheriffs who the Sheriff's Office alleged were illegally certified. The complaints alleged that 30 certified employees had correctly answered less than the minimum number of questions required to achieve a passing score on the test and that these certifications were, therefore, void ab initio.
In September 1994 the Teamsters Local Union No. 714 (Local 714), the bargaining representative for deputy sheriffs and correctional officers, demanded that petitioners bargain with them regarding the decision to decertify employees who allegedly obtained their positions fraudulently. Local 714 also demanded that petitioners provide it with a list of all employees whom they intended to discharge. Petitioners refused both requests based on their position that the matter of decertification was exclusively within the authority of the Merit Board and that the requested information was confidential. Local 714 then filed an unfair labor practice charge with the Labor Board alleging that petitioners refused to bargain and provide information in violation of sections 10(a)(1) and 10(a)(4) of the Labor Act.
On administrative review, the administrative law judge found that petitioners violated sections 10(a)(1) and 10(a)(4) of the Labor Act by refusing to bargain with Local 714 before proceeding to revoke the certifications and appointments of the 31 employees and discharging them. The administrative law judge further found that petitioners violated these sections of the Labor Act by refusing to allow Local 714 access to the information it requested that was relevant and necessary for the performance of the union's duties. The employees were awarded costs and attorney fees for the cost of defending the action and sanctions were imposed against petitioners for engaging in frivolous litigation.
Petitioners filed exceptions to the administrative law judge's recommended decision with the Labor Board. Upon review, the Labor Board adopted the decision in its entirety. Petitioners appeal the Labor Board's decision.
Initially, it should be pointed out that, contrary to the findings of the administrative law judge and the Labor Board, 30 of the sheriff's employees before this court have not had a hearing before the Merit Board and have not been discharged. Plaintiff, Lonnie Yancy (Yancy), 1 of the 31 individuals named in the petitioners' complaint, was discharged by the Merit Board after a full hearing. At the hearing, it was established that Yancy's *179 Merit Board application and personal history questionnaire stated that he did not graduate from high school or possess a general equivalency diploma (GED). However, Yancy's personnel file contained a GED certificate dated January 12, 1990. The parties stipulated that according to the director of the GED program, there was no record of either Yancy or his certificate. Yancy also admitted at the hearing that he did not graduate from high school or possess a GED at the time he submitted an application for employment with the Merit Board.
Subsequently, the Merit Board found that Yancy's application for employment and certification were void ab initio because he failed to meet the minimum qualifications for eligibility as prescribed by the Merit Board's rules and regulations. Specifically, Yancy lacked a high school diploma or certification of equivalent formal education at the time he applied for the position of correctional officer. Subsequently, Yancy sought administrative review of the Merit Board decision before the circuit court. The circuit court reversed the sanction of discharge and remanded the case to the Merit Board with directions to impose a penalty less than discharge. In accordance with the circuit court's order, the Merit Board imposed a sanction of suspension for 180 days, with time considered served. This sanction effectively reinstated Yancy to his position as a correctional officer. The circuit court issued an order affirming the Merit Board's imposition of suspension, from which petitioners appeal.
Petitioners first contend that the Labor Board's finding that they failed to comply with sections 10(a)(1) and 10(a)(4) of the Labor Act was against the manifest weight of the evidence. A decision of an administrative agency is said to be contrary to the manifest weight of the evidence only when, after reviewing the evidence in a light most favorable to the administrative agency, the court determines that no rational trier of fact could have agreed with the agency's decision. Chief Judge of the Circuit Court v. American Federation of State, County & Municipal Employees, Council 31, 153 Ill. 2d 508, 514, 180 Ill. Dec. 288, 607 N.E.2d 182 (1992). The agency's findings of fact are presumed to be prima facie true and correct. American Federation of State, County & Municipal Employees Council 31, 153 Ill.2d at 514, 180 Ill. Dec. 288, 607 N.E.2d 182. A reviewing court is not bound by administrative decisions interpreting the legal effect of statutory language but will accord substantial deference to the interpretation of a statute by the agency charged with its administration. Strube v. Pollution Control Board, 242 Ill.App.3d 822, 826, 182 Ill. Dec. 848, 610 N.E.2d 717 (1993). Although deference is shown, a court of review cannot allow an erroneous conclusion of law to stand. Bethania Ass'n v. Jackson, 262 Ill.App.3d 773, 776, 200 Ill. Dec. 332, 635 N.E.2d 671 (1994).
Petitioners argue that they did not violate sections 10(a)(1) and 10(a)(4) of the Labor Act by refusing to bargain with Local 714 because the Merit Board has the sole authority to void illegal certifications and appointments and, therefore, decertification is not a mandatory subject of bargaining. Respondents maintain that, pursuant to sections 10(a)(1) and 10(a)(4) of the Labor Act, the decertification of employees affects the terms and conditions of employment, which is a mandatory subject of collective bargaining.
Administrative agencies such as the Merit Board exercise purely statutory powers and possess no inherent or common law powers. O'Grady v. Cook County Sheriff's Merit Board, 260 Ill.App.3d 529, 534, 198 Ill. Dec. 28, 632 N.E.2d 87 (1994). Any power claimed by the administrative agency must find its source within the provisions of the statute by which the agency was created. O'Grady, 260 Ill.App.3d at 534, 198 Ill. Dec. 28, 632 N.E.2d 87. An express grant of power to an administrative body or officer includes the authority to do all that is reasonably necessary to execute that power or to perform the duty specifically conferred. O'Grady, 260 Ill.App.3d at 534, 198 Ill. Dec. 28, 632 N.E.2d 87.
Section 10 of the Labor Act states in pertinent part:
"(a) [i]t shall be an unfair labor practice for an employer or its agents:
*180 (1) to interfere with, restrain or coerce public employees in the exercise of the rights guaranteed in this Act or to dominate or interfere with the formation, existence or administration of any labor organization or contribute financial or other support to it; provided, an employer shall not be prohibited from permitting employees to confer with him during working hours without loss of time or pay;
* * *
(4) to refuse to bargain collectively in good faith with a labor organization which is the exclusive representative of public employees in an appropriate unit, including but not limited to, the discussing of grievances with the exclusive representative." 5 ILCS 315/10 (West 1996).
Pursuant to section 7 of the Labor Act, the duty to bargain collectively is defined in pertinent part as:
"the performance of the mutual obligation of the public employer * * * and the representative of the public employees to meet at reasonable times * * * and to negotiate in good faith with respect to wages, hours and other conditions of employment, not excluded by Section 4 of this Act * * *.
The duty `to bargain collectively' shall also include an obligation to negotiate over any matter with respect to wages, hours and other conditions of employment, not specifically provided for in any other law or not specifically in violation of the provisions of any law." 5 ILCS 315/7 (West 1996).
However, under section 4 of the Labor Act, an employer is not required to bargain collectively over:
"matters of inherent managerial policy, which shall include such areas of discretion or policy as * * * selection of new employees, examination techniques and direction of employees. Employers however, shall be required to bargain collectively with regard to policy matters directly affecting wages, hours and terms and conditions of employment * * *." 5 ILCS 315/4 (West 1996).
Section 3-7001 et seq. of the Counties Code (Code) enumerates the powers of the Merit Board. 55 ILCS 5/3-7001 et seq. (West 1996). Section 3-7008 provides:
"The appointment of deputy sheriffs in the Police Department, full-time deputy sheriffs not employed as county police officers or county corrections officers and of employees in the Department of Corrections shall be made from those applicants who have been certified by the Board as being qualified for appointment. * * * In addition, all persons so appointed shall * * * possess such prerequisites of training, education and experience as the Board may from time to time prescribe, and shall be required to pass successfully mental, physical, psychiatric and other tests and examinations as may be prescribed by the Board." 55 ILCS 5/3-7008 (West 1996).
Section 3-7015 of the Counties Code provides that the "Board shall investigate the enforcement of this Division and its rules, and the conduct and action of the appointees herein provided for." 55 ILCS 5/3-7015 (West 1996). This section contemplates that the terms of the Code are to be enforced by the Board and specifically requires that the Board investigate the enforcement of the Code and its rules. Although section 3-7015 does not expressly authorize the Merit Board to void illegal certifications, our holding in O'Grady made it clear that "when the statutory mandates are not adhered to, the Merit Board has the authority to void certifications and corresponding appointments to merit-protected positions." O'Grady, 260 Ill. App.3d at 536, 198 Ill. Dec. 28, 632 N.E.2d 87. To say that the Merit Board has the power and duty to investigate and enforce the Counties Code, but has no authority to void certifications that are in direct contravention of the statute, "would be a distinct contradiction in terms" (Meana v. Morrison, 28 Ill.App.3d 849, 855, 329 N.E.2d 535 (1975) quoting People ex rel. Heineck v. Holding, 207 Ill.App. 38, 41 (1917)) and frustrate the intent and purpose of the Counties Code.
This court recently followed O'Grady in Cook County Sheriff Sheahan v. Bianchi, 296 Ill.App.3d 310, 230 Ill. Dec. 864, 695 N.E.2d 73 (1998). Bianchi was hired by the Cook *181 County sheriff's department after taking a certification examination on May 9, 1987. Bianchi had answered 56 questions correctly and a passing score was established to be a minimum of 57 correct answers. As in the present case, the sheriff filed a complaint before the Merit Board to decertify Bianchi and terminate his employment. A hearing was held by the Merit Board and it declined to decertify Bianchi. The decision of the Merit Board was affirmed on administrative review in the circuit court. This court affirmed, relying on O'Grady in holding that the Merit Board had the authority under the Counties Code (55 ILCS 5/3-7001 et seq. (West 1996)) to determine the validity of the merit certification of sheriff's employees and to void the certification "`where that action was reasonably necessary [by the Board] to execute the duty to investigate and enforce the terms of the [Code].'" Bianchi, 296 Ill. App.3d at 312, 230 Ill. Dec. 864, 695 N.E.2d at 75, quoting O'Grady, 260 Ill.App.3d at 535, 198 Ill. Dec. 28, 632 N.E.2d 87. In our view, the Merit Board's authority to void illegal certifications and appointments is reasonably necessary to execute the investigatory and enforcement provisions of the Counties Code. Consequently, the Labor Board improperly found that the Merit Board lacks authority to void illegal certifications and appointments.
Petitioners further argue that they did not violate sections 10(a)(1) and 10(a)(4) of the Labor Act by seeking to decertify employees because the prehire certification standards were in place when the employees applied for the positions and, therefore, decertification is not a mandatory subject of bargaining. Respondents maintain that the decertification of incumbent employees, even based on existing requirements, is a mandatory subject of bargaining.
Respondents rely on County of Cook (Cermak Health Services), 3 Pub. Employee Rep. (Ill.) par. 3030, Nos. L-CA-87-200, L-CA-87-205 (ILLRB September 21, 1987) (hereinafter 3 Pub. Employee Rep. par. 30), to support their claim that the decertification of incumbent employees is a mandatory subject of bargaining. In Cermak Health Services, Cook County classified and promulgated new paramedic licensing standards for certain positions. The county announced that incumbent employees would have to requalify for their positions under the new requirements. 3 Pub. Employee Rep. (Ill.) par. 3030, at 1X-157. The employees' bargaining agent requested that the employer bargain over the application of the new standards to incumbent employees. The employer refused to bargain, contending that it had no duty to do so because the promulgation of job requirements involved issues of inherent managerial authority. The union then filed a grievance with the Labor Board contending that the employer committed an unfair labor practice by refusing to bargain over the imposition of new job prerequisites prior to adopting them. The Labor Board concluded that the county's application of newly promulgated civil service rules to its incumbent employees, without first affording the union notice and an opportunity to bargain, was a violation of the county's obligation to bargain under the Labor Act. 3 Pub. Employee Rep. (Ill.) par. 3030, at 1X-16D through Mar 161.
Similarly, in Forest Preserve District v. Illinois Labor Relations Board, 190 Ill. App. 3d 283, 137 Ill. Dec. 730, 546 N.E.2d 675 (1989), appeal denied, 129 Ill. 2d 563, 140 Ill. Dec. 671, 550 N.E.2d 556 (1990), the Forest Preserve District sought to impose new civil service examination requirements on incumbent police officers and those hired as temporary appointments to the position of police officer. Forest Preserve, 190 Ill. App.3d at 285, 137 Ill. Dec. 730, 546 N.E.2d 675. Upon taking the examination, 17 of the temporary officers were found ineligible because they did not receive a score of at least 70% on the exam. The other 23 temporary officers ranked from 6 to 252 out of the 258 eligible applicants. Based on these examination results, the Forest Preserve District informed the 17 temporary officers who failed the exam that they had to find other employment and informed the 23 eligible temporary officers that they would receive a position on the police force when their rank on the register was reached. Forest Preserve, 190 Ill. App.3d at 285, 137 Ill. Dec. 730, 546 N.E.2d 675. The Fraternal Order of Police, exclusive bargaining representative of the employees, filed an unfair labor practice charge with the Labor Board, alleging that the Forest *182 Preserve District unilaterally implemented new examinations without first bargaining in good faith. The Labor Board found that the examination was a mandatory subject of bargaining. On appeal, this court held that the Labor Board did not abuse its discretion in determining that the administration of the new examination was a matter involving wages, hours and conditions of employment under section 7 the Labor Act and therefore was a mandatory subject of bargaining. Forest Preserve, 190 Ill.App.3d at 290, 137 Ill. Dec. 730, 546 N.E.2d 675.
Finally, in American Federation of State, County & Municipal Employees, Council 31 v. County of Cook, 145 Ill. 2d 475, 164 Ill. Dec. 904, 584 N.E.2d 116 (1991), the county sought to impose a new civil service examination on three incumbent employees who had temporary appointments. The county contended that it had no duty to bargain over matters that fell within the scope of the civil service provisions. AFSCME, 145 Ill.2d at 478, 164 Ill. Dec. 904, 584 N.E.2d 116. The Labor Board found that refusing to bargain over the effects of the examination on the three incumbent employees violated the Labor Act. AFSCME, 145 Ill.2d at 478-79, 164 Ill. Dec. 904, 584 N.E.2d 116. Although this court reversed the Board's decision, the Illinois Supreme Court reversed this court's decision, finding that the examination requirement was subject to the duty to bargain. AFSCME, 145 Ill.2d at 490-91, 164 Ill. Dec. 904, 584 N.E.2d 116.
We find these cases distinguishable from the [email protected]. In each of the three cases discussed above, new standards or testing procedures were imposed on incumbent employees. Here, petitioners did not seek to apply new terms and conditions of employment on incumbent employees. Rather, petitioners sought to enforce hiring prerequisites that were already in place prior to the hiring of the employees. Thus, unlike the cases discussed above, petitioners did not change the terms and conditions of employment for incumbent employees.
An instructive case is Vanko v. Sheahan, 278 Ill.App.3d 302, 214 Ill. Dec. 946, 662 N.E.2d 512 (1996). In Vanko, the plaintiff, John Vanko, was appointed to the position of deputy sheriff but was discharged because his initial appointment was not in accordance with section 3-7008 of the Counties Code. Vanko, 278 Ill.App.3d at 302, 214 Ill. Dec. 946, 662 N.E.2d 512. Vanko brought a mandamus action to compel the, Merit Board to provide him with a hearing pursuant to section 3-7012 of the Counties Code which entitles a deputy sheriff the right to a hearing before the Labor Board prior to removal, suspension or demotion. The defendants argued that Vanko was not entitled to a hearing because he was never certified in accordance with section 3-7008 of the Counties Code. Vanko, 278 Ill.App.3d at 302, 214 Ill. Dec. 946, 662 N.E.2d 512. This court agreed that the sheriff alone could make the factual determination that an employee had never been certified in the face of uncontroverted evidence, but held when the evidence of certification is unclear, the question becomes an issue for the Merit Board to determine following a hearing. Vanko, 278 Ill.App.3d at 306, 214 Ill. Dec. 946, 662 N.E.2d 512.
In the instant case, petitioners have complied fully with the requirements of Vanko. The Sheriff's Office filed complaints before the Merit Board seeking to decertify 31 of its employees. The Labor Board held that these actions on the part of the sheriff violated sections 10(a)(1) and 10(a)(4) of the Labor Act because the sheriff refused to bargain with the union over the filing of these complaints. The question to be determined by the Merit Board is whether the employees were properly certified. The fact that some (or all) of the employees in question have worked in the Sheriff's Office for years does not waive the requirement for certification. Vanko, 278 Ill.App.3d at 305, 214 Ill. Dec. 946, 662 N.E.2d 512; O'Grady, 260 Ill.App.3d at 538, 198 Ill. Dec. 28, 632 N.E.2d 87. Further, "[i]f plaintiff was never certified, he falls outside the ambit of section 3-7012's [of the Counties Code] procedural safeguards since the Act clearly requires the sheriff to appoint only from Board-certified candidates." Vanko, 278 Ill.App.3d at 305, 214 Ill. Dec. 946, 662 N.E.2d 512.
Based on the reasoning of O'Grady and Vanko, it makes no sense to provide the protections of section 7 of the Labor Act to *183 persons who were never certified. If the Merit Board determines that any of the 30 persons before us were never certified, they were never properly "employees" at all. To require the sheriff to bargain with the union over the decertification of these employees is in conflict with the holdings of this court in O'Grady, Vanko and Bianchi. Those holdings require the sheriff to bring complaints for decertification before the Merit Board. We hold that the decision whether to file a complaint before the Merit Board seeking to decertify an employee of the Sheriff's Office need not be bargained over.
Petitioners next contend that the Merit Board's decision to discharge Yancy was not unreasonable, arbitrary or unrelated to the requirements of service. Petitioners specifically argue that, because Yancy did not meet the minimum certification requirements for appointment, discharge was the only reasonable sanction available to the Merit Board.
A reviewing court's scope of review of an agency's decision to discharge a public employee is a two-step process. First, the court must determine if the agency's findings of fact are contrary to the manifest weight of the evidence. Ross v. Civil Service Comm'n, 250 Ill.App.3d 597, 600, 190 Ill. Dec. 290, 621 N.E.2d 159 (1993). Second, the reviewing court must determine if the findings of fact provide a sufficient basis for the agency's determination that cause for discharge exists. Ross, 250 Ill.App.3d at 600, 190 Ill. Dec. 290, 621 N.E.2d 159. An administrative agency's finding of "cause" for discharge is entitled to deference and should not be overturned unless it is arbitrary, unreasonable, or unrelated to the requirements of service. Launius v. Board of Fire & Police Commissioners, 151 Ill. 2d 419, 435, 177 Ill. Dec. 407, 603 N.E.2d 477, 484 (1992); Ross, 250 Ill.App.3d at 600, 190 Ill. Dec. 290, 621 N.E.2d 159. It is well settled that an administrative agency's finding of cause for discharge commands respect and substantial deference and will stand even if the reviewing court considers another sanction to be more appropriate. Walsh v. Board of Fire & Police Commissioners, 96 Ill. 2d 101, 105, 70 Ill. Dec. 241, 449 N.E.2d 115 (1983).
Cause has been defined as "`some substantial shortcoming which renders [the employee's] continuance in office or employment in some way detrimental to the discipline and efficiency of the service and something which the law and a sound public opinion recognize as good cause for his [discharge].'" Walsh, 96 Ill.2d at 105, 70 Ill. Dec. 241, 449 N.E.2d 115, quoting Fantozzi v. Board of Fire & Police Commissioners, 27 Ill. 2d 357, 360, 189 N.E.2d 275 (1963).
In the instant case, the Merit Board's imposition of discharge as a sanction was neither arbitrary nor unreasonable. There is no dispute that Yancy failed to possess the minimum educational requirements necessary for certification. The record reveals that Yancy admitted that he did not have a high school diploma or general equivalency certificate at the time he applied for the position of correctional officer. As an illegal certification may be rendered void by the Merit Board, Yancy's lack of the minimum educational requirements necessary for certification constituted cause for discharge. We hold that the circuit court erred in substituting its judgment for that of the Merit Board.
In light of our holding that the decision whether to file a complaint before the Merit Board seeking to decertify an employee of the Sheriff's Office need not be bargained over, we also reverse the Labor Board's holding that the Sheriff's Office violated the Labor Act by refusing to relinquish confidential information. An employer need not supply information that relates to a non-bargainable subject. Village of Franklin Park v. Illinois State Labor Relations Board, 265 Ill.App.3d 997, 1004, 203 Ill. Dec. 18, 638 N.E.2d 1144 (1994). We also reverse the Labor Board's order awarding costs and attorney fees against petitioners and vacate the sanctions imposed by the Labor Board.
Accordingly, the judgment of the circuit court of Cook County is reversed and remanded for proceedings consistent with this opinion. We also reverse the holdings of the Illinois Local Labor Relations Board.
Reversed and remanded.
ZWICK, J., concurs.
*184 THEIS, J., specially concurring in part and dissenting in part.
Justice THEIS, specially concurring in part and dissenting in part:
This is a consolidated appeal from two cases brought by the Sheriff of Cook County and the County of Cook. In one case, we are asked to directly review the Labor Board's finding that the County of Cook and the Sheriff violated the Labor Act. Here, I concur with the majority's conclusion that the Labor Board incorrectly found a violation of the Labor Act. However, I disagree with the majority's rationale for two reasons.
First, I do not agree that certification is considered void ab initio because certain minimum hiring requirements are not met. We have drawn a distinction between the acts of a state agency which are void and those which are voidable. Cook Co. Sheriff Sheahan v. Bianchi, 296 Ill.App.3d 310, 230 Ill. Dec. 864, 695 N.E.2d 73 (1998). If an employee was certified as a result of an arbitrary or capricious hiring system, the employee is treated as never having been certified. In that case, the certification is considered void ab initio pursuant to O'Grady v. Cook County Sheriff's Merit Board, 260 Ill.App.3d 529, 536, 198 Ill. Dec. 28, 632 N.E.2d 87, 92 (1994). On the other hand, if an otherwise unqualified employee was certified as a result of a mistake of fact, the employee is treated as certified. In this situation, the certification is considered voidable. Where certification is voidable, an employee only may be decertified "for cause." Bianchi, 296 Ill.App.3d at 313, 230 Ill. Dec. 864, 695 [email protected].
However, in the cases before us (except for Yancy) there has not yet been an inquiry to determine whether the Merit Board acted within its statutory authority by certifying these employees. The Sheriff alleged before the Merit Board two theories for decertification. As the majority notes, the complaints addressed the test scores of the certified employees. Additionally, the Sheriff alleged that, because an employee or employees of the Board fraudulently assigned passing scores, the Merit Board abdicated its authority in violation of the Merit Act. Until the Merit Board's actions are examined, it is impossible to say the certifications here are void ab initio.
My second concern with the majority opinion is that it does not sufficiently address what I see to be the central issue in this casewho is to decide whether these certifications were void or voidable. Notably, the issue of collective bargaining was not raised in the prior decertification cases upon which the majority relies. Bianchi, 296 Ill.App.3d 310, 230 Ill. Dec. 864, 695 N.E.2d 73; Vanko v. Sheahan, 278 Ill.App.3d 302, 214 Ill. Dec. 946, 662 N.E.2d 512 (1996); O'Grady, 260 Ill.App.3d 529, 198 Ill. Dec. 28, 632 N.E.2d 87.
We are asked to decide whether the Labor Board correctly found that the County of Cook and the Sheriff of Cook County breached their duty to bargain. To answer that question we must first determine whether the inquiry into how the Merit Board "certified" the employees in this case is a subject of mandatory collective bargaining. The supreme court established a three-part test to determine which matters must be bargained in Central City Education Ass'n v. Illinois Educational Labor Relations Board, 149 Ill. 2d 496, 174 Ill. Dec. 808, 599 N.E.2d 892 (1992).
The first part of the test requires a determination of whether the matter is one of wages, hours and terms and conditions of employment. Central City, 149 Ill.2d at 523, 174 Ill. Dec. 808, 599 [email protected]. If the answer to this question is no, the employer is under no duty to bargain and the other two parts of the test do not need to be employed. I believe the issue as to how the original Merit Board proceeded in certifying employees is not a bargainable issue. Whether there was an abuse of authority such that the Merit Board acted arbitrarily or fraudulently is not a determination that affects the terms and conditions of employment.
This issue is not a labor dispute regarding the conditions surrounding employment. Rather, the issue is whether the prerequisites to certification were compromised in bad faith by the former Merit Board. The purpose of the certification process is to further recognized merit principles of public *185 employment. O'Grady, 260 Ill.App.3d at 536-37, 198 Ill. Dec. 28, 632 [email protected]. These principles are designed to eliminate patronage, ensure that the best qualified people get the job, and foster open access to the process. O'Grady, 260 Ill.App.3d at 537, 198 Ill. Dec. 28, 632 [email protected]. If the prerequisites are compromised, these principles are not fulfilled. Because the Merit Board has the authority to promulgate and enforce the prerequisites, as the majority opinion discussed, it has the expertise to determine whether the principles were violated. This determination is necessary to protect the integrity of the system and, therefore, cannot be the subject of bargaining.
Additionally, the void/voidable distinction protects both the certification process and the employees from being decertified unfairly. If the certification process was conducted arbitrarily or fraudulently, the void ab initio standard from O'Grady applies and the "employees" were never employees covered by the collective bargaining agreement. If arbitrary or fraudulent conduct cannot be shown, the voidable standard of Bianchi applies and the employees only may be dismissed for cause. Based on the only evidence before the Merit Board that the employees did not satisfy the minimum test score, Bianchi indicates that the employees' certifications are voidable and they may not be decertified except "for cause."
The other case in this consolidated appeal requires us to review the circuit court's order reversing the penalty of discharge imposed by the Merit Board against Lonnie Yancy. I disagree with the majority opinion's conclusion that the court erred by reversing the penalty and substituting its judgment for the Merit Board's.
Based on Bianchi and my previous discussion, Yancy only may be discharged "for cause." As there were no findings to warrant termination "for cause," the circuit court was correct in determining that a penalty less than discharge was required. Therefore, I would affirm the decision of the circuit court.
For the foregoing reasons, I concur in judgment as to the case against the Labor Board (X-XX-XXXX), but dissent in the case involving Lonnie Yancy (X-XX-XXXX).
|
Case 7:18-cv-07910-KMK Document 32 Filed 04/30/20 Page 1 of 8
GEOFFREY S. BERMAN
United States Attorney for the
Southern District of New York
By: SAMUEL DOLINGER
Assistant United States Attorney
86 Chambers Street, 3rd Floor
New York, New York 10007
Tel.: (714)741-7502
E-mail: [email protected]
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA,
Plaintiff, 18 Civ. 7910 (KMK)
-v- RULE 56.1 STATEMENT
HEINZ GENTGES,
Defendant.
Plaintiff the United States of America (the “United States”), by its attorney, Geoffrey S.
Berman, United States Attorney for the Southern District of New York, respectfully submits this
statement pursuant to Local Civil Rule 56.1 of the Local Rules of the United States District
Courts for the Southern and Eastern Districts of New York to set forth material facts as to which
it contends there is no genuine issue to be tried in connection with its motion for summary
judgment.
1. Defendant Heinz Gentges was a U.S. citizen in 2007. Declaration of Samuel
Dolinger (“Dolinger Decl.”) Ex. L (“Compl.”) ¶¶ 11-12; Dolinger Decl. Ex. M (“Answer”)
¶¶ 11-12; see Dolinger Decl. Ex. D (“Gentges Depo.”) 14:10-15:10; Dolinger Decl. Ex. F
(“Gentges Aff.”) ¶¶ 1, 9.
Case 7:18-cv-07910-KMK Document 32 Filed 04/30/20 Page 2 of 8
2. In 2007, Gentges had financial interests in two foreign financial accounts at UBS
AG (“UBS”) in Switzerland, bearing numbers XXX-XXXX4959 1 (the “4959 Account”) and
XXXX-XX4337 (the “4337 Account”). Compl. ¶¶ 13-14, 25-26; Answer ¶¶ 13-14, 25-26;
Gentges Depo. 126:1-19; Gentges Aff. ¶ 9;
3. The balance of both UBS accounts during 2007 was greater than $10,000.
Compl. ¶¶ 18, 27; Answer ¶¶ 18, 27; Dolinger Decl. Ex. B (“UBS 4959 Records”) at USA18;
Dolinger Decl. Ex. C (“UBS 4337 Records”) at D2267. 2
4. Gentges failed to file a timely Form TD F 90-22.1, Report of Foreign Bank and
Financial Accounts, also known as an “FBAR,” to report his interest in the UBS accounts in
2007. Compl. ¶¶ 23, 30; Answer ¶¶ 23, 30.
5. In November 2001, Gentges signed documents to open the 4959 Account. UBS
4959 [email protected].
6. The 4959 Account was opened as a numbered account rather than a “name
account.” Id. at USA70.
7. Gentges identified himself as the beneficial owner of the 4959 Account and listed
his address in Hawthorne, New York. Id. at USA69-70.
8. With respect to the 4959 Account, Gentges instructed UBS not to invest in U.S.
securities, and signed an instruction to UBS stating, “I would like to avoid disclosure of my
identity to the US Internal Revenue Service under the new tax regulations. To this end, I declare
that I expressly agree that my account shall be frozen for all new investments in US securities as
from 1 November 2000.” Id. at USA50.
1
Pursuant to Fed. R. Civ. P. 5.2(a)(4), all but the last four digits of financial account numbers
herein are redacted.
2
For ease of reference, leading zeroes in Bates numbers have been omitted.
2
Case 7:18-cv-07910-KMK Document 32 Filed 04/30/20 Page 3 of 8
9. Gentges’s instruction regarding the 4959 Account acknowledged that he was
“liable to tax in the USA as a US person.” Id.; see Gentges Depo. 149:23-153:1.
10. Gentges instructed UBS to retain his mail related to the 4959 Account at the bank,
for a fee, rather than having it mailed to his address in New York. UBS 4959 [email protected].
11. Subsequently, when Gentges would visit the bank in Switzerland, including
during three visits in 2007, he retrieved his mail related to the 4959 Account and then authorized
UBS to destroy the mail that he did not take with him. See id. at USA124, 129, 136-37, 141,
144, 152, 159, 163.
12. Gentges also communicated with UBS bank personnel regularly to discuss the
account and his investments, through in-person visits, telephone conversations, e-mails, and
letters. See id. at USA40-48.
13. UBS frequently corresponded with Gentges using an address in Switzerland. See
id. at USA41, 44-47.
14. According to UBS records, the balance of the 4959 Account in June 2008—the
deadline for filing the 2007 FBAR—was $1,358,730.01. UBS 4959 [email protected].
15. In February 2002, Gentges signed documents to open the 4337 Account, which
was opened as a numbered account rather than a “name account.” UBS 4337 Records at D2154-
55.
16. Gentges identified himself as the beneficial owner of the 4337 Account and listed
his address in Hawthorne, New York. Id. at D2154, 2168.
17. In documents regarding the 4337 Account, Gentges stated that he was “liable to
tax in the USA as a US person,” and agreed that the account would be “frozen for all new
investments in US securities.” Id. at D2160.
3
Case 7:18-cv-07910-KMK Document 32 Filed 04/30/20 Page 4 of 8
18. Gentges instructed UBS to retain his mail related to the 4337 Account at the bank,
for a fee, rather than having it mailed to his address in New York. Id. at D2154.
19. Gentges retrieved his mail regarding the 4337 Account at the bank in Switzerland
on a number of occasions, including during three visits in 2007, and then authorized UBS to
destroy the mail that he did not take with him. See id. at D2173, 2183-86, 2189-91.
20. The balance for the 4337 Account at the end of 2007 was $448,975. Id. at
D2267-68.
21. In 2003, Gentges and his wife formed trusts for estate planning purposes, into
which they transferred the ownership of their home in New York and all of their U.S. accounts.
Gentges Depo. 97:2-100:22; Dolinger Decl. Ex. H (Certificate of Trust).
22. Gentges did not transfer the UBS accounts into the trust. Gentges Depo. 100:24-
101:25, 112:12-16.
23. Gentges did not disclose the existence of the UBS accounts to the attorney he
retained to form the trusts. Id.
24. Gentges did not seek any advice about the UBS accounts from the trust attorney
or anyone else. Id.
25. Gentges submitted a U.S. income tax return for tax year 2007. Dolinger Decl. Ex.
G (Gentges 2007 Tax Return); Compl. ¶ 11; Answer ¶ 11; Gentges Depo. 89:23-95:5; Gentges
Aff. ¶¶ 16.
26. Gentges had the opportunity to review this tax return after it was prepared by his
tax preparer, Richard Surico. Gentges Depo. 109:21-110:19.
4
Case 7:18-cv-07910-KMK Document 32 Filed 04/30/20 Page 5 of 8
27. Gentges employed the same accountant, Richard Surico, to prepare his tax returns
for decades leading up to tax year 2007. Gentges Depo. 55:22-56:6, 89:23-92:21; Dolinger Decl.
Ex. E (“Surico Depo.”) 35:5-22.
28. Gentges never disclosed the existence of the UBS accounts to Surico. Gentges
Depo. 76:11-25, 111:14-112:3; Surico Depo. 74:23-76:11.
29. Gentges never sought Surico’s advice about the income he received from the UBS
accounts. Gentges Depo. 76:11-25.
30. Part III of Schedule B of Gentges’s individual income tax return asked him to
state whether he had an interest in a foreign financial account in 2007. Gentges 2007 Tax Return
at D1725.
31. Schedule B of Gentges’s 2007 tax return included the following:
Gentges 2007 Tax [email protected].
32. The instructions for Schedule B, Part III, of the 2007 tax return specifically state
that a taxpayer “must complete this part if you . . . (b) had a foreign account.” Id.
33. The instructions for Schedule B require the taxpayer to select “Yes” in response
to Question 7(a) if the filing taxpayer has an “interest in or a signature or other authority over a
financial account in a foreign country.” Id.
34. If the “Yes” box is checked, Schedule B directs the taxpayer to filing
requirements for Form TD F 90-22.1, the FBAR form. Id.
5
Case 7:18-cv-07910-KMK Document 32 Filed 04/30/20 Page 6 of 8
35. Gentges’s 2007 return incorrectly responded “No” to Question 7(a), indicating
that he had no foreign financial accounts during that year. Id.
36. Gentges admitted at his deposition that this answer was incorrect, because in fact
he had foreign accounts at UBS in Switzerland in 2007. Gentges Depo. 93:16-95:5.
37. Gentges withdrew approximately $140,000 worth of cash from the UBS accounts
at issue between 2001 and 2007, in different currencies. See UBS 4959 Records at USA221,
226, 231, 244, 245, 248-50, 269, 275, 277, 312, 315, 318; UBS 4337 Records at D2210, 2212.
38. Between 2001 and 2007, Gentges withdrew $116,560 from U.S. dollar-
denominated sub-accounts of the UBS [email protected]. See id.
39. UBS contact records confirm Gentges’s withdrawals in U.S. dollars on a number
of these dates in 2007. UBS 4959 Records at USA40-41, 46.
40. In 2008, Gentges withdrew approximately $100,000 worth of cash from UBS, in
different currencies, including $83,033 from U.S. dollar-denominated sub-accounts. UBS 4959
Records at USA237, 238, 281, 283, 323.
41. UBS banking records and contact records confirm Gentges’s withdrawals in U.S.
dollars on several of these dates in 2008. Id. at USA47, 281; UBS 4337 [email protected].
42. Gentges was aware that U.S. regulations required him to declare the
transportation of currency exceeding $10,000 into the United States. Gentges Depo. 183:19-
184:9.
43. In September 2008, UBS informed Gentges that he had to close his accounts at
the bank by the end of the year. Gentges Depo. 199:22-200:8; UBS 4959 [email protected].
44. Gentges did not consider moving the funds into the United States after UBS
informed him that he was required to close his accounts. Gentges Depo. 199:22-200:8, 206:7-15.
6
Case 7:18-cv-07910-KMK Document 32 Filed 04/30/20 Page 7 of 8
45. Between September and November 2008, Gentges closed the UBS accounts and
transferred the funds from the accounts to Migros Bank, another financial institution based in
Switzerland. Compl. ¶¶ 32-34; Answer ¶¶ 32-34; UBS 4959 Records at USA47-48, 53-59; UBS
4337 Records at D2161; Gentges Depo. 202:1-13, 203:24-205:11.
46. In November 2008, Gentges instructed that his retained UBS mail be sent to his
son’s address in Lyss, Switzerland. UBS 4959 Records at USA48, 60; Gentges Depo. 205:1-14.
47. Several years later, Migros Bank advised Gentges that he had to close his account
there because that bank was “not doing business anymore with American citizen[s].” Gentges
Depo. 218:9-16.
48. At that point, Gentges transferred the funds to Raiffeisen Bank, another Swiss
bank, which he chose because it was one of the few remaining Swiss banks that would deal with
U.S.-citizen customers. Id. 228:18-230:9.
49. Raiffeisen Bank later also stopped dealing with U.S. customers. Id. 233:9-15.
50. Gentges transferred his funds to another Swiss bank, Privatbank Von Graffenried,
despite the fact that its fees were “quite a bit more expensive.” Id. 233:16-234:4.
51. On several occasions between December 2013 and August 2016, Gentges’s
representative agreed in writing to extend the time within which the Secretary of the Treasury
may assess an FBAR penalty against Gentges for calendar year 2007, ultimately extending the
deadline for assessment until December 31, 2017. See Compl. ¶ 39; Answer ¶ 39.
52. On October 7, 2016, the IRS assessed penalties totaling $903,853 against Gentges
for his willful failure to comply with the FBAR filing requirements with respect to his UBS
accounts for calendar year 2007. See Dolinger Decl. Ex. A (IRS Assessment documents);
Compl. ¶¶ 40-41; Answer ¶¶ 40-41.
7
Case 7:18-cv-07910-KMK Document 32 Filed 04/30/20 Page 8 of 8
53. The IRS assessed a $679,365 penalty relating to the 4959 Account and a $224,488
penalty relating to the 4337 Account. Id.
54. The IRS examiner’s report sets forth the bases for the agency’s finding that
Gentges’s failure to disclose his UBS accounts was willful and its determination of the penalty
amounts that the agency chose to assess. See Dolinger Decl. Ex. I (FBAR Penalty Lead Sheet).
Dated: April 30, 2020
New York, New York
GEOFFREY S. BERMAN
United States Attorney for the
Southern District of New York
By: /s/ Samuel Dolinger
SAMUEL DOLINGER
Assistant United States Attorney
86 Chambers Street, 3rd Floor
New York, New York 10007
Tel.: (714)741-7502
E-mail: [email protected]
8
|
Exhibit 10.3
PROMISSORY NOTE
Borrower:
Applied Optoelectronics, Inc.
13115 Jess Pirtle Blvd
Sugar Land, TX 77478
Lender:
East West Bank
Loan Servicing Department
9300 Flair Drive, 6th Floor
El Monte, CA 91731
Principal Amount: $15,000,000.00 Date of Note: July 15, 2014
PROMISE TO PAY. Applied Optoelectronics, Inc. ("Borrower") promises to pay to
East West Bank ("Lender"), or order, in lawful money of the United States of
America, the principal amount of Fifteen Million & 00/100 Dollars
($15,000,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on July 15, 2017. In addition, Borrower will
pay regular monthly payments of all accrued unpaid interest due as of each
payment date, beginning August 5, 2014, with all subsequent interest payments to
be due on the same day of each month after that. Unless otherwise agreed or
required by applicable law, payments will be applied first to any accrued unpaid
interest; then to principal; then to any late charges; and then to any unpaid
collection costs. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing.
LINE USAGE. The usage of the Loan shall be governed by the following sub-limits
with maximum aggregate amount that may be outstanding under all sub-limits
(items 1 through 2): $15,000,000.00.
1. Up to $15,000,000.00 for Clean Advances of maturity of the loan.
2. Up to $100,000.00 for corporate credit cards.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the rate quoted
by Lender for successive LIBOR Interest Periods.
INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360
basis; that is, by applying the ratio of the interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. All interest payable under
this Note is computed using this method.
PAYMENT DUE DATE. If any payment required to be made by the Borrower hereunder
becomes due and payable on a day other than a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and interest thereon shall
be payable at the then applicable rate during such extension.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. In any event, even upon full prepayment of this
Note,. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early partial payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue to make
payments of accrued unpaid interest. Rather, early payments will reduce the
principal balance due. If Borrower sends such a payment, Lender may accept it
without losing any of Lender's rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender. All written communications
concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes "payment in full" of the amount owed
or that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: East West Bank, Loan
Service Department, 9300 Flair Drive, 6th Floor El Monte, CA 91731.
LATE CHARGE. If a payment is 11 days or more late, Borrower will be charged
2.000% of the unpaid portion of the regularly scheduled payment or $5.00,
whichever is greater.
INTEREST AFTER DEFAULT. Upon default, the interest rate on this Note shall, if
permitted under applicable law, immediately increase by adding an additional
2.000 percentage point margin ("Default RateMargin"). The Default Rate Margin
shall also apply to each succeeding interest rate change that would have applied
had there been no default.
1
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this Note.
Other Defaults. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Note or in any of the
related documents or to comply with or to perform any term, obligation, covenant
or condition contained in any other agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults under any
loan, extension of credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's property or Borrower's ability to repay this
Note or perform Borrower's obligations under this Note or any of the related
documents.
False Statements. Any warranty, representation or statement made or furnished to
Lender by Borrower or on Borrower's behalf under this Note or the related
documents is false or misleading in any material respect, either now or at the
time made or furnished or becomes false or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the loan. This includes a garnishment of any of
Borrower's accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to
any guarantor, endorser, surety, or accommodation party of any of the
indebtedness or any guarantor, endorser, surety, or accommodation party dies or
becomes incompetent, or revokes or disputes the validity of, or liability under,
any guaranty of the indebtedness evidenced by this Note.
Change in Control. Any transaction in which any “person” or “group” (within the
meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of a sufficient number of shares
of all classes of stock then outstanding of Borrower ordinarily entitled to vote
in the election of directors, empowering such “person” or “group” to elect a
majority of the Board of Directors of Borrower, who did not have such power
before such transaction.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of this
Note is impaired.
Cure Provisions. If any default, other than a default in payment is curable and
if Borrower has not been given a notice of a breach of the same provision of
this Note within the preceding twelve (12) months, it may be cured if Borrower,
after Lender sends written notice to Borrower demanding cure of such default:
(1) cures the default within thirty (30) days; or (2) if the cure requires more
than thirty (30) days, immediately initiates steps which Lender deems in
Lender's sole discretion to be sufficient to cure the default and thereafter
continues and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, only after Borrower has exhausted all remedies
under the Cure Porvisions section as set forth above, Lender may declare the
entire unpaid principal balance under this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount.
2
JUDICIAL REFERENCE. If the waiver of the right to a trial by jury is not
enforceable, the parties hereto agree that any and all disputes or controversies
of any nature between them arising at any time shall be decided by a reference
to a private judge, mutually selected by the parties or, if they cannot agree,
then any party may seek to have a private judge appointed in accordance with
California Code of Civil Procedure §§ 638 and 640 (or pursuant to comparable
provisions of federal law if the dispute falls within the exclusive jurisdiction
of the federal courts). The reference proceedings shall be conducted pursuant to
and in accordance with the provisions of California Code of Civil Procedure §§
638 through 645.1, inclusive. The private judge shall have the power, among
others, to grant provisional relief, including without limitation, entering
temporary restraining orders, issuing preliminary and permanent injunctions and
appointing receivers. All such proceedings shall be closed to the public and
confidential and all records relating thereto shall be permanently sealed. If
during the course of any dispute, a party desires to seek provisional relief,
but a judge has not been appointed at that point pursuant to the judicial
reference procedures, then such party may apply to the Court for such relief.
The proceeding before the private judge shall be conducted in the same manner as
it would be before a court under the rules of evidence applicable to judicial
proceedings. The parties shall be entitled to discovery which shall be conducted
in the same manner as it would be before a court under the rules of discovery
applicable to judicial proceedings. The private judge shall oversee discovery
and may enforce all discovery rules and orders applicable to judicial
proceedings in the same manner as a trial court judge. The parties agree that
the selected or appointed private judge shall have the power to decide all
issues in the action or proceeding, whether of fact or of law, and shall report
a statement of decision thereon pursuant to California Code of Civil Procedure §
644(a). Nothing in this paragraph shall limit the right of any party at any time
to exercise self-help remedies, foreclose against collateral, or obtain
provisional remedies. The private judge shall also determine all issues relating
to the applicability, interpretation, and enforceability of this paragraph.
The parties agree that time is of the essence in conducting the referenced
proceedings. The parties shall promptly and diligently cooperate with one
another and the referee, and shall perform such acts as may be necessary to
obtain prompt and expeditious resolution of the dispute or controversy in
accordance with the terms hereof. The costs shall be borne equally by the
parties.
ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender fees incurred in
any attempt to collect. This includes, subject to any limits under applicable
law, Lender's attorneys' fees and Lender's legal expenses, whether or not there
is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction), and
appeals. Borrower also will pay any court costs, in addition to all other sums
provided by law.
JURY WAIVER. To the extent permitted by applicable law, Lender and Borrower
hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other.
GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of
California without regard to its conflicts of law provisions. This Note has been
accepted by Lender in the State of California.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.
COLLATERAL. Borrower acknowledges this Note is secured by the following
collateral described in the security instrument listed herein: inventory, ,
accounts, equipment and general intangibles described in the Commercial Security
Agreement dated July 15 , 2014.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or as
provided in this paragraph. All oral requests shall be confirmed in writing on
the day of the request, on forms acceptable to Lender. All communications,
instructions, or directions by telephone or otherwise to Lender are to be
directed to Lender's office shown above. The following person or persons are
authorized to request advances and authorize payments under the line of credit
until Lender receives from Borrower, at Lender's address shown above, written
notice of revocation of such authority: Chih-Hsiang (Thompson) Lin, CEO of
Applied Optoelectronics, Inc. Borrower agrees to be liable for all sums either:
(A) advanced in accordance with the instructions of an authorized person or(B)
credited to any of Borrower's accounts with Lender. The unpaid principal balance
owing on this Note at any time may be evidenced by endorsements on this Note or
by Lender's internal records, including daily computer print-outs.
3
CERTIFICATION OF ACCURACY. Borrower certifies under penalty of perjury that all
financial documents provided to Lender, which may include income statements,
balance sheets, accounts payable and receivable listings, inventory listings,
rents rolls, and tax returns, are the most recent such documents prepared by
Borrower, that they give a complete and accurate statement of the financial
condition of Borrower, as of the dates of such statements, and that no material
change has occurred since such time, except as disclosed to Lender in writing.
Borrower agrees to notify Lender immediately of the extent and character of any
material adverse change in the Borrower's financial condition. The financial
documents shall constitute continuing representations of Borrower and shall be
construed by Lender to be continuing statements of the financial condition of
Borrower and to be new and original statement of all assets and liabilities of
Borrower with respect to each advance under this Note and every other
transaction in which Borrower becomes obligated to Lender until Borrower advises
Lender to the contrary. The financial documents are being given to induce Lender
to extend credit and Lender is relying upon such documents. Lender may verify
with third parties any information contained in financial documents delivered to
Lender, obtain information from others, and ask and answer questions and
requests seeking credit experience about the undersigned.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of Los Angeles County, State of
California.
LIBOR INTEREST RATE OPTION. An exhibit, titled "LIBOR INTEREST RATE OPTION," is
attached to this Note and by this reference is made a part of this Note just as
if all the provisions, terms and conditions of the Exhibit had been fully set
forth in this Note.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Borrower may notify Lender if Lender reports any inaccurate information about
Borrower's account(s) to a consumer reporting agency. Borrower's written notice
describing the specific inaccuracy(ies) should be sent to Lender at the
following address: East West Bank Loan Service Department 9300 Flair Drive, 6th
Floor El Monte, CA 91731.
ORAL AGREEMENTS NOT EFFECTIVE. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written negotiations, agreements and
understandings of the parties with respect to the subject matter hereof and
shall remain in full force and effect in accordance with its terms and
conditions. Moreover, any subsequent oral statements, negotiations, agreements
or understandings of the parties shall not be effective against Lender unless
(i) expressly stated in writing, (ii) duly approved and authorized by an
appropriate decision making committee of Lender on such terms and conditions as
such committee shall deem necessary or appropriate in the committee’s sole and
absolute opinion and judgment and (iii) executed by an authorized officer of
Lender. Borrower shall not rely or act on any oral statements, negotiations,
agreements or understandings between the parties at anytime whatsoever,
including before or during any Lender approval process stated above. Borrower
acknowledges and agrees that Borrower shall be responsible for its own actions,
including any detrimental reliance on any oral statements, negotiations,
agreements or understandings between the parties and that Lender shall not be
liable for any possible claims, counterclaims, demands, actions, causes of
action, damages, costs, expenses and liability whatsoever, known or unknown,
anticipated or unanticipated, suspected or unsuspected, at law or in equity,
originating in whole or in part in connection with any oral statements,
negotiations, agreements or understandings between the parties which the
Borrower may now or hereafter claim against the Lender. Neither this Agreement
nor any other Related Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
section. Lender may from time to time, (a) enter into with Borrower written
amendments, supplements or modifications hereto and to the Related Documents or
(b) waive, on such terms and conditions as Lender may specify in such
instrument, any of the requirements of this Agreement or the Related Documents
or any Event Default and its consequences, if, but only if, such amendment,
supplement, modification or waiver is (i) expressly stated in writing, (ii) duly
approved and authorized by an appropriate decision making committee of Lender on
such terms and conditions as such committee shall deem necessary or appropriate
in the committee’s sole and absolute opinion and judgment and (iii) executed by
an authorized officer of Lender. Then such amendment, supplement, modification
or waiver shall be effective only in the specific instance and specific purpose
for which given.
4
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive any applicable statute of limitations, presentment, demand for
payment, and notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability. All such parties agree that Lender may renew or extend
(repeatedly and for any length of time) this loan or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
BORROWER:
APPLIED OPTOELECTRONICS, INC.
By: /s/ Chih-Hsiang (Thompson) Lin
Chih-Hsiang (Thompson) Lin, CEO of Applied Optoelectronics, Inc.
5
LIBOR INTEREST RATE OPTION
Borrower:
Applied Optoelectronics, Inc.
13115 Jess Pirtle Blvd
Sugar Land, TX 77478
Lender:
East West Bank
Loan Servicing Department
9300 Flair Drive, 6th Floor
El Monte, CA 91731
This LIBOR INTEREST RATE OPTION is attached to and by this reference is made a
part of the Promissory Note, dated _____________, 2014, and executed in
connection with a loan or other financial accommodations between EAST WEST BANK
and Applied Optoelectronics, Inc.
"Business Day" means any day other than a Saturday, Sunday, or other day that
commercial banks in Los Angeles, California are authorized or required by law to
close; provided, however that when used in connection with a LIBOR Rate, LIBOR
Amount or LIBOR Interest Period such term shall also exclude any day on which
dealings in U.S. dollar deposits are not carried on in the London interbank
market.
"LIBOR Amount" means each principal amount for which the LIBOR Borrowing Rate
applies for any specified LIBOR Interest Period.
"LIBOR Interest Period" means as to any LIBOR Amount, a period of each day, one
month, two months, or three months commencing on the date the LIBOR Borrowing
Rate becomes applicable thereto; provided, however, that: (i) the first day of
each LIBOR Interest Period must be a Business Day; (ii) no LIBOR Interest Period
shall be selected which would extend beyond the maturity date of the Note; (iii)
no LIBOR Interest Period shall extend beyond the date of any principal payment
required under this note; (iv) any LIBOR Interest Period which would otherwise
expire on a day which is not a Business Day, shall be extended to the next
succeeding Business Day, unless the result of such extension would be to extend
such LIBOR Interest Period into another calendar month, in which event the LIBOR
Interest Period shall end on the immediately preceding Business Day; and (v)
LIBOR Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such LIBOR Interest Period) shall end on the last Business
Day of a calendar month.
"LIBOR Rate" shall mean the rate determined by Lender to be the London interbank
offered rate for deposits in U.S. Dollars for the LIBOR Interest Period (defined
above) which appears on the Bloomberg Screen B TMM Page under the heading "LIBOR
Fix" as of 11:00 a.m. (London Time) on the second (2nd) Business Day prior to
the first day of such LIBOR Interest Period (adjusted for any all assessments,
surcharges and reserve requirements). If such interest rate shall cease to be
available from the described Bloomberg report, the LIBOR Rate shall be
determined from such financial reporting service as Lender shall reasonably
determine and use with respect to its other loan facilities on which interest is
determined based on the London interbank offered rate.
The LIBOR Borrowing Rate.
(i) The LIBOR Borrowing Rate is the LIBOR Rate plus 2.750% per annum.
(ii) Borrower may obtain LIBOR Borrowing Rate quotes from Lender between 9:00
a.m. and 11:00 a.m. (California time) on any Business Day. Borrower may request
an Advance or a new LIBOR Interest Period for an existing LIBOR Amount only by
giving Lender notice before 11:00 a.m. (California time) on such day. If
Borrower does not give notice of a new LIBOR Interest Period for an existing
LIBOR Amount, Borrower is deemed to have requested a new LIBOR Interest Period
of three months.
(iii) Any oral notice shall be given by, and any written notice shall be signed
by, the person(s) authorized in this note, and shall specify the requested
effective date of the rate, LIBOR Interest Period and LIBOR Amount, and whether
Borrower is requesting a new Advance at the LIBOR Borrowing Rate under a line of
credit, or a new LIBOR Interest Period for an outstanding LIBOR Amount. No more
than one LIBOR Rate Notice shall be in effect at any one time during the term of
the Loan, except that, notwithstanding anything to the contrary contained in
this Note, Borrower may select a separate LIBOR Rate Period for up to four (4)
different parts of the Loan (each part of which must be in the minimum amount of
One Hundred Thousand and 00/100 DOLLARS ($100,000.00), provided that such
selection is otherwise done in strict compliance with the terms of this Note.
(iv) If at any time the LIBOR Rate is unascertainable or unavailable to Lender
or if LIBOR Rate loans become unlawful, then the LIBOR Borrowing Rate, (A) shall
terminate automatically with respect to all LIBOR Amounts (i) on the last day of
each then applicable LIBOR Interest Period, if Lender may lawfully continue to
maintain such loans, or (ii) immediately if Lender may not lawfully continue to
maintain such loans through such day, and (B) the an interest rate equal to the
daily Wall Street Journal Prime Rate, as quoted in the “Money Rates” column of
The Wall Street Journal (Western Edition) all as determined by Lender minus
0.25% per annum automatically shall become effective as to such amounts upon
such termination.
6
(v) If at any time after the date hereof (A) any revision in or adoption of any
applicable law, rule, or regulation or in the interpretation or administration
thereof (i) shall subject Lender to any tax, duty, or other charge, or change
the basis of taxation of payments to Lender with respect to any loans bearing
interest based on the LIBOR Rate, or (ii) shall impose or modify any reserve,
insurance, special deposit, or similar requirements against assets of, deposits
with or for the account of, or credit extended by Lender, or impose on Lender
any other condition affecting any such loans, and (B) the result of any of the
foregoing is (i) to increase the cost to Lender of making or maintaining any
such loans or (ii) to reduce the amount of any sum receivable under this note by
Lender, Borrower shall pay Lender within 15 days after demand by Lender such
additional amount as will compensate Lender for such increased cost or
reduction. The determination hereunder by Lender of such additional amount
shall be conclusive in the absence of manifest error. If Lender demands
compensation, Borrower may upon three (3) Business Days' notice to Lender pay
the accrued interest on all LIBOR Amounts, together with any additional amounts
payable.
(vi) Borrower shall pay to Lender, on demand, such amount as Lender reasonably
determines (determined as though 100% of the applicable LIBOR Amount had been
funded in the London interbank market) is necessary to compensate Lender for any
direct or indirect losses, expenses, liabilities, costs, expenses or reductions
in yield to Lender, whether incurred in connection with liquidation or
re-employment of funds or otherwise, incurred or sustained by Lender as a result
of: (A) Any payment or prepayment of a LIBOR Amount, termination of the LIBOR
Borrowing Rate on a day other than the last day of the applicable LIBOR Interest
Period (including as a result of acceleration); or (B) Any failure of Borrower
to borrow, continue or prepay any LIBOR Amount after Borrower has given a notice
thereof to Lender.
(vii) Borrower shall pay interest based on the LIBOR Borrowing Rate, plus any
other applicable taxes or charges hereunder, even though Lender may have
obtained the funds loaned to Borrower from sources other than the London
interbank market. Lender's determination of the LIBOR Borrowing Rate and any
such taxes or charges shall be conclusive in the absence of manifest error.
(viii) Nothing contained in this note, including without limitation the
determination of any LIBOR Interest Period or Lender's quotation of any LIBOR
Borrowing Rate, shall be construed to prejudice Lender's right, if any, to
decline to make any requested Advance or to require payment on demand
THIS LIBOR INTEREST RATE OPTION IS EXECUTED ON ______________, 2014.
BORROWER:
APPLIED OPTOELECTRONICS, INC.
By: _____________________________________________
Chih-Hsiang (Thompson) Lin Lin, CEO of Applied Optoelectronics, Inc.
7
|
December 15, 2015 U.S. Securities and Exchange Commission treet, N.E. Washington, DC 20549 RE: VANGUARD ADMIRAL FUNDS (THE TRUST) FILE NO. 33-49023 Ladies and Gentlemen: Pursuant to Rule 497(j) under the Securities Act of 1933, this letter serves as certification that the Prospectus and Statement of Additional Information with respect to the above-referenced Trust do not differ from that filed in the most recent post-effective amendment, which was filed electronically. Sincerely, Judith L. Gaines Associate Counsel The Vanguard Group, Inc.
|
EXHIBIT 10.53
DIRECTOR COMPENSATION ARRANGEMENTS
Board Service
Our non-employee directors receive grants of common stock, stock options or
restricted stock units to compensate them for their service on the Board of
Directors each year, with the number of securities determined as set forth
below. Non-employee directors do not receive any other compensation, in the form
of cash or otherwise, for service on the Board of Directors or its committees,
other than reimbursement of reasonable expenses and as described below under the
caption “Service with Respect to ARIAD Gene Therapeutics, Inc.”. Directors who
are also employees of the Company do not receive any additional compensation for
their service on the Board of Directors.
Upon election to the Board of Directors
25,000 stock options
Upon re-election to the Board of Directors (every three years)
20,000 stock options
Annually
10,000 shares of common stock or 10,000 restricted stock units, at each
director’s election
All awards are granted under our 2006 Long Term Incentive Plan. The stock
options have a term of ten years and vest one-third annually over three years,
with an exercise price equal to the fair market value of our common stock on the
date of grant. Each continuing director may elect at his or her discretion to
receive the annual stock grants in the form of shares of common stock or
restricted stock units, each of which will be fully vested upon grant. Issuance
of shares upon liquidation of stock units will be subject to payment limitations
under Section 409A of the Internal Revenue Code.
Service with Respect to ARIAD Gene Therapeutics, Inc.
On March 6, 2007, upon recommendation of the Compensation Committee, our Board
of Directors, with Harvey J. Berger, M.D. and Jay R. LaMarche abstaining,
revised our director compensation arrangements to provide additional
compensation to the independent and disinterested directors of the Board, or the
Independent Directors, for their service in connection with the evaluation of
strategic alternatives with respect to acquiring the 20% minority interest of
the Company’s subsidiary, ARIAD Gene Therapeutics, Inc., or AGTI, that ARIAD
Pharmaceuticals, Inc. does not currently own. The Independent Directors consist
of all of the directors other than Dr. Berger and Mr. LaMarche, who own shares
of the common stock of AGTI. The revised compensation arrangements provide that
each Independent Director will receive, in addition to compensation received
under our existing director compensation arrangements noted above, a one-time
cash payment of $10,000 on or about April 1, 2007. In addition, for each past
and future meeting of the Independent Directors related to their evaluation of
the strategic alternatives regarding AGTI, each such director will receive
$1,000 for each such meeting attended in person and $500 for each such meeting
attended by phone; provided that the aggregate of all fees paid (including the
one-time fee) shall not exceed $25,000 per director.
|
218 F.2d 524
UNITED STATES of America, Appellant,v.2979.72 ACRES OF LAND, MORE OR LESS, IN the COUNTY OFHALIFAX, VIRGINIA, Olive Vaughan Williams, et al.,and unknown owners, Appellees.
No. 6839.
United States Court of Appeals, Fourth Circuit.
Argued Oct. 13, 1954.Decided Jan. 5, 1955.
Harold S. Harrison, Atty., Department of Justice, Washington, D.C. (Perry W. Morton, Asst. Atty. Gen., John Strickler, U.S. Atty., John F. Cotter and S. Billingsley Hill, Attys., Department of Justice, Washington, D.C., on the brief), for appellant.
Francis V. Lowden, Jr., and Ralph H. Ferrell, Jr., Richmond, Va. (T. Justin Moore and Hunton, Williams, Gay, Moore & Powell, Richmond, Va., on the brief), for appellee Virginia Electric and Power Company.
Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.
PARKER, Chief Judge.
1
This is another appeal in condemnation proceedings had in connection with the John H. Kerr Dam and Reservoir, a flood control project on the Roanoke River in Virgina and North Carolina. The Virginia Electric and Power Company held flowage easements over 1540 acres of land belonging to Mrs. Olive Vaughan Williams. The government filed a declaration of taking with respect to this land corresponding in all respects with the declaration of taking filed in the case of United States v. 2,648.31 Acres of Land, More of Less, in the Counties of Charlotte and Halifax, Virginia, 4 Cir., 218 F.2d 518. Mrs. Williams had agreed to convey and interest she may have had in the land to the government for the nominal consideration of one dollar. The court held that the power company was entitled to recover from the government the fee simple value of the land, which was found to be $40 per acre, and on this basis entered judgment in favor of the power company and against the government for the sum of $61,600. The government has appealed from this judgment, contending (1) that there can be no recovery against the government for rights which would have value only in connection with the development of water power on a navigable stream, and (2) that, at all events, the government is liable, not for the fee simple value of the land, but for the difference between its value with and without the servitude resulting from the easement which the government is acquiring.
2
On the first question thus raised, we think that the position of the government is wrong for reasons fully set forth in our opinion in United States v. Twin City Power Co., 4 Cir., 215 F.2d 592, which need not be repeated here.
3
On the second question, this case differs from United States v. 2,648.31 Acres of Land, etc., supra, in that what is being taken here is the flowage easement of the power company, which was to flood permanently the entire 1540 acres of land, leaving no use of any value in the owner of the fee. The trial judge was justified, therefore, in valuing the flowage rights of the power company over the 1540 acres which wre destroyed by the government's taking as being measured by the fee simply value of the land which would be thus overflowed, since the value of flowage rights is the difference between the value of the land with and without the servitude imposed by the flowage easement. The fact that under the taking by the government there would be only an intermittent flooding of some portions of the 1540 acres is immaterial, since the flowage rights of the company were rendered worthless by the government's taking and their value must be the basis of the company's compensation. To state the matter simply, the power company is entitled to compensation for its flowage right easement which is destroyed by the government's taking. That easement was to flood completely the 1540 acres of land. The evidence is that the land which without this servitude would have a value of $40 per acre would have no value at all with the servitude imposed. It was doubtless for this reason that the owner was willing to convey her interest in the fee to the government for the nominal consideration of one dollar.
4
Affirmed.
|
Santa Ana River Development Company, a Corporation v. Commissioner.Santa Ana River Development Co. v. CommissionerDocket No. 72129.United States Tax CourtT.C. Memo 1964-41; 1964 Tax Ct. Memo LEXIS 297; 23 T.C.M. 242; T.C.M. (RIA) 64041; February 24, 19641964 Tax Ct. Memo LEXIS 297">*297 Henry C. Diehl, for the petitioner. Wesley A. Dierberger, for the respondent. RAUMMemorandum Opinion RAUM, Judge: A controversy has arisen between the parties as to the computation in respect of the decision to be entered upon remand of this case by the Court of Appeals for the Ninth Circuit. This case was originally heard together with that of a related taxpayer, and was decided sub nom. , affirmed in part and reversed in part, (C.A. 9). The matter presently in dispute grows out of that portion of the case that was affirmed. This Court held that petitioner was a separate entity, not a mere agent of its two stockholders, and that the Commissioner correctly reallocated income and expense in respect of certain property held by petitioner and its stockholders as co-tenants. . The Court of Appeals affirmed as to this issue. As a consequence of the reallocations thus approved it turned out that certain amounts received by petitioner from its stockholders for services rendered during the tax years, 1952-1954, were1964 Tax Ct. Memo LEXIS 297">*298 excessive. However, these latter amounts are otherwise wholly unrelated to the items that were reallocated between petitioner and its stockholders. And there is no dispute between the parties that petitioner is under an obligation to restore the excess to the stockholders. The matter presently in dispute between the parties is whether, in computing the tax liabilities for the years 1952-1954, the amounts in fact received by petitioner during each of the years 1952-1954 should be reduced by the excessive portions not yet restored. Petitioner refers us to certain language in the opinion of the Court of Appeals. But we are convinced that such language was not directed to the problem before us. It merely recognized the arrangement between petitioner and its stockholders that would require restoration of the excessive portions received. It was not concerned with the problem of determining whether such obligation would retroactively affect the tax for the earlier years, as contended in substance by petitioner, or whether petitioner is to be given tax benefit in respect thereof only in a later year when the excess amounts are in fact repaid. This issue was raised for the first time on remand. 1964 Tax Ct. Memo LEXIS 297">*299 1We think it clear that the excessive portions must be treated as income to the recipient in the years they were received, and corresponding adjustments are properly to be taken into account only in the year or years of restoration. Cf. ; ; (C.A. 9); , affirmed, (C.A. 5). The Commissioner's computation which gives effect to the principles applied in these cases is correct and will be adopted. Footnotes1. Petitioner suggested at the hearing on remand that the issue had previously been raised, but referred to it as the issue whether petitioner "was merely an agent for the stockholders". That latter issue was indeed in the case originally, but was decided against petitioner by this Court and the Court of Appeals. It is quite different from the issue which is now being presented.↩ |
935 F.2d 1286Unpublished Disposition
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.In re Charles M.L. MANGUM, Attorney for Ruth Anderson, Appellant,Ruth A. ANDERSON, Plaintiff,v.COMMONWEALTH OF VIRGINIA, DEPARTMENT OF CONSERVATION ANDHISTORIC RESOURCES; DIVISION OF PARKS AND RECREATIONS,Ronald D. Sutton, Commissioner, Warren Wahl, II, Director ofOperations, B.C. Leyne, Director of Conservation/HistoricResources, Donald G. Showalter, Human Resources Director,William Almond, Regional Superintendent, Defendants.
No. 90-2162.
United States Court of Appeals, Fourth Circuit.
Argued April 10, 1991.Decided June 25, 1991.
Appeal from the United States District Court for the Eastern District of Virginia, at Richmond. Richard L. Williams, District Judge. (CA-89-742-R)
Charles M.L. Mangum, Lynchburg, Va., for appellant.
Robert William Jaspen, Assistant United States Attorney, Richmond, Va. (Argued), for United States. Henry L. Hudson, United States Attorney, Richmond, Va., on brief.
E.D.Va.
AFFIRMED.
Before WILKINSON and NIEMEYER, Circuit Judges, and JAMES H. MICHAEL, Jr., United States District Judge for the Western District of Virginia, sitting by designation.
PER CURIAM:
1
Charles M.L. Mangum, Esquire ("Mangum"), appeals the order of the district court finding him in contempt of court for failing to obey a scheduling order and a pretrial order. Mangum contends that he did not have knowledge of the orders and therefore could not have known what they required him to do.
2
In the suit before the court below, Ruth A. Anderson, acting pro se, brought an employment discrimination action against the Commonwealth of Virginia and other named defendants. On January 22, 1990, the district court entered a scheduling order which imposed pretrial deadlines and set a pretrial conference on April 12, 1990. Apparently, around April 9, 1990, Anderson successfully engaged Mangum as her counsel,1 and he appeared on her behalf at the pretrial conference on April 12, 1990. At the conference, the court set a July 5, 1990 trial date and entered a pretrial order reflecting that date and noting that the scheduling order remained in effect.
3
Although he was present for the April 12 conference, Mangum indicates that he did not review the case file in the district court clerk's office at that time, nor did he do so at any other time. Consequently, he asserts that he did not become aware of the extent of his obligations until three or four days before the scheduled trial, when he would not have had the appropriate time in which to complete the matters outlined in the orders. Despite Mangum's efforts immediately before trial and on the morning of trial to secure a continuance or, in the alternative, a "nonsuit," the case was tried in accordance with the schedule. Thereafter, the appellant was cited to appear before the district court on a show cause order as to whether he should be held in contempt.
4
A senior assistant Attorney General for the Commonwealth of Virginia, Neil A.G. McPhie, Esq., testified that he was present when Waller Horsley, Esq., also an Assistant Attorney General, discussed the scheduling order and the pretrial order with Mangum on June 15, 1990, during the deposition of Ruth Anderson. McPhie is reasonably certain about his dates in this respect, and also about a further telephone conversation that he had with Mangum around June 28, 1990, in which the two further discussed Mangum's failure to abide by the terms of the orders. Mangum testified that the conversations about the scheduling and pretrial orders took place on June 28 or 29, 1990, not on June 15, 1990.
5
The court below specifically found that the pretrial order had been sent to the appellant following the pretrial conference after the appellant became counsel of record, which order reaffirmed the scheduling order. This finding is corroborated by the docket sheet, which notes that as to the pretrial order, "Copies Mailed" on April 12, 1990. While the pretrial docket entry does not specifically indicate to whom the copies were mailed, the court's finding was that a copy of the pretrial order went forward to the appellant in the usual course of business of the court. The court further indicated in its order below that the appellant had been advised at the pretrial conference on April 12, 1990, that the various matters discussed would be reduced to writing, and that the appellant would "receive a pretrial order memorializing certain dates relevant to the trial."
6
Further, the court below specifically found that counsel for the Commonwealth brought up the question of the court's pretrial and scheduling orders, and the necessity of adhering to the provisions and particularly to the dates of those orders, "as early as June 15, 1990," the date counsel met for Ruth Anderson's deposition. The court also found that Mangum, from the time of his initial appearance until immediately before the trial, had taken no effective action to inform himself about the court's orders and thus failed to comply with those orders.
7
The matter of contempt is vested in the sound discretion of the court below and will not be modified except upon a showing of abuse of that discretion. National Hockey League v. Metro Hockey Club, Inc., 427 U.S. 639 (1976). Further, the findings of fact in the court below are to be given deference. Given the facts as presented in the record, this court cannot find that the court below erred in its factual findings or in its conclusion that Mangum's conduct justified a finding of contempt.
8
For the reasons indicated, the judgment of the district court is
9
AFFIRMED.
1
In his testimony before the district court on the show cause order relating to contempt, the appellant indicates that he became counsel to Mrs. Anderson "somewhere around the latter part of May, 1990." However, the docket sheet for the case below clearly shows that "Plaintiff's counsel's notice of appearance" was filed on April 12, 1990
|
[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]
Date of Sentence March 1, 1994 Date of Application March 2, 1994 Date Application Filed March 9, 1994 Date of Decision October 25, 1994
Application for review of sentence imposed by the Superior Court for the District of [email protected]. Docket Nos. CR5-91333 and CR5-91458.
David F. Egan, Esq., Defense Counsel, for Petitioner.
Robert O'Brien, Esq., Assistant State's Attorney, for the State.
BY THE DIVISION
In two separate criminal cases the petitioner plead guilty and received a total effective sentence of 45 years, execution suspended after 30 with three years probation. The petitioner entered a guilty plea to kidnapping in the 1st degree in violation of G.S. § 53a-92(a)(2)(A) and assault in the 1st degree, G.S. § 53a-59(a)(2) in Docket No. CR5-91333 and was sentenced to 25 years on the first count and 20 years suspended after 5 consecutive on the second count. In the second file, Docket CR5-91458, the petitioner entered a guilty plea to kidnapping in the 1st degree in violation of G.S. § 53a-92(a)(2)(B) and was given a sentence of 25 years concurrent with Docket No. CR5-91333.
In the first case, a woman was abducted on her way to work in the early morning hours at the parking lot of the United Methodist Convalescent Home in Shelton. Petitioner held a knife to the victim's throat, drove the victim around to various automatic teller machines and at one point threatened to rape her. She was released physically unharmed but emotionally traumatized by the petitioner's actions.
The victim in the second file was not so fortunate. She was abducted about a week after the first incident when petitioner pulled her over on the ruse that he was a police officer. He got in her car and drove to the back of the Derby High School. An alert police officer noted the car tracks in the snow and investigated. He came upon the petitioner and the victim outside the car, but by that time the victim had been stabbed by the petitioner 24 times as she resisted him.
There was an agreed recommendation of 50 years suspended after 35 total effective sentence on both cases with the right of defendant to argue to a lesser sentence.
Petitioner points out that there was no physical injury in the first case and no prior criminal record before these two incidents which occurred within one week of each other. His attorney emphasized the petitioner's psychiatric and addictive history.
The state points out that had it not been for the officer appearing on the scene when he did, the second incident might well have been a murder. The petitioner had experienced other problems with the law, primarily as a result of his impulsive and destructive behavior. The division is asked to bear in mind the physical and mental havoc petitioner caused to the victims. It is suggested that the court took into account all factors enumerated CT Page 11917 in P.B. § 942 and imposed a lesser sentence than the agreed recommendation.
The petitioner addressed the division and acknowledged there should be consequences to his actions, but he points out he was under the influence of crack cocaine for a substantial period of time and unable to recall these two incidents. He expressed remorse for his actions both to the board and in an insightful and articulate letter he gave to the sentencing judge.
We have no reason to question the petitioner's sincerity in expressing his regret for having caused such destruction in such a short period of time, but we are compelled to note the seriousness of these two offenses. The second incident was carried out with savage brutality and utter viciousness and it is apparent the sentencing court placed what we consider to be proper emphasis on the need to protect society from the petitioner. Although the petitioner's rehabilitation well may be underway, the isolative purpose of the sentence renders it neither disproportionate nor inappropriately excessive.
Sentence affirmed.
Stanley, J.
Klaczak, J.
Norko, J.
Stanley, J., Klaczak, J. and Norko, J. participated in this decision. |
STATE OF WEST VIRGINIA FILED
SUPREME COURT OF APPEALS
April 20, 2021
EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
In re W.H., J.H., I.H., and C.H.-1
No. 20-0872 (Webster County 19-JA-28, 19-JA-29, 19-JA-30, and 19-JA-31)
MEMORANDUM DECISION
Petitioner Mother C.H.-2, by counsel Bernard R. Mauser, appeals the Circuit Court of
Webster County’s October 5, 2020, order terminating her “parental and all other rights [she] may
have to” W.H., J.H., I.H. and C.H.-1. 1 The West Virginia Department of Health and Human
Resources (“DHHR”), by counsel James Wegman, filed a response in support of the circuit
court’s order. The guardian ad litem, Mary Elizabeth Snead, filed a response on behalf of the
children in support of the circuit court’s order. On appeal, petitioner argues that the circuit court
erred in terminating her rights upon erroneously finding that she could not conform her conduct
to satisfy the requirements of an improvement period, without first granting her an improvement
period, and when less-restrictive dispositional alternatives were available.
This Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these
reasons, a memorandum decision affirming the circuit court’s order is appropriate under Rule 21
of the Rules of Appellate Procedure.
The proceedings below began in July of 2019, when the DHHR filed its initial abuse and
neglect petition. The DHHR later filed an amended petition in August of 2019. Neither of these
documents were included in petitioner’s appendix record, although they are reflected on the
1
Consistent with our long-standing practice in cases with sensitive facts, we use initials
where necessary to protect the identities of those involved in this case. See In re K.H., 235 W.
Va. 254, 773 S.E.2d 20 (2015); Melinda H. v. William R. II, 230 W. Va. 731, 742 S.E.2d 419
(2013); State v. Brandon B., 218 W. Va. 324, 624 S.E.2d 761 (2005); State v. Edward Charles
L., 183 W. Va. 641, 398 S.E.2d 123 (1990). Additionally, because one of the children and
petitioner share the same initials, they will be referred to as C.H.-1 and C.H.-2, respectively,
throughout this memorandum decision.
1
docket sheet petitioner did include. On September 19, 2019, the DHHR filed its second amended
petition alleging that petitioner abused and neglected the children 2 by engaging in domestic
violence with her husband, the father of C.H.-1. According to the DHHR, it began providing
petitioner parenting services after this incident in June of 2019. The DHHR further alleged that
in July of 2019, W.H., who is blind, was permitted to swim in a river without proper supervision,
which resulted in the child nearly drowning. When the DHHR spoke with petitioner about this
incident, she denied that the child was improperly supervised and indicated that he instead
slipped on a rock. The DHHR also alleged that in July of 2019, law enforcement responded to
the home to serve warrants on another adult who lived there, at which point law enforcement
officers discovered drugs and drug paraphernalia in the home. When law enforcement returned to
the home with a Child Protective Services (“CPS”) worker, petitioner’s husband ran from the
premises. The investigation uncovered digital scales in the husband’s vehicle and additional
drugs and paraphernalia in the home. According to the DHHR, nine adults lived in the two-
bedroom residence with the four [email protected]. Finally, the DHHR alleged that petitioner had
been involved in a prior abuse and neglect proceeding wherein it was ordered that she prohibit
her husband from having contact with W.H. because of the husband’s drug abuse. As such, the
DHHR alleged that petitioner abused and/or neglected the children.
According to the record, petitioner admitted to the allegations against her and was
adjudicated as an abusive and neglectful parent. Thereafter, petitioner filed a motion for an
improvement period. In August and September of 2020, the circuit court held dispositional
hearings, during which the circuit court heard testimony from multiple individuals, including
several named respondents, law enforcement personnel, and DHHR workers. Specifically, a
Pocahontas County Sheriff’s Deputy testified that he responded to petitioner’s residence in July
of 2020 after receiving a report that petitioner and her husband were engaged in a physical
altercation. After forcing entry into petitioner’s residence, the deputy found petitioner and her
husband lying on a bed and noticed that petitioner “had some light bruising and scrap[e]s on . . .
her face.” Upon questioning, petitioner admitted that she “hit [her husband] in the mouth.”
Petitioner’s husband then informed the deputy that petitioner “stabbed him in the hand” and the
deputy observed the laceration. Petitioner was arrested as a result of this altercation on a charge
of domestic battery. Next, a West Virginia State Trooper testified that he responded to
petitioner’s home multiple times since January of 2020, including once in response to a possible
domestic violence situation between petitioner and her husband in May of 2020. The trooper
confirmed that petitioner’s husband was present at the home each time he responded to that
location.
One of petitioner’s service providers testified that she began working with petitioner to
help with domestic violence prior to the initiation of the proceedings below. According to the
provider, although petitioner “can talk about how domestic violence is a problem,” she
nonetheless did not apply herself in services “because she doesn’t really feel like she [did]
anything to have a case” and “never felt like she was really part” of the problem. According to
2
Petitioner is the mother of C.H.-1 and the grandmother of the remaining children.
According to the record, petitioner exercised custody of all four children at the time the DHHR
initiated the proceedings.
2
the provider, petitioner did not understand the importance of addressing the issues of abuse and
neglect and that “her judgment and decision making is problematic,” given that the provider was
“still addressing . . . domestic violence . . . and the case has been open for a year.” The provider
also discussed the condition of petitioner’s home, which lacked running water. According to the
provider, petitioner delayed correcting the issues with the home, instead simply “saying that she
was just getting it ready” throughout the entirety of the proceedings. The provider concluded that
there were no further services that could change petitioner’s circumstances.
A CPS worker testified and confirmed the unsuitable nature of petitioner’s home,
indicating that she visited the home shortly before the August of 2020 dispositional hearing and
it lacked running water. According to the CPS worker, the home had “actually gotten worse”
during the proceedings. The CPS worker testified that the home did not have a functioning front
door and was cluttered with belongings. According to the CPS worker, petitioner informed her
that “someone had broke in and moved stuff around.” The CPS worker also testified about
petitioner’s ongoing contact with her husband, who she had been directed to cease contacting
throughout the case because of the ongoing domestic violence between them and the fact that the
husband’s parental rights were terminated earlier in the proceedings. The CPS worker stated that
petitioner “still doesn’t believe that there was really any domestic violence” and that petitioner
“believes she has done nothing wrong that caused the . . . adjudication.” Finally, petitioner
testified and indicated that she had not had contact with her husband since his incarceration,
although she later contradicted herself by indicating that she had spoken with him at least once
since his incarceration. Despite reiterating at the September of 2020 dispositional hearing that
she had not spoken to her husband, the DHHR introduced a recording that established petitioner
had spoken with her husband the prior day. Petitioner denied that it was her voice on the
recording and testified repeatedly that she could not recall having spoken with her husband the
day prior.
Based on this evidence, the circuit court found that petitioner failed to establish by clear
and convincing evidence that she would comply with an improvement period based on her
failure to accept responsibility for her actions and the fact that she demonstrated no change in her
circumstances over fourteen months. According to the court, petitioner failed to provide a fit and
suitable home and “is not going to cease contact with” her husband. Further, the court found that
petitioner’s testimony regarding her contact with her husband was evasive and lacked credibility.
Accordingly, the court found that there was no reasonable likelihood that petitioner could
substantially correct the conditions of abuse and neglect and that termination of her rights was
necessary for the children’s welfare. As such, the court terminated petitioner’s “parental and all
other rights [she] may have” to all of the children. 3 It is from the dispositional order that
petitioner appeals.
The Court has previously established the following standard of review:
3
All parents’ parental rights to all of the children were terminated below. The
permanency plan for W.H., J.H., and I.H. is adoption together in the current foster home.
Seventeen-year-old C.H. is placed with a separate foster family with a permanency plan of legal
guardianship in that home.
3
“Although conclusions of law reached by a circuit court are subject to de
novo review, when an action, such as an abuse and neglect case, is tried upon the
facts without a jury, the circuit court shall make a determination based upon the
evidence and shall make findings of fact and conclusions of law as to whether
such child is abused or neglected. These findings shall not be set aside by a
reviewing court unless clearly erroneous. A finding is clearly erroneous when,
although there is evidence to support the finding, the reviewing court on the entire
evidence is left with the definite and firm conviction that a mistake has been
committed. However, a reviewing court may not overturn a finding simply
because it would have decided the case differently, and it must affirm a finding if
the circuit court’s account of the evidence is plausible in light of the record
viewed in its entirety.” Syl. Pt. 1, In Interest of Tiffany Marie S., 196 W. Va. 223,
470 S.E.2d 177 (1996).
Syl. Pt. 1, In re Cecil T., 228 W. Va. 89, 717 S.E.2d 873 (2011).
On appeal, petitioner argues that it was error to terminate her parental rights upon a
finding that she could not conform her conduct to satisfy the requirements of an improvement
period and when less-restrictive alternatives were available. Without belaboring petitioner’s
specific arguments, we find that the resolution of this matter turns entirely upon petitioner’s
failure to acknowledge the conditions of abuse and [email protected].
As this Court has routinely held,
[i]n order to remedy the abuse and/or neglect problem, the problem must first be
acknowledged. Failure to acknowledge the existence of the problem, i.e., the truth
of the basic allegation pertaining to the alleged abuse and neglect or the
perpetrator of said abuse and neglect, results in making the problem untreatable
and in making an improvement period an exercise in futility at the child’s
expense.
In re Timber M., 231 W. Va. 44, 55, 743 S.E.2d 352, 363 (2013) (citation omitted). The evidence
below was uncontroverted that petitioner failed to acknowledge or accept responsibility for the
children’s abuse and/or neglect. On appeal, petitioner distorts the record and attempts to
minimize her conduct in order to argue that termination of her parental rights was in error. These
arguments, however, are without merit.
According to petitioner, the circuit court did not provide her with an opportunity to prove
that she could modify her conduct or continue working on her residence to ensure that it was fit
and proper. The record, however, entirely contradicts this argument. Although it is true that
petitioner was never granted a formal improvement period, she ignores the fact that the DHHR
began providing services to address her issues prior to the initiation of the proceedings and
continued to do so throughout the entire case. Contrary to her argument, petitioner had over one
year to comply with services in an effort to remedy the conditions at issue, to no avail. Indeed,
witnesses at the dispositional hearings testified that petitioner not only failed to improve but, in
4
fact, denied that she engaged in domestic violence or was in any way responsible for her
adjudication as an abusive and neglectful parent. This was in spite of the fact that petitioner was
arrested for stabbing her husband roughly one month prior to the August of 2020 adjudicatory
hearing. Despite extensive services and an extended period to demonstrate improvement,
petitioner’s conduct with regard to domestic violence deteriorated. Similarly, DHHR personnel
testified that petitioner’s residence was in worse condition at the time of the dispositional
hearings than it was earlier in the proceedings. As such, it is clear that petitioner’s argument that
she was given no opportunity to demonstrate improvement is without merit.
On appeal to this Court, petitioner continues to ignore the abuse and/or neglect for which
she was adjudicated and minimizes her conduct by asserting that “[t]his was not a case where
[she] was physically abusive to her child/grandchildren, where she was addicted to drugs, or
where she did not have a good relationship with these children.” This argument only reinforces
the circuit court’s findings that petitioner failed to accept responsibility for her conduct and its
impact on the children below. While petitioner’s assertions may be true, the fact that she
attempts to characterize her abusive and/or neglectful conduct as somehow less harmful to the
children because it did not involve physical abuse or drug addiction only highlights her
continued refusal to accept responsibility for her conduct. While petitioner argues that she
established that she was likely to fully participate in an improvement period, as required by West
Virginia Code § 49-4-610, she nevertheless ignores the fact that her failure to acknowledge the
abuse and neglect at issue resulted in an improvement period being an exercise in futility. As we
have explained, a circuit court has discretion to deny an improvement period when no
improvement is likely. See In re Tonjia M., 212 W. Va. 443, 448, 573 S.E.2d 354, 359 (2002).
Indeed, petitioner clearly evidenced her refusal to comply with basic requirements below,
including that she have no contact with her husband. Not only did petitioner fail to comply with
this requirement, she actively engaged in additional domestic violence with him on at least one
occasion during the proceedings. Therefore, it is clear that the circuit court did not err in denying
petitioner an improvement period.
This same evidence also supports the circuit court’s termination of petitioner’s parental
rights. Again, petitioner’s refusal to acknowledge the conditions of abuse and neglect resulted in
those conditions being untreatable, which fully supports the circuit court’s finding that there was
no reasonable likelihood that the conditions of abuse and neglect could be substantially corrected
in the near future. West Virginia Code § 49-4-604(d) defines “[n]o reasonable likelihood that
conditions of neglect or abuse can be substantially corrected” as meaning “that, based upon the
evidence before the court, the abusing adult or adults have demonstrated an inadequate capacity
to solve the problems of abuse or neglect on their own or with help.” Given petitioner’s inability
to correct the conditions of abuse and neglect due to her refusal to acknowledge them, it is clear
the circuit court did not err in making this finding. Additionally, the court found that the
children’s welfare required termination of petitioner’s rights, given her failure to acknowledge,
or otherwise accept responsibility for, her conduct. Under West Virginia Code § 49-4-604(c)(6),
a circuit court may terminate parental rights upon these findings. Further, contrary to petitioner’s
argument that less-restrictive alternatives should have been employed, this Court has held that
“[t]ermination of parental rights, the most drastic remedy under the
statutory provision covering the disposition of neglected children, [West Virginia
5
Code § 49-4-604] . . . may be employed without the use of intervening less
restrictive alternatives when it is found that there is no reasonable likelihood
under [West Virginia Code § 49-4-604(d)] . . . that conditions of neglect or abuse
can be substantially corrected.” Syllabus point 2, In re R.J.M., 164 W. Va. 496,
266 S.E.2d 114 (1980).
Syl. Pt. 5, In re Kristin Y., 227 W. Va. 558, 712 S.E.2d 55 (2011). Accordingly, we find no error
in the circuit court’s termination of petitioner’s parental and other rights to the children.
For the foregoing reasons, we find no error in the decision of the circuit court, and its
October 5, 2020, order is hereby affirmed.
Affirmed.
ISSUED: April 20, 2021
CONCURRED IN BY:
Chief Justice Evan H. Jenkins
Justice Elizabeth D. Walker
Justice Tim Armstead
Justice John A. Hutchison
Justice William R. Wooton
6
|
805 F. Supp. 7 (1992)
Carroll E. MOORE, Plaintiff,
v.
INGRAM & ASSOCIATES, INC., Defendant.
No. 7:92-0428-20.
United States District Court, D. South Carolina, Spartanburg Division.
October 29, 1992.
*8 James J. Raman, Spartanburg, S.C., for plaintiff.
Perry D. Boulier, Spartanburg, S.C., for defendant.
ORDER
HERLONG, District Judge.
This matter is before the court on the motion for summary judgment by the defendant, Ingram & Associates, Inc. ("Ingram").
The facts of the case are not in dispute. This case arises from an attempt to collect a debt. Ingram sent a letter dated January 11, 1991, to the plaintiff, Carroll E. Moore ("Moore"), about a debt asserted to be owed by Moore to Wallace Thomson Hospital in the amount of One Thousand One Hundred Sixty-One Dollars and Eighty Cents ($1,161.80). This letter was the only communication between the parties. The letter provides in part:
Unless you notify this office within 30 days after receiving this notice that you dispute the validity of the debt or any portion thereof, this office will assume the debt is valid. If you notify this office in writing within 30 days from receiving this notice, this office will: obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification. (emphasis added).
It is not disputed that no judgment has been obtained against Moore. Moore brought this action under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. Moore alleges that the validation notice required by 15 U.S.C. § 1692g was misleading because it is stated in the alternative, and one of the alternatives does not apply to this case. "A debt collector may not use any false, deceptive, or misleading representations or means in connection with the collection of any debt...." 15 U.S.C. § 1692e (1982).
Under the FDCPA, the debt collector is required to send the consumer a written notice containing:
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of the judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of *9 the original creditor, if different from the current creditor.
15 U.S.C. § 1692g(a) (1982).
The portion of the January 11, 1991, letter that is alleged to be misleading is the statement required by 15 U.S.C. § 1692g(a)(4). The question presented in this case is whether the language of the January 11, 1991, letter is misleading in violation of 15 U.S.C. § 1692e. This is a matter of law. In determining this question, the court must determine if the notice would have the tendency to mislead the "least sophisticated recipients" of the letter. See Jeter v. Credit Bureau, Inc., 760 F.2d 1168 (11th Cir.1985); Baker v. G.C. Services Corp., 677 F.2d 775 (9th Cir.1982). This is an objective standard. Beattie v. D.M. Collections, Inc., 754 F. Supp. 383, 392 (D.Del.1991). It is immaterial how the plaintiff may have understood the statement. The court must look to whether the letter would mislead a general unsophisticated recipient.
The court can find only two cases in which the question of whether it is misleading to state in a validation notice that the debt collector will obtain "verification of the debt or a copy of a judgment" when no judgment exists is addressed. In re Barr, 54 B.R. 922 (D.Or.1984); Blackwell v. Professional Business Services of Georgia, Inc., 526 F. Supp. 535 (N.D.Ga.1981).[*] Each of those cases found that the use of language about a judgment, in the alternative, was not misleading even though no judgment existed.
Moore contends that having the notice provision in the alternative, with the use of the word "or" is misleading. The court does not agree. The mention of a judgment in the notice is merely an alternative means of confirmation of the debt. Even the least sophisticated consumer understands that the word "or" means that one of two alternatives will be taken. Moore seeks this court to find that "or" is misleading unless both of the alternatives apply to every situation. The court cannot make such a finding. The letter in this case does not threaten that a judgment will be sought nor does it imply that a judgment has been obtained.
Also, the language in the January 11, 1991, letter mirrors the language required by 15 U.S.C. § 1692g(a)(4). A debt collector, however, does not comply with § 1692g merely by including the required debt validation notice. Miller v. Payco-General American Credits, Inc., 943 F.2d 482, 484 (4th Cir.1991). The notice must be conveyed effectively to the debtor. Id. Unlike Miller, in which the notice language was overshadowed and contradicted by other language in the letter, this case involves a letter that contained the required language and conveyed it in a manner which could be understood by even the least sophisticated recipient.
Moore cites several informal opinion letters from a Federal Trade Commission attorney to the effect that reference to a judgment when none exists is misleading. The court agrees with the reasoning from the Blackwell case that these informal opinion letters are by no means binding on this court. Blackwell, 526 F.Supp. at 538-39. As did the court in Blackwell, this court declines to follow these informal opinion letters.
Based on the foregoing, the court finds that the January 11, 1991, letter did not contain any false, deceptive, or misleading representations in violation of 15 U.S.C. § 1692e. Therefore, it is
ORDERED that the defendant's motion for summary judgment is granted.
IT IS SO ORDERED.
NOTES
[*] Blackwell was decided on the "reasonable consumer" standard instead of the "least sophisticated recipient" standard. Although the court does not agree with the standard applied in Blackwell, the reasoning on whether the use of the word "judgment" was misleading is instructive.
|
Name: Regulation (EU) Noà 1077/2011 of the European Parliament and of the Council of 25à October 2011 establishing a European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice
Type: Regulation
Subject Matter: European construction; information and information processing; EU institutions and European civil service; international law; migration; information technology and data processing
Date Published: nan
1.11.2011 EN Official Journal of the European Union L 286/1 REGULATION (EU) No 1077/2011 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 October 2011 establishing a European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union and in particular Article 74, Article 77(2)(a) and (b), Article 78(2)(e), Article 79(2)(c), Article 82(1)(d), Article 85(1), Article 87(2)(a) and Article 88(2) thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Acting in accordance with the ordinary legislative procedure (1), Whereas: (1) The second-generation Schengen Information System (SIS II) was established by Regulation (EC) No 1987/2006 of the European Parliament and of the Council of 20 December 2006 on the establishment, operation and use of the second generation Schengen Information System (SIS II) (2) and by Council Decision 2007/533/JHA of 12 June 2007 on the establishment, operation and use of the second generation Schengen Information System (SIS II) (3). Regulation (EC) No 1987/2006 and Decision 2007/533/JHA provide that the Commission is to be responsible, during a transitional period, for the operational management of Central SIS II. After that transitional period, a Management Authority is to be responsible for the operational management of Central SIS II and certain aspects of the communication infrastructure. (2) The Visa Information System (VIS) was established by Council Decision 2004/512/EC of 8 June 2004 establishing the Visa Information System (VIS) (4). Regulation (EC) No 767/2008 of the European Parliament and of the Council of 9 July 2008 concerning the Visa Information System (VIS) and the exchange of data between Member States on short-stay visas (VIS Regulation) (5) provides that the Commission is to be responsible, during a transitional period, for the operational management of the VIS. After that transitional period, a Management Authority is to be responsible for the operational management of the Central VIS and of the national interfaces and for certain aspects of the communication infrastructure. (3) Eurodac was established by Council Regulation (EC) No 2725/2000 of 11 December 2000 concerning the establishment of Eurodac for the comparison of fingerprints for the effective application of the Dublin Convention (6). Council Regulation (EC) No 407/2002 (7) lays down necessary implementing rules. (4) It is necessary to establish a Management Authority in order to ensure the operational management of SIS II, VIS and Eurodac and of certain aspects of the communication infrastructure after the transitional period, and potentially that of other large-scale information technology (IT) systems in the area of freedom, security and justice, subject to the adoption of separate legislative instruments. (5) With a view to achieving synergies, it is necessary to provide for the operational management of those large-scale IT systems in a single entity, benefiting from economies of scale, creating critical mass and ensuring the highest possible utilisation rate of capital and human resources. (6) In the joint statements accompanying the SIS II and VIS legislative instruments, the European Parliament and the Council invited the Commission to present, following an impact assessment, the necessary legislative proposals entrusting an agency with the long-term operational management of Central SIS II and of certain aspects of the communication infrastructure, and of the VIS. (7) Since the Management Authority should have legal, administrative and financial autonomy it should be established in the form of a regulatory agency (Agency) having legal personality. As was agreed, the seat of the Agency should be in Tallinn (Estonia). However, since the tasks relating to technical development and the preparation for the operational management of SIS II and VIS are carried out in Strasbourg (France) and a backup site for those IT systems has been installed in Sankt Johann im Pongau (Austria), this should continue to be the case. Those two sites should also be the locations, respectively, where the tasks relating to technical development and operational management of Eurodac should be carried out and where a backup site for Eurodac should be established. Those two sites should also be the locations, respectively, for the technical development and operational management of other large-scale IT systems in the area of freedom, security and justice, and, if so provided in the relevant legislative instrument, for a backup site capable of ensuring the operation of a large-scale IT system in the event of failure of that system. (8) Consequently, the tasks of the Management Authority set out in Regulations (EC) No 1987/2006 and (EC) No 767/2008 should be exercised by the Agency. Those tasks include further technical development. (9) In accordance with Regulations (EC) No 2725/2000 and (EC) No 407/2002, a central Unit has been established within the Commission which is responsible for the operation of the central database of Eurodac and other tasks relating to it. In order to exploit synergies, the Agency should take over the Commissions tasks relating to the operational management of Eurodac including certain tasks relating to the communication infrastructure as from the date on which the Agency takes up its responsibilities. (10) The core function of the Agency should be to fulfil the operational management tasks for SIS II, VIS and Eurodac and, if so decided, other large-scale IT systems in the area of freedom, security and justice. The Agency should also be responsible for technical measures required by the tasks entrusted to it, which are not of a normative nature. Those responsibilities should be without prejudice to the normative tasks reserved to the Commission alone or to the Commission assisted by a Committee in the respective legislative instruments governing the systems operationally managed by the Agency. (11) In addition, the Agency should perfom tasks relating to training on the technical use of SIS II, VIS and Eurodac and other large-scale IT systems which might be entrusted to it in the future. (12) Furthermore, the Agency could also be made responsible for the preparation, development and operational management of additional large-scale IT systems in application of Articles 67 to 89 of the Treaty on the Functioning of the European Union (TFEU). The Agency should be entrusted with such tasks only by means of subsequent and separate legislative instruments, preceded by an impact assessment. (13) The Agency should be responsible for monitoring research and for carrying out pilot schemes, in accordance with Article 49(6)(a) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (8), for large-scale IT systems in application of Articles 67 to 89 TFEU, at the specific and precise request of the Commission. When tasked with carrying out a pilot scheme, the Agency should pay particular attention to the European Union Information Management Strategy. (14) Entrusting the Agency with the operational management of large-scale IT systems in the area of freedom, security and justice should not affect the specific rules applicable to those systems. In particular, the specific rules governing the purpose, access rights, security measures and further data protection requirements for each large-scale IT system the operational management of which the Agency is entrusted with, are fully applicable. (15) The Member States and the Commission should be represented on a Management Board, in order to control the functions of the Agency effectively. The Management Board should be entrusted with the necessary functions, in particular to adopt the annual work programme, carry out its functions relating to the Agencys budget, adopt the financial rules applicable to the Agency, appoint an Executive Director and establish procedures for taking decisions relating to the operational tasks of the Agency by the Executive Director. (16) As regards SIS II, the European Police Office (Europol) and the European Judicial Cooperation Unit (Eurojust), both having the right to access and search directly data entered into SIS II in application of Decision 2007/533/JHA, should have observer status at the meetings of the Management Board when a question in relation to the application of Decision 2007/533/JHA is on the agenda. Europol and Eurojust should each be able to appoint a representative to the SIS II Advisory Group established under this Regulation. (17) As regards VIS, Europol should have observer status at the meetings of the Management Board, when a question in relation to the application of Council Decision 2008/633/JHA of 23 June 2008 concerning access for consultation of the Visa Information System (VIS) by designated authorities of Member States and by Europol for the purposes of the prevention, detection and investigation of terrorist offences and of other serious criminal offences (9) is on the agenda. Europol should be able to appoint a representative to the VIS Advisory Group established under this Regulation. (18) Member States should have voting rights on the Management Board of the Agency concerning a large-scale IT system, if they are bound under Union law by any legislative instrument governing the development, establishment, operation and use of that particular system. Denmark should also have voting rights concerning a large-scale IT system, if it decides under Article 4 of the Protocol (No 22) on the position of Denmark, annexed to the Treaty on European Union (TEU) and the TFEU, (Protocol on the position of Denmark) to implement the legislative instrument governing the development, establishment, operation and use of that particular system in its national law. (19) Member States should appoint a Member to the Advisory Group concerning a large-scale IT system, if they are bound under Union law by any legislative instrument governing the development, establishment, operation and use of that particular system. Denmark should, in addition, appoint a Member to the Advisory Group concerning a large-scale IT system, if it decides under Article 4 of the Protocol on the position of Denmark to implement the legislative instrument governing the development, establishment, operation and use of that particular system in its national law. (20) In order to guarantee its full autonomy and independence, the Agency should be granted an autonomous budget with revenue from the general budget of the European Union. The financing of the Agency should be subject to an agreement by the budgetary authority as set out in point 47 of the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management (10). The Union budgetary and discharge procedures should be applicable. The auditing of accounts and of the legality and regularity of the underlying transactions should be undertaken by the Court of Auditors. (21) Within the framework of their respective competences, the Agency should cooperate with other agencies of the Union, in particular those established in the area of freedom, security and justice, and, in particular, the European Union Agency for Fundamental Rights. It should also consult and follow up the recommendations of the European Network and Information Security Agency regarding network security, where appropriate. (22) When ensuring the development and the operational management of large-scale IT systems, the Agency should follow European and international standards taking into account the highest professional requirements, in particular the European Union Information Management Strategy. (23) Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data (11) should apply to the processing of personal data by the Agency. The European Data Protection Supervisor should be able to obtain from the Agency access to all information necessary for his or her enquiries. In accordance with Article 28 of Regulation (EC) No 45/2001, the Commission consulted the European Data Protection Supervisor, who delivered his opinion on 7 December 2009. (24) In order to ensure the transparent operation of the Agency, Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (12) should apply to the Agency. The activities of the Agency should be subject to the scrutiny of the European Ombudsman in accordance with Article 228 TFEU. (25) Regulation (EC) No 1073/1999 of the European Parliament and of the Council of 25 May 1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) (13) should apply to the Agency, which should accede to the Interinstitutional Agreement of 25 May 1999 between the European Parliament, the Council of the European Union and the Commission of the European Communities concerning internal investigations by the European Anti-Fraud Office (OLAF) (14). (26) The Agencys host Member States should provide the best possible conditions to ensure the proper functioning of the Agency, for example including multilingual, European-oriented schooling and appropriate transport connections. (27) In order to ensure open and transparent employment conditions and equal treatment of staff, the Staff Regulations of Officials of the European Union (Staff Regulations of Officials) and the Conditions of Employment of Other Servants of the European Union (Conditions of Employment), laid down in Regulation (EEC, Euratom, ECSC) No 259/68 (15) (together referred to as the Staff Regulations), should apply to the staff and to the Executive Director of the Agency, including the rules of professional secrecy or other equivalent duties of confidentiality. (28) The Agency is a body set up by the Union in the sense of Article 185(1) of Regulation (EC, Euratom) No 1605/2002 and should adopt its financial rules accordingly. (29) Commission Regulation (EC, Euratom) No 2343/2002 (16) on the framework Financial Regulation for the bodies referred to in Article 185 of Regulation (EC, Euratom) No 1605/2002 should apply to the Agency. (30) Since the objectives of this Regulation, namely the establishment of an Agency at Union level responsible for the operational management and where appropriate the development of large-scale IT systems in the area of freedom, security and justice cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale and effects of the action, be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary to achieve those objectives. (31) This Regulation respects fundamental rights and observes the principles recognised by the Charter of Fundamental Rights of the European Union in accordance with Article 6(1) TEU. (32) In accordance with Articles 1 and 2 of the Protocol on the Position of Denmark, Denmark is not taking part in the adoption of this Regulation and is not bound by it or subject to its application. Given that this Regulation, insofar as it relates to SIS II and VIS, builds upon the Schengen acquis, Denmark shall, in accordance with Article 4 of that Protocol, decide within a period of 6 months of the date of adoption of this Regulation whether it will implement it in its national law. In accordance with Article 3 of the Agreement between the European Community and the Kingdom of Denmark on the criteria and mechanisms for establishing the State responsible for examining a request for asylum lodged in Denmark or any other Member State of the European Union and Eurodac for the comparison of fingerprints for the effective application of the Dublin Convention (17), Denmark is to notify the Commission whether it will implement the contents of this Regulation, insofar as it relates to Eurodac. (33) Insofar as its provisions relate to SIS II as governed by Decision 2007/533/JHA, the United Kingdom is taking part in this Regulation, in accordance with Article 5(1) of Protocol (No 19) on the Schengen acquis integrated into the framework of the European Union, annexed to the TEU and to the TFEU (Protocol on the Schengen acquis), and Article 8(2) of Council Decision 2000/365/EC of 29 May 2000 concerning the request of the United Kingdom of Great Britain and Northern Ireland to take part in some of the provisions of the Schengen acquis (18). Insofar as its provisions relate to SIS II as governed by Regulation (EC) No 1987/2006 and to VIS, which constitute developments of provisions of the Schengen acquis in which the United Kingdom does not take part in accordance with Decision 2000/365/EC, the United Kingdom requested, by letter of 5 October 2010 to the President of the Council, to be authorised to take part in the adoption of this Regulation, in accordance with Article 4 of the Protocol on the Schengen acquis. By virtue of Article 1 of Council Decision 2010/779/EU of 14 December 2010 concerning the request of the United Kingdom of Great Britain and Northern Ireland to take part in some of the provisions of the Schengen acquis relating to the establishment of a European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (19), the United Kingdom has been authorised to take part in this Regulation. Furthermore, insofar as its provisions relate to Eurodac, the United Kingdom has notified, by letter of 23 September 2009 to the President of the Council, its wish to take part in the adoption and application of this Regulation, in accordance with Article 3 of Protocol (No 21) on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, annexed to the TEU and to the TFEU (Protocol on the position of the United Kingdom and Ireland). The United Kingdom therefore takes part in the adoption of this Regulation, is bound by it and subject to its application. (34) Insofar as its provisions relate to SIS II as governed by Regulation (EC) No 1987/2006 and to VIS, this Regulation constitutes a development of provisions of the Schengen acquis in which Ireland does not take part, in accordance with Council Decision 2002/192/EC of 28 February 2002 concerning Irelands request to take part in some of the provisions of the Schengen acquis (20). Ireland has not requested to take part in the adoption of this Regulation, in accordance with Article 4 of the Protocol on the Schengen acquis. Ireland is therefore not taking part in the adoption of this Regulation and is not bound by it or subject to its application to the extent that its measures develop provisions of the Schengen acquis as they relate to SIS II as governed by Regulation (EC) No 1987/2006 and to VIS. Insofar as its provisions relate to Eurodac, in accordance with Articles 1 and 2 of the Protocol on the position of the United Kingdom and Ireland, Ireland is not taking part in the adoption of this Regulation and is not bound by it or subject to its application. Since it is not possible, under these circumstances, to ensure the applicability of this Regulation to Ireland in its entirety, as required by Article 288 TFEU, Ireland is not taking part in the adoption of this Regulation and is not bound by it or subject to its application, without prejudice to its rights under the aforementioned Protocols. (35) As regards Iceland and Norway, this Regulation constitutes, insofar as it relates to SIS II and VIS, a development of the provisions of the Schengen acquis within the meaning of the Agreement concluded by the Council of the European Union and the Republic of Iceland and the Kingdom of Norway concerning the latters association with the implementation, application and development of the Schengen acquis (21) which fall within the area referred to in Article 1, points A, B and G of Council Decision 1999/437/EC of 17 May 1999 on certain arrangements for the application of that Agreement (22). As regards Eurodac, this Regulation constitutes a new measure related to Eurodac within the meaning of the Agreement between the European Community and the Republic of Iceland and the Kingdom of Norway concerning the criteria and mechanisms for establishing the State responsible for examining a request for asylum lodged in a Member State or in Iceland or Norway (23). Consequently, subject to their decision to implement it in their internal legal order, delegations of the Republic of Iceland and the Kingdom of Norway should participate in the Management Board of the Agency. In order to determine further detailed rules, for example voting rights, allowing for the participation of the Republic of Iceland and the Kingdom of Norway in the activities of the Agency, a further arrangement should be concluded between the Union and these States. (36) As regards Switzerland, this Regulation constitutes, insofar as it relates to SIS II and VIS, a development of the provisions of the Schengen acquis within the meaning of the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederations association with the implementation, application and development of the Schengen acquis (24) which fall within the area referred to in Article 1, points A, B and G of Decision 1999/437/EC read in conjunction with Article 3 of Council Decision 2008/146/EC (25). As regards Eurodac, this Regulation constitutes a new measure related to Eurodac within the meaning of the Agreement between the European Community and the Swiss Confederation concerning the criteria and mechanisms for establishing the State responsible for examining a request for asylum lodged in a Member State or in Switzerland (26). Consequently, subject to its decision to implement it in their internal legal order, the delegation of the Swiss Confederation should participate in the Management Board of the Agency. In order to determine further detailed rules, for example voting rights, allowing for the participation of the Swiss Confederation in the activities of the Agency, a further arrangement should be concluded between the Union and the Swiss Confederation. (37) As regards Liechtenstein, this Regulation constitutes, insofar as it relates to SIS II and VIS, a development of the provisions of the Schengen acquis within the meaning of the Protocol between the European Union, the European Community, the Swiss Confederation and the Principality of Liechtenstein on the accession of the Principality of Liechtenstein to the Agreement between the European Union, the European Community and the Swiss Confederation on the Swiss Confederations association with the implementation, application and development of the Schengen acquis (27) which fall within the area referred to in Article 1, points A, B and G of Decision 1999/437/EC read in conjunction with Article 3 of Council Decision 2011/350/EU (28). As regards Eurodac, this Regulation constitutes a new measure related to Eurodac within the meaning of the Protocol between the European Community, the Swiss Confederation and the Principality of Liechtenstein on the accession of the Principality of Liechtenstein to the Agreement between the European Community and the Swiss Confederation concerning the criteria and mechanisms for establishing the State responsible for examining a request for asylum lodged in a Member State or in Switzerland (29). Consequently, the delegation of the Principality of Liechtenstein should participate in the Management Board of the Agency. In order to determine further detailed rules, for example voting rights, allowing for the participation of the Principality of Liechtenstein in the activities of the Agency, a further arrangement should be concluded between the Union and the Principality of Liechtenstein, HAVE ADOPTED THIS REGULATION: CHAPTER I SUBJECT MATTER Article 1 Establishment of the Agency 1. A European agency for the operational management of large-scale IT systems in the area of freedom, security and justice (the Agency) is hereby established. 2. The Agency shall be responsible for the operational management of the second-generation Schengen Information System (SIS II), the Visa Information System (VIS) and Eurodac. 3. The Agency may also be made responsible for the preparation, development and operational management of large-scale IT systems in the area of freedom, security and justice other than those referred to in paragraph 2, only if so provided by relevant legislative instruments, based on Articles 67 to 89 TFEU, taking into account, where appropriate, the developments in research referred to in Article 8 of this Regulation and the results of pilot schemes referred to in Article 9 of this Regulation. 4. Operational management shall consist of all the tasks necessary to keep large-scale IT systems functioning in accordance with the specific provisions applicable to each of them, including responsibility for the communication infrastructure used by them. Those large-scale IT systems shall not exchange data or enable sharing of information or knowledge, unless so provided in a specific legal basis. Article 2 Objectives Without prejudice to the respective responsibilities of the Commission and of the Member States under the legislative instruments governing large-scale IT systems, the Agency shall ensure: (a) effective, secure and continuous operation of large-scale IT systems; (b) the efficient and financially accountable management of large-scale IT systems; (c) an adequately high quality of service for users of large-scale IT systems; (d) continuity and uninterrupted service; (e) a high level of data protection, in accordance with the applicable rules, including specific provisions for each large-scale IT system; (f) an appropriate level of data and physical security, in accordance with the applicable rules, including specific provisions for each large-scale IT system; and (g) the use of an adequate project management structure for efficiently developing large-scale IT systems. CHAPTER II TASKS Article 3 Tasks relating to SIS II In relation to SIS II, the Agency shall perform: (a) the tasks conferred on the Management Authority by Regulation (EC) No 1987/2006 and Decision 2007/533/JHA; and (b) tasks relating to training on the technical use of SIS II, in particular for SIRENE-staff (SIRENE Supplementary Information Request at the National Entries) and training of experts on the technical aspects of SIS II in the framework of Schengen evaluation. Article 4 Tasks relating to VIS In relation to VIS, the Agency shall perform: (a) the tasks conferred on the Management Authority by Regulation (EC) No 767/2008 and Decision 2008/633/JHA; and (b) tasks relating to training on the technical use of VIS. Article 5 Tasks relating to Eurodac In relation to Eurodac, the Agency shall perform: (a) the tasks conferred on the Commission as the authority responsible for the operational management of Eurodac in accordance with Regulations (EC) No 2725/2000 and (EC) No 407/2002; (b) tasks relating to the communication infrastructure, namely: supervision, security and coordination of relations between the Member States and the provider; and (c) tasks relating to training on the technical use of Eurodac. Article 6 Tasks relating to the preparation, development and operational management of other large-scale IT systems When entrusted with the preparation, development and operational management of other large-scale IT systems referred to in Article 1(3), the Agency shall perform tasks relating to training on the technical use of those systems, as appropriate. Article 7 Tasks relating to the communication infrastructure 1. The Agency shall carry out the tasks relating to the communication infrastructure conferred on the Management Authority by the legislative instruments governing the development, establishment, operation and use of large-scale IT systems referred to in Article 1(2). 2. According to the legislative instruments referred to in paragraph 1, the tasks regarding the communication infrastructure (including the operational management and security) are divided between the Agency and the Commission. In order to ensure coherence between the exercise of their respective responsibilities, operational working arrangements shall be made between the Agency and the Commission and reflected in a Memorandum of Understanding. 3. The communication infrastructure shall be adequately managed and controlled in order to protect it from threats, and to ensure its security and that of large-scale IT systems, including that of data exchanged through the communication infrastructure. 4. Appropriate measures including security plans shall be adopted, inter alia, to prevent the unauthorised reading, copying, modification or deletion of personal data during transfers of personal data or transport of data media, in particular by means of appropriate encryption techniques. No system-related operational information shall circulate in the communication infrastructure without encryption. 5. Tasks relating to the operational management of the communication infrastructure may be entrusted to external private-sector entities or bodies in accordance with Regulation (EC, Euratom) No 1605/2002. In such a case, the network provider shall be bound by the security measures referred to in paragraph 4 and shall have no access to SIS II, VIS or Eurodac operational data, or to the SIS II-related SIRENE exchange, by any means. 6. Without prejudice to the existing contracts on the network of SIS II, VIS and Eurodac, the management of the encryption keys shall remain within the competence of the Agency and shall not be outsourced to any external private-sector entity. Article 8 Monitoring of research 1. The Agency shall monitor the developments in research relevant for the operational management of SIS II, VIS, Eurodac and other large-scale IT systems. 2. The Agency shall on a regular basis keep the European Parliament, the Council, the Commission, and, where data protection issues are concerned, the European Data Protection Supervisor, informed of the developments referred to in paragraph 1. Article 9 Pilot schemes 1. Only upon the specific and precise request of the Commission, which shall have informed the European Parliament and the Council at least 3 months in advance, and after a decision by the Management Board, the Agency may, in accordance with Article 12(1)(l), carry out pilot schemes as referred to in Article 49(6)(a) of Regulation (EC, Euratom) No 1605/2002, for the development or the operational management of large-scale IT systems, in the application of Articles 67 to 89 TFEU. The Agency shall on a regular basis keep the European Parliament, the Council and, where data protection issues are concerned, the European Data Protection Supervisor, informed of the evolution of the pilot schemes referred to in the first subparagraph. 2. Financial appropriations for pilot schemes as requested by the Commission shall be entered in the budget for no more than two successive financial years. CHAPTER III STRUCTURE AND ORGANISATION Article 10 Legal status 1. The Agency shall be a Union body and shall have legal personality. 2. In each of the Member States, the Agency shall enjoy the most extensive legal capacity accorded to legal persons under national law. It may, in particular, acquire or dispose of movable and immovable property and may be a party to legal proceedings. It may also conclude agreements concerning the seat of the Agency and the sites set up in accordance with paragraph 4 with the Member States on whose territories the seat and the technical and backup sites are situated (host Member States). 3. The Agency shall be represented by its Executive Director. 4. The seat of the Agency shall be Tallinn, Estonia. The tasks relating to development and operational management referred to in Article 1(3) and Articles 3, 4, 5 and 7 shall be carried out in Strasbourg, France. A backup site capable of ensuring the operation of a large-scale IT system in the event of a failure of such a system shall be installed in Sankt Johann im Pongau, Austria, if a backup site is provided for in the legislative instrument governing its development, establishment, operation and use. Article 11 Structure 1. The Agencys administrative and management structure shall comprise: (a) a Management Board; (b) an Executive Director; (c) Advisory Groups. 2. The Agencys structure shall also include: (a) a Data Protection Officer; (b) a Security Officer; (c) an Accounting Officer. Article 12 Functions of the Management Board 1. In order to ensure that the Agency carry out its tasks, the Management Board shall: (a) appoint, and if appropriate dismiss, the Executive Director, in accordance with Article 18; (b) exercise disciplinary authority over the Executive Director and oversee his performance including the implementation of the Management Boards decisions; (c) establish the Agencys organisational structure after consulting the Commission; (d) establish the rules of procedure of the Agency after consulting the Commission; (e) approve, following a proposal by the Executive Director, the Headquarters Agreement concerning the seat of the Agency and Agreements concerning the technical and backup sites set up in accordance with Article 10(4) to be signed by the Executive Director with the host Member States; (f) in agreement with the Commission, adopt the necessary implementing measures referred to in Article 110 of the Staff Regulations of Officials; (g) adopt the necessary implementing measures on the secondment of national experts to the Agency; (h) adopt a multi-annual work programme based on the tasks referred to in Chapter II on the basis of a draft submitted by the Executive Director as referred to in Article 17, after consulting the Advisory Groups referred to in Article 19, and following receipt of the Commissions opinion. The multi-annual work programme shall, without prejudice to the annual budgetary procedure, include a multi-annual budget estimate and ex ante evaluations in order to structure the objectives and the different stages of the multi-annual planning; (i) adopt a multi-annual staff policy plan and a draft annual work programme and submit them by 31 March each year to the Commission and the budgetary authority; (j) by 30 September each year, and after receiving the opinion of the Commission, adopt by a two-thirds majority of its members with the right to vote, and in accordance with the annual budgetary procedure and the Union legislative programme in areas under Articles 67 to 89 TFEU, the Agencys annual work programme for the following year; and ensure that the adopted work programme is transmitted to the European Parliament, the Council and the Commission and published; (k) by 31 March each year, adopt the Agencys annual activity report for the previous year comparing, in particular, the results achieved with the objectives of the annual work programme and transmit it by 15 June of the same year to the European Parliament, the Council, the Commission and the Court of Auditors; the annual activity report shall be published; (l) carry out its functions relating to the Agencys budget, including the implementation of pilot schemes as referred to in Article 9, pursuant to Article 32, Article 33(6) and Article 34; (m) adopt the financial rules applicable to the Agency in accordance with Article 34; (n) appoint an Accounting Officer who shall be functionally independent in the performance of his duties; (o) ensure adequate follow-up to the findings and recommendations stemming from the various internal or external audit reports and evaluations; (p) adopt the necessary security measures, including a security plan and a business continuity and disaster recovery plan, taking into account the possible recommendations of the security experts present in the Advisory Groups; (q) appoint a Security Officer; (r) appoint a Data Protection Officer in accordance with Regulation (EC) No 45/2001; (s) adopt, by 22 May 2012, the practical arrangements for implementing Regulation (EC) No 1049/2001; (t) adopt the reports on the technical functioning of SIS II pursuant to Article 50(4) of Regulation (EC) No 1987/2006 and Article 66(4) of Decision 2007/533/JHA respectively and of VIS pursuant to Article 50(3) of Regulation (EC) No 767/2008 and Article 17(3) of Decision 2008/633/JHA; (u) adopt the annual report on the activities of the Central Unit of Eurodac pursuant to Article 24(1) of Regulation (EC) No 2725/2000; (v) make comments on the European Data Protection Supervisors reports on the audits pursuant to Article 45 of Regulation (EC) No 1987/2006 and Article 42(2) of Regulation (EC) No 767/2008 and ensure appropriate follow-up of the audits; (w) publish statistics related to SIS II pursuant to Article 50(3) of Regulation (EC) No 1987/2006 and Article 66(3) of Decision 2007/533/JHA respectively; (x) compile statistics on the work of the Central Unit of Eurodac pursuant to Article 3(3) of Regulation (EC) No 2725/2000; (y) ensure annual publication of the list of competent authorities authorised to search directly the data contained in SIS II pursuant to Article 31(8) of Regulation (EC) No 1987/2006 and Article 46(8) of Decision 2007/533/JHA, together with the list of Offices of the national systems of SIS II (N.SIS II) and SIRENE Bureaux as referred to in Article 7(3) of Regulation (EC) No 1987/2006 and Article 7(3) of Decision 2007/533/JHA respectively; (z) ensure annual publication of the list of authorities designated pursuant to Article 15(2) of Regulation (EC) No 2725/2000; (aa) perform any other tasks conferred on it in accordance with this Regulation. 2. The Management Board may advise the Executive Director on any matter strictly related to the development or operational management of large-scale IT systems. Article 13 Composition of the Management Board 1. The Management Board shall be composed of one representative of each Member State and two representatives of the Commission. 2. Each Member State and the Commission shall appoint the members of the Management Board as well as alternate members, by 22 January 2012. After the expiry of that period, the Commission shall convene the Management Board. In their absence, members shall be represented by their alternates. 3. The members of the Management Board shall be appointed on the basis of the high level of their relevant experience and expertise in the field of large-scale IT systems in the area of freedom, security and justice, and knowledge in data protection. 4. The term of office of the members shall be 4 years. It may be renewed once. Upon expiry of their term of office or in the event of their resignation, members shall remain in office until their appointments are renewed or until they are replaced. 5. Countries associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures shall participate in the activities of the Agency. They shall each appoint one representative and an alternate to the Management Board. Article 14 Chairmanship of the Management Board 1. The Management Board shall elect a Chairperson and a deputy Chairperson from among its members. 2. The term of office of the Chairperson and the deputy Chairperson shall be 2 years. Their term of office may be renewed once. If, however, their membership of the Management Board ends at any time during their term of office, their term of office shall automatically expire on that date also. 3. The Chairperson and the deputy Chairperson shall be elected only from among those members of the Management Board who are appointed by Member States which are fully bound under Union law by the legislative instruments governing the development, establishment, operation and use of all large-scale IT systems managed by the Agency. Article 15 Meetings of the Management Board 1. The meetings of the Management Board shall be convened at the request of any of the following: (a) its Chairperson; (b) at least a third of its members; (c) the Commission; (d) the Executive Director. The Management Board shall hold at least one ordinary meeting every 6 months. 2. The Executive Director shall participate in the meetings of the Management Board. 3. The members of the Management Board may be assisted by experts who are members of the Advisory Groups. 4. Europol and Eurojust may attend the meetings of the Management Board as observers when a question concerning SIS II in relation to the application of Decision 2007/533/JHA is on the agenda. Europol may also attend the meetings of the Management Board as an observer when a question concerning VIS, in relation to the application of Decision 2008/633/JHA, is on the agenda. 5. The Management Board may invite any other person whose opinion may be of interest, to attend its meetings as an observer. 6. The Agency shall provide the Management Board with a secretariat. Article 16 Voting 1. Without prejudice to paragraph 5 of this Article, and to Article 12(1)(j) and Article 18(1) and (7), decisions of the Management Board shall be taken by a majority of all its members with a right to vote. 2. Without prejudice to paragraph 3, each member in the Management Board shall have one vote. 3. Each member appointed by a Member State which is bound under Union law by any legislative instrument governing the development, establishment, operation and use of a large-scale IT system managed by the Agency may vote on a question which concerns that large-scale IT system. In addition, as regards Denmark, it may vote on a question which concerns such a large-scale IT system, if it decides under Article 4 of the Protocol on the position of Denmark to implement the legislative instrument governing the development, establishment, operation and use of such a large-scale IT system in its national law. 4. Regarding countries associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures, Article 37 shall apply. 5. In the case of a disagreement among members about whether a specific large-scale IT system is affected by a vote, any decision that it is not so affected shall be taken by a two-thirds majority. 6. The Executive Director shall not vote. 7. More detailed voting arrangements shall be established in the rules of procedure of the Agency, in particular the conditions under which a member may act on behalf of another member as well as any quorum requirements, where appropriate. Article 17 Functions and powers of the Executive Director 1. The Agency shall be managed and represented by its Executive Director. 2. The Executive Director shall be independent in the performance of his duties. Without prejudice to the respective competences of the Commission and the Management Board, the Executive Director shall neither seek nor take instructions from any government or other body. 3. Without prejudice to Article 12, the Executive Director shall assume full responsibility for the tasks entrusted to the Agency and shall be subject to the procedure for annual discharge by the European Parliament for the implementation of the budget. 4. The European Parliament or the Council may invite the Executive Director to report on the implementation of his tasks. 5. The Executive Director shall: (a) ensure the Agencys day-to-day administration; (b) ensure the Agencys operation in accordance with this Regulation; (c) prepare and implement the procedures, decisions, strategies, programmes and activities adopted by the Management Board, within the limits specified by this Regulation, its implementing rules and the applicable law; (d) establish and implement an effective system enabling regular monitoring and evaluations of: (i) large-scale IT systems, including statistics; and (ii) the Agency, including the effective and efficient achievement of its objectives; (e) participate, without the right to vote, in the meetings of the Management Board; (f) exercise with respect to the Agencys staff the powers laid down in Article 20(3) and manage staff matters; (g) without prejudice to Article 17 of the Staff Regulations of Officials, establish confidentiality requirements in order to comply with Article 17 of Regulation (EC) No 1987/2006, Article 17 of Decision 2007/533/JHA and Article 26(9) of Regulation (EC) No 767/2008 respectively and in order to apply appropriate rules of professional secrecy or other equivalent duties of confidentiality to the Agencys staff required to work with Eurodac data; (h) negotiate and, after approval by the Management Board, sign a Headquarters Agreement concerning the seat of the Agency and Agreements concerning technical and backup sites with the Governments of the host Member States. 6. The Executive Director shall submit to the Management Board for adoption, in particular, the drafts of the following: (a) the Agencys annual work programme and its annual activity report, after prior consultation of the Advisory Groups; (b) the financial rules applicable to the Agency; (c) the multi-annual work programme; (d) the budget for the coming year, established on the basis of activity-based budgeting; (e) the multi-annual Staff Policy Plan; (f) the terms of reference for the evaluation referred to in Article 31; (g) the practical arrangements for implementing Regulation (EC) No 1049/2001; (h) the necessary security measures including a security plan, and a business continuity and disaster recovery plan; (i) reports on the technical functioning of each large-scale IT system referred to in Article 12(1)(t) and the annual report on the activities of the Central Unit of Eurodac referred to in Article 12(1)(u), on the basis of the results of monitoring and evaluation; (j) the annual list, for publication, of competent authorities authorised to search directly the data contained in SIS II, including the list of N.SIS II Offices and SIRENE Bureaux, referred to in Article 12(1)(y) and the list of authorities referred to in Article 12(1)(z). 7. The Executive Director shall perform any other tasks in accordance with this Regulation. Article 18 Appointment of the Executive Director 1. The Management Board shall appoint the Executive Director for a term of office of 5 years from a list of eligible candidates identified in an open competition organised by the Commission. The selection procedure shall provide for publication in the Official Journal of the European Union and elsewhere of a call for expressions of interest. The Management Board may require a repeated procedure if it is not satisfied with the suitability of any of the candidates retained in the list. The Management Board shall appoint the Executive Director on the basis of personal merit, experience in the field of large-scale IT systems and administrative, financial and management skills as well as knowledge in data protection. The Management Board shall take its decision to appoint the Executive Director by a two-thirds majority of all its members with a right to vote. 2. Before appointment, the candidate selected by the Management Board shall be invited to make a statement before the competent committee(s) of the European Parliament and answer questions from the committee members. After such a statement, the European Parliament shall adopt an opinion setting out its view of the selected candidate. The Management Board shall inform the European Parliament of the manner in which that opinion has been taken into account. The opinion shall be treated as personal and confidential until the appointment of the candidate. 3. In the course of the 9 months preceding the end of the five-year term of office, the Management Board, in close consultation with the Commission, shall undertake an evaluation in which it shall assess, in particular, the results achieved during the Executive Directors first term of office and how they were achieved. 4. The Management Board, taking into account the evaluation report, and only in those cases where it can be justified by the objectives and tasks of the Agency, may extend the term of office of the Executive Director once for up to 3 years. 5. The Management Board shall inform the European Parliament about its intention to extend the Executive Directors term of office. Within the month before any such extension, the Executive Director shall be invited to make a statement before the competent committee(s) of the European Parliament and answer questions from the committee members. 6. The Executive Director shall be accountable to the Management Board. 7. The Management Board may dismiss the Executive Director. The Management Board shall take such a decision by a two-thirds majority of all its members with a right to vote. Article 19 Advisory Groups 1. The following Advisory Groups shall provide the Management Board with expertise relating to large-scale IT systems and, in particular, in the context of the preparation of the annual work program and the annual activity report: (a) SIS II Advisory Group; (b) VIS Advisory Group; (c) Eurodac Advisory Group; (d) any other Advisory Group relating to a large-scale IT system when so provided in the relevant legislative instrument governing the development, establishment, operation and use of that large-scale IT system. 2. Each Member State which is bound under Union law by any legislative instrument governing the development, establishment, operation and use of a particular large-scale IT system, as well as the Commission, shall appoint one member to the Advisory Group relating to that large-scale IT system, for a three-year term, which may be renewed. As regards Denmark, it shall also appoint a member to an Advisory Group relating to a large-scale IT system, if it decides under Article 4 of the Protocol on the position of Denmark to implement the legislative instrument governing the development, establishment, operation and use of that particular large-scale IT system in its national law. Each country associated with the implementation, application and development of the Schengen acquis, Eurodac-related measures and the measures related to other large-scale IT systems which participates in a particular large-scale IT system shall appoint a member to the Advisory Group relating to that large-scale IT system. 3. Europol and Eurojust may each appoint a representative to the SIS II Advisory Group. Europol may also appoint a representative to the VIS Advisory Group. 4. Members of the Management Board shall not be members of any of the Advisory Groups. The Executive Director or the Executive Directors representative shall be entitled to attend all the meetings of the Advisory Groups as observers. 5. The procedures for the operation and cooperation of the Advisory Groups shall be laid down in the Agencys rules of procedure. 6. When preparing an opinion, the members of each Advisory Group shall do their best to reach a consensus. If such a consensus is not reached, the opinion shall consist of the reasoned position of the majority of members. The minority reasoned position(s) shall also be recorded. Article 16(3) and (4) shall apply accordingly. The members representing the countries associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures shall be allowed to express opinions on issues on which they are not entitled to vote. 7. Each Member State and each country associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures shall facilitate the activities of the Advisory Groups. 8. For the chairmanship of the Advisory Groups, Article 14 shall apply mutatis mutandis. CHAPTER IV GENERAL PROVISIONS Article 20 Staff 1. The Staff Regulations and the rules adopted jointly by the Union institutions for the purpose of applying the Staff Regulations shall apply to the staff of the Agency and to the Executive Director. 2. For the purpose of implementing the Staff Regulations, the Agency shall be considered an agency within the meaning of Article 1a(2) of the Staff Regulations of Officials. 3. The powers conferred on the Appointing Authority by the Staff Regulations of Officials and on the authority entitled to conclude contracts by the Conditions of Employment shall be exercised by the Agency in respect of its own staff. 4. The staff of the Agency shall consist of officials, temporary staff or contract staff. The Management Board shall give its consent on an annual basis where the contracts that the Executive Director plans to renew would become indefinite pursuant to the Conditions of Employment. 5. The Agency shall not recruit interim staff to perform what are deemed to be sensitive financial duties. 6. The Commission and the Member States may second officials or national experts to the Agency on a temporary basis. The Management Board shall, taking into account the multi-annual staff policy plan, adopt the necessary implementing measures for that purpose. 7. Without prejudice to Article 17 of the Staff Regulations of Officials, the Agency shall apply appropriate rules of professional secrecy or other equivalent duties of confidentiality. 8. The Management Board shall, in agreement with the Commission, adopt the necessary implementing measures referred to in Article 110 of the Staff Regulations of Officials. Article 21 Public interest The members of the Management Board, the Executive Director and the members of the Advisory Groups shall undertake to act in the public interest. For that purpose they shall issue an annual, written, public statement of commitment. The list of members of the Management Board shall be published on the Agencys Internet site. Article 22 Headquarters Agreement and Agreements concerning the technical and backup sites The necessary arrangements concerning the accommodation to be provided for the Agency in the host Member States and the facilities to be made available by those Member States and the specific rules applicable in the host Member States to the Executive Director, the members of the Management Board, staff of the Agency and members of their families shall be laid down in a Headquarters Agreement concerning the seat of the Agency and in Agreements concerning the technical and backup sites, concluded between the Agency and the host Member States after obtaining the approval of the Management Board. Article 23 Privileges and immunities The Protocol on the Privileges and Immunities of the European Union shall apply to the Agency. Article 24 Liability 1. The contractual liability of the Agency shall be governed by the law applicable to the contract in question. 2. The Court of Justice of the European Union shall have jurisdiction to give judgment pursuant to any arbitration clause contained in a contract concluded by the Agency. 3. In the case of non-contractual liability, the Agency shall, in accordance with the general principles common to the laws of the Member States, make good any damage caused by its departments or by its servants in the performance of their duties. 4. The Court of Justice of the European Union shall have jurisdiction in disputes relating to compensation for the damage referred to in paragraph 3. 5. The personal liability of the Agencys staff towards the Agency shall be governed by the provisions laid down in the Staff Regulations. Article 25 Linguistic regime 1. Regulation No 1 of 15 April 1958 determining the languages to be used by the European Economic Community (30) shall apply to the Agency. 2. Without prejudice to decisions taken pursuant to Article 342 TFEU, the annual work programme and the annual activity report referred to in Article 12(1)(j) and (k), shall be produced in all official languages of the institutions of the Union. 3. The translation services necessary for the activities of the Agency shall be provided by the Translation Centre for the Bodies of the European Union. Article 26 Access to documents 1. On the basis of a proposal by the Executive Director, and not later than 6 months after 1 December 2012, the Management Board shall adopt rules concerning access to the Agencys documents, in accordance with Regulation (EC) No 1049/2001. 2. Decisions taken by the Agency pursuant to Article 8 of Regulation (EC) No 1049/2001 may give rise to the lodging of a complaint to the European Ombudsman or form the subject of an action before the Court of Justice of the European Union, under the conditions laid down in Articles 228 and 263 TFEU respectively. Article 27 Information and communication 1. The Agency shall communicate in accordance with the legislative instruments governing the development, establishment, operation and use of large-scale IT-systems and on its own initiative in the fields within its tasks. It shall ensure in particular that in addition to the publication specified in Article 12(1)(j), (k), (w) and (y) and Article 33(8), the public and any interested party are rapidly given objective, reliable and easily understandable information with regard to its work. 2. The Management Board shall lay down the practical arrangements for the application of paragraph 1. Article 28 Data protection 1. Without prejudice to the provisions on data protection laid down in the legislative instruments governing the development, establishment, operation and use of large-scale IT systems, the information processed by the Agency in accordance with this Regulation shall be subject to Regulation (EC) No 45/2001. 2. The Management Board shall establish measures for the application of Regulation (EC) No 45/2001 by the Agency, and in particular Section 8 concerning the Data Protection Officer. Article 29 Security rules on the protection of classified information and non-classified sensitive information 1. The Agency shall apply the security principles laid down in Commission Decision 2001/844/EC, ECSC, Euratom of 29 November 2001 amending its internal Rules of Procedure (31), including the provisions for the exchange, processing and storage of classified information, and measures on physical security. 2. The Agency shall also apply the security principles relating to the processing of non-classified sensitive information as adopted and implemented by the Commission. 3. The Management Board shall, pursuant to Article 2 and Article 12(1)(p), decide on the Agencys internal structure necessary to fulfil the appropriate security principles. Article 30 Security of the Agency 1. The Agency shall be responsible for the security and the maintenance of order within the buildings, premises and land used by it. The Agency shall apply the security principles and relevant provisions of the legislative instruments governing the development, establishment, operation and use of large-scale IT systems. 2. The host Member States shall take all effective and adequate measures to maintain order and security in the immediate vicinity of the buildings, premises and land used by the Agency and shall provide to the Agency the appropriate protection, in accordance with the relevant Headquarters Agreement concerning the seat of the Agency and the Agreements concerning the technical and backup sites, whilst guaranteeing free access to these buildings, premises and land to persons authorised by the Agency. Article 31 Evaluation 1. Within 3 years from 1 December 2012, and every 4 years thereafter, the Commission, in close consultation with the Management Board, shall perform an evaluation of the action of the Agency. The evaluation shall examine the way and extent to which the Agency effectively contributes to the operational management of large-scale IT systems in the area of freedom, security and justice and fulfils its tasks laid down in this Regulation. The evaluation shall also assess the role of the Agency in the context of a Union strategy aimed at a coordinated, cost-effective and coherent IT environment at Union level that is to be established in the coming years. 2. On the basis of the evaluation referred to in paragraph 1, the Commission, after consulting the Management Board, shall issue recommendations regarding changes to this Regulation, also in order to bring it further in line with the Union strategy referred to in paragraph 1. The Commission shall forward those recommendations, together with the opinion of the Management Board, as well as appropriate proposals to the European Parliament, the Council and the European Data Protection Supervisor. CHAPTER V FINANCIAL PROVISIONS Article 32 Budget 1. The revenue of the Agency shall consist, without prejudice to other types of income, of: (a) a subsidy from the Union entered in the general budget of the European Union (Commission section); (b) a contribution from the countries associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures; (c) any financial contribution from the Member States. 2. The expenditure of the Agency shall include, inter alia, staff remuneration, administrative and infrastructure expenses, operating costs and expenditure relating to contracts or agreements concluded by the Agency. Each year the Executive Director shall draw up, taking into account the activities carried out by the Agency, a draft statement of estimates of the Agencys revenue and expenditure for the following financial year, together with the establishment plan, and shall transmit it to the Management Board. 3. Revenue and expenditure of the Agency shall be in balance. 4. The Management Board, on the basis of a draft drawn up by the Executive Director, shall adopt a draft statement of estimates of the revenue and expenditure of the Agency for the following financial year. 5. The draft statement of estimates of the Agencys revenue and expenditure and the general guidelines underlying that estimate, shall be transmitted by the Management Board to the Commission and to the countries associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures by 10 February each year and the final statement of estimates by 31 March each year. 6. By 31 March each year, the Management Board shall submit to the Commission and to the budgetary authority: (a) its draft annual work programme; (b) its updated multi-annual Staff Policy Plan, established in line with the guidelines set by the Commission; (c) information on the number of officials, temporary and contract staff as defined in the Staff Regulations for the years n-1 and n as well as an estimate for the year n+1; (d) information on contributions in kind granted by the host Member States to the Agency; (e) an estimate of the balance of the outturn account for the year n-1. 7. The statement of estimates shall be forwarded by the Commission to the budgetary authority together with the draft general budget of the European Union. 8. On the basis of the statement of estimates, the Commission shall enter in the draft general budget of the European Union the estimates it deems necessary for the establishment plan and the amount of the subsidy to be charged to the general budget, which it shall place before the budgetary authority in accordance with Article 314 TFEU. 9. The budgetary authority shall authorise the appropriations for the subsidy to the Agency. The budgetary authority shall adopt the establishment plan for the Agency. 10. The Agencys budget shall be adopted by the Management Board. It shall become final following the final adoption of the general budget of the European Union. Where appropriate, it shall be adjusted accordingly. 11. Any modification to the budget, including the establishment plan, shall follow the same procedure. 12. The Management Board shall, as soon as possible, notify the budgetary authority of its intention to implement any project, which may have significant financial implications for the funding of its budget, in particular any projects relating to property such as the rental or purchase of buildings. It shall inform the Commission thereof as well as the countries associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures. If either branch of the budgetary authority intends to issue an opinion, it shall, within 2 weeks after receipt of the information on the project, notify the Management Board of its intention to issue such an opinion. In the absence of a reply, the Agency may proceed with the planned operation. Article 33 Implementation of the budget 1. The Agencys budget shall be implemented by its Executive Director. 2. The Executive Director shall forward annually to the budgetary authority any information relevant to the outcome of the evaluation procedures. 3. The Agencys Accounting Officer shall send to the Commissions Accounting Officer and the Court of Auditors by 1 March of the following year the Agencys provisional accounts, together with the report on budgetary and financial management during the year. The Commissions Accounting Officer shall consolidate the provisional accounts of the institutions and decentralised bodies in accordance with Article 128 of Regulation (EC, Euratom) No 1605/2002. 4. The Agencys Accounting Officer shall also send to the budgetary authority, by 31 March of the following year, the report on budgetary and financial management. 5. On receipt of the Court of Auditors observations on the Agencys provisional accounts, pursuant to Article 129 of Regulation (EC, Euratom) No 1605/2002, the Executive Director shall draw up the Agencys final accounts under his own responsibility and forward them to the Management Board for an opinion. 6. The Management Board shall deliver an opinion on the Agencys final accounts. 7. By 1 July of the following year, the Executive Director shall send the final accounts, together with the opinion of the Management Board, to the budgetary authority, the Commissions Accounting Officer, the Court of Auditors as well as the countries associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures. 8. The final accounts shall be published. 9. The Executive Director shall send the Court of Auditors a reply to its observations by 30 September. The Executive Director shall also send that reply to the Management Board. 10. Upon the request of the European Parliament, the Executive Director shall submit the information necessary for the smooth application of the discharge procedure for the financial year in question, as laid down in Article 146(3) of Regulation (EC, Euratom) No 1605/2002. 11. The European Parliament, on a recommendation from the Council acting by a qualified majority, shall, before 15 May of year n + 2, give a discharge to the Executive Director in respect of the implementation of the budget for year n. Article 34 Financial rules The financial rules applicable to the Agency shall be adopted by the Management Board after consultation of the Commission. They shall not depart from Regulation (EC, Euratom) No 2343/2002 unless such departure is specifically required for the Agencys operation and the Commission has given its prior consent. Article 35 Combating fraud 1. In order to combat fraud, corruption and other unlawful activities, Regulation (EC) No 1073/1999 shall apply. 2. The Agency shall accede to the Interinstitutional Agreement concerning internal investigations by the European Anti-fraud Office (OLAF) and shall issue, without delay, the appropriate provisions applicable to all the employees of the Agency. 3. The decisions concerning funding and the implementing agreements and instruments resulting from them shall explicitly stipulate that the Court of Auditors and OLAF may carry out, if necessary, on-the-spot checks among the recipients of the Agencys funding and the agents responsible for allocating it. CHAPTER VI FINAL PROVISIONS Article 36 Preparatory actions 1. The Commission shall be responsible for the establishment and initial operation of the Agency until the latter has the operational capacity to implement its own budget. 2. For that purpose, until such time as the Executive Director takes up his duties following his appointment by the Management Board in accordance with Article 18, the Commission may assign a limited number of officials including one to fulfil the functions of the Executive Director, on an interim basis. The interim Executive Director may be assigned only once the Management Board is convened, in accordance with Article 13(2). If the interim Executive Director does not comply with the obligations laid down in this Regulation, the Management Board may ask the Commission to assign a new interim Executive Director. 3. The interim Executive Director may authorise all payments covered by credits provided in the budget of the Agency, once approved by the Management Board and may conclude contracts, including staff contracts following the adoption of the Agencys establishment plan. If justified, the Management Board may impose restrictions on the interim Executive Directors powers. Article 37 Participation by countries associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures Under the relevant provisions of their association agreements, arrangements shall be made in order to specify, inter alia, the nature and extent of, and the detailed rules for, the participation by countries associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures in the work of the Agency, including provisions on financial contributions, staff and voting rights. Article 38 Entry into force and applicability This Regulation shall enter into force on the 20th day following its publication in the Official Journal of the European Union. The Agency shall take up its responsibilities set out in Articles 3 to 9 from 1 December 2012. This Regulation shall be binding in its entirety and directly applicable in the Member States in accordance with the Treaties. Done at Strasbourg, 25 October 2011. For the European Parliament The President J. BUZEK For the Council The President M. DOWGIELEWICZ (1) Position of the European Parliament of 5 July 2011 (not yet published in the Official Journal) and Decision of the Council of 12 September 2011. (2) OJ L 381, 28.12.2006, p. 4. (3) OJ L 205, 7.8.2007, p. 63. (4) OJ L 213, 15.6.2004, p. 5. (5) OJ L 218, 13.8.2008, p. 60. (6) OJ L 316, 15.12.2000, p. 1. (7) Council Regulation (EC) No 407/2002 of 28 February 2002 laying down certain rules to implement Regulation (EC) No 2725/2000 concerning the establishment of Eurodac for the comparison of fingerprints for the effective application of the Dublin Convention (OJ L 62, 5.3.2002, p. 1). (8) OJ L 248, 16.9.2002, p. 1. (9) OJ L 218, 13.8.2008, p. 129. (10) OJ C 139, 14.6.2006, p. 1. (11) OJ L 8, 12.1.2001, p. 1. (12) OJ L 145, 31.5.2001, p. 43. (13) OJ L 136, 31.5.1999, p. 1. (14) OJ L 136, 31.5.1999, p. 15. (15) OJ L 56, 4.3.1968, p. 1. (16) OJ L 357, 31.12.2002, p. 72. (17) OJ L 66, 8.3.2006, p. 38. (18) OJ L 131, 1.6.2000, p. 43. (19) OJ L 333, 17.12.2010, p. 58. (20) OJ L 64, 7.3.2002, p. 20. (21) OJ L 176, 10.7.1999, p. 36. (22) OJ L 176, 10.7.1999, p. 31. (23) OJ L 93, 3.4.2001, p. 40. (24) OJ L 53, 27.2.2008, p. 52. (25) OJ L 53, 27.2.2008, p. 1. (26) OJ L 53, 27.2.2008, p. 5. (27) OJ L 160, 18.6.2011, p. 21. (28) OJ L 160, 18.6.2011, p. 19. (29) OJ L 160, 18.6.2011, p. 39. (30) OJ 17, 6.10.1958, p. 385/58. (31) OJ L 317, 3.12.2001, p. 1. |
Citation Nr: 0416638
Decision Date: 06/24/04 Archive Date: 06/30/04
DOCKET NO. 03-31 104 ) DATE
)
)
On appeal from the
Department of Veterans Affairs (VA) Regional Office (RO)
in Columbia, South Carolina
THE ISSUES
1. Entitlement to service connection for status post
reduction fracture of the right maxilla (claimed as a jaw
injury).
2. Entitlement to service connection for extraction of teeth
numbers eight and nine.
REPRESENTATION
Veteran represented by: The American Legion
ATTORNEY FOR THE BOARD
C. Kedem, Associate Counsel
INTRODUCTION
The veteran had active duty service from June 1965 to January
1969.
This matter comes to the Board of Veterans' Appeals (Board)
from a February 2003 rating decision of the RO.
The issue of service connection for the extraction of teeth
numbers eight and nine is addressed in the REMAND portion of
the decision below and is being remanded to the RO via the
Appeals Management Center (AMC), in Washington, DC. VA will
notify the veteran and his representative if further action
is required on his part.
FINDING OF FACT
The veteran is shown as likely as not to be suffering from
current right maxillary fracture residuals due to an injury
during his period of active service.
CONCLUSION OF LAW
By extending the benefit of the doubt to the veteran, his
right maxillary fracture residuals represent a disability due
to an injury that was incurred in military service. 38
U.S.C.A. §§ 1110, 5107, 7104 (West 2002); 38 C.F.R. § 3.303
(2003).
REASONS AND BASES FOR FINDING AND CONCLUSION
Veterans Claims Assistance Act of 2000 (VCAA)
VCAA notice, as required by 38 U.S.C.A. § 5103(a), must be
provided to a claimant before the initial unfavorable RO
decision on a claim for VA benefits. The mandate was
followed in this instance although it was promulgated after
the February 2003 rating decision that is on appeal herein.
VCAA provides that VA shall make reasonable efforts to assist
a claimant in obtaining evidence necessary to substantiate a
claim for benefits unless no reasonable possibility exists
that such assistance would aid in substantiating the claim.
38 U.S.C.A. § 5103A (West 2002).
The Secretary may defer providing assistance pending the
submission by the claimant of essential information missing
from the application. Id.
VCAA also contains provisions regarding the scope of notice
to which those claiming VA benefits are entitled. 38
U.S.C.A. § 5103 (West 2002).
Having reviewed the complete record, the Board believes that
there is ample medical and other evidence of record upon
which to decide the veteran's claim. The Board is unaware
of, and the veteran has not identified, any additional
evidence which is necessary to make an informed decision on
the issue.
Thus, the Board believes that all relevant evidence which is
available has been obtained. The veteran and his
representative, moreover, have been accorded ample
opportunity to present evidence and argument on his behalf.
Further, by a December 2002 letter and the August 2003
Statement of the Case, he and his representative have been
notified of the evidence needed to establish the benefit
sought, and he has been advised via those documents regarding
his and VA's respective responsibilities as to obtaining that
evidence. See Quartuccio v. Principi, 16 Vet. App. 183
(2002).
Consequently, the Board concludes that VA's statutory duty to
assist the veteran has been satisfied.
The Board notes that seeking further development of the case
would serve no useful purpose. Soyini v. Derwinski, 1 Vet.
App. 540 (1991) (strict adherence to requirements in the law
does not dictate an unquestioning, blind adherence in the
face of overwhelming evidence in support of the result in a
particular case; such adherence would result in unnecessarily
imposing additional burdens on VA with no benefit flowing to
the veteran); Sabonis v. Brown, 6 Vet. App. 426, 430 (1994)
(remands which would only result in unnecessarily imposing
additional burdens on VA with no benefit flowing to the
veteran should be avoided).
VA has satisfied, as far as practicably possible, the notice,
assistance, and other requirements of VCAA, and any further
action is not indicated given the favorable action taken
hereinbelow.
Factual Background
On May 1965 induction medical examination, no pertinent
disabilities or abnormalities were found.
On November 1968 report of medical history prior to
discharge, the veteran did not report any maxillary
complaints. On the corresponding medical examination report,
no pertinent disabilities were noted. The veteran's
"PULHES" physical profile amounted to a "picket fence"
(i.e., all 1's), indicating a high level of medical fitness.
(See generally Hanson v. Derwinski, 1 Vet. App. 512, 514
(1991) for an explanation of the military medical profile
system).
In December 1968 just prior to separation, the veteran
fractured his right maxilla in an automobile accident. The
fractured maxilla was repositioned and fractured teeth
numbers eight and nine were removed.
On January 2003 VA dental and oral examination, the examiner
indicated that the fracture in the maxillary area had healed
well and there was no indication of any abnormal bone changes
in the maxillary anterior region of the mouth. In his
report, the examiner stated that he did not have access to
the claims file.
Law and Regulations
Service connection will be granted if it is shown that the
veteran suffers from disability resulting from an injury
suffered or disease contracted in line of duty, or for
aggravation of a preexisting injury suffered or disease
contracted in line of duty, in the active military, naval, or
air service. 38 U.S.C.A. § 1110; 38 C.F.R. § 3.303.
That an injury occurred in service alone is not enough; there
must be chronic disability resulting from that injury. If
there is no showing of a resulting chronic condition during
service, then a showing of continuity of symptomatology after
service is required to support a finding of chronicity.
38 C.F.R. § 3.303(b).
Service connection may also be granted for any disease
diagnosed after discharge, when all the evidence, including
that pertinent to service, establishes that the disease was
incurred in service. 38 C.F.R. § 3.303(d).
When there is an approximate balance of positive and negative
evidence regarding the merits of an issue material to the
determination of the matter, the benefit of the doubt in
resolving each such issue shall be given the claimant. 38
U.S.C.A. § 5107(b); Gilbert v. Derwinski, 1 Vet. App. 49
(1990); 38 C.F.R. §§ 3.102, 4.3 (2003).
When the positive and negative evidence as to a veteran's
claim are in approximate balance, thereby creating a
reasonable doubt as to the merits of a claim, the veteran
prevails. Ortiz v. Principi, 274 F.3d 1361 (Fed. Cir. 2001).
If the Board determines that the preponderance of the
evidence is against the claim, it has necessarily found that
the evidence is not in approximate balance, and the benefit
of the doubt rule is inapplicable. Id. at 1365.
Analysis
Service connection for residuals of an injury to the right
maxilla can be granted in this case. 38 C.F.R. § 3.303. In
order for service connection to be granted, a present
disability must be shown. Id.; Gilpin, supra.
On January 2003 VA dental and oral examination report, the
examiner noted that the veteran's maxillary area was well
healed without evidence of abnormality. Because the veteran
is shown as likely as not to be suffering currently from
demonstrable fracture residuals, the Board finds that they
constitute a disability of VA compensation purposes.
Accordingly, service connection for such a disability is
granted. Id.
The Board recognizes the veteran's testimony and other
assertions regarding the presence of a disability of the
right maxilla. The veteran is competent to provide
assertions about manifestations related to his significant
service injury upon which the Board may rely.
In making this determination, the Board has considered the
provisions of 38 U.S.C.A. § 5107(b), and finds that there is
a state of approximate balance of the positive evidence with
the negative evidence to otherwise warrant a favorable
decision.
ORDER
Service connection for status post reduction fracture of the
right maxilla is granted.
REMAND
The veteran is receiving private dental treatment. The RO
must make reasonable efforts to secure these records.
With respect to the issue of service connection for the
extraction of teeth numbers eight and nine, an additional
dental examination is necessary in order to obtain an opinion
regarding the etiology of the extraction.
The veteran was afforded a dental examination in January
2003, but in the ensuing report, the examiner indicated that
he did not have access to the veteran's claims file.
To ensure full compliance with due process requirements, the
case is REMANDED for the following development:
1. The RO must review the claims file to
ensure compliance with the mandates of
the VCAA. See 38 U.S.C.A. §§ 5102, 5103,
5103A, and 5107 (West 2002); 38 C.F.R.
§§ 3.102, 3.156(a), 3.159, 3.326(a)
(2003). See also Veterans Benefits Act
of 2003, Pub. L. No. 108-183, 117 Stat.
2651 (Dec. 16, 2003); See Quartuccio,
supra.
2. The RO must seek from the veteran the
names of all dentists who have provided
treatment since service. After obtaining
the necessary release, the RO must make
reasonable efforts to secure all
identified dental records.
3. The RO should schedule a VA dental
examination. The claims file and a copy
of this remand must be made available to
and reviewed by the examiner prior to the
requested examination. The examiner
should indicate in the report that the
claims file was reviewed. The examiner
is asked to discuss the etiology of the
extraction of teeth numbers eight and
nine. A rationale for all opinions and
conclusions must be provided.
4. The RO should review the claims file
to ensure that all of the above requested
development has been completed. In
particular, the RO should ensure that the
medical examination and opinion are in
complete compliance with the directives
of this remand and, if they are not, the
RO should take corrective action. See
Stegall v. West, 11 Vet. App. 268 (1998).
5. Finally, the RO should readjudicate
the claim. If any benefit sought on
appeal remains denied, the veteran should
be provided a Supplemental Statement of
the Case. It must contain notice of all
relevant actions taken on the claim for
benefits, to include a summary of the
evidence and applicable law and
regulations considered pertinent to the
issue currently on appeal. An
appropriate period of time should be
allowed for response.
Thereafter, the case should be returned to the Board for the
purpose of appellate disposition, if indicated.
The veteran has the right to submit additional evidence and
argument on the matter the Board has remanded. Kutscherousky
v. West, 12 Vet. App. 369 (1999).
This claim must be afforded expeditious treatment. The law
requires that all claims that are remanded by the Board or by
the Court for additional development or other appropriate
action must be handled in an expeditious manner. See The
Veterans Benefits Act of 2003, Pub. L. No. 108-183, § 707(a),
(b), 117 Stat. 2651 (2003) (to be codified at 38 U.S.C. §§
5109B, 7112).
____________________________________________
STEPHEN L. WILKINS
Veterans Law Judge,
Board of Veterans' Appeals
Department of Veterans Affairs
YOUR RIGHTS TO APPEAL OUR DECISION
The attached decision by the Board of Veterans' Appeals (BVA or Board) is
the final decision for all issues addressed in the "Order" section of the
decision. The Board may also choose to remand an issue or issues to the
local VA office for additional development. If the Board did this in your
case, then a "Remand" section follows the "Order." However, you cannot
appeal an issue remanded to the local VA office because a remand is not a
final decision. The advice below on how to appeal a claim applies only to
issues that were allowed, denied, or dismissed in the "Order."
If you are satisfied with the outcome of your appeal, you do not need to do
anything. We will return your file to your local VA office to implement
the BVA's decision. However, if you are not satisfied with the Board's
decision on any or all of the issues allowed, denied, or dismissed, you
have the following options, which are listed in no particular order of
importance:
? Appeal to the United States Court of Appeals for Veterans Claims
(Court)
? File with the Board a motion for reconsideration of this decision
? File with the Board a motion to vacate this decision
? File with the Board a motion for revision of this decision based on
clear and unmistakable error.
Although it would not affect this BVA decision, you may choose to also:
? Reopen your claim at the local VA office by submitting new and
material evidence.
There is no time limit for filing a motion for reconsideration, a motion to
vacate, or a motion for revision based on clear and unmistakable error with
the Board, or a claim to reopen at the local VA office. None of these
things is mutually exclusive - you can do all five things at the same time
if you wish. However, if you file a Notice of Appeal with the Court and a
motion with the Board at the same time, this may delay your case because of
jurisdictional conflicts. If you file a Notice of Appeal with the Court
before you file a motion with the BVA, the BVA will not be able to consider
your motion without the Court's permission.
How long do I have to start my appeal to the Court? You have 120 days from
the date this decision was mailed to you (as shown on the first page of
this decision) to file a Notice of Appeal with the United States Court of
Appeals for Veterans Claims. If you also want to file a motion for
reconsideration or a motion to vacate, you will still have time to appeal
to the Court. As long as you file your motion(s) with the Board within 120
days of the date this decision was mailed to you, you will then have
another 120 days from the date the BVA decides the motion for
reconsideration or the motion to vacate to appeal to the Court. You should
know that even if you have a representative, as discussed below, it is your
responsibility to make sure that your appeal to Court is filed on time.
How do I appeal to the United States Court of Appeals for Veterans Claims?
Send your Notice of Appeal to the Court at:
Clerk, U.S. Court of Appeals for Veterans Claims
625 Indiana Avenue, NW, Suite 900
Washington, DC 20004-2950
You can get information about the Notice of Appeal, the procedure for
filing a Notice of Appeal, the filing fee (or a motion to waive the filing
fee if payment would cause financial hardship), and other matters covered
by the Court's rules directly from the Court. You can also get this
information from the Court's web site on the Internet at
www.vetapp.uscourts.gov, and you can download forms directly from that
website. The Court's facsimile number is (531)296-0090.
To ensure full protection of your right of appeal to the Court, you must
file your Notice of Appeal with the Court, not with the Board, or any other
VA office.
How do I file a motion for reconsideration? You can file a motion asking
the BVA to reconsider any part of this decision by writing a letter to the
BVA stating why you believe that the BVA committed an obvious error of fact
or law in this decision, or stating that new and material military service
records have been discovered that apply to your appeal. If the BVA has
decided more than one issue, be sure to tell us which issue(s) you want
reconsidered. Send your letter to:
Director, Management and Administration (014)
Board of Veterans' Appeals
810 Vermont Avenue, NW
Washington, DC 20420
VA
FORM
JUN
2003
(RS)
4597
Page
1
CONTINUED
Remember, the Board places no time limit on filing a motion for
reconsideration, and you can do this at any time. However, if you also plan
to appeal this decision to the Court, you must file your motion within 120
days from the date of this decision.
How do I file a motion to vacate? You can file a motion asking the BVA to
vacate any part of this decision by writing a letter to the BVA stating why
you believe you were denied due process of law during your appeal. For
example, you were denied your right to representation through action or
inaction by VA personnel, you were not provided a Statement of the Case or
Supplemental Statement of the Case, or you did not get a personal hearing
that you requested. You can also file a motion to vacate any part of this
decision on the basis that the Board allowed benefits based on false or
fraudulent evidence. Send this motion to the address above for the
Director, Management and Administration, at the Board. Remember, the Board
places no time limit on filing a motion to vacate, and you can do this at
any time. However, if you also plan to appeal this decision to the Court,
you must file your motion within 120 days from the date of this decision.
How do I file a motion to revise the Board's decision on the basis of clear
and unmistakable error? You can file a motion asking that the Board revise
this decision if you believe that the decision is based on "clear and
unmistakable error" (CUE). Send this motion to the address above for the
Director, Management and Administration, at the Board. You should be
careful when preparing such a motion because it must meet specific
requirements, and the Board will not review a final decision on this basis
more than once. You should carefully review the Board's Rules of Practice
on CUE, 38 C.F.R. 20.1400 -- 20.1411, and seek help from a qualified
representative before filing such a motion. See discussion on
representation below. Remember, the Board places no time limit on filing a
CUE review motion, and you can do this at any time.
How do I reopen my claim? You can ask your local VA office to reopen your
claim by simply sending them a statement indicating that you want to reopen
your claim. However, to be successful in reopening your claim, you must
submit new and material evidence to that office. See 38 C.F.R. 3.156(a).
Can someone represent me in my appeal? Yes. You can always represent
yourself in any claim before VA, including the BVA, but you can also
appoint someone to represent you. An accredited representative of a
recognized service organization may represent you free of charge. VA
approves these organizations to help veterans, service members, and
dependents prepare their claims and present them to VA. An accredited
representative works for the service organization and knows how to prepare
and present claims. You can find a listing of these organizations on the
Internet at: www.va.gov/vso. You can also choose to be represented by a
private attorney or by an "agent." (An agent is a person who is not a
lawyer, but is specially accredited by VA.)
If you want someone to represent you before the Court, rather than before
VA, then you can get information on how to do so by writing directly to the
Court. Upon request, the Court will provide you with a state-by-state
listing of persons admitted to practice before the Court who have indicated
their availability to represent appellants. This information is also
provided on the Court's [email protected].
Do I have to pay an attorney or agent to represent me? Except for a claim
involving a home or small business VA loan under Chapter 37 of title 38,
United States Code, attorneys or agents cannot charge you a fee or accept
payment for services they provide before the date BVA makes a final
decision on your appeal. If you hire an attorney or accredited agent within
1 year of a final BVA decision, then the attorney or agent is allowed to
charge you a fee for representing you before VA in most situations. An
attorney can also charge you for representing you before the Court. VA
cannot pay fees of attorneys or agents.
Fee for VA home and small business loan cases: An attorney or agent may
charge you a reasonable fee for services involving a VA home loan or small
business loan. For more information, read section 5904, title 38, United
States Code.
In all cases, a copy of any fee agreement between you and an attorney or
accredited agent must be sent to:
Office of the Senior Deputy Vice Chairman (012)
Board of Veterans' Appeals
810 Vermont Avenue, NW
Washington, DC 20420
The Board may decide, on its own, to review a fee agreement for
reasonableness, or you or your attorney or agent can file a motion asking
the Board to do so. Send such a motion to the address above for the Office
of the Senior Deputy Vice Chairman at the Board.
VA
FORM
JUN
2003
(RS)
4597
Page
2
|
Title: [TORONTO, CANADA] Bought electronics from guy, later found out the receipts were made up fakes. Sent some electronics out for warranty and am worried.
Question:Hi all, I bought a lot of electronics from an international [email protected]. iPad, Laptop and 2 TVs and gaming PC stuff.
After I got the receipts and paid for it, the guy messages me 4 months later and says to not use the receipts for returns because they are fake (WTF?). He leaves for China and I have no other way to contact him back.
I already sent out 4 devices for warranty. Xbox was rebooting constantly, laptop was recalled for some power adapter issue inside the laptop, and the TVs both came with bad boards causing them to never turn on after they became hot.
All the manufacturers accepted it, they have fixed my devices and sent them back.
What I am worried about is, what are my legal means if I ever get approached by the store that hey you sent xx receipt but we never sold xx item? Do the manufacturers even check with the store? I have no other proof I bought it from him, he "transferred" all the receipts to my name and all of them have my name and address on it.
Really worried. What should I do?
Answer #1: The manufacturer usually only checks the receipt exists in order to get proof of purchase.
If the items were real, the fake receipts would likely only trigger an issue if returning for money back at the store, not the manufacturer.
My only advice would be to be careful where you get your electronics, if it sounds too good to be true it usually is.
I suspect they were fake electronics (**very** common in china)and you got extremely lucky (They probably tested them, saw they didn't work, and then tossed them out without looking inside and replaced with new) |
Case 19-04549-5-DMW Doc 7 Filed 10/03/19 Entered 10/03/19 10:29:55 Page 1 of 5
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
DIVISION
Fill in this information to identify your case:
Debtor 1 Shanetha M. Lyons
First Name Middle Name Last Name
Debtor 2
(Spouse, if filing) First Name Middle Name Last Name
Check if this is an amended plan, and
list below the sections of the plan that
have been changed.
Case number: 19-04549-5
(If known)
CHAPTER 13 PLAN
Part 1: Notices
Definitions: Definitions of several terms used in this Plan appear online at https://www.nceb.uscourts.gov/local- forms under the heading
“Chapter 13 Plan Definitions.” These definitions also are published in the Administrative Guide to Practice and Procedure for the
United States Bankruptcy Court for the Eastern District of North Carolina.
To Debtor(s): This form sets out options that may be appropriate in some cases, but the presence of an option on this form does not indicate that
the option is appropriate in your circumstances. Plans that do not comply with Local Rules and judicial rulings may not be
confirmable.
To Creditors: Your rights may be affected by this plan. Your claim may be reduced, modified, or eliminated if the plan is confirmed.
You should read this plan carefully and discuss it with your attorney if you have an attorney in this bankruptcy case. If you do
not have an attorney, you may wish to consult one.
If you oppose the plan’s treatment of your claim or any provision of this plan, you or your attorney must file an objection to
confirmation at least 7 days before the date set for the hearing on confirmation, unless otherwise ordered by the United States
Bankruptcy Court for the Eastern District of North Carolina (“Court”). The Court may confirm this plan without further
notice if no objection to confirmation is filed. In addition, you may need to file a timely proof of claim in order to be paid
under any confirmed plan.
Only allowed claims will receive a distribution from the Trustee, and all payments made to creditors by the Trustee shall be made
in accordance with the Trustee’s customary distribution process. When required, pre- confirmation adequate protection payments
shall be paid in accordance with Local Rule 3070- 1(c). Unless otherwise ordered by the Court, creditors not entitled to adequate
protection payment will receive no disbursements from the Trustee until after the plan is confirmed.
The following matters may be of particular importance to you. Debtors must check one box on each line of §§ 1.1, 1.2, and 1.3,
below, to state whether or not the plan includes provisions related to each item listed. If an item is checked “Not Included,” or
if neither box is checked, or if both boxes are checked, the provision will not be effective, even if set out later in the plan.
1.1 A limit on the amount of a secured claim, set out in Section 3.3, which may result in a Included Not Included
secured claim being treated as only partially secured or wholly unsecured. This could
result in the secured creditor receiving only partial payment, or no payment
1.2 Avoidance of a judicial lien or nonpossessory, nonpurchase-money security interest, set Included Not Included
out in Section 3.5.
1.3 Nonstandard provisions, set out in Part 8. Included Not Included
Part 2: Plan Payments and Length of Plan
2.1 The Debtor(s) shall make regular payments to the Trustee as follows:
$ 1,938.00 per Month for 60 months
(Insert additional line(s), if needed.)
2.2 Additional payments. (Check one.)
E.D.N.C. Local Form 113A (9.1.2019) Page 1 of 5
Software Copyright (c) 1996-2019 Best Case, LLC - www.bestcase.com Best Case Bankruptcy
Case 19-04549-5-DMW Doc 7 Filed 10/03/19 Entered 10/03/19 10:29:55 Page 2 of 5
Debtor Shanetha M. Lyons Case number 19-04549-5
None. (If “None” is checked, the rest of this section need not be completed.)
The Debtor(s) will make additional payment(s) to the Trustee from other sources, as specified below. Describe the source,
estimated amount, and date of each anticipated payment. (Insert additional rows, if needed.)
2.3 The total amount of estimated payments to the Trustee is $ 116,280.00 .
2.4 Adjustments to the Payment Schedule/Base Plan (Check one).
None.
Confirmation of this plan shall not prevent an adjustment to the plan payment schedule or plan base. The Trustee or the Debtor(s)
may seek to modify the plan payment schedule and/or plan base within 60 days after the governmental bar date to accommodate secured
or priority claims treated in Parts 3 or 4 of this Plan. This provision shall not preclude the Debtor or the Trustee from opposing
modification after confirmation on any other basis.
2.5 Applicable Commitment Period, Projected Disposable Income, and “Liquidation Test.”
The Applicable Commitment Period of the Debtor(s) is 60 months, and the projected disposable income of the Debtor(s), as referenced in 11
U.S.C. § 1325(b)(1)(B), is $ -114.24 per month. The chapter 7 “liquidation value” of the estate of the Debtor(s), as referenced in 11 U.S.C.
§ 1325(a)(4), refers to the amount that is estimates to be paid to holders of non- priority unsecured claims. In this case, this amount is
$ 0.00
Part 3: Treatment of Secured Claims
3.1 Lien Retention.
The holder of each allowed secured claim provided for below will retain the lien on the property interest of the Debtor(s) or the estate until the
earlier of:
(a) payment of the underlying debt determined under nonbankruptcy law, or
(b) discharge of the Debtor(s) under 11 U.S.C. § 1328.
3.2 Maintenance of Payments and Cure of Default (if any) (Check one.)
None. If “None” is checked, the rest of § 3.2 need not be completed or reproduced.
The current contractual installment payments will be maintained on the secured claims listed below, with any changes required by the
applicable contract and noticed in conformity with any applicable rules. These payments will be disbursed either by the Trustee
(“Conduit”) or directly by the Debtor(s), as specified below. Any arrearage listed for a claim below will be paid in full through
disbursements by the Trustee, with interest, if any, at the rate stated. Unless otherwise ordered by the Court, the amounts listed on a proof
of claim filed before the filing deadline under Bankruptcy Rule 3002(c) will control over any contrary amounts listed below as to the
current installment payment and arrearage. In the absence of a timely filed proof of claim, the amounts stated below are controlling as to
the current installment payment and arrearage. If relief from the automatic stay is ordered as to any item of collateral listed in this
paragraph, then, unless otherwise ordered by the Court, all payments under this paragraph as to that collateral will cease, and all secured
claims based on that collateral will no longer be paid by the plan.
Creditor Name Collateral Current Installment Arrears Owed Interest Rate
Payment (if any) on Arrearage
(including escrow) (if appliable)
Carrington Mortgage 9999 East Hwy 97 Rocky Mount, $1,171.94 $24,000.00 0.00%
NC 27803 Nash County To be disbursed by:
Tax Value $179,710.00 Trustee
Debtor(s)
Insert additional claims as needed.
Other. (Check all that apply, and explain.) The Debtor(s):
(a) do intend to seek a mortgage modification with respect to the following loan(s) listed above:
(b) do not intend to seek mortgage modification with respect to the following loan(s) listed above;
(c) intend to:
3.3 Request for Valuation of Security and Modification of Undersecured Claims. (Check one)
E.D.N.C. Local Form 113A (9.1.2019) Page 2 of 5
Software Copyright (c) 1996-2019 Best Case, LLC - www.bestcase.com Best Case Bankruptcy
Case 19-04549-5-DMW Doc 7 Filed 10/03/19 Entered 10/03/19 10:29:55 Page 3 of 5
Debtor Shanetha M. Lyons Case number 19-04549-5
None. If “None” is checked, the rest of § 3.3 need not be completed or reproduced.
The remainder of this paragraph will be effective only if there is a check in the box “Included” in Part 1, § 1.1, of this plan, above.
Requests for Valuation of Collateral and Modification of Undersecured Claims for Real Estate may not be accomplished in this district in
the absence of the filing and proper service of a motion and notice of motion specifically seeking such relief and giving the affected creditor
the opportunity to object to the motion and request a hearing. Note that a separate motion must be brought if the collateral is real estate, but
not if the collateral is personal property.
The Debtor(s) request that the Court determine the value of the collateral securing each of the claims listed below. For each
non- governmental secured claim listed below, the Debtor(s) propose to treat each claim as secured in the amount set out in the column
headed “Amount of Secured Claim.” For secured claims of governmental units, unless otherwise ordered by the Court, the value of the
collateral listed in a proof of claim filed in accordance with the Bankruptcy Rules controls over any contrary valuation amount listed
below. For each listed claim, the amount of the secured claim will be amortized and paid with interest at the stated rate over the life of
the plan. The portion of any allowed claim that exceeds the amount of the secured claim will be treated as an unsecured claim under Part
5 of this plan. If the amount of a creditor’s secured claim is listed below as having no value, the creditor’s entire claim will be treated as
an unsecured claim under Part 5 of this plan. Unless otherwise ordered by the Court, the amount of the creditor’s total claim listed on its
proof of claim controls over any contrary amount listed in this paragraph. Secured creditors entitled to pre-confirmation adequate
protection payments will receive the same pursuant to E.D.N.C. LBR 3070-1(c).
Creditor Name Estimated Collateral Value of Collateral Amount of Claims Amount of Secured Interest
Amount of Senior to Creditor's Claim Rate
Creditor's Total Claim
Claim
Regional $15,211-17-1018 Buick $7,425.00 $0.00 $7,425.00 6.50%
Acceptance Regal
Corp. Transmission
needs to be
replaced, motor,
tires, leaks oil,
a/c unit and heat
barley works
Insert additional claims as needed.
3.4 Claims Excluded from 11 U.S.C. § 506(a). (check one)
None. If “None” is checked, the rest of § 3.4 need not be completed or reproduced.
3.5 Avoidance of Judicial Liens or Nonpossessory, Nonpurchase-Money Security Interests. (check one)
None. If “None” is checked, the rest of § 3.5 need not be completed or reproduced.
3.6 Surrender of Collateral. (Check one.)
None. If “None” is checked, the rest of § 3.6 need not be completed or reproduced.
The Debtor(s) will surrender the collateral listed below that secures the creditor’s claim. Upon confirmation of the plan, the automatic
stay of 11 U.S.C. § 362(a) shall terminate as to the surrendered collateral and any co- debtor stay of 11 U.S.C. § 1301 shall terminate in
all respects. No claim for a deficiency remaining due after the disposition of surrendered collateral will be allowed or paid unless the
creditor timely files a proof of claim and, within 180 days after confirmation of the plan, amends the claim as necessary to show the
remaining unsecured deficiency after the disposition of the surrendered collateral. Absent such timely filing and amendment of a claim, or
an order by the Court extending the 180- day filing deadline, the surrender of the collateral shall be deemed in full satisfaction of the
Debtor’s contractual obligation to the creditor.
Creditor Name Collateral
Acceptance Now Bed, night stand and living room furniture
Insert lines for additional creditors and collateral, as needed.
Part 4: Treatment of Fees and Priority Claims
4.1 General Treatment: Unless otherwise indicated in this Part or in Part 8, Nonstandard Plan Provisions, the Trustee’s fees and all allowed
priority claims, will be paid in full without interest through Trustee disbursements under the plan.
E.D.N.C. Local Form 113A (9.1.2019) Page 3 of 5
Software Copyright (c) 1996-2019 Best Case, LLC - www.bestcase.com Best Case Bankruptcy
Case 19-04549-5-DMW Doc 7 Filed 10/03/19 Entered 10/03/19 10:29:55 Page 4 of 5
Debtor Shanetha M. Lyons Case number 19-04549-5
4.2 Trustee’s Fees: Trustee’s fees are governed by statute and orders entered by the Court and may change during the course of the case. The
Trustee’s fees are estimated to be 6.50 % of amounts disbursed by the Trustee under the plan and are estimated to total $ 7,558.20 .
4.3 Debtor’s Attorney’s Fees. (Check one, below, as appropriate.)
Debtor(s)’ attorney has agreed to accept as a base fee $ 5,000.00 , of which $ 241.00 was paid prior to filing. The
Debtor(s)' attorney requests that the balance of $ 4,759.00 be paid through the plan.
The Debtor(s)' attorney intends to apply or has applied to the Court for compensation for services on a “time and expense” basis, as
provided in Local Rule 2016-1(a)(7). The attorney estimates that the total amount of compensation that will be sought is $ , of
which $ was paid prior to filing. The Debtor(s)' attorney requests that the estimated balance of $ be paid through the plan.
4.4 Domestic Support Obligations ("DSO's"). (Check all that apply.)
None. If “None” is checked, the rest of § 4.4 need not be completed or reproduced.
4.5 Priority Claims Other than Attorney’s Fees and Those Treated in Section 4.4
None. If “None” is checked, the rest of § 4.5 need not be completed or reproduced.
Section 507(a) priority claims, other than attorney’s fees and domestic support obligations are estimated to be as follows:
Creditor Name Claim for: Est. Claim Amt.
NC Dept. of Revenue Taxes and certain other debts 678.00
Part 5: Unsecured Non- priority Claims
5.1 General Treatment. After confirmation of a plan, holders of allowed, non- priority unsecured claims that are not specially classified in § 5.2
below, will receive a pro rata distribution with other holders of allowed, non- priority unsecured claims from the higher of either the disposable
income of the Debtor(s) over the applicable commitment period or liquidation test (see paragraph 2.5). Payments will commence after payment
to the holders of allowed secured, arrearage, unsecured priority, administrative, specially classified unsecured claims, and the Trustee’s fees.
Except as may be required by the “disposable income” or “liquidation” tests, or as may otherwise be specifically set forth in this Plan, no
specific distribution to general unsecured creditors is guaranteed under this Plan, and the distribution to such creditors may change depending on
the valuation of secured claims (including arrears) and/or the amounts which will be paid to holders of priority unsecured claims under this Plan,
both of which may differ from the treatment set forth in Parts 3 and 4 of this Plan based on claims filed by secured and priority creditors, or
based on further orders of the Court.
5.2 Co- Debtor and Other Specially Classified Unsecured Claims. (Check one.)
None. If “None” is checked, the rest of Part 5 need not be completed or reproduced.
Part 6: Executory Contracts and Unexpired Leases
6.1 The executory contracts and unexpired leases listed below are to be treated as specified. All other executory
contracts and unexpired leases are rejected. Allowed claims arising from the rejection of executory contracts or
unexpired leases shall be treated as unsecured non-priority claims under Part 5 of this Plan, unless otherwise
ordered by the Court. (Check one.)
None. If “None” is checked, the rest of Part 6 need not be completed or reproduced.
[OR]
The executory contracts and unexpired leases listed below will be assumed (“A) or rejected (“R), as specified below.
If assumed, post-petition installment payments on the claims listed below will be paid directly by the Debtor(s) according to the terms of the
underlying contract. Any pre-petition arrears listed on an assumed executory contract/unexpired lease will be cured by payments disbursed by
the trustee over the “Term of Cure” indicated, with interest (if any) at the rate stated.
Pre-petition
Term of Current Contract or
Arrears to be Interest Rate
Lessor/Creditor Subject of A or R Cure Mo. Lease Ends
Cured On Arrears
Name Lease/Contract (#of mos.) Pmt. (mm/yyyy)
(if any)
Progressive R $0.00 0.00% 0 $0.00 / /
Leasing, LLC
Insert additional leases or contracts, as needed.
E.D.N.C. Local Form 113A (9.1.2019) Page 4 of 5
Software Copyright (c) 1996-2019 Best Case, LLC - www.bestcase.com Best Case Bankruptcy
Case 19-04549-5-DMW Doc 7 Filed 10/03/19 Entered 10/03/19 10:29:55 Page 5 of 5
Debtor Shanetha M. Lyons Case number 19-04549-5
Part 7: Miscellaneous Provisions
7.1 Vesting of Property of the Bankruptcy Estate: (Check one.)
Property of the estate will vest in the Debtor(s) upon:
plan confirmation.
discharge
other:
7.2 Possession and Use of Property of the Bankruptcy Estate: Except as otherwise provided or ordered by the Court, regardless of when property
of the estate vests in the Debtor(s), property not surrendered or delivered to the Trustee (such as payments made to the Trustee under the Plan)
shall remain in the possession and control of the Debtor(s), and the Trustee shall have no liability arising out of, from, or related to such property
or its retention or use by the Debtor(s). The use of property by the Debtor(s) remains subject to the requirements of 11 U.S.C. § 363, all other
provisions of the Bankruptcy Code, Bankruptcy Rules, and Local Rules.
7.3 Rights of the Debtor(s) and Trustee to Object to Claims: Confirmation of the plan shall not prejudice the right of the Debtor(s) or Trustee to
object to any claim.
7.4 Rights of the Debtor(s) and Trustee to Avoid Liens and Recover Transfers: Confirmation of the plan shall not prejudice any rights the
Trustee or Debtor(s) may have to bring actions to avoid liens, or to avoid and recover transfers, under applicable law.
Part 8: Nonstandard Plan Provisions
8.1 Check “None” or List Nonstandard Plan Provisions.
None. If “None” is checked, the rest of Part 8 need not be completed or reproduced.
Part 9: Signatures
9.1 Signatures of Debtor(s) and Debtor(s)' Attorney
If the Debtor(s) do not have an attorney, the Debtor(s) must sign below, otherwise the Debtor(s) signatures are optional. The attorney for
Debtor(s), if any, must sign below.
X /s/ Shanetha M. Lyons X
Shanetha M. Lyons Signature of Debtor 2
Signature of Debtor 1
Executed on October 1, 2019 Executed on
By signing and filing this document, the Debtor(s) certify that the wording and order of the provisions in this Chapter 13 plan are identical
to those contained in E.D.N.C. Local Form 113, other than any nonstandard provisions included in Part 8.
X /s/ Benjamin R. Eisner Date October 1, 2019
Benjamin R. Eisner 42241 MM/DD/YYYY
Signature of Attorney for Debtor(s)
If this document is also signed and filed by an Attorney for Debtor(s), the Attorney also certifies, that the wording and order of the
provisions in this Chapter 13 plan are identical to those contained in E.D.N.C. Local Form 113, other than any nonstandard provisions
included in Part 8.
E.D.N.C. Local Form 113A (9.1.2019) Page 5 of 5
Software Copyright (c) 1996-2019 Best Case, LLC - www.bestcase.com Best Case Bankruptcy
|
Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have issued our reports dated March 1, 2013, with respect to the consolidated financial statements, schedule, and internal control over financial reporting included in the Annual Report of Knight Transportation, Inc. on Form 10-K for the year ended December 31, 2012.We hereby consent to the incorporation by reference of said reports in the Registration Statements of Knight Transportation, Inc. on Forms S-8 (File Nos. 333-72377, effective February 16, 1999, 333-105718, effective May 30, 2003, 333-126601, effective July 14, 2005, 333-152756, effective August 4, 2008, and 333-181547, effective May 17, 2012). /s/ GRANT THORNTON LLP Phoenix, Arizona March 1, 2013 Return to From 10-K
|
863 F.2d 1023
274 U.S.App.D.C. 334, 27 Fed. R. Serv. 459
UNITED STATES of Americav.Reginald T. REMBERT, Appellant.
No. 88-3040.
United States Court of Appeals,District of Columbia Circuit.
Argued Nov. 7, 1988.Decided Dec. 23, 1988.
Appeal from the United States District Court for the District of Columbia (Criminal Action No. 87-00406-01).
Richard S. Stern (appointed by this Court) for appellant.
W. Mark Nebeker, Asst. U.S. Atty., with whom Jay B. Stephens, U.S. Atty., Michael W. Farrell, and Helen M. Bollwerk, Asst. U.S. Attys., were on the brief, for appellee.
Before WALD, Chief Judge, STARR and SENTELLE, Circuit Judges.
Opinion for the Court filed by Circuit Judge SENTELLE.
SENTELLE, Circuit Judge:
1
Reginald T. Rembert ("Rembert" or "appellant") appeals from his conviction under all counts of a six-count indictment, charging two counts each of kidnapping, 18 U.S.C. Sec. 1201(a)(1) (1982); interstate transportation of a stolen vehicle, 18 U.S.C. Secs. 2312 & 2 (1982); and armed robbery, D.C.Code Secs. 22-2901, -3202 (1981). His sole assignment of error relates to the admission into evidence of photographs taken by a bank surveillance camera. Rembert contends that there was not a sufficient evidentiary foundation for the admission of the photos. We disagree and affirm.
I. BACKGROUND
2
Rembert's convictions arise from crime sprees occurring on July 7 and 26, 1987. On July 7, according to the testimony of victim witness Mary Simon, she drove to a Signet Bank in Falls Church, Virginia, at approximately 10:30 p.m. As she attempted to use her bank card in the automatic teller machine ("ATM"), a man armed with a knife reached into the open window of her car, grabbed her by the neck, and threatened to kill her if she did not give him her ATM code number. At trial she positively identified appellant as being this man. A second man, referred to in the record as "Washington," joined them at her car.1 She gave the two men her ATM number. They used the number and her bank card to extract $150 from her account. The two men forced Simon to accompany them in her car, driven by appellant, to a park in Washington, D.C. They made multiple stops and robbed Simon of her jewelry before leaving her in her vehicle, still in Washington.
3
A second victim witness, Andrea McGee, testified that on Sunday, July 26, 1987, in the midafternoon, she drove her automobile to an ATM machine in Washington, D.C. After she discovered the machine was out of order, she accidentally drove her car into the wall of the bank, where it became stuck. Two men, one of whom she later identified at a line-up and in court as appellant, and a third man not further involved in the incident, assisted in freeing her vehicle. The men identified as appellant and his companion then told her that they had missed their bus while helping her, and asked her to drive them to a bus stop. However, once in the car and under way, one of them threatened her with a butcher's knife and told her to drive to Virginia. The other man, identified as appellant, rifled through her purse. Once in Virginia, the assailants ordered her to stop at a bank, where appellant's companion took her bank card and demanded her code number in order to obtain money. With some difficulty, he extracted $10 from the machine. Appellant's companion then took over the driving, and the two forced her to accompany them to another bank. At that bank they spotted a male customer, later identified as John Lynn, attempting to use the ATM machine. Appellant jumped from the car with the knife and began stabbing Lynn. Appellant's companion demanded and obtained Lynn's wallet, keys, and card code. After unsuccessfully attempting to steal Lynn's car, the assailants fled the scene in McGee's car, appellant driving, and forced her to accompany them to a Seat Pleasant, Maryland, branch of Sovran Bank, where they unsuccessfully attempted to use Lynn's ATM card.2 After taking her purse, they finally returned McGee to Washington, D.C., where they abandoned her and her vehicle near the point of her abduction.
4
In addition to positive eyewitness identifications of Rembert by the two women victims and Lynn, the prosecution offered at trial evidence that each had identified Rembert in line-ups and that Simon had identified appellant in a series of photographs taken by a closed-circuit surveillance video camera at the Seat Pleasant bank where the two assailants took McGee. These photographs were received into evidence.
5
The record also contains other evidence linking appellant to the incidents, including the recovery from Simon's car of a latent fingerprint identifiable with the known print of appellant, and a composite sketch made by police artists with the assistance of Simon shortly after her abduction.
II. ANALYSIS
6
As noted above, appellant's sole assignment of error concerns the admission of the photographic evidence from the video recorder at the Sovran Bank in Seat Pleasant, Maryland. The sole authenticating witness for the photos was Katie Wohlfarth, a supervisor in the loss control division of the bank, who testified that she was in charge of investigating questioned activities through the ATM machines. She testified that the machine-maintained records at the Seat Pleasant branch showed an unusual pattern of use associated with John Lynn's ATM card on July 26, 1987, at approximately 8:00 p.m. The machine's records indicated that the card had been entered ten times on that occasion and was retained by the machine on the tenth attempt. She further testified that video cameras are maintained at each of the three ATM machines at the Seat Pleasant location. A video recorder taped the view from each camera in sequence, rotating to the next camera, taking a photograph every three seconds. This videotaping process imprints the date and time at which the pictures were made on the resultant photographs. She then identified a strip of pictures which was admitted into evidence over Rembert's objection. She further testified that she had viewed the original videotape and the resultant photographs and that the photographs were fair and accurate depictions of what was on the videotape. The imprinted date and times on the photographs ranged from 8:04:22 p.m. until 8:13:30 p.m. on July 26, 1987. On cross examination, she testified that she had no personal knowledge of the events that transpired at the Seat Pleasant location on that date, and could not say from her own knowledge whether the photographs fairly and accurately depicted the scene and events at that time and place or not.
7
Appellant argues that photographs are admitted under two theories of authentication, and that the foundation offered by the prosecution in the present case meets neither theory. He first presents the classic model of illustrative or "pictorial testimony" use of photographs as evidence. Under this theory, a sponsoring witness (whether or not he is the photographer) who has personal knowledge of the scene depicted testifies that the photograph fairly and accurately portrays that scene. See, e.g., Simms v. Dixon, 291 A.2d 184 (D.C.1972); E. Cleary, McCormick on Evidence (3d ed.1984) at 671. Obviously this model was not followed in Rembert's trial.
8
Appellant next argues that the only other basis for the introduction of photographic evidence is the "silent witness" model, under which the admissibility of a photograph is based on the reliability of the process by which it is made. This model is most often associated with the introduction of x-rays, where obviously no witness has viewed the scene portrayed. See McCormick on Evidence, supra, at 672. Appellant persuasively contends that the foundational evidence of the witness Wohlfarth does not meet that description. Her testimony did not really speak to the reliability of the process. She testified rather as a custodian of the records without supplying evidence as to the type of camera used, its general reliability, the quality of its product, the purpose of its employment, the process by which it is focused, or the general reliability of the entire system.
9
Appellant is undoubtedly correct that the evidence in this case does not meet either of those two models. He is further correct that those models are adopted in the Federal Rules of Evidence under the Authentication and Identification heading of Rule 901. Fed.R.Evid. 901(b)(1) (testimony that a matter is what it is claimed to be); 901(b)(9) (evidence describing a process or system used to produce a result and showing that the process or system produces an accurate result). But this does not close our inquiry. Rule 901 expressly prefaces the two subsections set forth above by the language that they function "[b]y way of illustration only, and not by way of limitation," thereby leaving room for the general application of Rule 901(a). That general provision states that "[t]he requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims."As we have already held in a case also dealing with photographic evidence, "[a]uthentication and identification are specialized aspects of relevancy that are necessary conditions precedent to admissibility." United States v. Blackwell, 694 F.2d 1325, 1330 (D.C.Cir.1982) (citations omitted). The Blackwell case involved a prosecution for unlawful possession of firearms. The photographs in question depicted the defendant holding a firearm, apparently the same as one of the guns seized at the time of his arrest. The prosecution had obtained the photographs as the result of a search of the same room in which the firearms were found. No witness could testify as to when the photographs were made, where they were made, by what process, or whether they fairly and accurately depicted any particular scene on any particular date. The detective who conducted the search did testify that the details of the pictured weapon and the background interior were similar to the details of the weapon and room in question. We applied the same authentication and identification analysis as we would have with reference to the contents of any documentary evidence. That is, we required only that "the proponent of documentary evidence make a showing sufficient to permit a reasonable juror to find that the evidence is what its proponent claims." 694 F.2d at 1330 (citation omitted). We further held that under Rule 901, "[t]he sufficiency of a showing of a document's authenticity rests within the sound discretion of the trial judge," and that "[t]he trial court's determination regarding admissibility will not be overturned absent a clear abuse of discretion." Id. (citing, inter alia, Jackson v. United States, 395 F.2d 615, 619 (D.C.Cir.1968), and United States v. Smith, 490 F.2d 789, 794 (D.C.Cir.1974) (per curiam)).
10
These same principles apply to the photographic evidence in the instant case. Appellant correctly states the two traditional bases for the admission of the photographic evidence, but the uses of photography have not stood still and neither should the law. Nor has the law on the use of photographic evidence remained unaffected by the changes in society. For example, in United States v. Stearns, 550 F.2d 1167 (9th Cir.1977), Judge (now Justice) Kennedy wrote for the Ninth Circuit in a case in which the trial court had admitted certain photographs of a boat taken on the open seas. The defendants in that case were charged with stealing a boat named the Sea Wind. As part of a factually involved trial, the defendants contended that they had taken Sea Wind only to protect the vessel and at a time when their own vessel, the Iola, was disabled. Details within the photograph showed the rigging of the Sea Wind in the foreground (as if the photograph were taken from that vessel) and the Iola under full sail in the background. Other details in companion photographs provided circumstantial evidence of the date of the taking of the photographs as being after the time of the alleged disability of the Iola. In upholding the trial court's admission of the evidence, Judge Kennedy wrote: "Even if direct testimony as to foundation matters is absent ... the contents of a photograph itself, together with such other circumstantial or indirect evidence as bears upon the issue, may serve to explain and authenticate a photograph sufficiently to justify its admission into evidence." Id. at 1171.
11
Other courts, both federal and state, have likewise modernized their standards for admissibility of photographic evidence. In United States v. Taylor, 530 F.2d 639 (5th Cir.1976), for example, the trial court had admitted into evidence in a bank robbery trial contact prints made from a film taken by the bank camera after the victim bank employees had been locked in a vault. The bank camera was in the business area of the bank so that none of the witnesses could testify as to the accuracy of the scene depicted at the time of the taking of the prints. The only foundational evidence was introduced by government witnesses not present at the time of the robbery, who testified as to the manner in which the film was installed in the camera, how the camera was activated, the removal of the film immediately after the robbery, the chain ofpossession, and the method of development. The Fifth Circuit held that admis sion of that evidence on that foundation was within the discretion of the district court and that the district court did not abuse its discretion. Id. at 641-42. See also People v. Bowley, 59 Cal. 2d 855, 859, 31 Cal. Rptr. 471, 474, 382 P.2d 591, 594 (1963) (holding that photographs may be admissible as probative evidence in themselves, rather than being solely illustrative of a witness's testimony, upon proper foundation).
12
Cases expanding the foundation appropriate to make photographic evidence admissible within the discretion of the trial court are becoming legion. See, e.g., State v. Henderson, 100 N.M. 260, 669 P.2d 736 (1983) (admitting photographs by an ATM camera on a bank officer's testimony as to origin and developing procedures); Fisher v. State, 7 Ark.App. 1, 643 S.W.2d 571 (1982) (upholding admissibility of videotape from store surveillance camera on testimony similar to that of the present case).
13
Consistent with our decision in Blackwell and the teachings of our sister circuits and the courts of the several states, we conclude that the contents of photographic evidence to be admitted into evidence need not be merely illustrative, but can be admitted as evidence independent of the testimony of any witness as to the events depicted, upon a foundation sufficient to meet the requirements of Federal Rule of Evidence 901(a). In this case the circumstantial evidence provided by the victim witnesses as to the occurrences at the ATM machines, together with the testimony of Wohlfarth as to the loading of the cameras and the security of the film, coupled with the internal indicia of date, place, and event depicted in the evidence itself provide ample support for the District Court's exercise of its discretion. Just as the Ninth Circuit held that the contents alone provided sufficient circumstantial evidence for the authentication of the photographs in Stearns, so do the contents of the photos in the instant case supply any further need for authentication that the contact prints from the ATM machine may require on the present record.3
14
Appellant further contends that we should require a heightened standard of authentication in a criminal prosecution where identification of the defendant [email protected]. He offers no support for this proposition, nor are we aware of any. The Federal Rules of Evidence govern proceedings in the courts of the United States without regard to their civil or criminal nature, see Fed.R. Evid. 101, as do the principles of case law set forth above, each of which is drawn from a criminal prosecution. The Supreme Court made clear in Lego v. Twomey, 404 U.S. 477, 92 S. Ct. 619, 30 L. Ed. 2d 618 (1972), that the heightened burden of proof in criminal cases, that is proof beyond a reasonable doubt, applies to the establishment of the facts underlying the conviction, not to the admissibility of specific pieces of evidence offered to prove these facts. In Lego, the Court was asked to hold that a confession should be ruled inadmissible unless its voluntariness was proved beyond a reasonable doubt rather than by a preponderance of the evidence. The Court held that a reasonable doubt standard was not offended "because the admissibility of a confession is determined by a less stringent standard." Id. at 487, 92 S.Ct. at 625. That opinion, of course, dealt with one of the most sensitive of constitutional protections of criminal defendants, the Fifth Amendment's protection against self-incrimination. If the protection of that right does not require a heightened standard for the admissibility of evidence, how much less so does the admissibility of mere photographic evidence.
III. CONCLUSION
15
Before expressing our conclusion in this case, we would be remiss if we did not acknowledge the candor and ethical propriety of the conduct of the court-appointed counsel in this cause. While advancing a novel theory, he has at all times carefully advised the Court of all relevant authority, both supporting and opposing his point. We expressly commend this practice. Nonetheless, the role of photography in technology and society at large is a changing one, and the courts must change with it. For the reasons set forth above, we conclude that our precedent in Blackwell and the reasoning of the other authorities collected above persuasively show that the evidence herein was properly admitted. The judgment of the District Court is without error and is therefore
16
AFFIRMED.
1
Rembert's co-defendant, Kenneth E. Washington, pleaded guilty before trial and is not a party to this appeal
2
Lynn had supplied a false code, which later resulted in an ATM machine rejecting, and ultimately retaining the card
3
Of course photographic evidence, even where it meets the specialized relevancy requirements of the authentication rule, must still meet the general relevancy requirements of Rules 401, 403, and 404. See Blackwell, supra, 694 F.2d at 1332 and n. 8. There is no contention in the present case that such requirements were violated by the evidence in question
|
{¶ 22} I concur in the judgment of the court today but write separately to emphasize the many critical issues that have been left unresolved by today's decision.
{¶ 23} Tragedy does not even begin to describe what has happened to six-month-old Aiden Stein. Aiden is not brain dead so, according to the definition of death under Ohio law, he is still alive. See R.C. 2108.30. Although not legally dead, Aiden is trapped somewhere between life and death with no ability to remove himself from that state. The cortex of his brain is permanently and severely damaged, and he has lost all cognitive functioning. Only his brain stem, which controls primitive activities such as breathing, heart rate, and reflexive actions, remains functional. All of his treating physicians agree that, for the rest of his life, Aiden will remain in a persistent vegetative state, unable to interact with or even perceive his environment. The United States Supreme Court more thoroughly described a persistent vegetative state as follows:
"Vegetative state describes a body which is functioning entirely in terms of its internal controls. It maintains temperature. It maintains heart beat and pulmonary ventilation. It maintains digestive activity. It maintains reflex activity of muscles and nerves for low level conditioned responses. But there is no behavioral evidence of either self-awareness or awareness of the surroundings in a learned manner." Cruzan v. Dir., Missouri Dept. of Health (1990), 497 U.S. 261, 267, 110 S. Ct. 2841, 111 L. Ed. 2d 224.
{¶ 24} Due to advances in medical technology, a patient can exist in a persistent vegetative state for many years, unable to fully live but also unable to die. *Page 424
"Debate over a patient's right to refuse life sustaining medical treatment has been fueled by advances in medical technology which have enabled medical practitioners to prolong life where, in the past, death would have been shortly forthcoming. A semblance of life may now be sustained long after conscious existence has ceased. `Hopelessly or terminally ill patients who in the past would have met with a swift end, now find that medical science can sustain them, near the threshold of death, but not yet across it.'
"* * *
"`Not long ago the realms of life and death were delineated by a bright line. Now this line is blurred by wondrous advances in medical technology — advances that until recent years were only ideas conceivable by such science-fiction visionaries as Jules Verne and H.G. Wells. Medical technology has effectively created a twilight zone of suspended animation where death commences while life, in some form, continues.'" In re Fiori (1995), 438 Pa.Super. 610, 632-633, 652 A.2d 1350, quoting Rasmussen by Mitchell v. Fleming (1987), 154 Ariz. 207, 741 P.2d 674, 678.
{¶ 25} Unfortunately, the law has not kept pace with the advances in medicine that allow life to be prolonged beyond its natural limits. In 1989 and 1991, the Ohio General Assembly enacted its modified version of the Uniform Rights of the Terminally Ill Act. See R.C. 2133.0 through 2133.15. R.C. 2133.08 is the only Ohio statute that explicitly authorizes the removal of life-sustaining treatment. No one is asserting that R.C.2133.08 applies here because, by its very terms, R.C. 2133.08 applies only to adults and Aiden is not an adult. See R.C. 2133.08(A)(1).
{¶ 26} The probate court has taken the view, however, that because R.C. 2133.08 is inapplicable, its authority is derived from R.C. 2111.06, a general statute that authorizes the probate court to appoint a guardian to make medical decisions for a minor. See In re Guardianship of Myers
(1993), 62 Ohio Misc.2d 763, 610 N.E.2d 663. Although the probate court's authority in this regard has not been challenged today, nor was it challenged in the Myers case, the lack of a challenge does not equate with a grant of authority by the legislature.
{¶ 27} For several reasons, it is questionable whether the legislature intended R.C. 2111.06 to authorize the probate court to appoint guardians to make decisions about the removal of life-sustaining treatment from a minor ward. To begin with, R.C. 2111.06 predates R.C. 2133.08 and the Uniform Act by decades and has not been amended since 1977. One could take a view contrary to that of the probate court that, by failing to make any provisions for minors in R.C. 2133.08, the legislature did not intend that these types of decisions would be made at all in the case of a minor or that the decision would be made by the minor's parents. *Page 425
{¶ 28} Next, although no one disputes that R.C. 2111.06 and R.C. 2111.13
authorize the appointment of a guardian to make medical decisions, those decisions have typically involved maintaining the health and well-being of the ward, not deciding when a child's life may end. All of the parties to this action seem to agree that a guardian's authority to make medical decisions encompasses the decision to remove life-sustaining treatment, despite the lack of any such language in the guardianship statutes. I am troubled by their focus on the lack of statutory language prohibiting the guardian from making this type of decision, particularly given that the guardianship statutes expressly grant certain types of authority. If the legislature had intended "medical * * * treatment" to encompass the removal of life-sustaining treatment, it certainly could have made that clear when it codified the Uniform Act.
{¶ 29} Finally, if the legislature intended R.C. 2111.06 to authorize the appointment of a guardian to make life and death decisions, it likely would have included specific standards to guide the decision-making process. Where the legislature did explicitly authorize the power to make decisions regarding the removal of life-sustaining treatment, it did not do so with merely a blanket requirement that the decision be made in the patient's best interest. R.C. 2133.08 authorizes the removal of life-sustaining treatment only after a long list of requirements has been met. Among those requirements is that the individual on life-sustaining treatment be either terminally ill or has been in a permanently unconscious state for at least 12 months. R.C. 2133.08 also includes detailed requirements for determining who will make the decision, what must be considered in making the decision, and how the decision can be challenged in the probate court.
{¶ 30} In addition to the question of the probate court's authority in this area, I am concerned that in another situation, aside from the facts of this case, the constitutional rights of the parents to make this decision may not be adequately protected. I agree that the parents here did not preserve this issue for appellate review and that we should not address the merits of the challenge. Nonetheless, it is the position of the guardian that R.C. 2111.06 authorizes the probate court to appoint a guardian to make this critical decision whenever the probate court determines that the minor has no parents, the parents are unsuitable, or if the minor's interest "will be promoted thereby." Given that such a decision essentially terminates parental rights, I question whether parental rights are adequately protected under such a statutory scheme or whether in fact the legislature even contemplated the use of the statute in this manner.
{¶ 31} It is time for the Ohio General Assembly to enact comprehensive standards to adequately protect the competing interests at issue here and to guide the decision-making process in such a critical area. In the meantime, "[i]t may be advantageous for the Court to proceed slowly, on a case by case basis, *Page 426
while awaiting action by the state legislature." In re Fiori (1995),438 Pa.Super. 610, at 655, 652 A.2d 1350 (Popovich, J., concurring and dissenting). |
Exhibit 10.5
EXECUTION COPY
SERVICING AGREEMENT
AMONG
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION,
CITIBANK, N.A.,
AS INDENTURE TRUSTEE,
NAVISTAR FINANCIAL 2010-A OWNER TRUST,
AS ISSUER,
AND
NAVISTAR FINANCIAL CORPORATION,
AS SERVICER
DATED AS OF MAY 27, 2010
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS; SERVICING SUPPLEMENT 1
SECTION 1.01
Certain Defined Terms 1 ARTICLE II ADMINISTRATION AND SERVICING OF
RECEIVABLES 1
SECTION 2.01
Duties of the Servicer 1
SECTION 2.02
Establishment of Accounts. 2
SECTION 2.03
Collection of Receivables Payments 6
SECTION 2.04
Realization Upon Liquidating Receivables. 6
SECTION 2.05
Maintenance of Insurance Policies 7
SECTION 2.06
Maintenance of Security Interests in Vehicles 7
SECTION 2.07
Covenants of the Servicer 7
SECTION 2.08
Purchase of Receivables Upon Breach of Covenant. 8
SECTION 2.09
Servicing Fee 8
SECTION 2.10
Servicer Expenses 8
SECTION 2.11
Deposits to Collection Account 9
SECTION 2.12
Collections 9
SECTION 2.13
Application of Collections 9
SECTION 2.14
Monthly Advances 10
SECTION 2.15
Additional Deposits 10
SECTION 2.16
Net Deposits 10
SECTION 2.17
Servicer’s Certificate 11 ARTICLE III STATEMENTS AND REPORTS 11
SECTION 3.01
Annual Statement as to Compliance; Notice of Servicer Default; Tax Reports.
11
SECTION 3.02
Annual Accountants’ Report. 12
SECTION 3.03
Access to Certain Documentation and Information Regarding Receivables 12
SECTION 3.04
Maintenance of Schedule of Retail Notes 13
SECTION 3.05
Amendments to Schedule of Retail Notes 13
SECTION 3.06
Maintenance of Systems and Receivables List. 13 ARTICLE IV THE CUSTODIAN
14
SECTION 4.01
Custody of Receivable Files 14
SECTION 4.02
Duties of Servicer as Custodian. 15
SECTION 4.03
Custodian’s Indemnification 16
SECTION 4.04
Effective Period and Termination 16 ARTICLE V REPRESENTATIONS AND
WARRANTIES OF THE SERVICER 16
SECTION 5.01
Representations and Warranties of the Servicer 16
- i -
--------------------------------------------------------------------------------
ARTICLE VI THE SERVICER 17
SECTION 6.01
Merger or Consolidation of, or Assumption of the Obligations of, the Servicer
17
SECTION 6.02
Limitation on Liability of Servicer and Others. 18
SECTION 6.03
Delegation of Duties 18
SECTION 6.04
Servicer not to Resign 18
SECTION 6.05
Servicer Indemnification. 19
SECTION 6.06
Backup Servicer 20 ARTICLE VII DEFAULT 20
SECTION 7.01
Servicer Defaults 20
SECTION 7.02
Consequences of a Servicer Default 21
SECTION 7.03
Appointment of Successor Servicer 22
SECTION 7.04
Notification to Securityholders 23
SECTION 7.05
Repayment of Advances 23
SECTION 7.06
Waiver of Past Defaults 23 ARTICLE VIII MISCELLANEOUS 24
SECTION 8.01
Amendment 24
SECTION 8.02
Termination 24
SECTION 8.03
Notices 24
SECTION 8.04
Governing Law 24
SECTION 8.05
Severability 24
SECTION 8.06
Assignment; Rights of the Indenture Trustee 24
SECTION 8.07
Successors and Assigns 25
SECTION 8.08
Counterparts 25
SECTION 8.09
Headings and Cross-References 25
SECTION 8.10
No Petition Covenants 25
SECTION 8.11
Limitation of Liability of the Trustees. 25
SECTION 8.12
MUTUAL WAIVER OF JURY TRIAL 26
EXHIBIT A Form of Servicer’s Certificate
- ii -
--------------------------------------------------------------------------------
SERVICING AGREEMENT
SERVICING AGREEMENT, dated as of May 27, 2010 (as it may be further amended,
supplemented or modified, this “Agreement”), among Navistar Financial Retail
Receivables Corporation, a Delaware corporation (“NFRRC”), Navistar Financial
2010-A Owner Trust, a Delaware statutory trust (the “Issuer”), Navistar
Financial Corporation, a Delaware corporation (hereinafter, together with its
successors and assigns, “NFC” or, in its capacity as servicer hereunder, the
“Servicer”), Citibank, N.A., a national banking association, acting in its
capacity as Indenture Trustee pursuant to the Indenture (the “Indenture
Trustee”).
R E C I T A L S:
WHEREAS, NFRRC and NFC are parties to the Purchase Agreement, pursuant to which
NFRRC will purchase the Designated Receivables and the Related Security with
respect thereto from NFC;
WHEREAS, the Issuer will issue Notes pursuant to the Indenture between the
Issuer and the Indenture Trustee and exchange the Notes and the Certificates for
the Receivables and the Related Security with respect thereto transferred by
NFRRC pursuant to the Pooling Agreement;
WHEREAS, the Servicer desires to perform the servicing obligations set forth
herein relating to the Receivables and the Related Security owned by the Issuer
for and in consideration of the fees and other benefits set forth in this
Agreement; and
WHEREAS, the parties wish to set forth the terms and conditions upon which the
Receivables are to be serviced by the Servicer.
NOW, THEREFORE, in consideration of the foregoing, the other good and valuable
consideration and the mutual terms and covenants contained herein, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS; SERVICING SUPPLEMENT
SECTION 1.01 Certain Defined Terms. Capitalized terms used in the above recitals
and in this Agreement shall have the respective meanings assigned them in Part I
of Appendix A to the Pooling Agreement dated as of the date hereof between the
Issuer and NFRRC (as it may be amended, supplemented or modified from time to
time), unless otherwise defined herein. The rules of construction set forth in
Part II of Appendix A to the Pooling Agreement shall be applicable to this
Agreement.
ARTICLE II
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 2.01 Duties of the Servicer. The Servicer is hereby appointed and
authorized to act as agent for the Owner and the Indenture Trustee with respect
to servicing the Receivables and in such capacity shall manage, service,
administer and make collections on the
--------------------------------------------------------------------------------
Receivables with reasonable care, using that at least degree of skill and
attention that the Servicer exercises as of the date of this Agreement with
respect to comparable medium and heavy duty truck, truck chassis, bus and
trailer receivables that it services for itself or others. The Servicer hereby
accepts such appointment and authorization and agrees to perform the duties of
Servicer with respect to the Receivables set forth herein. The Servicer’s duties
with respect to all Receivables shall include collection and posting of all
payments, responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information to
Obligors, policing the collateral securing the Receivables, accounting for
collections with respect thereto and performing the other duties specified
herein. Subject to the provisions of Section 2.02, the Servicer shall follow its
customary standards, policies and procedures and shall have full power and
authority, acting alone, to do any and all things in connection with such
managing, servicing, administration and collection that it may deem necessary or
desirable.
Without limiting the generality of the foregoing, the Servicer is hereby
authorized and empowered by the Owner and the Indenture Trustee pursuant to this
Section 2.01, to execute and deliver any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and the related Financed
Vehicles. The Servicer is hereby authorized to commence in the name of the Owner
or, to the extent necessary, in its own name, a legal proceeding to enforce a
Liquidating Receivable as contemplated by Section 2.04, and to commence or
participate in any legal proceeding (including a bankruptcy proceeding) relating
to or involving a Receivable (including a Liquidating Receivable). If the
Servicer commences or participates in any such legal proceeding in its own name,
the Owner thereupon shall be deemed to have automatically assigned such
Receivable to the Servicer solely for purposes of commencing and participating
in any such proceeding as a party or claimant, and the Servicer is hereby
authorized and empowered by the Owner, to execute and deliver in the Servicer’s
name any notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceeding. If in any
proceeding it is held that the Servicer may not enforce a Receivable on the
ground that it is not a real party in interest or a holder entitled to enforce
the Receivable, the Owner shall, at the Servicer’s expense and written
directions, take such reasonable steps as the Servicer reasonably deems
necessary to enforce the Receivable, including bringing suit in the name of such
Person. The Owner, upon the written request of the Servicer, shall furnish the
Servicer with any powers of attorney and other documents and take any other
steps which the Servicer may reasonably deem necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties under this
Agreement and the other Basic Documents. Except to the extent required by the
preceding three sentences, the authority and rights granted to the Servicer in
this Section 2.01 shall be nonexclusive and shall not be construed to be in
derogation of any equivalent authority and rights of the Owner.
SECTION 2.02 Establishment of Accounts.
(a) (i) The Servicer, for the benefit of the Financial Parties, shall establish
and maintain in the name of the Indenture Trustee an Eligible Deposit Account
known as the Navistar Financial 2010-A Owner Trust Collection Account (the
“Collection Account”), bearing an additional designation clearly indicating that
the funds deposited therein are held for the benefit of the Financial Parties.
- 2 -
--------------------------------------------------------------------------------
(ii) The Servicer, for the benefit of the Noteholders, shall establish and
maintain in the name of the Indenture Trustee an Eligible Deposit Account known
as the Navistar Financial 2010-A Owner Trust Note Distribution Account (the
“Note Distribution Account”), bearing an additional designation clearly
indicating that the funds deposited therein are held for the benefit of the
Noteholders.
(iii) Pursuant to the Trust Agreement, the Servicer, for the benefit of the
Certificateholders, shall establish and maintain in the name of the Trust an
Eligible Deposit Account known as the Navistar Financial 2010-A Owner Trust
Certificate Distribution Account (the “Certificate Distribution Account”),
bearing an additional designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders.
(iv) The Servicer, for the benefit of the Financial Parties (excluding the
Certificateholder), shall establish and maintain in the name of the Indenture
Trustee an Eligible Deposit Account known as the Navistar Financial 2010-A Owner
Trust Reserve Account (the “Reserve Account”), bearing an additional designation
clearly indicating that the funds deposited therein are held for the benefit of
such Financial Parties.
(b) (i) Each of the Designated Accounts and the Certificate Distribution Account
shall be initially established with the Indenture Trustee and shall be
maintained with the Indenture Trustee so long as (A) the short-term unsecured
debt obligations of the Indenture Trustee have the Required Deposit Rating or
(B) each of the Designated Accounts and the Certificate Distribution Account
qualifies as an Eligible Deposit Account. All amounts held in such accounts
(including amounts, if any, which the Servicer is required to remit daily to the
Collection Account pursuant to Section 2.11) shall, to the extent permitted by
applicable laws, rules and regulations, be invested, at the written direction of
the Servicer, by such bank or trust company in Eligible Investments. Such
written direction shall constitute certification by the Servicer that any such
investment is authorized by this Section 2.02. Funds deposited in the Reserve
Account shall be invested in Eligible Investments which mature, unless payable
on demand, prior to the next Distribution Date; provided, that such investments
may mature on a later date if the Rating Agency Condition is satisfied with
respect thereto. Investments in Eligible Investments shall be made in the name
of the Indenture Trustee or its nominee, and such investments shall not be sold
or disposed of prior to their maturity. Eligible Investments may include those
investments with respect to which the Indenture Trustee or an Affiliate of the
Indenture Trustee is an obligor or provides services and received compensation.
Should the short-term unsecured debt obligations of the Indenture Trustee (or
any other bank or trust company with which the Designated Accounts or the
Certificate Distribution Account are maintained) no longer have the Required
Deposit Rating, then the Servicer shall within 10 Business Days (or such longer
period, not to exceed 30 calendar days, upon satisfaction of the Rating Agency
Condition with respect thereto), with the Indenture Trustee’s assistance as
necessary, cause the Designated Accounts and the Certificate Distribution
Account (X) to be moved to a bank or trust company, the short-term unsecured
debt obligations of which shall have the Required Deposit Rating, or (Y) to be
moved to an Eligible Deposit Account. Investment Earnings on funds deposited in
the Designated Accounts shall be deposited into the Certificate Distribution
Account for distribution to the Certificateholders, except when the Indenture
Trustee is acting as successor Servicer in which case such Investment Earnings
shall be payable to the Indenture Trustee as successor Servicer. The Indenture
Trustee or the other Person holding the
- 3 -
--------------------------------------------------------------------------------
Designated Accounts and the Certificate Distribution Account as provided in this
Section 2.02(b)(i) shall be the “Securities Intermediary.” If the Securities
Intermediary shall be a Person other than the Indenture Trustee, the Servicer
shall obtain the express agreement of such Person to the obligations of the
Securities Intermediary set forth in this Section 2.02.
(ii) With respect to the Designated Account Property, the Securities
Intermediary agrees, by its acceptance hereof, that:
(A) The Designated Accounts are accounts to which Financial Assets will be
credited.
(B) All securities or other property underlying any Financial Assets credited to
the Designated Accounts shall be registered in the name of the Securities
Intermediary, indorsed to the Securities Intermediary or in blank or credited to
another securities account maintained in the name of the Securities
Intermediary, and in no case will any Financial Asset credited to any of the
Designated Accounts be registered in the name of the Issuer, the Servicer or the
Seller, payable to the order of the Issuer, the Servicer or the Seller or
specially endorsed to the Issuer, the Servicer or the Seller except to the
extent the foregoing have been specially indorsed to the Securities Intermediary
or in blank.
(C) All property delivered to the Securities Intermediary pursuant to this
Agreement will be promptly credited to the appropriate Designated Account.
(D) Each item of property (whether investment property, Financial Asset,
security, instrument or cash) credited to a Designated Account shall be treated
as a “financial asset” within the meaning of Section 8-102(a)(9) of the New York
UCC.
(E) If at any time the Securities Intermediary shall receive any order from the
Indenture Trustee directing transfer or redemption of any Financial Asset
relating to the Designated Accounts, the Securities Intermediary shall comply
with such entitlement order without further consent by the Issuer, the Servicer,
the Seller or any other Person.
(F) The Designated Accounts shall be governed by the laws of the State of New
York, regardless of any provision in any other agreement. For purposes of the
UCC, New York shall be deemed to be the Securities Intermediary’s jurisdiction
and the Designated Accounts (as well as the Securities Entitlements related
thereto) shall be governed by the laws of the State of New York.
(G) The Securities Intermediary has not entered into, and until the termination
of this Agreement will not enter into, any agreement with any other person
relating to the Designated Accounts and/or any Financial Assets credited thereto
pursuant to which it has agreed to comply with entitlement orders (as defined in
Section 8-102(a)(8) of the New York UCC) of such other person
- 4 -
--------------------------------------------------------------------------------
and the Securities Intermediary has not entered into, and until the termination
of this Agreement will not enter into, any agreement with the Issuer, the
Seller, the Servicer or the Indenture Trustee purporting to limit or condition
the obligation of the Securities Intermediary to comply with entitlement orders
as set forth in Section 2.02(b)(ii)(E).
(H) Except for the claims and interest of the Indenture Trustee and of the
Issuer in the Designated Accounts, the Securities Intermediary knows of no claim
to, or interest in, the Designated Accounts or in any Financial Asset credited
thereto. If any other person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution or
similar process) against the Designated Accounts or in any Financial Asset
carried therein, the Securities Intermediary will promptly notify the Indenture
Trustee, the Servicer and the Issuer thereof.
(I) The Securities Intermediary will promptly send copies of all statements,
confirmations and other correspondence concerning the Designated Accounts and/or
any Designated Account Property simultaneously to each of the Servicer and the
Indenture Trustee at the addresses set forth in Appendix B to the Pooling
Agreement.
(iii) The Servicer shall have the power, revocable by the Indenture Trustee (or
by the Issuer with the consent of the Indenture Trustee) to instruct the
Indenture Trustee to make withdrawals and payments from the Designated Accounts
for the purpose of permitting the Servicer or the Issuer to carry out its
respective duties hereunder or permitting the Indenture Trustee to carry out its
duties under the Indenture.
(iv) The Indenture Trustee shall possess all right, title and interest in and to
all funds on deposit from time to time in the Designated Accounts and in all
proceeds thereof (except Investment Earnings). Except as otherwise provided
herein or in the Indenture, the Designated Accounts shall be under the sole
dominion and control of the Indenture Trustee for the benefit of the applicable
Financial Parties.
(v) The Servicer shall not direct the Indenture Trustee to make any investment
of any funds or to sell any investment held in any of the Designated Accounts
unless the security interest granted and perfected in such account shall
continue to be perfected in such investment or the proceeds of such sale, in
either case without any further action by any Person, and, in connection with
any direction to the Indenture Trustee to make any such investment or sale, if
requested by the Indenture Trustee, the Servicer shall deliver to the Indenture
Trustee an Opinion of Counsel, acceptable to the Indenture Trustee, to such
effect.
(c) Pursuant to the Trust Agreement, the Issuer shall possess all right, title
and interest in and to all funds on deposit from time to time in the Certificate
Distribution Account and in all proceeds thereof. Except as otherwise provided
herein or in the Trust Agreement, the Certificate Distribution Account shall be
under the sole dominion and control of the Issuer for the benefit of the
Certificateholders. If, at any time, the Certificate Distribution Account ceases
to be an Eligible Deposit Account, the Servicer shall within 10 Business Days
(or such longer
- 5 -
--------------------------------------------------------------------------------
period, not to exceed 30 calendar days, as to which the Certificateholder or any
Rating Agency may consent) establish a new Certificate Distribution Account as
an Eligible Deposit Account and shall cause the Issuer to transfer any cash
and/or any investments in the old Certificate Distribution Account to such new
Certificate Distribution Account.
(d) The Indenture Trustee, the Issuer, the Securities Intermediary and each
other Eligible Deposit Institution with whom a Designated Account or the
Certificate Distribution Account is maintained waives any right of set-off,
counterclaim, security interest or bankers’ lien to which it might otherwise be
entitled.
SECTION 2.03 Collection of Receivables Payments. The Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due, and shall
follow such collection practices, policies and procedures as it follows with
respect to comparable medium and heavy duty truck, truck chassis, bus and
trailer receivables that it services for itself or others. Except as provided in
Section 2.07(c), the Servicer is hereby authorized to grant extensions, rebates
or adjustments on a Receivable without the prior consent of the Owner of such
Receivable and to rewrite, in the ordinary course of its business, a Receivable
to reflect the Full Prepayment of a Receivable with respect to any related
Financed Vehicle without the prior consent of the Owner of such Receivable. The
Servicer is authorized in its discretion to waive any prepayment charge, late
payment charge or any other fees that may be collected in the ordinary course of
servicing such Receivable. Subject to Section 2.13 of this Agreement, the
Servicer shall allocate payments on Receivables between principal and interest
in accordance with the customary servicing procedures it follows with respect to
all comparable medium and heavy duty truck, truck chassis, bus and trailer
receivables that it services for itself or others.
SECTION 2.04 Realization Upon Liquidating Receivables.
(a) The Servicer shall use commercially reasonable efforts, consistent with its
customary servicing procedures, to repossess or otherwise comparably convert the
ownership or otherwise take possession of each Financed Vehicle that it has
reasonably determined should be repossessed or otherwise converted following a
default under the Receivable secured by or relating to each such Financed
Vehicle. The Servicer is authorized to follow such practices, policies and
procedures as it shall deem necessary or advisable and as shall be customary and
usual in its servicing of medium and heavy duty truck, truck chassis, bus and
trailer receivables that it services for itself or others, which practices,
policies and procedures may include reasonable efforts to realize upon or obtain
benefits of any lease assignments, any Dealer Liability, any Navistar Purchase
Obligations, any Insurance Policies and any Guaranties, in each case with
respect to the Receivables, selling the related Financed Vehicle or Vehicles at
public or private sale or sales and other actions by the Servicer in order to
realize upon any Receivable. The foregoing is subject to the provision that, in
any case in which the Financed Vehicle shall have suffered damage, the Servicer
shall not expend funds in connection with any repair or towards the repossession
of such Financed Vehicle unless it shall determine in its discretion that such
repair or repossession shall increase the proceeds of liquidation of the related
Receivable by an amount greater than or equal to the amount of such expenses.
The Servicer shall be entitled to receive Liquidation Expenses with respect to
each Liquidating Receivable at such time as the Receivable becomes a Liquidating
Receivable in accordance with Section 8.2(b)(i) of the Indenture.
- 6 -
--------------------------------------------------------------------------------
(b) The Servicer shall pay all costs, expenses and liabilities incurred by it in
connection with any action taken in respect of a Financed Vehicle; provided,
however, that it shall be entitled to reimbursement of such costs and expenses
to the extent they constitute Liquidation Expenses or expenses recoverable under
an applicable Insurance Policy.
SECTION 2.05 Maintenance of Insurance Policies. The Servicer shall, in
accordance with its customary servicing procedures, require that each Obligor
under a Receivable shall have obtained physical damage insurance covering each
Financed Vehicle as of the execution of such Receivable, unless the Servicer has
in accordance with its customary procedures permitted an Obligor to self-insure
the Financed Vehicle or Financed Vehicles securing such Receivable. The Servicer
shall, in accordance with its customary servicing procedures, monitor such
physical damage insurance with respect to each Financed Vehicle that secures or
is related to each Receivable.
SECTION 2.06 Maintenance of Security Interests in Vehicles. The Servicer shall,
in accordance with its customary servicing procedures and at its own expense,
promptly take such steps as are necessary to maintain perfection of the first
priority security interest created by a Receivable in the related Financed
Vehicle or Financed Vehicles. The Owner of each Receivable hereby authorizes the
Servicer to re-perfect such security interests as necessary because of the
relocation of a Financed Vehicle or for any other reason.
SECTION 2.07 Covenants of the Servicer. The Servicer hereby makes the following
covenants on which the Issuer is relying in acquiring the Receivables under the
Pooling Agreement and issuing the Securities under the Further Transfer and
Servicing Agreements:
(a) except as contemplated by the other Basic Documents, the Servicer shall not
release any Financed Vehicle from the security or ownership interest securing
the related Receivable;
(b) the Servicer shall do nothing to impair the rights of NFRRC, the Issuer, the
Securityholders or the Indenture Trustee in and to such Receivables;
(c) the Servicer shall not amend or otherwise modify any Receivable such that
the Starting Receivable Balance, the Annual Percentage Rate or the total number
of Scheduled Payments is altered or such that the final scheduled payment on
such Receivable will be due any later than April 30, 2017; and
(d) other than solely for the purpose of collecting or enforcing the Receivables
for the benefit of the Owner, (i) the Servicer shall not at any time have or in
any way attempt to assert any interest in any Receivables or Related Security or
records related to the Collateral and (ii) the entire legal and equitable
interest of the Owner of a Receivable in such Receivable and the Related
Security shall at all times be vested in such Owner.
- 7 -
--------------------------------------------------------------------------------
SECTION 2.08 Purchase of Receivables Upon Breach of Covenant.
(a) Upon discovery by the Servicer or a Responsible Officer of any of the
Interested Parties of a breach of any of the covenants set forth in
Sections 2.06 and 2.07 with respect to any Receivable, the party discovering
such breach shall give prompt written notice thereof to the others. As of the
second Accounting Date (or, at the Servicer’s election, the first Accounting
Date) following notice to or discovery by the Servicer of a breach of any
covenant of the Servicer that materially and adversely affects any Receivable,
unless such breach is cured in all material respects, the Servicer shall, with
respect to such Receivable (an “Administrative Receivable”) purchase such
Administrative Receivable from the Issuer at a price equal to the Administrative
Purchase Payment. The Servicer shall pay the Administrative Purchase Payment as
described in Section 2.11.
It is understood and agreed that the obligation of the Servicer to purchase any
Receivable with respect to which such a breach has occurred and is continuing
shall, if such obligation is fulfilled, constitute the sole remedy against the
Servicer for such breach available to any Interested Party for any such uncured
breach.
(b) Upon receipt of the Administrative Purchase Payment with respect to a
Receivable which is an Administrative Receivable, the Owner shall assign,
without recourse, representation or warranty, to the Servicer (and shall take
such other actions as the Servicer may reasonably request in writing to perfect
or confirm such assignment) all of such Person’s right, title and interest in,
to and under (i) such Administrative Receivable and all monies due thereon and
(ii) all Related Security with respect to such Administrative Receivable, such
assignment being an assignment outright and not for security. Upon the
assignment of such Administrative Receivable described in the preceding
sentence, the Servicer shall own such Administrative Receivable, and all such
Related Security, free of any further obligations to such Person with respect
thereto.
SECTION 2.09 Servicing Fee. In consideration for its services hereunder and as
compensation for expenses paid as contemplated by Section 2.10, the Servicer
shall be entitled to receive on each Distribution Date a servicing fee (the
“Basic Servicing Fee”) for the related Monthly Period equal to one-twelfth of 1%
(the “Basic Servicing Fee Rate”) multiplied by the Aggregate Receivables Balance
as of the last day of the preceding Monthly Period. On each Distribution Date,
the Servicer will be paid the Basic Servicing Fee and any unpaid Basic Servicing
Fees from all prior Distribution Dates (collectively, the “Total Servicing Fee”)
pursuant to Section 8.2(c) of the Indenture to the extent of funds available
therefor. In addition, the Servicer will be entitled to receive any late fees,
prepayment charges or certain similar fees and charges collected during a
Monthly Period (the “Supplemental Servicing Fee”). The Servicer shall retain all
Supplemental Servicing Fees and shall not be obligated to deposit them into the
Collection Account.
SECTION 2.10 Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of the Issuer, any trustees and independent accountants,
taxes imposed on the Servicer and expenses incurred in connection with
distributions and reports and all other fees and expenses not expressly stated
under this Agreement to be for the account of the Interested Parties, but
excluding federal, state and local income taxes, if any, of the Issuer or any
Securityholder.
- 8 -
--------------------------------------------------------------------------------
SECTION 2.11 Deposits to Collection Account. The Servicer shall remit to the
Indenture Trustee for deposit to the Collection Account all Collections it
receives during each Monthly Period within two Business Days after receipt
thereof. However, Collections received during the period from the Cutoff Date to
the Closing Date shall be deposited to the Collection Account within two
Business Days after the Closing Date. The Servicer shall remit to the Indenture
Trustee for deposit (in immediately available funds) in the Collection Account
the aggregate Administrative Purchase Payments with respect to Administrative
Receivables to be purchased as of the last day of any Monthly Period on the
Business Day immediately preceding the immediately succeeding Distribution Date.
SECTION 2.12 Collections. In the event that:
(a) NFC is the Servicer,
(b) a Servicer Default shall not have occurred and be continuing, and
(c) (i) the Servicer satisfies the requirements for monthly remittances of
Collections established by each Rating Agency, and upon satisfaction of such
requirements, each Rating Agency reaffirms the rating of the Notes at the level
at which they would be rated if Collections were remitted within two Business
Days of receipt, or
(ii) the short-term unsecured debt of the Servicer is rated at least “R-1” by
DBRS, if rated by DBRS, and “P-1” by Moody’s, or
(iii) a standby letter of credit has been issued by an Eligible Institution
which, as of each date during the period that the Servicer is making monthly
remittances of Collections, has an undrawn amount at least equal to 150% of all
Scheduled Payments due in respect of the Receivables for the latest Monthly
Period ended prior to the next succeeding Distribution Date (and the aggregate
amount of unremitted Collections does not at any time exceed 90% of the undrawn
amount of such letter of credit),
then, the Servicer shall not be required to deposit Collections into the
Collection Account until the Business Day preceding the Distribution Date
following the Monthly Period during which such Collections were received.
Pending deposit into the Collection Account, Collections may be employed by the
Servicer at its own risk and for its own benefit and will not be segregated from
its own funds.
SECTION 2.13 Application of Collections. For the purposes of this Agreement, all
Collections for the related Monthly Period with respect to each Receivable shall
be applied by the Servicer as follows:
(a) all payments by or on behalf of the Obligor or other collections on a
Receivable (including Warranty Payments and Administrative Purchase Payments but
excluding Supplemental Servicing Fees and Investment Earnings) shall be applied
(i) first, to reduce Outstanding Monthly Advances, if any, with respect to such
Receivable, (ii) second, to the Scheduled Payment on such Receivable for such
Monthly Period, and (iii) third, the remainder shall constitute, with respect to
such Receivable, a Full Prepayment or Partial Prepayment; and
- 9 -
--------------------------------------------------------------------------------
(b) a Partial Prepayment made on a Receivable is applied to reduce the final
Scheduled Payment and will thereafter, to the extent the Partial Prepayment
exceeds the final Scheduled Payment, reduce Scheduled Payments in reverse
chronological order beginning with the penultimate Scheduled Payment. The Rebate
related to such Partial Prepayment will reduce the final Scheduled Payment and
will thereafter, to the extent the Rebate exceeds the final Scheduled Payment,
reduce Scheduled Payments in reverse chronological order beginning with the
penultimate Scheduled Payment.
SECTION 2.14 Monthly Advances. Subject to the following sentence, as of each
Accounting Date, if the payments received by the Servicer during the related
Monthly Period by or on behalf of the Obligor on a Receivable (other than an
Administrative Receivable, a Warranty Receivable or a Liquidating Receivable)
after application of such payments under Section 2.13(a) shall be less than the
Scheduled Payment on such Receivable for such Monthly Period, whether as a
result of any extension granted to the Obligor or otherwise, then the Servicer
shall advance any such shortfall (such amount, a “Monthly Advance”). The
Servicer shall be obligated to make a Monthly Advance in respect of a Receivable
only to the extent that the Servicer, in its sole discretion, shall determine
that such advance shall be recoverable (in accordance with the two immediately
following sentences) from subsequent collections or recoveries on such
Receivable. Subject to Section 8.2 of the Indenture, the Servicer shall be
reimbursed for unreimbursed Outstanding Monthly Advances with respect to a
Receivable from the following sources with respect to such Receivable, in each
case as set forth in this Agreement, (a) subsequent payments by or on behalf of
the Obligor, (b) Liquidation Proceeds, (c) the Administrative Purchase Payment,
together with the amount of any Monthly Advance released pursuant to the
definition thereof, and (d) the Warranty Payment. At such time as the Servicer
shall determine that Outstanding Monthly Advances with respect to any Receivable
shall not be recoverable from payments with respect to such Receivable, the
Servicer shall be reimbursed from any Collections made on other Receivables.
SECTION 2.15 Additional Deposits. The Servicer shall deposit in the Collection
Account the aggregate Monthly Advances pursuant to Section 2.14. The Servicer
and the Warranty Purchaser shall deposit in the Collection Account the aggregate
Administrative Purchase Payments and Warranty Payments with respect to
Administrative Receivables and Warranty Receivables, respectively. All such
deposits with respect to a Monthly Period shall be made in immediately available
funds on the Transfer Date with respect to the Distribution Date related to such
Monthly Period.
SECTION 2.16 Net Deposits. At any time that (a) NFC shall be the Servicer and
(b) the Servicer shall be permitted by Section 2.12 of this Agreement to remit
collections on a basis other than a daily basis, the Indenture Trustee at the
written request of the Servicer may make any remittances pursuant to this
Article II or Article VIII of the Indenture net of amounts to be distributed by
the Indenture Trustee to such remitting party. Nonetheless, each such party
shall account for all of the above described remittances and distributions as if
the amounts were deposited and/or transferred separately.
- 10 -
--------------------------------------------------------------------------------
SECTION 2.17 Servicer’s Certificate
(a) Not later than 10:00 a.m. (Chicago, Illinois time) on each Determination
Date, the Servicer shall deliver to each Trustee, the Backup Servicer and the
Rating Agencies (in the case of DBRS, [email protected]) a Servicer’s
Certificate with respect to the immediately preceding Monthly Period,
substantially in the form attached hereto as Exhibit A, executed by the
President, any Vice President or the Assistant Treasurer of the Servicer
containing all information necessary to each such party for making the
calculations, withdrawals, deposits, transfers and distributions required by
Sections 8.2 and 8.10 of the Indenture, and all information required to be
provided to the Interested Parties under Section 8.8 of the Indenture.
Receivables to be purchased by the Servicer under Section 2.08 of this
Agreement, by NFC pursuant to Section 5.04 of the Purchase Agreement or by NFRRC
under Section 2.06 of the Pooling Agreement as of the last day of any Monthly
Period shall be identified by Receivable number with respect to Retail Notes (in
each case, as set forth in the Schedule of Retail Notes). With respect to any
Receivables for which the Seller is the Owner, the Servicer shall deliver to the
Seller such accountings relating to such Receivables and the actions of the
Servicer with respect thereto as the Seller may reasonably request.
(b) On or before each Determination Date, with respect to the preceding Monthly
Period and the related Distribution Date, the Servicer shall calculate the
Available Amount, the Total Available Amount, the Total Servicing Fee, the
Backup Servicing Fee, the Aggregate Class A Noteholders’ Interest Distributable
Amount, the Class B Noteholders’ Interest Distributable Amount, the Class C
Noteholders’ Interest Distributable Amount, the Priority Principal Distribution
Amount, the Regular Principal Distribution Amount, the Principal Distributable
Amount, the Reserve Account Deposit Amount and all other amounts required to
determine the amounts to be deposited in or paid from each of the Collection
Account, the Note Distribution Account, the Certificate Distribution Account and
the Reserve Account on the next succeeding Distribution Date or Transfer Date,
as applicable, and supply such information to the Issuer and the Indenture
Trustee.
(c) On the Closing Date (with respect to the remainder of calendar year 2010)
and thereafter, within 15 days prior to the end of each calendar year while this
Agreement remains in effect (with respect to the next succeeding calendar year),
the Servicer shall deliver to either the Indenture Trustee or the Owner Trustee,
following receipt of a written request, an Officers’ Certificate specifying the
days on which banking institutions in Chicago, Illinois are authorized or
obligated by law or executive order to be closed.
ARTICLE III
STATEMENTS AND REPORTS
SECTION 3.01 Annual Statement as to Compliance; Notice of Servicer Default; Tax
Reports.
(a) The Servicer shall deliver to the Issuer, the Rating Agencies and the
Indenture Trustee, on or before March 1 of each year, beginning March 1, 2011,
an officer’s certificate signed by the Chairman of the Board, Vice Chairman of
the Board, the President or any Vice President of the Servicer, dated as of the
immediately preceding October 31, stating that (i) a review of the activities of
the Servicer during the Servicer’s immediately preceding fiscal year (or, with
respect to the first such certificate, such period as shall have elapsed from
- 11 -
--------------------------------------------------------------------------------
the Closing Date to the last day of the Servicer’s immediately preceding fiscal
year) and of its performance under this Agreement has been made under such
officer’s supervision and (ii) to such officer’s knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such period, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and the
nature and status thereof. A copy of such certificate may be obtained by any
Noteholder or Certificateholder by a request in writing to the Indenture Trustee
or Issuer, respectively, addressed to the Corporate Trust Office of the
Indenture Trustee or the Owner Trustee, respectively.
(b) The Servicer shall deliver to the Issuer, each Trustee and the Rating
Agencies, promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, written notice in an Officer’s
Certificate of any Servicer Default under Section 7.01 or event which with the
giving of notice or lapse of time, or both, would become a Servicer Default
under Section 7.01.
(c) The Servicer shall prepare and deliver to the Issuer and the Indenture
Trustee the annual report described in Section 8.8(b) of the Indenture.
SECTION 3.02 Annual Accountants’ Report.
(a) The Servicer shall cause a firm of independent public accountants, who may
also render other services to the Servicer or NFRRC, to deliver to the Issuer,
each Trustee and the Rating Agencies, on or before March 1 of each year,
beginning with March 1, 2011, with respect to the Servicer’s immediately
preceding fiscal year, (or, with respect to the first such report, such period
as shall have elapsed from the Closing Date to the last day of the Servicer’s
immediately preceding fiscal year), a copy of the report (the “Accountants’
Report”) addressed to the board of directors of the Servicer, the Issuer, and to
each Trustee to the effect that such firm has audited the financial statements
of the Servicer and issued its report thereon and that such audit (i) was made
in accordance with generally accepted auditing standards, (ii) included tests
relating to receivables (including certain of the Receivables) serviced for
others in accordance with the requirements of the Uniform Single Attestation
Program for Mortgage Bankers (the “Program”), to the extent the procedures in
the Program are applicable to the servicing obligations set forth in this
Agreement, and (iii) except as described in the report, disclosed no exceptions
or errors in the records relating to receivables (including certain of the
Receivables) serviced for others that, in the firm’s opinion, the Program
requires such firm to report.
(b) The same firm of independent public accountants shall have certified to
NFRRC that the firm is independent of NFRRC and the Servicer within the meaning
of the Code of Professional Ethics of the American Institute of Certified Public
Accountants.
(c) A copy of the Accountant’s Report may be obtained by any Noteholder or
Certificateholder by a request in writing to the Indenture Trustee or the
Issuer, addressed to the Corporate Trust Office of the Indenture Trustee or the
Owner Trustee, respectively.
SECTION 3.03 Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall, upon receipt of reasonable notice, provide to
the Issuer, each
- 12 -
--------------------------------------------------------------------------------
Trustee and Securityholders reasonable access to the Servicer’s records
regarding the Receivables owned by the Issuer. The Servicer shall provide such
access to any Securityholder only in such cases where a Securityholder is
required by applicable statutes or regulations to review such documentation. In
each case, such access shall be afforded without charge but only upon reasonable
request and during normal business hours at offices of the Servicer designated
by the Servicer. Nothing in this Section 3.03 shall derogate from the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding Obligors, and the failure of the Servicer to provide
access as provided in this Section 3.03 as a result of such obligation shall not
constitute a breach of this Section 3.03.
SECTION 3.04 Maintenance of Schedule of Retail Notes. The Servicer shall
maintain at all times the Schedule of Retail Notes, which shall list separately
all Retail Notes which are owned by the Issuer. The Schedule of Retail Notes
shall be updated to reflect all sales of Receivables as a result of a Receivable
becoming a Warranty Receivable or an Administrative Receivable. The Servicer
shall deliver to the Owner Trustee and the Indenture Trustee an updated Schedule
of Retail Notes on or before each Distribution Date.
SECTION 3.05 Amendments to Schedule of Retail Notes. If the Servicer, during a
Monthly Period, assigns to a Receivable an account number that differs from the
account number previously identifying such Receivable on the Schedule of Retail
Notes, the Servicer shall amend the Schedule of Retail Notes to report the newly
assigned account number. Each Schedule of Retail Notes delivered on a
Distribution Date pursuant to Section 3.04 shall list all new account numbers
assigned to Receivables during such Monthly Period and shall show by cross
reference the prior account numbers identifying such Receivables on the
previously distributed Schedule of Retail Notes.
SECTION 3.06 Maintenance of Systems and Receivables List.
(a) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know the
status of such Receivable, including payments and recoveries made and payments
owing (and the nature of each) and extensions of any scheduled payments made not
less than 45 days prior thereto, and (ii) reconciliation between payments or
recoveries on (or with respect to) each Receivable and the amounts from time to
time deposited in the Collection Account with respect to such Receivable.
(b) The Servicer shall maintain its computer systems so that the Servicer’s
master computer records (including any backup archives) that refer to any
Receivable shall indicate clearly that the Receivable is owned by the Issuer and
that such Receivable has been pledged by the Issuer to the Indenture Trustee.
Indication of the Issuer’s and the Indenture Trustee’s interest in a Receivable
shall be deleted from or modified on the Servicer’s computer systems when, and
only when, the Receivable shall have been paid in full, repurchased by NFC,
purchased by the Servicer or become a Liquidating Receivable as to which the
Servicer and NFC has discontinued pursuing remedies with respect to collection
in accordance with its customary servicing procedures and such Receivable is
deleted from the Servicer’s computer systems.
- 13 -
--------------------------------------------------------------------------------
(c) If at any time the Servicer shall propose to sell, grant a security interest
in, or otherwise transfer any interest in truck, truck chassis, bus or trailer
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee,
computer tapes, records or printouts (including any of those restored from
backup archives) that, if they refer in any manner whatsoever to any Receivable,
indicate clearly that such Receivable has been sold and is owned by the Issuer
and has been pledged to the Indenture Trustee unless such Receivable has been
paid in full, repurchased by NFC or purchased by the Servicer.
(d) The Servicer will furnish to the Issuer and the Indenture Trustee at any
time upon request a list of all Receivables then held as part of the Owner Trust
Estate, together with a reconciliation of such list to the Schedule of Retail
Notes and to each of the Servicer’s Certificates furnished before such request
indicating removal of Receivables from the Owner Trust Estate. Upon request, the
Servicer shall furnish a copy of any such list to the Seller.
(e) The Servicer shall prepare and file such financing statements and cause to
be prepared and filed such continuation and other statements, all in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interest of the Issuer under the Pooling Agreement in the
Receivables, the Related Security and the other property conveyed thereunder (to
the extent such property constitutes Code Collateral) and the Indenture
Trustee’s security interest in the Receivables, the Related Security and the
other Collateral (to the extent such Collateral constitutes Code Collateral).
The Servicer shall deliver (or cause to be delivered) to the Indenture Trustee
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
ARTICLE IV
THE CUSTODIAN
SECTION 4.01 Custody of Receivable Files. To assure uniform quality in servicing
the Receivables and to reduce administrative costs, the Owner of each Receivable
and the Indenture Trustee hereby appoint the Servicer, and the Servicer hereby
accepts such appointment, to act as agent for the Owner of each Receivable and
the Indenture Trustee (for the benefit of the Financial Parties) as custodian to
maintain custody of the following documents or instruments with respect to such
Receivable (as to each Receivable, the “Receivable File”), which will be hereby
constructively delivered to the Owner of the related Receivable and the
Indenture Trustee:
(a) the fully executed original of the Retail Note;
(b) documents evidencing or related to any related Insurance Policy;
(c) a copy of the credit application of each Obligor, fully executed by each
such Obligor on NFC’s customary form, or on a form approved by NFC, for such
application;
(d) where permitted by law, the original Certificate of Title (when received)
and otherwise such documents, if any, that NFC keeps on file in accordance with
its customary procedures indicating that the Financed Vehicle is owned by the
Obligor and subject to the interest of NFC as first lienholder or secured party;
and
- 14 -
--------------------------------------------------------------------------------
(e) any and all other documents that NFC keeps on file in accordance with its
customary procedures relating to the individual Receivable, Obligor or Financed
Vehicle.
SECTION 4.02 Duties of Servicer as Custodian.
(a) The Servicer shall hold each Receivable File for the benefit of the Owner of
the related Receivable and the Indenture Trustee (for the benefit of the
Financial Parties) and maintain such accurate and complete accounts, records and
computer systems pertaining to each Receivable File as shall enable NFRRC, the
Issuer and the Indenture Trustee to comply with their respective obligations
under the Purchase Agreement and the Further Transfer and Servicing Agreements.
Each Receivable shall be identified as such on the books and records of the
Servicer to the extent the Servicer reasonably determines to be necessary to
comply with the terms and conditions of the Purchase Agreement and, if
applicable, the Further Transfer and Servicing Agreements. In performing its
duties as custodian, the Servicer shall act with reasonable care, using at least
that degree of skill and attention that the Servicer exercises as of the date of
this Agreement with respect to the receivable files relating to comparable
truck, truck chassis, bus and trailer receivables that the Servicer services and
holds for itself or others. The Servicer shall conduct, or cause to be
conducted, periodic physical inspections of the Receivable Files held by it
under this Agreement, and of the related accounts, records and computer systems,
in such manner as shall enable the Owner Trustee and the Indenture Trustee to
verify the accuracy of the Servicer’s inventory and record keeping. The Servicer
shall promptly report to each Owner and the Indenture Trustee any failure on its
part to hold the Receivable Files and maintain its accounts, records and
computer systems as herein provided and promptly take appropriate action to
remedy any such failure.
(b) The Servicer shall maintain each Receivable File at its principal office at
425 N. Martingale Road, Suite 1800, Schaumburg, Illinois, 60173, or at such
other office of the Servicer as shall from time to time be identified to the
Owners and the Indenture Trustee upon 60 days’ prior written notice. Subject
only to the Custodian’s security requirements applicable to its own employees
having access to similar records held by the Servicer and the limitations set
forth in Section 3.03 hereof and otherwise in the Basic Documents, the Servicer
shall permit the Owners, the Indenture Trustee or their duly authorized
representatives, attorneys or auditors to inspect the Receivable Files and the
related accounts, records and computer systems maintained by the Servicer
pursuant hereto at such times as such party may reasonably request.
(c) In general, the Servicer shall attend to all nondiscretionary details in
connection with maintaining custody of the Receivable Files. In addition, the
Servicer shall assist the Owner Trustee generally in the preparation of routine
reports to Securityholders, if any, or to regulatory bodies to the extent
necessitated by the Servicer’s custody of the Receivable Files.
(d) Except as otherwise contemplated in any other Basic Document, the Servicer
shall not be required to physically separate the Receivables Files from
receivables files relating to receivables owned by NFC or its affiliates;
provided, that the Receivables Files shall at all times be physically segregated
from receivables files relating to receivables owned or serviced by others.
- 15 -
--------------------------------------------------------------------------------
SECTION 4.03 Custodian’s Indemnification. The Servicer as custodian shall
indemnify the Issuer, the Indenture Trustee, the Owner Trustee and the Financial
Parties and each of their officers, directors and agents for any and all
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses of any kind whatsoever that may be imposed on, incurred by or asserted
against the Issuer, the Indenture Trustee, the Owner Trustee and the Financial
Parties or any of their officers, directors and agents as the result of any
improper act or omission in any way relating to the maintenance and custody by
the Servicer as custodian of the Receivable Files; provided, however, that the
Servicer shall not be liable to the Issuer, the Indenture Trustee, the Owner
Trustee or the Financial Parties or any of their officers, directors and agents
for any portion of any such amount resulting from the willful misfeasance, bad
faith or negligence of such Person.
SECTION 4.04 Effective Period and Termination. The Servicer’s appointment as
Custodian with respect to a Receivable File hereunder shall become effective as
of the Purchase Date and shall continue in full force and effect until
terminated pursuant to this Section 4.04. If the Servicer shall resign as
Servicer in accordance with the provisions of this Agreement, or if all of the
rights and obligations of the Servicer shall have been terminated under
Article VII, the appointment of such Servicer as custodian shall be terminated
and the terminated Custodian shall deliver the Receivables Files to (or at the
direction of) the Indenture Trustee pursuant to Section 7.02 of this Agreement.
Upon (a) the repurchase of a Warranty Receivable by NFC pursuant to the Purchase
Agreement, (b) purchase of a Warranty Receivable by NFRRC pursuant to the
Pooling Agreement, or (c) purchase of an Administrative Receivable by the
Servicer pursuant to Section 2.08(a) of this Agreement, the Servicer shall
deliver the related Receivable File to or at the direction of the purchaser.
Upon delivery of such Receivable File, the Servicer’s obligations as Custodian
with respect to such Receivable File shall terminate.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE SERVICER
SECTION 5.01 Representations and Warranties of the Servicer. The Servicer hereby
represents and warrants to NFRRC, the Issuer and the Indenture Trustee that as
of the Purchase Date:
(a) Organization and Good Standing. The Servicer has been duly organized and is
validly existing as a corporation, and in good standing under the laws of the
State of Delaware, with power and authority to own its properties and to conduct
its business as such properties are presently owned and such business is
presently conducted, and had at all relevant times, and now has, power,
authority and legal right to service the Receivables as provided in this
Agreement.
(b) Due Qualification. The Servicer is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including the servicing of the Receivables as
required by this Agreement) requires or shall require such qualification.
- 16 -
--------------------------------------------------------------------------------
(c) Power and Authority. The Servicer has the power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and the
execution, delivery and performance by the Servicer of this Agreement have been
duly authorized by all necessary corporate action on the part of the Servicer.
This Agreement has been duly executed and delivered by the Servicer.
(d) Binding Obligation. This Agreement constitutes a legal, valid and binding
obligation of the Servicer, enforceable against the Servicer in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors’ rights in general and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity [email protected].
(e) No Violation. The execution and delivery of this Agreement by the Servicer
and its performance of its obligations hereunder will not violate any
Requirement of Law or Contractual Obligation of the Servicer and will not result
in, or require, the creation or imposition of any Lien on any of its property or
assets pursuant to any such Requirement of Law or Contractual Obligation other
than as expressly permitted by the Basic Documents.
(f) No Proceedings. There are no actions, proceedings or, to the Servicer’s
knowledge, investigations pending or, to the Servicer’s knowledge, threatened
before any Governmental Authority (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or the issuance of the Securities, or
(iii) seeking any determination or ruling that would reasonably be expected to
have a Material Adverse Effect with respect to the Servicer.
(g) No Consent. Except as expressly contemplated by the Basic Documents, no
consent, permit, approval or authorization of, or declaration to or filing with,
or other act by or in respect of, any Governmental Authority or any other Person
is required in connection with the execution, delivery, performance, validity or
enforceability by or against the Servicer of this Agreement.
ARTICLE VI
THE SERVICER
SECTION 6.01 Merger or Consolidation of, or Assumption of the Obligations of,
the Servicer. Any Person (a) into which the Servicer may be merged or
consolidated, (b) resulting from any merger, conversion or consolidation to
which the Servicer shall be a party, (c) succeeding to the business of the
Servicer, or (d) more than 50% of the voting stock or other interest of which is
owned directly or indirectly by Navistar International Corporation, a Delaware
corporation, and which is otherwise servicing NFC’s receivables, which Person in
any of the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer under this Agreement shall be the successor to the
Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement,
notwithstanding anything in this Agreement to the contrary. The Servicer shall
provide prompt notice of any merger, consolidation or succession pursuant to
this Section 6.01 to the Rating Agencies, the Owner Trustee and the Indenture
Trustee.
- 17 -
--------------------------------------------------------------------------------
SECTION 6.02 Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Issuer or any
Noteholder, except as specifically provided in this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this Agreement
or any other Further Transfer and Servicing Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
such Person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence (except errors in judgment) in the
performance of the Servicer’s duties or by reason of reckless disregard of
obligations and duties under the Further Transfer and Servicing Agreements. The
Servicer and any director, officer or employee or agent of the Servicer may rely
in good faith on the advice of counsel or on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties to service the Receivables in accordance with this
Agreement and that, in its opinion, may involve it in any expense or liability;
provided, however, that the Servicer may undertake any reasonable action that it
may deem necessary or desirable in respect of this Agreement and the rights and
duties of the parties to this Agreement and the interests of the Securityholders
under this Agreement and the Noteholders and (to the extent expressly provided
therein) the Certificateholders under the Indenture and the interests of the
Certificateholders under the Trust Agreement. In such event, the legal expenses
and costs for such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Issuer, and the Servicer shall be
entitled to be reimbursed therefor.
SECTION 6.03 Delegation of Duties. So long as NFC acts as Servicer, the Servicer
may, at any time without notice or consent, delegate any duties under this
Agreement to any Person more than 50% of the voting stock or other interest of
which is owned, directly or indirectly, by NFC. The Servicer may at any time
perform specific duties as Servicer through subservicers who are in the business
of servicing medium and heavy duty truck, truck chassis, bus and trailer
receivables. Any delegation of the Servicer’s duties under this Section 6.03
shall not relieve the Servicer of its responsibility with respect to such
duties.
SECTION 6.04 Servicer not to Resign. Subject to the provisions of Section 7.02,
the Servicer shall not resign from the obligations and duties imposed on it by
this Agreement as Servicer except upon determination that the performance of its
duties under this Agreement is no longer permissible under applicable law. Any
such determination permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect delivered to the Indenture Trustee. No
such resignation shall become effective until the Indenture Trustee or a
successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 7.02.
- 18 -
--------------------------------------------------------------------------------
SECTION 6.05 Servicer Indemnification.
(a) The Servicer (other than the Indenture Trustee in its capacity as successor
Servicer pursuant to Section 7.03 hereof) shall be liable in accordance with
this Agreement only to the extent of the obligations in this Agreement
specifically undertaken by the Servicer. Such obligations shall include the
following:
(i) The Servicer (other than any successor Servicer who is not an affiliate of
the initial Servicer, including the Indenture Trustee in its capacity as
successor Servicer pursuant to Section 7.03 hereof it being understood that the
removed Servicer shall retain such liability) shall defend, indemnify and hold
harmless the Indenture Trustee, the Owner Trustee, the Issuer and the Interested
Parties from and against any and all costs, expenses, losses, damages, claims
and liabilities arising out of or resulting from the use, ownership or operation
by the Servicer or any Affiliate thereof of any Financed Vehicle;
(ii) The Servicer (other than any successor Servicer who is not an affiliate of
the initial Servicer, including the Indenture Trustee in its capacity as
successor Servicer pursuant to Section 7.03 hereof it being understood that the
removed Servicer shall retain such liability) shall indemnify, defend and hold
harmless the Issuer, the Owner Trustee and the Indenture Trustee from and
against any taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated in this Agreement and the Pooling
Agreement, including any sales, gross receipts, general corporation, Illinois
corporate income, tangible personal property, privilege or license taxes (but
not including any taxes asserted with respect to, and as of the date of, the
sale of the Receivables to the Trust or the issuance and original sale of the
Securities, or asserted with respect to ownership of the Receivables, or federal
or other income taxes arising out of distributions on the Securities, or any
fees or other compensation payable to any such Person) and costs and expenses in
defending against the same; provided, that, if the Issuer is treated as a
partnership for federal income tax purpose and is subject to the Illinois
Personal Property Replacement Tax, the Servicer shall indemnify the Issuer for
any amount of Illinois Personal Property Replacement Tax to which the Issuer is
subject;
(iii) The Servicer shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee and the Interested Parties from and against
any and all costs, expenses, losses, claims, damages, and liabilities to the
extent that such cost, expense, loss, claim, damage, or liability arose out of,
or was imposed upon such Person through the negligence, willful misfeasance or
bad faith of the Servicer in the performance of its duties under this Agreement
and any other Transfer and Servicing Agreement or by reason of reckless
disregard of its obligations and duties under any of the Transfer and Servicing
Agreements;
(iv) The Servicer (other than any successor Servicer who is not an affiliate of
the initial Servicer, including the Indenture Trustee in its capacity as
successor Servicer pursuant to Section 7.03 hereof it being understood that the
removed Servicer shall retain such liability) shall indemnify, defend and hold
harmless each Trustee and their respective agents, officers, directors and
servants, from and against all costs, expenses, losses, claims, damages and
liabilities arising out of or incurred in connection with (A) in the case of the
Owner Trustee, the Indenture Trustee’s performance of its duties under the Basic
Documents, (B) in the case of the Indenture Trustee, the Owner Trustee’s
performance of its duties under the Basic
- 19 -
--------------------------------------------------------------------------------
Documents, or (C) the acceptance, administration or performance by, or action or
inaction of, the applicable Trustee of the trusts and duties contained in this
Agreement, the Basic Documents, the Indenture (in the case of the Indenture
Trustee), including the administration of the Collateral, and the Trust
Agreement (in the case of the Owner Trustee), including the administration of
the Owner Trust Estate, except in each case to the extent that such cost,
expense, loss, claim, damage or liability: (X) is due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Person seeking to be indemnified, (Y) to the extent otherwise payable to the
Indenture Trustee, arises from the Indenture Trustee’s breach of any of its
representations or warranties in Section 6.13 of the Indenture, or (Z) to the
extent otherwise payable to the Owner Trustee, arises from the Owner Trustee’s
breach of any of its representations or warranties set forth in Section 6.6 of
the Trust Agreement; and
(v) The Servicer (other than any successor Servicer who is not an affiliate of
the initial Servicer, including the Indenture Trustee in its capacity as
successor Servicer pursuant to Section 7.03 hereof it being understood that the
removed Servicer shall retain such liability) will indemnify the Owner Trustee
in accordance with the provisions specified in Section 6.9 of the Trust
Agreement.
(b) Indemnification under this Section 6.05 shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement or the Trust Agreement and shall include reasonable fees and expenses
of counsel and expenses of litigation. If the Servicer has made any indemnity
payments pursuant to this Section 6.05 and the recipient thereafter collects any
of such amounts from others, the recipient shall promptly repay such amounts
collected to the Servicer, without interest.
SECTION 6.06 Backup Servicer. On or prior to the Closing Date, NFC, as Servicer,
will enter into a backup servicing agreement with a Person who meets the
criteria specified for a successor Servicer as set forth in Section 7.03
pursuant to which such Person agrees to become a successor Servicer and
Custodian in accordance with the terms and conditions of this Agreement and the
other Basic Documents if appointed by the Indenture Trustee pursuant to
Section 7.03 (the “Backup Servicer”); provided, that, the Backup Servicer’s
responsibilities, restrictions, duties and liabilities as Servicer or Custodian
under this Agreement and the other Basic Documents may be modified in the Backup
Servicing Agreement (including any exhibit thereto).
ARTICLE VII
DEFAULT
SECTION 7.01 Servicer Defaults. Each of the following shall constitute a
“Servicer Default”:
(a) any failure by the Servicer to deliver to the Indenture Trustee for deposit
in any of the Designated Accounts or to the Owner Trustee for deposit in the
Certificate Distribution Account any required deposit or to direct the Indenture
Trustee to make any required distributions therefrom, in each case which failure
continues unremedied for five Business Days after the earlier of (i) written
notice is received by the Servicer from the applicable Trustee or (ii) after
discovery of such failure by an officer of the Servicer;
- 20 -
--------------------------------------------------------------------------------
(b) any failure by the Servicer duly to observe or perform any other covenant or
agreement of the Servicer set forth in this Agreement (other than as set forth
in this Section 7.01) or any other Basic Document which failure materially and
adversely affects the rights of the Noteholders or the Certificateholders and
which continues unremedied for 60 days after the giving of written notice of
such failure (i) to the Servicer by either Trustee or (ii) to the Servicer and
to either Trustee by the holders of not less than 25% of the Outstanding Amount
of the Controlling Class;
(c) any representation, warranty or certification made by the Servicer pursuant
to this Agreement or any other Basic Document shall prove to have been incorrect
in any material respect when made, and if the consequences of such
representation, warranty or certification being incorrect shall be susceptible
of remedy in all material respects, such consequences shall not be remedied in
all material respects within 30 days after the Servicer first becomes aware or
is advised that such representation, warranty or certification was incorrect in
a material respect;
(d) the occurrence of an Insolvency Event with respect to the Servicer; and
(e) the failure by the Servicer to engage a replacement Backup Servicer within
one hundred eighty (180) days after the date that the Backup Servicer is
terminated as backup servicer, unless the Backup Servicer is terminated as
backup servicer in the Servicer’s sole discretion and the Rating Agencies then
rating the Notes have been given at least 10 Business Days prior notice thereof
and have notified the Indenture Trustee that the Rating Agency Condition is
satisfied, in which case a backup servicer will no longer be required,
notwithstanding anything in the Basic Documents to the contrary.
SECTION 7.02 Consequences of a Servicer Default. If a Servicer Default shall
occur and be continuing, the Indenture Trustee or holders of Securities
evidencing not less than a majority of the Outstanding Amount of the Controlling
Class may, in addition to other rights and remedies available in a court of law
or equity to damages, injunctive relief and specific performance, terminate all
the rights and obligations of the Servicer hereunder and under all sub-servicing
agreements whereupon (except as otherwise provided in Section 7.03) (x) the
Servicer, (y) the Backup Servicer, as successor Servicer, or (y) if there is no
longer a Backup Servicer, the Indenture Trustee, will succeed to all the
responsibilities, duties and liabilities of the Servicer under this Agreement
and will be entitled to similar compensation arrangements. On or after the
receipt by the Servicer and the Backup Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Receivables, the Receivable Files or otherwise, shall pass to and be
vested in the Backup Servicer or, if there is no longer a Backup Servicer, the
Indenture Trustee, as applicable, pursuant to and under this Section 7.02.
Subject to Section 7.03 and upon the effective date specified in such notice,
the Servicer’s appointment as custodian shall be terminated and, upon
instruction from the Indenture Trustee, the Servicer shall release all
Receivable Files to the Backup Servicer or, if there is no longer a Backup
Servicer, the Indenture Trustee or its respective agent or assignee, as the case
may be, at such place or places as the Backup Servicer or the Indenture Trustee,
as applicable, may designate, as soon as practicable. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by an officer of the Indenture
Trustee. The Indenture Trustee is hereby authorized and empowered to execute and
deliver, on
- 21 -
--------------------------------------------------------------------------------
behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivables
and related documents, or otherwise. The predecessor Servicer agrees to
cooperate with the Indenture Trustee or any successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer under this
Agreement, including the transfer to the Indenture Trustee for administration by
it of all cash amounts that shall at the time be held by the predecessor
Servicer for deposit, or that shall have been deposited by the Servicer in the
Collection Account, the Reserve Account, the Note Distribution Account or the
Certificate Distribution Account or thereafter received that shall at any time
be held with respect to the Receivables by the Servicer. All reasonable costs
and expenses (including attorneys’ fees) incurred in connection with such
transfer, including the costs of transferring the Receivable Files to the
successor Servicer and amending this Agreement to reflect its succession as
Servicer, shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses.
SECTION 7.03 Appointment of Successor Servicer. Upon the Servicer’s receipt of
notice of termination pursuant to Section 7.02, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement until the
date specified in such termination notice, which period shall not exceed sixty
(60) days from the date of the notice, or, if no such date is specified in a
notice of termination, until receipt of such notice; provided, that if the
Backup Servicer is to be appointed as successor Servicer, the effective date of
the predecessor Servicer’s termination as Servicer shall be the same as the date
upon which the Backup Servicer’s appointment as successor Servicer becomes
effective in accordance with the terms of the Backup Servicing Agreement. In the
event of the Servicer’s termination hereunder, if there is no longer a Backup
Servicer, the Indenture Trustee shall be the successor in all respects to the
Servicer in its capacity as servicer and custodian under this Agreement and the
transactions set forth or provided for in this Agreement and the other Basic
Documents and shall be subject to all the responsibilities, restrictions, duties
and liabilities relating thereto placed on the Servicer and the Custodian by the
terms and provisions of this Agreement and the other Basic Documents; provided,
however, that if the Backup Servicer satisfies the criteria for a successor
servicer specified below, the Indenture Trustee shall promptly appoint the
Backup Servicer as the successor Servicer; provided, further, that the
predecessor Servicer shall remain liable for, and the successor Servicer shall
have no liability for, any indemnification obligations of the Servicer arising
as a result of acts, omissions or occurrences during the period in which the
predecessor Servicer was the Servicer; and provided, further, that NFC shall
remain liable for all such indemnification obligations of the Servicer without
regard to whether it is still Servicer hereunder. If the Backup Servicer is
appointed as the successor Servicer, at or prior to the effectiveness of such
appointment, the Backup Servicer shall execute a counterpart of this Agreement
and thereafter shall assume the rights, obligations and duties of a success
Servicer and a successor Custodian as expressly set forth hereunder, subject to
the terms, provisions and limitations described in the Backup Servicing
Agreement. As compensation therefor, the Indenture Trustee or the Backup
Servicer shall, upon the effectiveness of the termination of the predecessor
Servicer, be entitled to such compensation (whether payable out of the
Collection Account or otherwise) as the Servicer would have been entitled to
under this Agreement if no such notice of termination had been given including,
but not limited to, the Total Servicing Fee and Supplemental Servicing Fees and
shall be entitled to Investment Earnings as set forth in
- 22 -
--------------------------------------------------------------------------------
Section 2.02(b) hereof. Notwithstanding the above, if the Indenture Trustee does
not appoint the Backup Servicer as the successor servicer then the Indenture
Trustee may, if it shall be unwilling to so act, or shall, if it is legally
unable to so act, appoint, or petition a court of competent jurisdiction to
appoint, a successor (i) having a net worth of not less than $100,000,000 or
whose majority owner is, either directly or indirectly, a Person having a net
worth on a consolidated basis of not less than $100,000,000 and (ii) whose
regular business includes the servicing of receivables of the type included in
the Collateral, as the successor to the Servicer under this Agreement in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer under this Agreement. In connection with such appointment and
assumption, the Indenture Trustee may make such arrangements for the
compensation of such successor out of payments on Receivables as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Servicer under this Agreement. The Indenture
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Upon
termination of the Servicer and after appointment of a successor Servicer, the
Servicer shall reasonably cooperate with such successor Servicer to notify all
Obligors to cease remitting payments to bank accounts and lock boxes controlled
by the Servicer and to instead remit payment directly to any bank accounts and
lock boxes designated by such successor Servicer. If at any time on or after the
date on which the Servicer is terminated the Servicer receives any payment from
any Obligor, then the Servicer shall promptly forward the amount of such
payment, along with copies of any remittances or other documentation
accompanying such payment, to the successor Servicer.
SECTION 7.04 Notification to Securityholders. Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article VII, the
Indenture Trustee shall give prompt written notice thereof to the Noteholders
and the Rating Agencies and the Owner Trustee shall give prompt written notice
thereof to the Certificateholders.
SECTION 7.05 Repayment of Advances. If a successor Servicer shall be appointed,
the predecessor Servicer shall be entitled to receive, to the extent of
available funds, reimbursement for Outstanding Monthly Advances pursuant to
Section 2.14 in the manner specified in Section 8.2 of the Indenture with
respect to all Monthly Advances made by such predecessor Servicer. The successor
Servicer shall not be entitled to reimbursement for Monthly Advances made by the
predecessor Servicer.
SECTION 7.06 Waiver of Past Defaults. The Indenture Trustee, at the direction of
the holders of not less than a majority of the Outstanding Amount of the
Controlling Class, may waive any default by the Servicer in the performance of
its obligations hereunder and its consequences, except a default in making any
required deposits to or payments from any of the Designated Accounts in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Servicer Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon. The Servicer shall give written notice of each such waiver
to the Rating Agencies.
- 23 -
--------------------------------------------------------------------------------
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Amendment. This Agreement may be amended from time to time (subject
to any expressly applicable amendment provision of the Further Transfer and
Servicing Agreements) by a written amendment duly executed and delivered by the
parties hereto; provided, however, that this Agreement may not be amended unless
such amendment is in accordance with the provisions of Section 5.01 of the
Pooling Agreement as if such Section 5.01 were contained herein and were
applicable to this Agreement. Prior to the execution of any such amendment, the
Servicer shall furnish written notification of the substance of such amendment
to each of the Rating Agencies.
SECTION 8.02 Termination. The respective obligations and responsibilities of the
parties hereto pursuant to this Agreement shall terminate upon the earlier of:
(a) the maturity or other liquidation of the last Receivable and the disposition
of any amounts received upon liquidation of any such remaining Receivables or
(b) the termination of the Pooling Agreement pursuant to Section 4.02 thereof.
SECTION 8.03 Notices. All notices, requests and demands to NFRRC, the Servicer,
either Trustee or Rating Agencies under this Agreement shall be delivered as
specified in Appendix B to the Pooling Agreement.
SECTION 8.04 Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Illinois, without
giving effect to any choice of law or conflict provision or rule (whether of the
State of Illinois or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Illinois.
SECTION 8.05 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 8.06 Assignment; Rights of the Indenture Trustee. Except to the extent
permitted by Article VI or as required by Article VII, the Servicer may not
assign its rights or delegate its obligations hereunder. The Servicer
acknowledges that the Issuer shall assign all of its rights, title and interest
in this Agreement to the Indenture Trustee on behalf of the Noteholders pursuant
to the Indenture. The Servicer agrees that the Indenture Trustee, to the extent
provided in the Indenture, shall be entitled to enforce the terms of this
Agreement and the rights (including, without limitation, the right to grant or
withhold any consent or waiver) of Issuer directly against the Servicer. Until
the satisfaction and discharge of all obligations of the Issuer, the Servicer
further agrees that, in respect of its obligations hereunder, it will act at the
direction of and in accordance with all requests and instructions from the
Indenture Trustee given in accordance with the Indenture. The Indenture Trustee
shall have the rights of a third-party beneficiary under this Agreement. The
Servicer shall deliver copies of all statements, reports, Opinions of Counsel,
notices, requests, demands and other documents to be delivered by the Servicer
to Issuer pursuant to the terms hereof to the Indenture Trustee.
- 24 -
--------------------------------------------------------------------------------
SECTION 8.07 Successors and Assigns . This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Except as otherwise provided in Section 6.03 or in this
Article VIII, no other Person shall have any right or obligation hereunder.
SECTION 8.08 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 8.09 Headings and Cross-References. The various headings in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement.
SECTION 8.10 No Petition Covenants.
(a) Notwithstanding any prior termination of this Agreement, the Servicer shall
not, prior to the date which is one year and one day after payment in full of
all obligations and the final distribution with respect to the Securities,
acquiesce, petition or otherwise invoke or cause the Issuer or NFRRC to invoke
or join any other Person in instituting the process of any court or government
authority for the purpose of commencing or sustaining a case against the Issuer
or NFRRC any bankruptcy, reorganization, arrangement, insolvency, liquidation
proceeding, or similar law of the United States or any state of the United
States.
(b) Notwithstanding any prior termination of this Agreement, the Issuer shall
not, prior to the date which is one year and one day after the last maturing
indebtedness for borrowed money, whether evidenced by notes, certificates or
otherwise, of NFRRC and its subsidiaries (including any statutory trust) have
been paid in full, acquiesce, petition or otherwise invoke or join any other
Person in instituting the process of any court or government authority for the
purpose of commencing or sustaining a case against NFRRC any bankruptcy,
reorganization, arrangement, insolvency, liquidation proceeding, or similar law
of the United States or any state of the United States.
(c) Notwithstanding any prior termination of this Agreement, the Servicer shall
not, prior to the date which is one year and one day after the last maturing
indebtedness for borrowed money, whether evidenced by notes, certificates or
otherwise, of NFRRC and its subsidiaries (including any statutory trust) have
been paid in full, acquiesce, petition or otherwise invoke or join any other
Person in instituting the process of any court or government authority for the
purpose of commencing or sustaining a case against NFRRC any bankruptcy,
reorganization, arrangement, insolvency, liquidation proceeding, or similar law
of the United States or any state of the United States.
SECTION 8.11 Limitation of Liability of the Trustees.
(a) Notwithstanding anything contained herein to the contrary, this Agreement
has been acknowledged and accepted by Citibank N.A., not in its individual
capacity
- 25 -
--------------------------------------------------------------------------------
but solely as Indenture Trustee, and in no event shall Citibank, N.A. have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
(b) Notwithstanding anything contained herein to the contrary, this Agreement
has been executed by Deutsche Bank Trust Company Delaware not in its individual
capacity but solely in its capacity as Owner Trustee and in no event shall
Deutsche Bank Trust Company Delaware in its individual capacity or, except as
expressly provided in the Trust Agreement, as Owner Trustee of the Issuer have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer. For all purposes of this Agreement, in
the performance of its duties or obligations hereunder, or in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Article VI of the Trust Agreement.
SECTION 8.12 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN
OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING IN CONTRACT, TORT OR
OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
* * * *
- 26 -
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Servicing Agreement to
be duly executed by their respective officers duly authorized as of the day and
year first above written.
NAVISTAR FINANCIAL CORPORATION,
as Servicer
By:
/s/ William V. McMenamin
Name: William V. McMenamin Title:
Vice President, Chief Financial Officer
and Treasurer
NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION By:
/s/ William V. McMenamin
Name: William V. McMenamin Title:
Vice President, Chief Financial Officer
and Treasurer
NAVISTAR FINANCIAL 2010-A OWNER TRUST By: DEUTSCHE BANK TRUST COMPANY DELAWARE,
not in its individual capacity, but solely as Owner Trustee By:
/s/ Michele HY Voon
Name: Michele HY Voon Title: Attorney-in-fact By:
/s/ Mark DiGiacomo
Name: Mark DiGiacomo Title: Attorney-in-fact
--------------------------------------------------------------------------------
CITIBANK, N.A., not in its individual capacity, but solely as Indenture Trustee
By:
/s/ Jacqueline Suarez
Name: Jacqueline Suarez Title: Vice President The Indenture Trustee, in its
role as Securities Intermediary, hereby acknowledges its undertaking as set
forth in Section 2.02 By:
/s/ Jacqueline Suarez
Name: Jacqueline Suarez Title: Vice President
--------------------------------------------------------------------------------
EXHIBIT A
FORM OF SERVICER’S CERTIFICATE
See attached.
Ex. A-1
--------------------------------------------------------------------------------
LOGO [g38813ex10_5pg033.jpg]
Ex. A-2
--------------------------------------------------------------------------------
LOGO [g38813ex10_5pg034.jpg]
Ex. A-3
--------------------------------------------------------------------------------
LOGO [g38813ex10_5pg035.jpg]
Ex. A-4 |
638 N.W.2d 441 (2002)
Loren HENTGES, et al., Relators,
v.
MINNESOTA BOARD OF WATER AND SOIL RESOURCES, Rice Creek Watershed District, St. Paul Audubon Society, et al., and Minnesota Department of Transportation, Respondents.
No. C7-01-799.
Court of Appeals of Minnesota.
January 4, 2002.
*443 Paul R. Haik, Krebsbach & Haik, Ltd., Minneapolis, for relators.
Mike Hatch, Attorney General, William A. Szotkowski, Assistant Attorney General, St. Paul, for respondent Minnesota Board of Water and Soil Resources.
Harold H. Sheff, Michelle J. Ulrich, Smith, Gendler, Shiell, Sheff, Ford, & Maher, P.A., Minneapolis, for respondent Rice Creek Watershed District.
A.W. Clapp III, St. Paul, for respondents St. Paul Audubon Society, et al.
David L. Phillips, Office of the Attorney General, St. Paul, for respondent, Minnesota Department of Transportation.
Gerald W. Von Korff, John C. Kolb, Rinke Noonan, St. Cloud, for Amicus Curiae Lac qui Parle County and Polk County.
Considered and decided by GORDON W. SHUMAKER, Presiding Judge, HALBROOKS, Judge, and MULALLY, Judge.[*]
OPINION
GORDON W. SHUMAKER, Judge.
Relators challenge the Board of Soil and Water's affirmance of the Rice Creek Watershed District's denial of relators' petition for an exemption from the wetland replacement requirement. Specifically, relators allege that (a) the Board exceeded its statutory authority by adopting Minn. R. 8420.0122, subp. 3(A) (1999), which sets a standard for wetlands replacement that is different from Minn.Stat. § 103G.2241 (2000); (b) the District's misapplication of 33 U.S.C. § 1344(f) regarding whether wetlands replacement was necessary resulted in a misapplication of Minn.Stat. § 103G.2241; (c) Minn. R. 8420.0122, subp. 3(A), deprives relators of equal protection, due process of law, and just compensation for property taken for public use by limiting their ability to maintain a county ditch; (d) the Board failed to address procedural errors made by the District in these proceedings; and (e) certain participants in the proceedings below did not appeal and cannot be participants in this appeal. Because we find no reversible error, we affirm.
FACTS
Relators own lands adjacent to Anoka County Ditch No. 53-62. They claim that *444 the placement and obstruction of certain culverts in the ditch system cause water to overflow and to flood their lands. This appeal focuses principally on a culvert in the ditch at I-35W, in the Rice Creek Watershed District. The Minnesota Department of Transportation installed that culvert in the late 1950s. Over the years, the culvert has risen to a higher elevation as a result of natural forces. Relators want it to be lowered to the height of the original placement, and they want the sediment in the ditch removed.
The ditch work that relators propose will cause partial drainage of adjacent wetlands that have existed for over 25 years. State law requires that partially drained wetlands be replaced, unless the work that caused the drainage is exempt from the replacement requirement.
The local government unit with jurisdiction may determine eligibility for a replacement exemption. This is the Rice Creek Watershed District. Contending that the proposed project is simply ditch maintenance and that federal law exempts ditch maintenance from the replacement requirement, relators asked the District for an exemption.
The District denied the exemption, and on administrative appeal the Board of Water and Soil Resources affirmed, invoking one of its own rules that the federal exemption is inapplicable if the work will partially drain a wetland.
Relators have brought the Board's denial to this court through certiorari for review. They challenge the authority, propriety, and constitutionality of the Board's rule; the propriety of dividing the exemption process into two phases; and the propriety of participation by civic and environmental-advocacy groups in the appeal to the Board and in this appeal.
ISSUES
1. Did the Board of Soil and Water Resources exceed its statutory authority in adopting Minn. R. 8420.0122, subp. 3(A), to prevent maintenance of public drainage ditches as authorized by Minn.Stat. § 103G.2241, subd. 3(1) (2000)?
2. Did the Board of Water and Soil resources misapply 33 U.S.C. § 1344(f)?
a. If so, did this error affect the decision regarding the exemption authorized by Minn.Stat. § 103G.2241, subd. 3(1)?
3. Does Minn. R. 8420.0122, subp. 3(A), unconstitutionally deny relators their right to:
a. Equal Protection?
b. Due Process?
4. Are persons who did not file a notice of appeal parties to this appeal?
5. Did the Board engage in unlawful procedures that affected the outcome of the case and were prejudicial to relators by:
a. extending the deadline in which to render a decision without extenuating circumstances?
b. delegating the decisions to an administrator and technical evaluation panel?
c. bifurcating the exemption proceedings?
ANALYSIS
1. The Board's Authority
In Minnesota, "wetlands may not be drained * * * unless * * * [they] are replaced by wetlands that will have equal or greater public value." Minn.Stat. § 103G.221, subd. 1 (2000). However, a replacement plan is not required for "activities exempted from federal regulation under United States Code, title 33, section 1344(f) * * *," the so-called "federal approvals" *445 exemption. Minn.Stat. § 103G.2241, subd. 3(1) (2000).
The federal approvals exemption classifies as a "non-prohibited" activity "the discharge of dredged or fill material * * * for the purpose of maintenance * * * of currently serviceable structures * * *." 33 U.S.C. § 1344(f)(1)(B) (1994).
This federal exemption, which allows the discharge of dredged and fill materials into certain waters, is qualified by a state rule that (1) requires proof of eligibility for the exemption, and (2) provides that the exemption is not applicable to any project that will partly drain a wetland:
The local government unit may certify the exemption only if the landowner furnishes proof of qualification for one of the exemptions from the United States Army Corps of Engineers.
This exemption does not apply to a project with the purpose of converting a wetland to a nonwetland, either immediately or gradually, or converting the wetland to another use, or when the fill will result in significant discernible change to the flow or circulation of water in the wetland, or partly draining it, or reducing the wetland area.
Minn. R. 8420.0122, subp. 3A (Supp. II 2000).
Relators obtained the requisite proof from the Army Corps of Engineers that the ditch work meets the requirements of the federal exemption. But, applying the rule that limits the exemption, the Board of Water and Soil Resources denied the exemption. Relators contend that the Board exceeded its statutory authority in adopting Minn. R. 8420.0122, subp. 3A.
When an administrative agency's authority is questioned, this court independently reviews the enabling statute. Weber v. Hvass, 626 N.W.2d 426, 431 (Minn.App.2001), review denied (Minn. June 27, 2001). Minn.Stat. § 103G.2242, subd. 1(a) (2000), gives the Board authority to adopt rules regarding wetland replacement plans. See also Minn. R. ch. 8420 (chapter of rules implementing act). "Generally, we will invalidate an agency rule only if the rule was adopted in excess of the agency's statutory authority." Drum v. Bd. of Water & Soil Res., 574 N.W.2d 71, 73 (Minn.App.1998).
In enacting the Wetland Conservation Act of 1991, the Minnesota legislature clearly stated its intent to "achieve no net loss in the quantity, quality, and biological diversity of Minnesota's existing wetlands * * *." Minn.Stat. § 103A.201, subd. 2(b)(1) (2000). To achieve "no net loss" of wetlands, the legislature provided the requirement that partly drained wetlands be replaced. Minn.Stat. § 103G.222, subd. 1(a) (2000). On its face, rule 8420.0122, subp. 3A, comports with legislative intent because, if followed, the rule will ensure that even ditch maintenance that causes wetland drainage will not result in net loss of Minnesota wetlands.
Not only does the rule satisfy express legislative intent, but the process for promulgation disclosed no conflict between the rule and the statutory authority for the rule. In the administrative law judge's report under Minn.Stat. § 14.15 (1992), no comments or concerns from the public were noted, and the report contained a recommendation that the rule be adopted. The chief administrative law judge approved the report. See Minn.Stat. § 14.16 (1992) (after chief ALJ approves the changes in the rules made in accordance with the ALJ's report, the agency then may adopt the rules).
Although there is some ambiguity in how the federal approvals exemption is to be applied, relators' interpretation seems clearly at odds with both the express language *446 of the statutes and the state's policy of achieving no net loss of wetlands. Thus, on this record, we conclude that the Board did not exceed its statutory authority in adopting rule 8420.0122, subp. 3A.
2. Application of 33 U.S.C. § 1344(f)
Relators argue that the Board misapplied section 1344(f) by failing to follow the law as set forth in United States v. Sargent County Water Res. Dist., 876 F. Supp. 1090 (D.N.D.1994).
In Sargent, the issue was whether the ditch work was an improvement or maintenance. If maintenance, it was exempt from section 1344(f) regulation. Id. at 1098-99. The federal district court determined that only ditch maintenance was involved, and that the discharge of the material into the wetland was a non-prohibited activity under section 1344(f). Id. at 1102-04.
Relators contend that here, too, only ditch maintenance is involved and that is an exempt activity. They also suggest that it is common sense that some drainage will occur with ditch maintenance, but because the runoff is part of a maintenance project no replacement of the runoff is required. Relators assert that the exemption is negated by a rule that does not apply the exemption to ditch maintenance.
As we have indicated, the relationship of the exemption and the statutory and policy language is not entirely clear. But the exemption refers to the activity of putting dredged and fill material into a wetland, thus obviously causing some loss of water. The record here shows that it is not depositing fill but rather draining part of 66.6 acres that will be the result of the ditch work. Thus, because the exemption has a focus different from what apparently will be done in this ditch work and because of the unassailable conclusion that the legislature intends that there be no net loss of Minnesota wetlands, we are not persuaded that the Board misapplied the law in denying the exemption.
3. Constitutional Issues
a. Due Process
Relators argue that the state unconstitutionally took their land without just compensation by passing laws and promulgating rules that prohibit or restrict the maintenance of the ditch. However, neither the District nor the Board has ever prohibited relators from maintaining the ditch; rather, the District and the Board require that if relators do lower the culvert, causing partial drainage of the nearby wetlands, the lost acreage of wetlands must be replaced by wetlands "that will have equal or greater public value." Minn.Stat. § 103G.221, subd. 1. Thus, there is no due process violation in this case because relators have always been free to maintain the ditch.
Furthermore, Minnesota courts have recognized that the maintenance of ditches may be subject to environmental laws. See In re Christenson, 417 N.W.2d 607, 615 (Minn.1987) (finding that environmental laws prohibited the applicant from enlarging or draining private drainage ditches and drain a protected wetland). Thus, the Board's denial of relators' request to be exempted from the wetland replacement requirement did not constitute a violation of relators' due-process rights.
b. Equal Protection
Relators also argue that the District's and the Board's actions violate relators' rights to equal protection. However, relators make this argument only in a conclusory fashion in their brief to this court. An assignment of error based on "mere assertion" and not supported by argument or authority is waived unless *447 prejudicial error is obvious on mere inspection. State v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (Minn.App.1997) (quotation omitted). It is not obvious on mere inspection how the denial of relators' request for the "federal" exemption violates their right to equal protection. This issue is waived.
4. Parties to Appeals
Relators argue that the Board erred in allowing ABC League of Women Voters, the St. Paul Audubon Society, and the Izaak Walton League, Minnesota Division, to participate in the appeal to the Board. An appeal may be made by the wetland owner, by any party who is required to receive notice under Minn.Stat. § 103G.2242, subd. 7 (2000), or by 100 residents of the county in which a majority of the wetland is located. Minn.Stat. § 103G.2242, subd. 9 (2000); Minn. R. 8420.0250, subp. 1 (Supp. II 2000). Parties to an appeal are the appellant, the landowner, the local government unit, and in the case of replacement plan appeals, all those required to receive notice of the local government unit decision.
Minn. R. 8420.0250, subp. 3 (Supp. II 2000). A party required to receive notice is a member of the public who requests a copy of the decision. Minn.Stat. § 103G.2242, subd. 7. This case involves the requirement of a wetlands replacement plan, and ABC, Walton, and the Audubon Society requested, and received, a copy of the District's decision, and thus are proper parties to the appeal. ABC, Walton, and the Audubon Society did not file notices of appeal because they agreed with the District's decision.
Although Minn.Stat. § 103G.2242, subd. 9, limits the persons eligible to appeal a decision, it does not state that only one of the eligible parties may appeal. Thus, all of the eligible parties may appeal if they desire. Furthermore, Minn. R. 8420.0250, subp. 3, indicates that if an appeal is brought, ABC, Walton, and the Audubon Society are parties to the appeal because they were parties required to receive notice of the District's decision. Since ABC, Walton, and the Audubon Society were all eligible parties to appeal the District's decision, and they are considered parties to an appeal under the Board's administrative rules, the Board did not err in allowing these parties to participate in the appeal.
5. Procedural Issues
a. Extensions
Relators argue that it was unlawful for the Board to deny their exemption request after the 60 day time limit as required by Minn.Stat. § 15.99 (2000), and in doing so, the Board effectively granted their request for a "federal" exemption. An agency must approve or deny within 60 days a written request for a permit. Minn.Stat. § 15.99, subd. 2. Failure to do so is approval of the request. Id. However, an agency may extend the time limit by providing written notice of the extension, which details the reasons for and the anticipated length of the extension, before the end of the initial 60-day period. Minn.Stat. § 15.99, subd. 3(f).
The record shows that two extensions were given. The first extension letter refers to relators' request for an exemption to lower the culvert, which was received by the District on September 27, 2000. The letter then notifies relators that, under Minn.Stat. § 15.99, the District is extending the time limit in which to render a decision to 30 days past the November 26, 2000, deadline, for the purpose of "consider[ing] evidence and legal issues regarding application of exemption." This notice complies with the requirements of the statute. The record shows that the decision was rendered within this time period.
*448 The District sent its second letter to relators on December 18, 2000. The letter notes that relators requested an exemption from the wetland replacement requirement under the "federal" exemption on October 25, 2000, and that the notice was being sent under Minn.Stat. § 15.99 extending the time limit by 60 days. A decision was rendered within that 60-day extension period.
The record shows that both decisions were timely, the extensions were authorized by law, and the notices complied with the law. Thus, these extensions were lawful, and relators have not shown how they were prejudiced.
b. Delegating Decisions
Relators argue that the District erred in delegating exemption determinations to the "Administrator." However, there is nothing in the record indicating that anything was delegated to any "Administrator," and relators do not explain the argument beyond this one-sentence conclusory statement. An assignment of error based on "mere assertion" and not supported by argument or authority is waived unless prejudicial error is obvious on mere inspection. Modern Recycling, 558 N.W.2d at 772 (quotation omitted). Furthermore, there is no indication that this argument was raised either before the District or the Board. This court will generally not consider matters not argued and considered below. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn.1988).
c. Bifurcation
Relators argue that the Board's bifurcation of this case into two phases, the first to determine jurisdictional issues, the second to determine issues on the merits, affected the outcome of the case and prejudiced relators. Relators first argue that they were denied the opportunity to be heard. However, the record shows that relators not only filed briefs at both phases of the hearings and participated in oral arguments, but they also filed "responses" to advisory reports to the Board at both phases of the proceedings. Relators had an opportunity to be heard, and took advantage of that opportunity.
Relators also argue that splitting the case into phases was done for the sole purpose of avoiding a final determination on the merits. A transcript of the proceeding shows that the Board's Dispute Resolution Committee (DRC) wanted to determine who had standing to be a party to the dispute before any arguments on the merits were considered. See Sundberg v. Abbott, 423 N.W.2d 686, 688 (Minn.App.1988) (a party must have standing in a dispute in order to have the court decide the merits of particular issues), review denied (Minn. June 29, 1988). Because it was important to determine who was able to participate in the proceedings before issues on the merits were considered, it was not unlawful for the DRC to bifurcate the proceedings to first determine who was entitled to be heard in this matter.
Lastly, relators provide no evidence showing how they were prejudiced, or how the bifurcation of the proceedings affected the outcome of the case. An assignment of error based on "mere assertion" and not supported by argument or authority is waived unless prejudicial error is obvious on mere inspection. Modern Recycling, 558 N.W.2d at 772 (quotation omitted). Prejudicial error is not obvious on mere inspection of this case. Furthermore, this court declines to address allegations unsupported by legal analysis or citation. Ganguli v. Univ. of Minnesota, 512 N.W.2d 918, 919 n. 1 (Minn.App.1994).
Although we hold that the Board did not exceed its authority in adopting or applying Minn. R. 8420.0122, subp. 3A, we are *449 troubled by the potential inequity of requiring landowners to choose between forgoing the use of their lands and incurring considerable expense to replace wetlands. We are left with an apparent gap in legislation that we have no authority to fill, but that, in the interest of fairness, ought to be addressed by the legislature.
DECISION
Neither the Board nor the District misapplied the "federal" exemption, nor did these entities act unlawfully in the process that led to the decisions in this case.
Affirmed.
NOTES
[*] Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.
|
528 F.2d 750
Carl E. HANNEMAN, as an Individual and as a representativeof the class of Milwaukee Policemen similarlysituated, et al., Plaintiffs-Appellants,v.Harold A. BREIER, as an Individual and as Chief of Police ofthe City of Milwaukee, and the City of Milwaukee,a municipality, Defendants-Appellees.
No. 75--1271.
United States Court of Appeals,Seventh Circuit.
Argued Sept. 25, 1975.Decided Jan. 6, 1976.
David Loeffler, Milwaukee, Wis., for plaintiffs-appellants.
James B. Brennan, Grant F. Langley, Milwaukee, Wis., for defendants-appellees.
Before HASTINGS, Senior Circuit Judge, and SPRECHER and BAUER, Circuit Judges.
HASTINGS, Senior Circuit Judge.
1
This is an appeal from the dismissal of a class action suit brought by Milwaukee police officers against Harold A. Breier, individually and as Chief of Police of the City of Milwaukee,1 charging that the discipline imposed on individual plaintiffs under a police department rule prohibiting disclosure of confidential police business abridged plaintiffs' First and Fourteenth Amendment rights in violation of the Civil Rights Act, 42 U.S.C. § 1983.
2
The named plaintiffs are members of the Milwaukee Professional Policemen's Protective Association (MPPPA). From July 1970 through January 1972, the City of Milwaukee and the MPPPA were negotiating a collective bargaining agreement covering nonsupervisory law enforcement personnel. The labor agreement eventually negotiated was required to be approved by the mayor and the city council.2
3
On August 26, 1970, certain of the named plaintiffs, acting as officers of the MPPPA, distributed to the MPPPA membership a letter endorsing candidates for national, state and local political office running in the upcoming primary. This publication prompted an investigation into the political activities of the MPPPA and its officers to determine whether there had been any violation of a police department regulation prohibiting police officers from using the influence of their office for political purposes.3 An investigator for the department interviewed certain MPPPA members, including the named plaintiffs. Each was advised that the investigation was confidential.
4
On September 16, 1970, a front-page story in the Milwaukee Journal disclosed that an internal investigation into the political activity of MPPPA officers was underway.4 The original leak of this story to the press is not attributed to the MPPPA.
5
On September 17, 1970, the named plaintiffs on behalf of the MPPPA distributed to the mayor, the city council, the city's labor negotiator, and the state labor board, a letter which confirmed that officers of the MPPPA had been questioned by 'agents of the City' in connection with their political activities.5 The letter urged city and state officials to protect the MPPPA officers from pressures being exerted by the City and its agents.
6
The September 17 letter prompted a separate departmental investigation and resulted in separate charges being brought against the named plaintiffs for breaching the confidentiality of the Department's internal affairs in violation of Rule 29, § 32, which provides:
7
Members of the Department shall treat as confidential the official business of the Department. They shall not impart it to anyone except those for whom it is intended, or as directed by their commanding officer, or under due process of law; and they shall not make known to any person, whether or not a member of the Department, any special order which they may receive, unless required by the nature of the order. A commanding officer of a district or bureau shall impart to representatives of the press, upon establishing their identity, current news, providing the ends of justice are not thereby defeated.
8
Each of the named plaintiffs was found guilty of violating the confidentiality rule. The three officers responsible for the August 26 letter were also found to have violated the rule prohibiting political activity.6 Sanctions for these violations were imposed by Police Chief Breier. One officer was suspended for five days; the others were required to work three to five off-days without pay. A record of the disciplinary action was placed in each individual's employment file.
9
Plaintiffs filed the instant action challenging as unconstitutional the defendant's application of the department's confidentiality rule and requesting injunctive relief and damages. After submission to the district court on depositions and briefs, the case was dismissed on the merits on October 2, 1974. The court based the dismissal on its factual conclusions that the September 17 letter was not necessary to secure plaintiffs' bargaining position and that, contrary to plaintiffs' beliefs and assertions, the departmental investigation was not being conducted for purposes of harassment.7 On February 4, 1975, plaintiffs' motion to alter the judgment was denied, upon the court's further conclusion that the disclosure of confidential information in violation of departmental regulations is not constitutionally protected.8 Plaintiffs appeal from the judgment and orders of October 2 and February 4.
10
The issue on appeal is whether the imposition of sanctions against police officers, under a police department confidentiality rule, for distribution of a letter confirming the existence of an already publicized internal police investigation violated the disciplined police officers' First and Fourteenth Amendment rights.
11
It is now well settled that public employees enjoy the full protection of the First Amendment. Keyishian v. Board of Regents, 385 U.S. 589, 87 S. Ct. 675, 17 L. Ed. 2d 629 (1967); Garrity v. New Jersey, 385 U.S. 493, 87 S. Ct. 616, 17 L. Ed. 2d 562 (1967). At the same time, it is also recognized that, because of the nature of the employment relationship, the state as employer has an interest in regulating its employees' public utterances distinct from its interest in regulating the statements of the [email protected]. Pickering v. Board of Education, 391 U.S. 563, 568, 88 S. Ct. 1731, 20 L. Ed. 2d 811 (1968). In Pickering the Supreme Court declined to adopt a general standard for reconciling state and individual interests in all cases. Instead the Court set forth a method for analyzing First Amendment issues arising in the public employment context which is appropriate in balancing those interests as they relate to the facts before us in the [email protected].
12
The plaintiff in Pickering was a teacher discharged for submitting a letter to the local newspaper criticizing school board budgetary policies. The Court found that the public statement at issue related to a matter of general public concern and that 'the fact of employment is only tangentially and insubstantially involved in the subject matter of the public communication.' 391 U.S. at 574, 88 S.Ct. at 1738. The Court concluded that no peculiar state interest arising from the employment relationship was at stake and that Pickering was therefore entitled to the same First Amendment protection afforded the general public. Applying the standard of New York Times Co. v. Sullivan, 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964), the Court held that Pickering could not be discharged for his public statement, even though it was at least partially false, without proof that the statement was knowingly or recklessly made. 391 U.S. at 574, 88 S. Ct. 1731.
13
However, the Court cautioned that a different standard may apply where the public statement at issue is of less 'public concern' or where the special nature of the employment relationship makes the need for discipline more compelling. The Court found it relevant, for example, that the statement was not directed at an immediate superior or at an individual with whom Pickering had a close working relationship and was therefore not disruptive of the school's discipline and harmony. Id. at 569--70, 88 S. Ct. 1731. The Court also emphasized that the statement did not contain 'inside' information that could not be effectively refuted by school board publication of the correct data. Id. at 572, 88 S. Ct. 1731. Finally, the Court concluded that publication of the statement neither impaired Pickering's ability to perform his employment duties nor interfered with the regular operation of the schools. Id. at 573, 88 S. Ct. 1731. Only where these missing factors are present and persuasive may an individual's otherwise protected freedom of speech be subordinated to the state interest. 'The problem in any case is to arrive at a balance between the interests of a teacher, as a citizen, in commenting upon matters of public concern and the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees.' Id. at 568, 88 S.Ct. at 1734.
14
This court followed the Pickering analysis in Donahue v. Staunton, 7 Cir., 471 F.2d 475 (1972), cert. denied, 410 U.S. 955, 93 S. Ct. 1419, 35 L. Ed. 2d 687 (1973). There a chaplain employed by a state mental institution was discharged on account of his public statements exposing unwholesome conditions within the institution. The defendant in that case urged that the chaplain, as a function of his employment, was required to publicly promote institutional programs and that this function could no longer be performed in view of his outspoken criticism of the institution. We found, however, that this function was not such an integral part of his job that public criticism could not be tolerated. After considering all the state interests applicable in the case, we concluded that 'the interest of society in 'uninhibited and robust debate' on matters of public concern, such as mental health care, and plaintiff's individual interest in being free to speak out on matters of concern to him, outweigh those of the State as an employer.' Id. at 481.
15
The analysis developed in Pickering and Donahue requires us to consider in the instant appeal whether a state interest inherent in the employment relationship between police officers and the chief of police justifies the police chief's action in disciplining plaintiffs for making the particular statements [email protected].
16
The Supreme Court has recognized that 'policemen, like teachers and lawyers, are not relegated to a watered-down version of constitutional rights.' Garrity v. New Jersey, 385 U.S. at 500, 87 S.Ct. at 620. This court has rejected any broad analogy between the interests of a municipal police force and those of a military unit requiring rigid discipline and broad curtailment of constitutional freedoms. Bence v. Breier, 7 Cir., 501 F.2d 1185, 1192 (1974), cert. denied, 419 U.S. 1121, 95 S. Ct. 804, 42 L. Ed. 2d 821 (1975); Muller v. Conlisk, 7 Cir., 429 F.2d 901, 904 (1970).9 We stated in Muller: 'To the extent that being a policeman is public employment with unique characteristics, the right of the employee to speak on matters concerning his employment with the full freedom of any citizen may be more or less limited. It is not, however, destroyed.' Id. Any unique aspect of police department employment is to be considered as but one element in the balancing of interests in an individual case.
17
The Milwaukee Police Department regulation at issue in this case, which prohibits employees from disclosing the confidential business of the department, is clearly valid on its face. A public employer has a legitimate interest in preserving confidentiality in the conduct of its internal affairs. This is particularly true in the sensitive area of law enforcement. A general confidentiality rule prevents improper use of inside information obtained in the course of public employment. The rule curtails the publication of inaccurate or misleading statements which might result from premature disclosure of pending matters. It further insures that the public will not erroneously attribute to the police department a statement made by a single officer without official sanction. The regulation essentially prevents the public employee from abusing the public confidence which inheres in his position.
18
In order to justify application of the confidentiality rule in this case, however, the defendant chief of police must still meet the requirements of Pickering v. Board of Education, supra. He must show a state interest in confidentiality applicable on these facts which outweighs the public and individual interests in the particular statements made.
19
In this case plaintiffs were disciplined for distributing their September 17 letter concerning the police department's political activity investigation which they had been instructed to keep confidential. After publication of the September 16 newspaper article, however, the investigation was no longer a secret. In fact, the newspaper article included a statement by Chief Breier acknowledging that an investigation was in progress. N. 4, supra. Plaintiffs' September 17 letter verified the factual details contained in the newspaper story. It also included charges that Chief Breier was conducting the internal investigation for improper purposes. Aside from these allegations, the letter disclosed no factual information not contained in the newspaper article published the day before.
20
Under these circumstances, we do not believe that the state interests which support the police department's confidentiality rule justify its application in this case. By the time plaintiffs' letter appeared, the ability of the chief of police to conduct his internal investigation in private had already been destroyed by publication of a front-page newspaper article disclosing the existence of the investigation and the persons and subjects involved.
21
In view of the prior newspaper coverage, the only new disclosure in plaintiffs' letter was their unfounded charge that Chief Breier was acting for improper anti-union motives. This disclosure was objectionable not because it was confidential, but rather because it was false and derogatory. The holding in Pickering suggests, however, that where the only state interest asserted is in preventing publication of false and derogatory statements, the state must meet the requirements of New York Times Co. v. Sullivan. That standard was not met in this case; the district court found that the named plaintiffs believed that the investigation into their political activity was in fact being conducted for purposes of harassment. There was no evidence that the statements were knowingly or recklessly false.
22
Nor were the plaintiffs in such a close personal working relationship with Chief Breier that sharp public criticism could not be tolerated. In fact they were apparent adversaries in the current collective bargaining situation. At the core of the First Amendment is a preference for debate rather than suppression. We found it significant in Donahue v. Staunton, supra, that 'defendants have not shown that they were hindered in any way in responding to the accusations.' 471 [email protected]. Chief Breier was equally competent to defend his own position publicly against plaintiffs' false accusations without a compelling need to suppress those accusations.
23
Of course departmental discipline may be undermined when police officers disobey an official regulation and an express order not to disclose police business. The department's general interest in discipline alone, however, does not outweigh the individual and public interest in the subject of plaintiffs' September 17 letter. See Bence v. Breier, 501 [email protected]. Once the matter was placed in the public eye, plaintiffs, as officers of the certified collective bargaining representative of nonsupervisory policemen, had a legitimate interest in bringing any improper anti-union conduct by the chief of police in connection with the now-publicized investigation to the attention of influential government officials outside the police department.10 The finding by the district court that the investigation was not motivated by anti-union animus does not negate plaintiffs' interest in soliciting outside support which they believed to be necessary at the time.11
24
The First Amendment protects not only the individual's interest in speaking out but also the public's interest in being informed. Pickering v. Board of Education, 391 U.S. at 573, 88 S. Ct. 1731; Donahue v. Staunton,471 [email protected]. We believe that plaintiffs' September 17 letter touched on matters of public concern. Wisconsin has undertaken broad regulation of the public employment relationship in the public interest.12 Moreover, the terms of a collective bargaining agreement covering municipal police officers may include provisions governing matters of important public policy.13 The state and city decision-makers to whom the letter was addressed were particularly concerned with its allegations because of their responsibilities either with respect to the negotiation and adoption of the collective bargaining agreement or with respect to public employer-employee relations generally. These government officials and the public at large were thus properly concerned with charges of misuse of police department internal discipline procedures to cripple the police officers' bargaining representative.
25
Upon consideration of all the factors deemed relevant in prior decisions of the Supreme Court and of this court, we conclude that the defendant chief of police has not demonstrated a need to enforce the confidentiality rule against the statements here in issue which outweighs the individual and public interests in their expression. It follows then that any disciplinary action taken against the named plaintiffs on account of their September 17 letter is in violation of their rights as guaranteed by the First and Fourteenth Amendments.
26
Our decision leaves unresolved several problems as to the remedies, legal and equitable, to which plaintiffs may be entitled. The sanctions imposed on plaintiffs for violation of the confidentiality rule have already been served. Plaintiffs have requested that, where a single sanction was imposed on a policeman found to have violated both the political activity rule and the confidentiality rule, the penalty be recomputed to reflect only the political activity violation. This recomputation will be required if damages are assessed; however, damages are appropriate only if plaintiffs prove defendant's bad faith as required by Wood v. Strickland, 420 U.S. 308, 95 S. Ct. 992, 43 L. Ed. 2d 214 (1975). Plaintiffs' request on oral argument for prospective injunctive relief against further application of the department's confidentiality rule appears to be without merit within the narrow context of our disposition of this matter. Their request for expungement from their employment files of the confidentiality rule violations merits consideration. We have concluded, however, that all questions of remedy should first be determined by the district court on remand after an appropriate hearing.
27
The judgment of the district court is reversed and this cause is remanded for consideration of an appropriate remedy.
1
All claims against the City of Milwaukee, the only other party defendant, have been abandoned
2
Cf. Wis.Stat. § 65.05 (1973); Milwaukee, Wis., Charter Ordinance §§ 4.01, 4.10 and 4.23
3
Milwaukee Police Department Rule 29, Section 31 provides:
SECTION 31. Members of the Department shall not solicit or make contribution in money or other thing, directly or indirectly, on any pretext, to any persons, committee, or association, for political purposes; nor shall they interfere or use the influence of their office for political reasons.
We upheld the constitutionality of Section 31 in Paulos v. Breier, 7 Cir., 507 F.2d 1383 (1974).
4
The newspaper article stated in part:
'The eight member board of the Milwaukee policemen's union was interviewed by Police Inspector Arnold Kramer Tuesday about the group's political activity. * * *
'According to one source, the members were questioned about their role in the endorsement by the group, the Professional Policeman's (sic) Protective Association of Milwaukee, of some candidates in the Sept. 8 primary election. * * *
'Police Chief Harold A. Breier acknowledged Tuesday that the association officers were interviewed, but declined to comment other than to repeat that he was taking 'a good hard look' at the situation.' Milwaukee Journal, Sept. 16, 1970, at 1 and 6.
The article also disclosed the names of the individuals who had been interviewed by the department's investigator.
5
The plaintiffs' letter stated in part:
'This letter is to protest the fact that members of the Board of Trustees of the Professional Policemen's Protective Association are being interfered with, restrained and coerced by the City of Milwaukee and/or its agents.
'Under duress, against our will, we are being forced by the City of Milwaukee and/or its agents to answer questions and give statements concerning our activity as members of the Board of Trustees of the Professional Policemen's Protective Association. This has been with the threat of disciplinary action and even the possibility of discontinued employment for our noncompliance.
'We have been questioned and required to give statements concerning our activity as members of the Board of Trustees in the following areas.
1
Our attendance at the State conventions of the Republican and Democratic parties
2
A letter dated July 14, 1970 sent by the Board to James J. Mortier concerning our current labor negotiations
3
A letter dated August 26, 1970 sent by the Board to our members concerning candidates in the September 8th primary election.'
The remainder of the letter made no additional factual disclosures. The letter was signed by the seven named plaintiffs.
6
Plaintiffs concede the validity of the rule against political activity and do not challenge here the discipline imposed under the rule
7
Unreported Decision and Order, October 2, 1974
8
Hanneman v. Breier, E.D.Wis., 390 F. Supp. 633 (1975)
9
In Muller we found a department regulation prohibiting policemen from making statements 'derogatory to the Department' void for overbreadth. In Bence we found void for vagueness a police department regulation which prohibited 'conduct unbecoming a member and detrimental to the service,' although the Supreme Court had upheld a similar regulation in the military context. See Parker v. Levy, 417 U.S. 733, 94 S. Ct. 2547, 41 L. Ed. 2d 439 (1974)
10
The right to form and join a union has been afforded constitutional protection. McLaughlin v. Tilendis, 7 Cir., 398 F.2d 287 (1968). Wisconsin's municipal employee bargaining statute further protects the right to engage in union activity. Wis.Stat. § 111.70 (1973). Section 111.70(3)(1) makes it an unfair labor practice for a municipal employer to 'interfere with, restrain or coerce municipal employees in the exercise of their rights guaranteed (by the Act.)'
11
In Bence v. Breier, supra, we stated our belief that a letter by officers of the policemen's union to the City's labor negotiator outlining a proposed bargaining demand and explaining the incident that provided the basis for the demand could not be constitutionally prohibited even under a valid rule. 501 [email protected]. This was so even though plaintiffs' account of the incident was erroneous. Id. at 1187
12
Cf. Wisconsin's Employment Peace Act, which states in its Declaration of Policy: '(The State) recognizes that there are three major interests involved, namely: That of the public, the employe, and the employer.' Wis.Stat. § 111.01 (1973). See n. 10, supra
13
Cf. Summers, Public Employee Bargaining: A Political Perspective, 83 Yale L.J. 1156 (1974)
|
Case 1:18-cr-00339-PAC Document 235 Filed 11/15/19 Page 1 of 1
LAW OFFICE OF KENNETH J. MONTGOMERY
P.L.L.C.
198 ROGERS AVENUE
BROOKLYN, NEW YORK 11225
PH 531.601.9357 FAX 531.601.9357
[email protected]
NOVEMBER 14, 2019
BY ECF / EX PARTE 11/15/2019
The request is denied.
The Honorable Paul A. Crotty
SO ORDERED.
United States District Court
Southern District of New York
500 Pearl Street
New York, New York 10007
Re: United States v. Dawdu Marriott, 18 Cr. 339 (PAC)
Dear Judge Crotty:
This letter is a request to modify bail conditions so that Mr. Marriott may be
allowed to attend a family event on November 16, 2019 from the hours of 6pm-9pm. The event a
Baby shower, is in the Eastern District of New York located at 227-02 Linden Boulevard,
Cambria Heights New York. I have corresponded with the Government and they take no
position. I also corresponded with Pretrial services which relayed to me as a matter of policy
they would not agree to a social event for a client who is on home detention. Thank you for the
Court’s time and consideration.
Respectfully,
Kenneth J. Montgomery
s/
Kenneth J. Montgomery
|
[Cite as In re C.J., 2014-Ohio-2403.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
Nos. 100532 and 100534
IN RE: C.J.
A Minor Child
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Juvenile Division
Case No. AD 11900672
BEFORE: Rocco, J., Celebrezze, P.J., and E.T. Gallagher, J.
RELEASED AND JOURNALIZED: June 5, 2014
-i-
ATTORNEY FOR FATHER
Betty C. Farley
17316 Dorchester Drive
Cleveland, OH 44119
ATTORNEY FOR MOTHER
George Coghill
10211 Lakeshore Blvd.
Cleveland, OH 44108
ATTORNEYS FOR APPELLEE, STATE OF OHIO
Timothy J. McGinty
Cuyahoga County Prosecutor
BY:
Rachel V. Eisenberg
Assistant Prosecuting Attorney
3955 Euclid Avenue
Cleveland, OH 44115
Jennifer McPaul
Assistant Prosecuting Attorney
C.C.D.C.F.S.
8111 Quincy Avenue
Cleveland, OH 44104
ATTORNEY FOR CHILD
Suzanne Piccoreli
255 Falmouth Drive
Rocky River, OH 44116
-ii-
GUARDIAN AD LITEM FOR CHILD
Carla L. Golubovic
P.O. Box 29127
Parma, OH 44129
KENNETH A. ROCCO, J.:
{¶1} In these consolidated appeals, appellants N.J. and T.W., respectively, natural
father and natural mother of the subject child, each challenge the decision of the
Cuyahoga County Court of Common Pleas, Juvenile Division, to terminate his or her
parental rights and to grant permanent custody of their minor child to the Cuyahoga
County Department of Children and Family Services (“the agency”).
{¶2} Father presents three assignments of error. He claims that the juvenile
court’s decision should be reversed because the evidence presented did not demonstrate
that permanent custody was in the child’s best interest. Father further claims that the
award should be reversed for both the agency’s failure to determine that the child could
be placed with her paternal aunt and the juvenile court’s failure to grant legal custody of
the child to her paternal aunt.
{¶3} Mother presents two assignments of error. Like Father, she claims that the
juvenile court’s decision is unsupported by the evidence in the record. Mother
additionally claims that the juvenile court abused its discretion in admitting certain
evidence at trial because it constituted hearsay.
{¶4} Upon a review of the record, this court finds that none of appellants’ claims
have merit. Consequently, the juvenile court’s order is affirmed.
{¶5} Mother gave birth to the child on January 22, 2005. The agency obtained
emergency custody of the child when she was five years old, and eventually placed the
child in the same foster home as her older female sibling. Subsequently, the child’s
sister was placed into a separate foster home.
{¶6} On January 12, 2011, the agency filed a complaint in juvenile court seeking
temporary custody of the child. As amended, the complaint stated that the child was
dependent, the family had an “extensive history” with the agency, two older half-siblings
had mental health and behavioral problems, and Father neither visited nor supported the
child.
{¶7} On April 29, 2011, the matter proceeded to a hearing. Mother admitted the
allegations of the amended complaint. At the conclusion of the hearing, the juvenile
court granted the agency’s motion and placed the child in the agency’s temporary custody.
The court found that Mother was “to be involved in mental health evaluation and
services for child and for self.” The court also found that each parent “need[ed] stable
housing.” The court approved the agency’s case plan.
{¶8} The agency thereafter applied to the juvenile court for an extension of the
child’s temporary custody; the juvenile court granted the extension. On September 10,
2012, the agency filed a motion to modify temporary custody to permanent custody. The
agency asserted that the child had been in temporary custody for over 12 months of a
consecutive 22 month period, as set forth in R.C. 2151.414(B)(1)(d).
{¶9} Attached to the agency’s motion was the affidavit of Joyce Freeman, the
social worker of record for the case. Freeman averred that: (1) the case plan required
mother to “obtain emotional stability” and “appropriate parenting skills,” but that Mother
was not in compliance, having been charged in Euclid Municipal Court with child
endangering, (2) Mother failed on a consistent basis to appear at her time of private
visitation with the child, (3) Mother had failed to obtain an updated mental health
assessment and her “last assessments were obtained in 2008, wherein a history of
schizophrenia was referenced along with a diagnosis of personality disorder,” (4) none of
Mother’s four children was in her care and custody, and (5) Father was “a registered sex
offender with a conviction [for] Felony Gross Sexual Imposition from Cuyahoga County
in 2006.”
{¶10} While the agency’s motion was pending, the juvenile court conducted
several pretrial hearings. On March 19, 2013, Father filed a motion requesting that the
court grant him “or in the alternative a relative * * * to be name[d] later, legal custody of
the child.” In his supporting memorandum, Father asserted that he “will have
substantially complied and/or completed the case plan by time of trial” and that he had
“the ability to care for and support the child.”
{¶11} On May 10, 2013, Father amended his motion for legal custody to name his
sister Luretha Talbert as the “alternate” relative. Father asserted in his memorandum in
support of his amended motion that Talbert had complied with the child’s guardian ad
litem’s (“GAL”) and with the agency’s “custody investigation[s] and addressed any
alleged concerns.”
{¶12} On May 28, 2013, Talbert filed a “statement of understanding for legal
custody” pursuant to R.C. 2151.353(A) and R.C. 2151.42. Her signature had no attached
attestation.
{¶13} On August 29, 2013, the juvenile court called the matter for trial. Neither
Father nor paternal aunt attended. The agency presented the testimony of the two social
workers who had been assigned to the child’s case. Mother also testified.
{¶14} On September 17, 2013, the juvenile court issued a judgment entry that
granted the agency’s motion for permanent custody of the child. Both Father and Mother
have appealed from that judgment.
{¶15} In App. No. 100532, Father presents three assignments of error as follows.
I. The Cuyahoga County Department of Children and Family
Services failed to show by clear and convincing evidence that permanent
custody is in the minor child’s best interest.
II. The Cuyahoga County Department of Children and Family Services failed to
comply with Ohio Revised Code § 2151.412(G) in that the child was not placed in the
legal custody of a suitable family member.
III. The trial court’s failure to grant appellant’s motion for legal custody of the
child to a relative was not based on a preponderance of the evidence and therefore
constitutes an abuse of discretion.
{¶16} In App. No. 100534, Mother presents the following two assignments of error.
I. The trial court’s decision to award permanent custody to CCDCFS was against
the manifest weight of the evidence as it was not supported by clear and convincing
evidence.
II. The trial court abused its discretion by erroneously admitting prejudicial
hearsay testimony.
{¶17} Both Father and Mother argue in their first assignments of error that the juvenile court’s
decision is unsupported in the record. This court disagrees.
{¶18} In order to terminate parental rights and grant permanent custody to a county
agency, the record must demonstrate by clear and convincing evidence the following: (1)
the existence of one of the conditions set forth in R.C. 2151.414(B)(1)(a) through (d);
and, (2) permanent custody is in the best interest of the child. In re: S.H., 8th Dist.
Cuyahoga Nos. 97992, 97993, and 97994, 2012-Ohio-4064, ¶ 27. “Clear and
convincing evidence” is that quantum of evidence that instills in the trier of fact a firm
belief or conviction as to the allegations sought to be established. In re Y.V., 8th Dist.
Cuyahoga No. 96061, 2011-Ohio-2409, ¶ 13, citing Cross v. Ledford, 161 Ohio St. 469,
477, 120 N.E.2d 118 (1954).
{¶19} In determining the child’s best interest, the relevant factors include the
following: (1) the interaction and interrelationship of the child with others; (2) the wishes
of the child; (3) the custodial history of the child; (4) the child’s need for a legally secure
placement and whether such a placement can be achieved without permanent custody;
and, (5) whether any of the factors in divisions (E)(7) to (11) apply. The “best interest
determination” focuses on the child, not the parent. R.C. 2151.414(C); In re Awkal, 95
Ohio App. 3d 309, 315, 642 N.E.2d 424 (8th Dist.1994). The discretion that the juvenile
court enjoys in deciding whether an order of permanent custody is in the best interest of a
child should be accorded the utmost respect, given the nature of the proceeding and the
impact the court’s decision will have on the lives of the parties concerned. Id. at 316.
{¶20} In this case, the record demonstrated pursuant to R.C. 2151.414(B)(1)(d)
that the child had “been in the temporary custody of a public children services agency * *
* for twelve or more months of a consecutive twenty-two month period.” Neither Father
nor Mother can dispute that this requirement was met. The existence of that one factor
alone can support a finding that the agency should be granted permanent custody of the
child. In re S.G., 8th Dist. Cuyahoga No. 100441, 2014-Ohio-1088, ¶ 16, citing In re
William S., 75 Ohio St. 3d 95, 661 N.E.2d 738 (1996).
{¶21} In addition, R.C. 2151.414(D)(2) provides:
If all of the following apply, permanent custody is in the best interest
of the child and the court shall commit the child to the permanent custody
of a public children services agency or private child placing agency:
(a) The court determines by clear and convincing evidence that one
or more of the factors in division (E) of this section exist and the child
cannot be placed with one of the child’s parents within a reasonable time or
should not be placed with either parent.
(b) The child has been in an agency’s custody for two years or
longer, and no longer qualifies for temporary custody pursuant to division
(D) of section 2151.415 of the Revised Code.
(c) The child does not meet the requirements for a planned
permanent living arrangement pursuant to division (A)(5) of section
2151.353 of the Revised Code.
(d) Prior to the dispositional hearing, no relative or other interested
person has filed, or has been identified in, a motion for legal custody of the
child.
(Emphasis added.)
{¶22} Putting aside the foregoing subsection (D)(2)(d) for purposes of the
discussion of Father’s and Mother’s first assignments of error, R.C. 2151.414(E)
provides:
(E) In determining at a hearing * * * whether a child cannot be placed with either
parent within a reasonable period of time or should not be placed with the parents, the
court shall consider all relevant evidence. If the court determines, by clear and convincing
evidence * * * that one or more of the following exist as to each of the child’s parents,
the court shall enter a finding that the child cannot be placed with either parent within a
reasonable time or should not be placed with either parent * * * .
{¶23} In this case, the juvenile court determined not one, but four, subsections of R.C.
2151.414(E) applied, viz., (1), (2), (4) and (11). The court determined that (1) in spite of planning and
diligent efforts by the agency to assist the parents in remedying the problems that initially caused the
child to be placed outside the home, the parents had failed continuously and repeatedly to substantially
remedy the conditions causing the child to be placed outside the home, (2) Mother displayed a chronic
mental or emotional illness so severe that it made her unable to provide an adequate permanent home
for the child at the present time and, as anticipated, within one year after the trial; (4) the parents
demonstrated a lack of commitment toward the child by failing to regularly support, visit, or
communicate with the child when able to so or by other actions showing an unwillingness to provide an
adequate home for the child, and (11) Mother had her parental rights involuntarily terminated with
respect to a sibling of the child and had failed to provide clear and convincing evidence to prove that,
notwithstanding the prior termination, Mother could provide a legally secure permanent placement and
adequate care for the health, welfare, and safety of the child.
{¶24} The juvenile court also found that the child’s best interest was served by
granting permanent custody to the agency. The juvenile court’s determinations and
findings were supported by clear and convincing evidence.
{¶25} As to Father, the record reflects that Father did not take any interest in the
child until late 2012. He never called the agency to inquire about the child’s welfare.
Moreover, he did not appear for his first supervised visit with the child, and could not
interact with the child at his next visit because the child refused to come near him.
{¶26} The record also reflects that, in the face of the child’s active aversion to him,
Father responded inappropriately; he told child to stop being afraid of him because she
was coming to live with him, which prompted only more fear in the child. Father did not
come to any visits with the child from February 2013 until June 2013. Father did not
have his own home; rather, he lived in his sister’s home. Father also had no verifiable
employment. Finally, Father did not find it necessary to attend the trial on the agency’s
motion for permanent custody.
{¶27} As to Mother, the record reflects that Mother failed to undergo qualified
assessments of her mental and emotional health, although she had been diagnosed in 2008
and 2010 with paranoid schizophrenia and a personality disorder. One social worker
testified that she was removed from the case because Mother had threatened her with
physical harm. Mother’s testimony at trial was disjointed and bizarre.
{¶28} The record also reflects that Mother was convicted of child endangering in
2012, Mother failed to utilize the services recommended by the social workers, and, at the
visitations with the child, she was chronically late and remained unfocused on the child.
Mother’s three older children had been permanently removed from her custody.
Mother’s claims that she could support the child because she had outside employment
were never substantiated. The child did not seem to have any affection for Mother;
indeed, Mother admitted that the child was usually “angry” during Mother’s visits.
{¶29} The child’s GAL recommended that the agency’s motion be granted. The
record supports a conclusion that, in light of the child’s lack of a bond with either her
Father or her Mother and the child’s own psychological and emotional problems, the
child had an urgent need for a legally secure placement.
{¶30} Based on the record, clear and convincing evidence supports the juvenile
court’s decision that granting permanent custody of the child to the agency was in her best
interest. Father’s and Mother’s first assignments of error, accordingly, are overruled.
{¶31} Father asserts in his second and third assignments of error that neither the
agency nor the juvenile court complied with its statutory duties under R.C. 2151.412(G)
and R.C. 2151.353(A) to ensure that the child was placed in the legal custody of a
relative. According to Father, his sister Luretha Talbert was a relative who was able to
appropriately provide for the child. Father misreads the statutes.
{¶32} R.C. 2151.412(G) governs case plans, not custody determinations. In re
M.W, 8th Dist. Cuyahoga No. 96817, 2011-Ohio-6444, ¶ 26. While the statute provides
that, in developing a case plan, the agency should consider that if parents are not suitable
custodians for their children then extended family members are next in priority, the
statute’s provisions are not mandatory. Id., citing In re Rollinson, 5th Dist. Stark Nos.
97CA00243 and 97CA00206, 1998 Ohio App. LEXIS 1984 (Apr. 27, 1998). The
statute provides in relevant part, moreover, that “[i]n the agency’s development of a case
plan and the court’s review of the case plan, the child’s health and safety shall be the
paramount concern.” Thus, other than parents, no preference exists for family members
in custody awards. In re M.W. at ¶ 27.
{¶33} Similarly R.C. 2151.353(A)(3) provides that a juvenile court “may” make an
order of disposition to
any other person who, prior to the dispositional hearing, files a
motion requesting legal custody of the child or is identified as a proposed
legal custodian in a * * * motion filed prior to the dispositional hearing by
any party to the proceedings. * * *
{¶34} In this case, the record reflects that the agency considered Talbert as a
possible placement alternative for the child. Upon investigation, however, the social
worker found that Talbert had been less than honest about her background; although
Talbert denied having any history of substance abuse, she had been charged with drug
trafficking. Talbert visited with the child only once, never called the agency to inquire
about the child’s welfare, and did not consider Father’s sexual offense conviction to be of
any concern. Like her brother, Talbert did not find it necessary to appear at the trial of
this case.
{¶35} Under these circumstances, neither the agency nor the court was required to
give preferential consideration to Father’s suggestion that Talbert be granted legal
custody of the child. In re P.T., 5th Dist. Tuscarawas No. 2012 AP 02 0009,
2012-Ohio-4034. Father’s second and third assignments of error, therefore, are also
overruled.
{¶36} Mother argues in her second assignment of error that the juvenile court
acted improperly in overruling her objections to the social workers’ testimony about
Mother’s psychiatric history; the social workers testified that Mother had been diagnosed
with schizophrenia and a personality disorder. Mother asserts the testimony was
inadmissible hearsay. Upon a review of the record, however, this court cannot find the
juvenile court erred.
{¶37} The rules of evidence apply to dispositional proceedings pursuant to R.C.
2151.35(I). Nevertheless, a trial court has broad discretion in admitting or excluding
evidence, and absent an abuse of discretion and a showing of material prejudice, a trial
court’s ruling on the admissibility of evidence will be upheld. In re J.T., 8th Dist.
Cuyahoga Nos. 93240 and 93241, 2009-Ohio-6224, ¶ 67, citing State v. Martin, 19 Ohio
St.3d 122, 129, 483 N.E.2d 1157 (1985).
{¶38} The juvenile court judge is presumed to be able to disregard improper
testimony. In re J.T. at ¶ 70. The admission of hearsay evidence in termination of
parental rights cases, therefore, even if error, is not considered prejudicial unless it is
shown that the judge relied on improper evidence in making his decision. Id., citing In
re Lucas, 29 Ohio App. 3d 165, 504 N.E.2d 472 (3d Dist.1985).
{¶39} In this case, the evidence Mother challenges was already properly a part of
the record. The case plan filed with the juvenile court indicated that a court-ordered
psychological test in 2010 “revealed that [Mother] is an individual who possibly meets
the criteria for having paranoid schizophrenia.” Thus, Mother’s mental status had
already been documented. In re J.T. at ¶ 71.
{¶40} The social workers’ testimony, therefore, was designed to report Mother’s
obligations under the case plan that they oversaw and whether there was compliance. Id.
In order to be “current,” Mother was required to undergo another psychological
assessment within two years of the institution of the case plan, but she failed to obtain an
approved assessment.
{¶41} The record in this case does not establish that either the juvenile court erred
in allowing the social workers’ testimony about Mother’s previous diagnosis or that the
juvenile court relied upon hearsay in determining that a grant of permanent custody to the
agency was in the child’s best interest. Id. at ¶ 71-72. Consequently, Mother’s second
assignment of error is overruled.
{¶42} The juvenile court’s judgment is affirmed.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into
execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
_________________________________________
KENNETH A. ROCCO, JUDGE
FRANK D. CELEBREZZE, JR., P.J., and
EILEEN T. GALLAGHER, J., CONCUR
|
Filed 8/13/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
HEDY WOLF,
Petitioner, E071318
v. (Super.Ct.Nos. CIVDS1823575 &
ACRAS1800106 & MSB1401789)
THE SUPERIOR COURT OF
SAN BERNARDINO COUNTY, OPINION
Respondent;
THE PEOPLE,
Real Party in Interest.
ORIGINAL PROCEEDINGS; petition for extraordinary writ. Carlos M.
Cabrera, Judge. Writ granted.
G. Christopher Gardner, Public Defender, Stephan J. Willms, Deputy Public
Defender for Petitioner.
Jason Anderson and Michael A. Ramos, District Attorneys, Brent J. Schultze,
Deputy District Attorney for Real Party in Interest.
1
Petitioner, Hedy Wolf, pled guilty to the misdemeanor offense of making
harassing telephone calls. (Pen. Code, § 653m, subd. (a).)1 The trial court (1) granted
Petitioner one year of summary probation with the condition she serve one day in jail in
lieu of paying fines; and (2) imposed a criminal protective order. Petitioner moved to
withdraw her plea. The trial court denied Petitioner’s motion. Petitioner appealed the
denial of her motion to the superior court’s appellate division and requested the
appointment of appellate counsel. The appellate division denied Petitioner’s request for
appointment of appellate counsel.
Petitioner petitions this court for a writ of mandate directing the superior court’s
appellate division to (1) vacate its order denying Petitioner’s request for appointment of
appellate counsel, and (2) enter an order granting Petitioner’s request for appointment of
appellate counsel. We grant the writ petition.
FACTUAL AND PROCEDURAL HISTORY
Petitioner was charged with the misdemeanor offense of making harassing
telephone calls. (§ 653m, subd. (a).) On May 14, 2018, Petitioner pled guilty to the
charge. The trial court (1) granted Petitioner one year of summary probation with the
condition she serve one day in jail; and (2) imposed a three-year criminal protective
order. Petitioner was not represented by counsel at the May 14 hearing.
1 All subsequent statutory references will be to the Penal Code unless otherwise
indicated.
2
On May 29, 2018, Petitioner moved to withdraw her plea. Petitioner asserted she
had not been represented by counsel and did not understand that the plea would result in
a three-year protective order and probation. Petitioner requested that she be able to
proceed to trial on the charge. On June 29, the trial court appointed the public
defender’s office to represent Petitioner. On July 2, the public defender’s office
accepted the appointment. On August 2, the trial court held a hearing on Petitioner’s
motion to withdraw her plea. Petitioner was represented by the public defender’s office.
The trial court denied the motion but modified the protective order to expire one year
from May 14, 2018.
Petitioner appealed the denial of her motion to withdraw her plea. Petitioner’s
notice of appeal was filed in the appellate division on August 6, 2018. (Judicial Council
Form CR-132.) In the notice of appeal, in section 2 of the form, Petitioner wrote, “A
court appoint appeal atty is requested [sic].” In section 4 of the notice of appeal,
Petitioner marked the boxes to indicate (a) she was represented by the public defender
in the trial court, and (b) she was “asking the court to appoint a lawyer to represent [her]
in this appeal.”
On August 17, Petitioner filed a request for a court-appointed attorney. (Judicial
Council Form CR-133.) On that form, petitioner again marked the box indicating she
was represented by a court-appointed attorney in the trial court. Petitioner also marked
a box indicating she had been granted probation.
3
On August 17, the appellate division denied Petitioner’s request for appointment
of counsel. The appellate division explained that counsel did not need to be appointed
because “[t]he denial of a motion to withdraw a plea is not a significant adverse
collateral consequence of the conviction.” Petitioner’s writ petition concerns the
appellate division’s order dated August 17, 2018.
DISCUSSION
Petitioner contends the superior court’s appellate division erred by denying her
request for appointment of appellate counsel.
The facts are undisputed, therefore we apply the de novo standard of review.
(People v. Hernandez (2009) 177 Cal. App. 4th 1182, 1187.) California Rules of Court,
rule 8.851(a)(1)2 provides: “On application, the appellate division must appoint
appellate counsel for a defendant convicted of a misdemeanor who: [¶] (A) Is subject
to incarceration or a fine of more than $500 (including penalty and other assessments),
or who is likely to suffer significant adverse collateral consequences as a result of the
conviction; and [¶] (B) Was represented by appointed counsel in the trial court or
establishes indigency.” “A defendant is subject to incarceration or a fine if the
incarceration or fine is in a sentence, is a condition of probation, or may be ordered if
the defendant violates probation.” (Rule 8.851(a)(3).)
A condition of Petitioner’s probation was that she serve one day in jail.
Therefore, Petitioner was subject to incarceration. (Rule 8.851(a)(1)&(3).)
2 For ease of reference, we will refer to Cal. Rules of Court, rule 8.851 as Rule
8.851.
4
At the hearing on the motion to withdraw her plea, Petitioner was represented by
appointed counsel. In the superior court’s appellate division, Petitioner is appealing the
trial court’s denial of her motion to withdraw her plea. Thus, Petitioner was represented
by appointed counsel at the hearing on the motion that is the subject of her appeal in the
appellate division. Therefore, Petitioner was “represented by appointed counsel in the
trial court.” (Rule 8.851(a)(2).)
In sum, Petitioner was (1) subject to incarceration, and (2) represented by
appointed counsel in the trial court. Rule 8.851(a)(1) mandates that appellate counsel
be appointed when the foregoing two criteria are met. Therefore, the appellate division
was required to appoint appellate counsel for Petitioner. We conclude the appellate
division erred.
Real Party in Interest contends (1) Petitioner was not represented by appointed
counsel at the time of judgment, therefore Petitioner was not represented by counsel in
the trial court; (2) Petitioner made procedural errors in her request for appointment of
counsel; and (3) Petitioner’s appeal is from the judgment and is untimely, therefore the
issue of appointment of counsel is moot.
We address the assertion that Petitioner was not represented by counsel in the
trial court because she was unrepresented at the time of judgment. We apply the de
novo standard of review when interpreting a rule of court. (Mercury Interactive Corp.
v. Klein (2007) 158 Cal. App. 4th 60, 81.)
If a defendant “desires and is unable to employ counsel the court shall assign
counsel to defend him or her.” (§ 987, subd. (a).) “In order to assist the court in
5
determining whether a defendant is able to employ counsel in any case, the court may
require a defendant to file a financial statement or other financial information under
penalty of perjury with the court or, in its discretion, order a defendant to appear before
a county officer designated by the court to make an inquiry into the ability of the
defendant to employ his or her own counsel. If a county officer is designated, the
county officer shall provide to the court a written recommendation and the reason or
reasons in support of the recommendation. The determination by the court shall be
made on the record.” (§ 987, subd. (c).)
Rule 8.851(a)(1)(B) reads: “[T]he appellate division must appoint appellate
counsel for a defendant convicted of a misdemeanor who . . . [¶] . . . [¶] . . . Was
represented by appointed counsel in the trial court or establishes indigency.” One can
reasonably infer that proof of the defendant having appointed counsel in the trial court is
an option so that the defendant is not required to again go through the process of
establishing indigency upon filing an appeal in the appellate division. Using proof of a
prior appointment of counsel, rather than establishing indigency a second time in the
same case, helps “to provide means for relatively speedy and inexpensive appeals from
judgments and appealable orders in criminal cases.” (People v. Jenkins (1976) 55
Cal. App. Supp. 3d 55, 60.)
With the foregoing understanding of rule 8.851(a)(1)(B), it is of little
consequence whether a defendant had appointed counsel prior to a judgment or after a
judgment. The point of a defendant having appointed counsel in the trial court is that
the defendant established indigency and is not required to establish it a second time in
6
the appellate division. Not having to go through a second process of establishing
indigency permits appeals to proceed in an efficient manner. Therefore, we are not
persuaded by Real Party in Interest’s assertion that Petitioner is not entitled to appointed
counsel on appeal because her appointed counsel was appointed postjudgment.
Petitioner established her indigency in the trial court and was appointed counsel, and
therefore was entitled to the appointment of counsel in the appellate division.
Next, we address the assertion that Petitioner made procedural errors in her
request for appointment of appellate counsel. Real Party in Interest asserts that
Petitioner did not submit information regarding indigency. Rule 8.851(a)(1)(B) requires
the defendant (i) have been represented by appointed counsel in the trial court, or
(ii) establish indigency. As set forth ante, Petitioner was represented by appointed
counsel in the trial court, therefore, Petitioner was not required to again establish
indigency in the appellate division.
Real Party in Interest contends Petitioner failed to use the proper forms to request
appointment of appellate counsel. Real Party in Interest contends Petitioner’s failure to
use the proper forms meant the appellate division was required to search the record to
determine if Petitioner was entitled to appointment of counsel, and the appellate
division was not required to conduct that search so it could properly deny Petitioner’s
request for appointment of counsel.
The determination of whether Petitioner is entitled to the appointment of
appellate counsel required looking at two minute orders: (1) the minute order granting
Petitioner probation with the condition she serve one day in jail; and (2) the minute
7
order reflecting Petitioner was represented by appointed counsel at the hearing on her
motion to withdraw her guilty plea. We are not persuaded that Petitioner’s alleged
failure to use the correct form(s) created a burden so great that the appellate division
needed to deny Petitioner’s request with prejudice. In sum, we find Real Party in
Interest’s assertion to be unpersuasive.
We turn to the issue of the appointment of counsel being moot because
Petitioner’s appeal is allegedly untimely. It is not for this court to decide if Petitioner’s
appeal in the superior court’s appellate division is untimely. If Real Party in Interest
believes Petitioner’s appeal is untimely, then Real Party in Interest should direct a
motion to dismiss to the appellate division of the superior court. If Real Party in
Interest moves to dismiss Petitioner’s appeal due to it being untimely, then Petitioner
should be represented by counsel for purposes of responding to that motion. In other
words, the possibility that Real Party in Interest could prevail on a motion to dismiss
Petitioner’s appeal in the appellate division does not mean Petitioner should be denied
counsel.
DISPOSITION
Let a writ of mandate issue directing the Appellate Division of the Superior
Court of San Bernardino County to vacate its order denying Petitioner’s request for a
court-appointed lawyer in her misdemeanor appeal and to enter an order granting
Petitioner’s request for a court-appointed lawyer in her misdemeanor appeal. The
previously ordered stay is lifted.
8
Petitioner is DIRECTED to prepare and have the writ of mandate issued, copies
served, and the original filed with the clerk of this court, together with proofs of service
on all parties.
CERTIFIED FOR PUBLICATION
MILLER
Acting P. J.
We concur:
SLOUGH
J.
RAPHAEL
J.
9
|
Citation Nr: 1710213
Decision Date: 03/31/17 Archive Date: 04/11/17
DOCKET NO. 12-31 053A ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in St. Petersburg, Florida
THE ISSUE
Entitlement to recognition of the Appellant as the surviving spouse of the Veteran for the purpose of receiving VA death benefits.
ATTORNEY FOR THE BOARD
Christine C. Kung, Counsel
INTRODUCTION
The Veteran served on active duty from April 1944 to March 1946. He died in October 2004. The Appellant is seeking recognition as the Veteran's surviving spouse for the purpose of receiving VA death pension benefits.
This matter comes on appeal before the Board of Veterans' Appeals (Board) from a June 2010 decision of the Department of Veterans Affairs (VA) Regional Office in St. Petersburg, Florida (RO).
The Appellant was scheduled for an October 2016 Travel Board hearing. The record indicates that she did not attend the scheduled hearing; therefore, the hearing request has been withdrawn.
FINDINGS OF FACT
1. The Veteran and Appellant married in December 1951.
2. The Veteran and Appellant divorced in May 1961.
3. The Veteran died in October 2004.
CONCLUSION OF LAW
The Appellant is not entitled to recognition as the Veteran's surviving spouse for the purpose of receiving VA death benefits. 38 U.S.C.A. §§ 101, 103 (West 2015);
38 C.F.R. §§ 3.1 (j), 3.5, 3.50 (2016).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
Duties to Notify and Assist
As provided for by the Veterans Claims Assistance Act of 2000 (VCAA), the United States Department of Veterans Affairs (VA) has a duty to notify and assist claimants in substantiating a claim for VA benefits. 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126 (West 2015); 38 C.F.R. §§ 3.102, 3.156(a), 3.159 and 3.326(a) (2016). With regard to the Appellant's status as a beneficiary under 38 U.S.C.A. §§ 1310 and 1541, VCAA notice is not required because the issue presented is solely one of statutory interpretation and the claim is barred as a matter of law. See Smith v. Gober, 14 Vet. App. 227, 231-232 (2000), aff'd, 281 F.3d 1384 (Fed. Cir. 2002), cert. denied, 537 U.S. 821 (2002); see also 38 C.F.R.
§ 3.159(b)(3)(ii) (VCAA notice not required when, as a matter of law, entitlement to the benefit claimed cannot be established); 38 C.F.R. § 3.159(d)(3) (VA will refrain from or discontinue assistance with regard to a claim requesting a benefit to which the claimant is not entitled as a matter of law).
The pertinent facts regarding the Appellant's marital status, date of marriage, date of divorce, and the date of the Veteran's death are not in dispute; instead, resolution of the claim is dependent on interpretation of the applicable laws and regulations pertaining to the Appellant's entitlement as a claimant to VA death benefits. The VCAA is therefore inapplicable and need not be considered with regard the issue of Appellant's status as an eligible beneficiary under 38 U.S.C.A. §§ 1310 and 1541. See Mason v. Principi, 16 Vet. App. 129, 132 (2002); Dela Cruz v. Principi, 15 Vet. App. 143, 149 (2001); see also VAOPGCPREC 5-2004. Hence, no further notice or assistance is required to assist the Appellant in the development of the claim. Smith, 14 Vet. App. 227; Dela Cruz, 15 Vet. App. 143.
Law and Analysis
For VA purposes, a marriage is considered valid under the law of the place where the parties resided at the time of marriage, or the law of the place where the parties resided when the right to benefits accrued. 38 U.S.C.A. § 103(c); 38 C.F.R.
§ 3.1(j).
A surviving spouse is defined as (1) a person in a recognized marriage for VA purposes; (2) who was the spouse of the Veteran at the time of the Veteran's death; (3) who lived with the Veteran continuously from the date of marriage to the date of the Veteran's death except, as provided in 38 C.F.R. § 3.53(a), where there was a separation which was due to the misconduct of, or procured by, the Veteran without the fault of the spouse; and (4) who, except as provided in 38 C.F.R. § 3.55, has not remarried or has not since the death of the Veteran, and after September 19, 1962, lived with another person of the opposite sex and held himself or herself out openly to the public to be the spouse of such other person. 38 U.S.C.A. § 101(3);
38 C.F.R. § 3.50(b).
VA death benefits may be paid to a surviving spouse who was married to the Veteran: (1) one year or more prior to the Veteran's death or (2) for any period of time, if a child was born of the marriage, or was born to them before the marriage. 38 U.S.C.A. §§ 1102, 1304, 1541 (West 2015); 38 C.F.R. § 3.54 (2016). One claiming to be the spouse of a veteran has the burden to come forward with a preponderance of evidence of a valid marriage under the laws of the appropriate jurisdiction. Aguilar v. Derwinski, 2 Vet. App. 21, 23 (1991).
The threshold question that must be addressed in any claim for VA benefits is whether the person seeking the benefit is a proper claimant for the benefit sought. If the appellant is not established as a proper claimant, the claim can proceed no further. The appellant has the burden to establish her status as claimant. Sandoval v. Brown, 7 Vet. App. 7, 9 (1994).
The Appellant contends that she should be recognized as the Veteran's surviving spouse for purposes of entitlement to VA death benefits. The facts of this case are not in dispute. A Certificate of Marriage from the state of New York shows that the Veteran and the Appellant were married in December 1951. The Appellant and the Veteran's marriage was terminated by divorce in May 1961. A certificate of death shows that the Veteran died in October 2004. He was divorced at the time of his death.
For VA benefits purposes, a marriage means a marriage valid under the law of the place where the parties resided at the time of the marriage, or where the parties resided when the right to benefits accrued. 38 C.F.R. § 3.1(j). A Ruling from the Superior Court of Puerto Rico clearly establishes that the Appellant and the Veteran divorced in May 1961, prior to the Veteran's death. The validity of a divorce decree regular on its face will be questioned by VA only when such validity is put in issue by a party thereto or a person whose interest in a claim for VA benefits would be affected thereby. 38 C.F.R. § 3.206 (2016). The Appellant does not contend that the divorce decree was not valid, and has acknowledged in multiple lay statements that she divorced the Veteran. See Lay Statements dated in April 2009, November 2012, and January 2013. January 2013 statements from the children of the Appellant and the Veteran also acknowledge the divorce of their parents.
In lay statements, the Appellant and her children contend that she separated from the Veteran due to domestic violence, citing incidents of severe physical abuse resulting in hospitalization. She indicated that she separated from the Veteran and subsequently sought a divorce for her safety and that of her children. She indicated, however, that she and her children also cared for the Veteran at the time of his death and reported that she never remarried. While the Board finds that the Appellant is credible in reporting that she left the Veteran and subsequently sought a divorce due to physical abuse, the Board finds, nonetheless, that she and the Veteran were divorced and remained divorced up until the time of his death. VA regulations require a "surviving spouse" to continuously cohabitate with the veteran except in cases of marital separation due to misconduct of the veteran and without fault of the spouse. 38 C.F.R. § 3.50(b). However, the "surviving spouse" must meet the requirements of 38 C.F.R. § 3.1(j) first, i.e., there must be a valid marriage under the law of the place where the parties resided. At the time of the Veteran's death there was no valid marriage from which the parties could have had a separation due to the 1961 divorce. Accordingly, the Appellant does not meet the definition of surviving spouse for the purpose of receiving VA death benefits. See 38 C.F.R. § 3.50(b).
As such, the Board must find that the Appellant lacks basic eligibility for DIC benefits on the basis of her claimed status as the Veteran's surviving spouse. The legal criteria governing the status of a deceased Veteran's widow as a surviving spouse are clear and specific, and the Board is bound by them.
The Board has carefully reviewed the Appellant's arguments, and the law has been considered in the most favorable light possible. However, for the reasons described above, the status which the Appellant seeks as the Veteran's surviving spouse is precluded by law. The Board is bound by the law and is without authority to grant benefits on an equitable basis. See 38 U.S.C.A. §§ 503, 7104 (West 2015); Harvey v. Brown, 6 Vet. App. 416, 425 (1994). The Board finds that the preponderance of the evidence is against a finding that the Appellant was the Veteran's surviving spouse for VA death benefits purposes. Therefore, the question of entitlement to VA death benefits is rendered moot, and the doctrine of reasonable doubt is not for application. See 38 U.S.C.A. § 5107(b) (West 2015), Gilbert v. Derwinski, 1 Vet. App. 49 (1990).
ORDER
The appeal seeking to establish that the Appellant is the Veteran's surviving spouse for the purpose of VA death benefits is denied.
____________________________________________
K. PARAKKAL
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs
|
814 So. 2d 870 (2001)
Ex parte ALABAMA BOARD OF PARDONS AND PAROLES.
(Re Alabama Board of Pardons and Paroles v. Montgomery County Grand Jury and Montgomery County District Attorney).
1001072.
Supreme Court of Alabama.
September 7, 2001.
*871 Robert D. Segall and Albert D. Perkins IV of Copeland, Franco, Screws & Gill, Montgomery, for petitioner.
Eleanor I. Brooks, district atty., and Karen Smiley Focia and William I. Powell, Montgomery, for respondent.
PER CURIAM.
The Alabama Board of Pardons and Paroles ("the Board") petitions for a writ of mandamus directing the Montgomery Circuit Court to vacate its order directing the Board to comply with Grand Jury Subpoena No. 2000-0216. That subpoena called for the Board to produce certain records maintained by the Board from 1997 to the present. We grant the petition and issue the writ.
"`A writ of mandamus is an extraordinary remedy that requires the showing of: (1) a clear legal right in the petitioner to the order sought; (2) an imperative duty on the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) the properly invoked jurisdiction of the court.' Ex parte McNaughton, 728 So. 2d 592, 594 (Ala.1998). This Court has held that a petition for a writ of mandamus is the proper method for reviewing `"whether a trial court has abused its discretion in ordering discovery, in resolving discovery matters, and in issuing discovery orders."' Ex parte Compass Bank, 686 So. 2d 1135, 1137 (Ala.1996) (quoting Ex parte Mobile Fixture & Equip. Co., 630 So. 2d 358, 360 (Ala.1993))....
"Because the discovery process involves a considerable amount of discretion on the part of the trial court, the standard this Court applies on mandamus review of a discovery order is whether the petitioner has made a clear showing that the trial court abused its discretion. Ex parte Clarke, 582 So. 2d 1064, 1067 (Ala.1991). Thus, a writ of mandamus directing the trial judge to set aside its ruling on a discovery matter will issue only where it is clear that the trial court abused its discretion. Id."
Ex parte Dumas, 778 So. 2d 798, 800 (Ala. 2000).
*872 We recognize that at issue is the propriety of the issuance of a grand jury's subpoena duces tecum, and not a trial court's subpoena duces tecum, as we had before us in Ex parte Cummings, 776 So. 2d 771, 774 (Ala.2000). Nevertheless, we conclude that the standards of review stated in Dumas are applicable.
The contentions of the parties revolve around § 15-22-36(b), Ala.Code 1975:
"(b) Each member of the Board of Pardons and Paroles favoring a pardon, parole, remission of a fine or forfeiture or restoration of civil and political rights shall enter in the file his reasons in detail, which entry and the order shall be public records, but all other portions of the file shall be privileged."
(Emphasis added.)
The Board contends that § 15-22-36(b) establishes that the Board's records are privileged and, consequently, not subject to a grand jury subpoena. The Board argues that because the statute does not specifically provide that the grand jury is excepted from the privilege, the legislative intent is clear and the Board's files are not subject to grand jury proceedings. The Board further argues that compliance with the grand jury subpoena would seriously impair its ability to function because, it says, the privilege offers individuals and entities "an unfettered opportunity" to provide information to the Board, without exposing those individuals and entities to potential retaliation by anyone who might not appreciate their sharing the information with the Board.
The Montgomery County district attorney contends that the Legislature did not intend to create a privilege that would thwart a grand jury's performance of its responsibility to investigate possible indictable offenses by members of the Board, see § 12-16-192, Ala.Code 1975. Additionally, the district attorney argues that because grand jury proceedings are secret, the Board's responding to the subpoena would not violate the confidentiality of the Board's files; and she argues that public policy, which she says is evidenced by the Board's past compliance with grand jury subpoenas, supports the propriety of the Board's compliance with the subpoena.
Principles of statutory construction bind this Court to interpret plain language of a statute "to mean exactly what it says" and to engage in judicial construction only if the language in the statute is ambiguous. Ex parte Alabama Great Southern R.R., 788 So. 2d 886, 889 (Ala. 2000), quoting Blue Cross & Blue Shield v. Nielsen, 714 So. 2d 293, 296 (Ala.1998). The Legislature stated in § 15-22-36(b), Ala.Code 1975, with specificity and particularity, that "all other portions of the file shall be privileged." A plain reading of the statute indicates that the Legislature created an absolute privilege to provide individuals and entities an unfettered opportunity to provide information to the Board, without exposing the individuals and entities to public scrutiny and potential retaliation. To hold otherwise, this Court would have to engage in improper judicial construction.
We recognize, as the district attorney argues, that the grand jury performs a "special role in insuring fair and effective law enforcement." United States v. Calandra, 414 U.S. 338, 343, 94 S. Ct. 613, 38 L. Ed. 2d 561 (1974). However, although the grand jury's investigative powers are "necessarily broad," they are limited with regard to investigating "those persons protected by a constitutional, common-law, or statutory privilege." Branzburg v. Hayes, 408 U.S. 665, 688, 92 S. Ct. 2646, 33 L. Ed. 2d 626 (1972). Indeed, if the Legislature had intended for this privilege to be subject to an exception for a grand jury *873 subpoena, as the district attorney argues, the Legislature would have included such a provision. See § 38-2-6(8), Ala.Code 1975 (specifically creating for grand jury matters, an exception to the statutory privilege created for certain information collected by the Department of Human Resources).
Section 15-22-36(b), Ala.Code 1975, clearly and unambiguously establishes an absolute privilege that the Board is legally bound to obey and the circuit court is under a duty to uphold. The circuit court abused its discretion in directing the Board to produce the privileged records; therefore, the circuit court is directed to vacate its order directing the Board to comply with Grand Jury Subpoena No. 2000-0216.
PETITION GRANTED; WRIT ISSUED.
HOUSTON, SEE, LYONS, BROWN, JOHNSTONE, HARWOOD, WOODALL, and STUART, JJ., concur.
|
742 F.2d 1225
117 L.R.R.M. (BNA) 2468, 101 Lab.Cas. P 11,188
Raymond P. SCOGGINS, Plaintiff-Appellant,v.The BOEING COMPANY, INC., a Delaware corporation; andInternational Association of Machinists and AerospaceWorkers, Aerospace Industrial District Lodge # 751, AFL-CIO,a labor organization, Defendants-Appellees.
No. 83-3778.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted June 7, 1984.Decided Sept. 18, 1984.
1
Carleton H.A. Taber, Lewis Lynn Ellsworth, Salter, McKeehen, Gudger & Rabine, Seattle, Wash., for plaintiff-appellant.
2
Hugh Hafer, Hafer, Cassidy & Price, John F. Aslin, Perkins, Cole, Stone, Olsen & Williams, Seattle, Wash., for defendants-appellees.
3
Appeal from the United States District Court for the Western District of Washington.
4
Before KILKENNY and NELSON, Circuit Judges, and EAST,* District Judge.
EAST, District Judge:
5
Raymond Scoggins brought this action against his former employer, The Boeing Company, Inc. (Boeing), under Section 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185, for breach of the collective bargaining agreement and against his union, the International Association of Machinists and Aerospace Workers, Aerospace Industrial District Lodge # 751 (the union), for violating its duty of fair representation. The District Court granted summary judgment for Boeing, ruling that the suit was barred by the statute of limitations. The District Court also granted summary judgment for the union based upon Scoggins' failure to exhaust internal union remedies. We affirm.
I. FACTS
6
Scoggins was terminated by Boeing on June 25, 1980. As a Boeing employee, Scoggins was represented by the union. Following his termination, Scoggins met with a union business agent, seeking the union's help in his efforts to get his job back. The agent subsequently interviewed witnesses, reviewed Boeing's files, and met with Boeing representatives to discuss Scoggins' termination.
7
On August 27, 1980, the business agent notified Scoggins by letter that further efforts on Scoggins' behalf would be futile. Scoggins complained to the business agent about the agent's decision not to pursue the grievance further. However, Scoggins made no effort to contact the local union's president or to file an internal union appeal of the agent's decision. On September 16, 1980, the union withdrew Scoggins' grievance.
8
Scoggins brought this action on December 28, 1981, sixteen months after he received notice of the union's decision not to pursue his grievance. In his complaint, Scoggins alleged that Boeing breached the collective bargaining agreement by terminating him without just cause. He further alleged that the union breached its duty of fair representation by failing to process his grievance through arbitration. Scoggins moved for summary judgment against Boeing and the union, and also moved to strike the defendants' affirmative defenses of statute of limitations and failure to exhaust internal union remedies. In response, the union moved for summary judgment.
9
The District Court granted the union's motion for summary judgment and dismissed the action as to both the union and Boeing.1 The court concluded that Scoggins failed to exhaust explicit and mandatory union remedies. The court also concluded that either the six month statute of limitations established by 29 U.S.C. Sec. 160(b) or the three month limitation of Wash.Rev.Code Sec. 7.04.180 (1974) applied to Scoggins' action, and that Scoggins' action was therefore time barred.
II. DISCUSSION
A. Statute of Limitations
10
Prior to the U.S. Supreme Court's decision in United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 101 S. Ct. 1559, 67 L. Ed. 2d 732 (1981), the statute of limitations for hybrid Section 301 actions in Washington was three years. Christianson v. Pioneer Sand & Gravel Co., 681 F.2d 577 (9th Cir.1982) (three year statute of limitations for suits against employers); Washington v. Northland Marine Co., 681 F.2d 582 (9th Cir.1982) (three year statute of limitations for suits against unions). In Mitchell, the Supreme Court held that a state limitation period for vacation of an arbitral award controlled the employee's Section 301 action against his employer Mitchell, 451 U.S. at 64, 101 S.Ct. at 1564. In Washington, this period is three months. See Wash.Rev.Code Sec. 7.04.180 (1974). The Mitchell opinion, however, invited a square presentation of the question whether a more appropriate period would be the six-month limitation period found in Section 10(b) of the National Labor Relations Act. 451 U.S. at 60 n. 2, 101 S. Ct. at 1562 n. 2. In DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S. Ct. 2281, 76 L. Ed. 2d 476 (1983), the Court decided this question. The Court held that the limitation period as to claims against both an employer and a union is six months. We must decide whether either of these decisions applies to Scoggins' action, filed eight months after Mitchell and sixteen months before DelCostello.
11
We have held that DelCostello does not apply retroactively either to claims against unions for breach of the duty of fair representation, see Barina v. Gulf Trading and Transportation Co., 726 F.2d 560, 562-63 (9th Cir.1984); McNaughton v. Dillingham Corp., 722 F.2d 1459 (9th Cir.1984), petition for cert. filed, 52 U.S.L.W. 3829 (U.S. May 15, 1984) (No. 83-1739); Edwards v. Teamsters Local 36, 719 F.2d 1036, 1040-41 (9th Cir.1983), cert. denied, --- U.S. ----, 104 S. Ct. 1599, 80 L. Ed. 2d 130 (1984), or to claims against employers under the Labor Management Relations Act. See Barina v. Gulf Trading and Transportation Co., 726 [email protected]. The six-month limitations period announced in DelCostello cannot, therefore, govern Scoggins' action.2
12
Scoggins, however, did not file his action until eight months after the Supreme Court decided Mitchell. Scoggins argues that based on the Supreme Court's decision in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S. Ct. 349, 30 L. Ed. 2d 296 (1971), and this court's decisions in Barina and Singer v. Flying Tiger Line Inc., 652 F.2d 1349 (9th Cir.1981), Mitchell should not be applied to bar Scoggins' action against Boeing.3 In Chevron Oil, the Supreme Court declined to apply a shorter statute of limitations retroactively to extinguish a claim, stating that "[i]t would ... produce the most 'substantial inequitable results,' ... to hold that the respondent 'slept on his rights' at a time when he could not have known the time limitation that the law imposed upon him." Chevron Oil, 404 U.S. at 108, 92 S.Ct. at 356. Based on factors set forth in Chevron Oil,4 we refused to apply Mitchell retroactively to a case filed three years prior to the Mitchell decision. Singer v. Flying Tiger Line Inc., 652 [email protected]. At the time the plaintiff in Singer filed his action, the statute of limitations, according to an earlier decision by this court,5 appeared to be three years. It was not until three years after the plaintiff filed his action that the Supreme Court announced that the statute of limitations was actually a shorter period. In Barina, we also held that Mitchell would not be retroactively applied to bar the plaintiff's suit. The plaintiff had filed his suit within two months of the Supreme Court's Mitchell decision and approximately one year after the cause of action accrued. Under the law prevailing prior to Mitchell, the plaintiff's suit would have been timely filed, but under Mitchell, the statute of limitations would have been 100 days. It would have produced "substantial inequitable results" to hold that the plaintiff in Barina had "slept on his rights" by not filing within 100 days of the time the cause arose; at that point in time, the statute of limitations was thought to be three years. The plaintiff, however, quickly filed suit after Mitchell announced the shorter statute of limitations.
13
The above cases do not help Scoggins. Although Scoggins was not aware of the shorter statute of limitations period when his cause of action accrued in August, 1980, Scoggins slept on his rights after the Mitchell decision. Unlike the plaintiff in Singer, who did not know the "correct" statute of limitations until several years after he filed his lawsuit, Scoggins knew the correct statute of limitations eight months before he filed his suit. Unlike the plaintiff in Barina, who quickly filed his lawsuit after the Court announced in Mitchell the shorter statute of limitations, Scoggins delayed filing his lawsuit until eight months after the Mitchell decision. It is not inequitable to hold Scoggins to the shorter statute of limitations period applicable under Mitchell. Consequently, Scoggins' action against Boeing is governed by a three month statute of limitations (see Wash.Rev.Code Sec. 7.04.180 (1974)) appropriate under Mitchell. Since Scoggins did not file his case until eight months after the Supreme Court announced the Mitchell decision, the District Court properly dismissed Scoggins' action against Boeing as time barred.
14
Mitchell, however, applies only to suits against employers; it does not apply to suits against unions. See n. 3, supra. Since neither Mitchell nor DelCostello governs the statute of limitations for Scoggins' action against the union, the appropriate statute of limitations for this suit is three years. See Washington v. Northland Marine Co., 681 F.2d 582, 586 (9th Cir.1982). Scoggins filed suit sixteen months after his cause of action accrued. The suit was therefore timely filed and the District Court erred in dismissing the suit against the union as time barred.
B. Exhaustion of Internal Union Remedies
15
The District Court also determined that Scoggins' suit against the union should be dismissed because Scoggins failed to exhaust internal union appeals procedures. The determination whether to require exhaustion is left to the sound discretion of the trial court. Fristoe v. Reynolds Metal Co., 615 F.2d 1209, 1214 (9th Cir.1980). Scoggins argues that the District Court abused its discretion in making this determination.
16
The Supreme Court has identified three factors to guide trial courts in determining whether to require an employee to exhaust such appeals procedures: (1) whether union officials are so hostile to the employee that the employee could not obtain a fair hearing; (2) whether the internal union appeals procedures would be inadequate either to reactivate the employee's grievance or to accord the employee the full relief sought under Section 301; and (3) whether exhaustion would unreasonably delay the employee's opportunity to obtain a judicial hearing on the merits. Clayton v. Automobile Workers, 451 U.S. 679, 689, 101 S. Ct. 2088, 2095, 68 L. Ed. 2d 538 (1981). On appeal, Scoggins relies primarily on the second factor in arguing that the District Court improperly required exhaustion.6
17
Although Scoggins argues on appeal that the union could neither award him the complete relief he sought nor reactivate his grievance, a careful search of the record reveals that Scoggins failed to make the reactivation argument to the District Court. When the union moved for summary judgment, the union submitted an affidavit and excerpts from the union constitution.7 The union used these documents to demonstrate to the District Court that internal union remedies were available to Scoggins. Scoggins, in his response to the union's motion for summary judgment, argued only that "[b]ecause, in this case, the internal union appeals procedures cannot grant the Plaintiff the complete relief sought in his Sec. 301 suit i.e., reinstatement, Clayton mandates that as a matter of law, the Union's motion [for summary judgment] be denied." Scoggins completely failed to argue to the District Court that the union could not reactivate the grievance. By emphasizing only half of Clayton's second factor and ignoring the other half, Scoggins failed to give the District Court a chance to determine whether there was a genuine issue of material fact for trial; i.e., whether the union could have reactivated the grievance. Scoggins may not make this argument for the first time on appeal.
18
In this circuit, when a party moves for summary judgment in a Section 301 action citing failure to exhaust internal union remedies, the moving party must first establish the availability of adequate internal union remedies; the burden then shifts to the party opposing the motion to respond by affidavits or otherwise and set forth specific facts showing that exhaustion of remedies would have been futile. See Keppard v. International Harvester Co., 581 F.2d 764 (9th Cir.1978). Scoggins failed to present any facts or arguments to the District Court to indicate that the union could not reactivate the grievance. Since Clayton requires only that the union be able to award the complete relief sought or reactivate the grievance, the District Court did not abuse its discretion in requiring exhaustion where Scoggins failed to suggest the union could not reactivate the grievance. See Hayes v. Brotherhood of Railway and Airline Clerks/Allied Services Division, 727 F.2d 1383, 1386 (5th Cir.), reh'g denied, 734 F.2d 219 (5th Cir.1984).
CONCLUSION
19
The District Court did not err in dismissing Scoggins' suit against Boeing and the union. The District Court properly dismissed Scoggins' action against Boeing because the statute of limitations had run. The court also properly dismissed the action against the union because Scoggins had failed to exhaust internal union appeals procedures.
20
AFFIRMED.
*
Honorable William G. East, Senior United States District Judge for the District of Oregon, sitting by designation
1
Scoggins argues that the District Court could not grant summary judgment for Boeing since Boeing never moved for it. However, where one party moves for summary judgment, the trial court may sua sponte grant summary judgment to the non-moving party. Cool Fuel, Inc. v. Connett, 685 F.2d 309, 311 (9th Cir.1982). Of course, "the moving party against whom summary judgment was rendered [must have] had a full and fair opportunity to ventilate the issues involved in the motion." Id. at 312. In this case, the statute of limitations question was thoroughly discussed upon Scoggins' motion
2
We recognize, as we did in Barina, 726 F.2d at 563 n. 5, that other circuits have reached contrary conclusions and applied DelCostello retroactively. Edwards v. Teamsters Local Union No. 36, McNaughton, and Barina, however, establish the law of this circuit and bind us. We also happen to agree
3
Mitchell applies only to suits against employers; it does not apply to suits against unions. Barina, 726 F.2d at 562; Edwards, 719 F.2d at 1039; McNaughton v. Dillingham Corp., 707 F.2d 1042, 1047-48 (9th Cir.1983), reh'g denied, 722 F.2d 1459 (9th Cir.), petition for cert. filed, 52 U.S.L.W. 3829 (U.S. May 15, 1984) (No. 83-1739). Consequently, the statute of limitations applicable under Mitchell governs only Scoggins' action against Boeing; it does not govern his action against the union
Scoggins also argues that Mitchell applies only where a final arbitration decision was rendered; Scoggins' grievance was withdrawn prior to arbitration and, consequently, Scoggins asserts Mitchell should not be applied even to his action against Boeing. This court, however, has previously rejected this argument. McNaughton, 707 [email protected]. Mitchell applies whether a grievance is withdrawn or goes to arbitration. Id.
4
In Chevron Oil, the Supreme Court listed three factors to be considered by courts when reviewing the issue of retroactivity: (1) whether the decision established a new principle of law; (2) whether retroactive application will retard or further the purposes of the rule in question; and (3) whether applying the new decision will produce substantial inequitable results. Chevron Oil, 404 U.S. at 106-07, 92 S.Ct. at 355
5
In Price v. Southern Pacific Transportation Co., 586 F.2d 750, 753 (9th Cir.1978), this court held that the statute of limitations for a suit against a union in California was three years
6
Scoggins also argues that the first factor--whether union officials are hostile to the employee--supports his position that exhaustion should not be required. Scoggins asserts that hostility should be inferred from a statement made by the union business representative who handled Scoggins' grievance; the representative told Scoggins that further pursuit of the grievance would be futile. Scoggins argues that this feeling of futility indicates hostility on the part of the entire union. However, "[f]or there to be an adequate demonstration of hostility, it must appear that persons involved in the intraunion appeals procedure are hostile toward the union member...." Hayes v. Brotherhood of Ry. & Airline Clerks/Allied Serv. Div., 734 F.2d 219, 220 (5th Cir.1984). See also Varra v. Dillon Companies, Inc., 615 F.2d 1315, 1317 (10th Cir.1980). Scoggins failed to present any evidence to the District Court, and fails to present any evidence now, of any indication of hostility on the part of anyone in the union who would have acted on Scoggins' appeal
7
On appeal, Scoggins argues that these documents should not have been considered by the District Court. He objects that they are improperly authenticated and contain hearsay statements. Scoggins, however, failed to object to the evidence in District Court. Consequently, Scoggins waived any objections to the evidence and the District Court properly considered it. United States v. Dibble, 429 F.2d 598, 603 (9th Cir.1970) (Wright, J., concurring); Davis v. Sears, Roebuck and Co., 708 F.2d 862, 864 (1st Cir.1983)
|
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 1 of 28
EXHIBIT 2
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 2 of 28
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
WACO DIVISION
WSOU INVESTMENTS LLC D/B/A §
BRAZOS LICENSING AND § C.A. NO. 6:20-cv-00487-ADA
DEVELOPMENT, § C.A. NO. 6:20-cv-00488-ADA
§ C.A. NO. 6:20-cv-00489-ADA
Plaintiff, § C.A. NO. 6:20-cv-00490-ADA
§ C.A. NO. 6:20-cv-00491-ADA
v. § C.A. NO. 6:20-cv-00492-ADA
§ C.A. NO. 6:20-cv-00493-ADA
ZTE CORPORATION, ZTE (USA) INC. § C.A. NO. 6:20-cv-00494-ADA
AND ZTE (TX), INC., § C.A. NO. 6:20-cv-00495-ADA
§ C.A. NO. 6:20-cv-00496-ADA
Defendants. § C.A. NO. 6:20-cv-00497-ADA
§
DEFENDANTS’ PROPOSED CLAIM CONSTRUCTIONS
Pursuant to the Court’s First Amended Scheduling Order (Dkt. No. 45), 1 Defendants ZTE
Corporation, ZTE (USA) Inc., and ZTE (TX), Inc. (collectively “ZTE”) hereby serves its proposed
claim constructions to WSOU Investments LLC D/B/A Brazos Licensing and Development
(“WSOU”) as to the Asserted Claims 2 of U.S. Patent No. 8,451,839 (the “’839 Patent”), U.S.
Patent No. 7,489,929 (the “’929 Patent”), U.S. Patent No. 7,487,240 (the “’240 Patent”), U.S.
Patent No. 8,179,960 (the “’960 Patent”), U.S. Patent No. 8,730,905 (the “’905 Patent”), U.S.
Patent No. 8,147,071 (the “’071 Patent”), U.S. Patent No. 9,294,060 (the “’060 Patent”), U.S.
Patent No. 9,185,036 (the “’036 Patent”), U.S. Patent No. 9,258,232 (the “’232 Patent”), U.S.
Patent No. 7,742,534 (the “’534 Patent”), and U.S. Patent No. 7,203,505 (the “’505 Patent”)
(collectively, the “Asserted Patents”).
1
There are 11 pending cases. Citations throughout refer to new WDTX Case Nos. -00487 through -00497, and
specific citations reference to the docket for WDTX Case No. -00487.
2
The “Asserted Claims” as identified by WSOU in its November 3, 2020 Disclosures of Preliminary Infringement
Contentions.
1
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 3 of 28
Defendants propose the following claim constructions for the Asserted Claims of the
Asserted Patents. Defendants also incorporate by reference all claim terms / limitations identified
in their invalidity contentions as being indefinite under indefinite under 35 U.S.C. § 112 ¶ 2 (see
Invalidity Contentions, Section IX.B as served on January 6, 2021), and as lacking enablement
and written support under indefinite under 35 U.S.C. § 112 ¶ 1 (see Invalidity Contentions, Section
IX.A as served on January 6, 2021).
Defendants expressly reserve the right to supplement, amend, or otherwise modify their
list of terms in any way permitted by the Federal Rules of Civil Procedure and this Court’s Local
Rules and Patent Rules, or in response to Plaintiff WSOU’s identification of terms and elements.
Defendants provide this disclosure based upon information reasonably known and available to
Defendants at this time. To the extent that WSOU shows good cause and is permitted to amend
or supplement its infringement contentions in the future, or otherwise changes or further clarifies
the positions it has taken in this case (including to add or to change in any way the claim(s)
currently asserted, or to modify its apparent interpretation of the scope of the claim(s)), Defendants
reserve the right to respond.
2
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 4 of 28
Means-Plus-Function Terms
Asserted Claim Claim Term Preliminary Proposed Construction
’505 Claim 14 “a data message receiver to receive Governed by 35 U.S.C. § 112(f)
data from a first terminal device”
Function: receiving data from a first terminal device
Indefinite under 35 U.S.C. § 112(b); specification fails to describe it
Structure: none disclosed
’505 Claim 14 “a formatter to format the received Governed by 35 U.S.C. § 112(f)
data into at least one SMS (Short
Message Service) message” Function: formatting the received data into at least one SMS (Short
Message Service) message
Indefinite under 35 U.S.C. § 112(b); specification fails to describe it
Structure: none disclosed
’505 Claim 14 “a transmitter to transmit the at Governed by 35 U.S.C. § 112(f)
least one SMS message to the
second, remotely located, terminal Function: transmitting the at least one SMS message to the second,
device through a cellular network remotely located, terminal device through a cellular network connection
connection”
Indefinite under 35 U.S.C. § 112(b); specification fails to describe it
Structure: none disclosed
’534 Claim 1 “transmitting user data between a Governed by 35 U.S.C. § 112(f)
transmitter and a receiver in a functions underlined in claim language
multi-carrier radio communication
system having a plurality of Indefinite under 35 U.S.C. § 112(b)
orthogonal frequency sub- Structure for transmitter: a base station of an OFDMA system set forth in
carriers,” ’534 specification, 5:33-35.
Structure for receiver is a terminal of an OFDMA system set forth in ’534
specification, 5:53-55.
3
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 5 of 28
’534 Claim 1 “at the receiver, determining Governed by 35 U.S.C. § 112(f)
quality levels for said sub- functions underlined in claim language
carriers;”
Indefinite under 35 U.S.C. § 112(b)
Structure for receiver is a terminal of an OFDMA system set forth in ’534
specification, 5:53-55.
’534 Claim 1 “sending said quality levels from Governed by 35 U.S.C. § 112(f)
said receiver to said transmitter;” functions underlined in claim language
Indefinite under 35 U.S.C. § 112(b)
Structure for transmitter: a base station of an OFDMA system set forth in
’534 specification, 5:33-35.
Structure for receiver is a terminal of an OFDMA system set forth in ’534
specification, 5:53-55.
’534 Claim 1 “selecting, based on said quality Governed by 35 U.S.C. § 112(f)
levels, a set of sub-carriers on functions underlined in claim language
which said user data is to be
transmitted between said Indefinite under 35 U.S.C. § 112(b)
transmitter and said receiver,” Structure for transmitter: a base station of an OFDMA system set forth in
’534 specification, 5:33-35.
Structure for receiver is a terminal of an OFDMA system set forth in ’534
specification, 5:53-55.
’534 Claim 1 “from said transmitter, before Governed by 35 U.S.C. § 112(f)
transmission of said user data, functions underlined in claim language
sending an indication related to a
threshold, said indication and said Indefinite under 35 U.S.C. § 112(b)
quality levels enabling said Structure for transmitter: a base station of an OFDMA system set forth in
receiver to deduce said set of sub- ’534 specification, 5:33-35.
carriers on which said user data is
to be transmitted;”
4
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 6 of 28
’534 Claim 1 “at said receiver, selecting said set Governed by 35 U.S.C. § 112(f)
of sub-carriers on which said user functions underlined in claim language
data is to be transmitted as a
function of said indication and of Indefinite under 35 U.S.C. § 112(b)
said quality levels.” Structure for receiver is a terminal of an OFDMA system set forth in ’534
specification, 5:53-55.
’534 Claim 6 “An apparatus to facilitate Governed by 35 U.S.C. § 112(f)
communication of user data in a
multi-carrier radio communication Indefinite under 35 U.S.C. § 112(b);
system having a plurality of Structure: none disclosed
orthogonal frequency sub-carriers,
the apparatus comprising”
’534 Claim 6 “means for selecting a set of sub- Governed by 35 U.S.C. § 112(f)
carriers from the plurality of sub-
carriers on which user data is to be Function: selecting a set of sub-carriers from the plurality of sub-carriers
communicated from a transmitter on which user data is to be communicated from a transmitter to a receiver
to a receiver, said selecting based
at least in part on at least one of Indefinite under 35 U.S.C. § 112(b)
sub-carrier quality levels and a Structure: none disclosed
threshold indication associated
with sub-carriers, said quality
levels communicated from the
receiver to the transmitter and said
threshold indication
communicated from the
transmitter to the receiver;”
’534 Claim 6 “means for selecting said set of Governed by 35 U.S.C. § 112(f)
sub-carriers on which said user
data is to be received from said Function: selecting the set of sub-carriers on which the user data is to be
transmitter” received from the transmitter
5
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 7 of 28
Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’534 Claim 6 “means for determining quality Governed by 35 U.S.C. § 112(f)
levels for sub-carriers”
Function: determining quality levels for sub-carriers
Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’534 Claim 6 “means for sending said quality Governed by 35 U.S.C. § 112(f)
levels to said transmitter”
Function: sending the quality levels to the transmitter
Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’534 Claim 6 “means for receiving and storing Governed by 35 U.S.C. § 112(f)
said threshold indication from said
transmitter, said threshold Function: receiving and storing the threshold indication from the
indication and said quality levels transmitter, the threshold indication and the quality levels enabling the
enabling said receiver to deduce receiver to deduce the set of sub-carriers on which the user data is to be
said set of sub-carriers on which received
said user data is to be received”
Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’534 Claim 11 “means for reading the threshold Governed by 35 U.S.C. § 112(f)
indication on at least one sub-
carrier of the selected set of sub- Function: reading the threshold indication on at least one sub-carrier of the
carriers after detecting a specific selected set of sub-carriers after detecting a specific identifier associated
identifier associated with the with the receiver on the at least one sub-carrier
receiver on said at least one sub-
carrier” Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’534 Claim 13 “means for selecting said set of Governed by 35 U.S.C. § 112(f)
sub-carriers on which said user
6
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 8 of 28
data is to be transmitted to said Function: selecting the set of sub-carriers on which the user data is to be
receiver” transmitted to the receiver
Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’534 Claim 13 “means for receiving said quality Governed by 35 U.S.C. § 112(f)
levels from said receiver”
Function: receiving the quality levels from the receiver
Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’534 Claim 13 “means for sending said threshold Governed by 35 U.S.C. § 112(f)
indication to said receiver, said
threshold indication and said Function: sending the threshold indication to the receiver,
quality levels enabling said
receiver to deduce the set of sub- Indefinite under 35 U.S.C. § 112(b)
carriers on which said user data is Structure: none disclosed
to be transmitted”
’232 Claim 14 “instructions for receiving, by a Governed by 35 U.S.C. § 112(f)
controller of the traffic flow
control system, a backpressure Function: receiving, by a controller of the traffic flow control system, a
signal, wherein the back pressure backpressure signal, wherein the back pressure signal indicates a period of
signal indicates a period of congestion
congestion”
Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’232 Claim 14 “instructions for determining, by Governed by 35 U.S.C. § 112(f)
the controller of the traffic flow
control system, at least one Function: determining, by the controller of the traffic flow control system,
weighting factor to be applied to at least one weighting factor to be applied to the flow of data packets based
the flow of data packets based on on the received backpressure signal
the received backpressure signal”
7
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 9 of 28
Indefinite under 35 U.S.C. § 112(b);
Structure: none disclosed
’232 Claim 14 “instructions for adjusting an Governed by 35 U.S.C. § 112(f)
amount of rate limiting applied to
at least a portion of the flow of Function: adjusting an amount of rate limiting applied to at least a portion
data packets based on both the of the flow of data packets based on both the determined at least one
determined at least one weighting weighting factor and a content of the backpressure
factor and a content of the
backpressure” Indefinite under 35 U.S.C. § 112(b);
Structure: none disclosed
’232 Claim 14 “instructions for execution by a Governed by 35 U.S.C. § 112(f)
traffic flow control system for
performing flow control on a flow Function: execution by a traffic flow control system for performing flow
of data packets for transmission control on a flow of data packets for transmission over a link
over a link”
Indefinite under 35 U.S.C. § 112(b); Structure: none disclosed
’232 Claim 1 “A method performed by a traffic Governed by 35 U.S.C. § 112(f)
flow control system for
performing flow control on a flow Function: performing flow control on a flow of data packets for
of data packets for transmission transmission over a link
over a link, the method
comprising” Structure: a plurality of ingress buffers, plurality of rate limiters, a
multiplexer, and a controller, as set forth in specification at 1:56-63
’036 Claims 1, “method for controlling data flow Governed by 35 U.S.C. § 112(f)
12 in a network”
Function: controlling data flow in a network
Structure: a device as set forth in the specification at 1:56-63.
’036 Claims 23, “apparatus configured for Governed by 35 U.S.C. § 112(f)
24 controlling data flow in a network”
Function: controlling data flow in a network
8
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 10 of 28
Structure: a computing device comprising at least one central processing
unit (CPU) connected to support circuits and memory as set forth in the
specification at 6:6-12.
’036 Claims 1, “congestion condition to enable Governed by 35 U.S.C. § 112(f)
12, 23, 24 thereby the control of at least one
data flow in a manner tending to Function: enable thereby the control of at least one data flow in a manner
reduce the congestion condition” tending to reduce the congestion condition
Indefinite under 35 U.S.C. § 112(b)
Lacks Written description under 35 U.S.C. § 112(a);
Structure: none disclosed
’240 Claims 1, 6 “connectivity verification server to Governed by 35 U.S.C. § 112(f)
perform unattended connectivity
verification jobs” Function: perform unattended connectivity verification jobs
Indefinite under 35 U.S.C. § 112(b)
Alternative structure: Managed Object Server as set forth in the
specification at 7:49-58.
’839 Claim 1 “method, in an access device of Governed by 35 U.S.C. § 112(f)
the communication network, for
managing route information” Function: managing route information
Structure: device as set forth in the specification at 3:22-27.
’839 Claim 6 “route management apparatus, in Governed by 35 U.S.C. § 112(f)
an access device of the
Function: managing route information
9
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 11 of 28
communication network, for
managing route information” Structure: apparatus comprising a receiving means, a first obtaining means
and a route maintenance means as set forth in the specification at 3:28-38.
’839 Claim 6 “a receiver configured to receive Governed by 35 U.S.C. § 112(f)
an access response message from a
server” Function: receive an access response message from a server
Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’839 Claim 6 “a first obtainer configured to Governed by 35 U.S.C. § 112(f)
obtain route-related information
and a predefined using time from Function: obtain route-related information and a predefined using time
said access response message, said from said access response message, said predefined using time indicating
predefined using time indicating the using time of said route
the using time of said route”
Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’839 Claim 6 “a route maintainer configured to Governed by 35 U.S.C. § 112(f)
update a route table based on said
route-related information and said Function: update a route table based on said route-related information and
predefined using time” said predefined using time
Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’839 Claim 8 “a first judger configured to judge Governed by 35 U.S.C. § 112(f)
whether the route table item
corresponding to said route-related Function: judge whether the route table item corresponding to said route-
information exists in said route related information exists in said route table
table”
Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’839 Claim 8 “a second judger configured to Governed by 35 U.S.C. § 112(f)
judge whether a remaining time of
10
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 12 of 28
said route table item is shorter than Function: judge whether a remaining time of said route table item is
said predefined using time if the shorter than said predefined using time if the first judger judges that the
first judger judges that the route route table item corresponding to said route-related information exists in
table item corresponding to said said route table
route-related information exists in
said route table” Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’839 Claim 8 “an updater configured to update Governed by 35 U.S.C. § 112(f)
the remaining time of said route
table item to said predefined using Function: update the remaining time of said route table item to said
time if the first judger judges that predefined using time if the first judger judges that the route table item
the route table item corresponding corresponding to said route-related information exists in said route table
to said route-related information and the second judger judges that the remaining time of said route table
exists in said route table and the item is shorter than said predefined using time
second judger judges that the
remaining time of said route table Indefinite under 35 U.S.C. § 112(b)
item is shorter than said predefined Structure: none disclosed
using time”
’839 Claim 8 “a creator configured to create the Governed by 35 U.S.C. § 112(f)
route table item corresponding to
said route-related information if Function: create the route table item corresponding to said route-related
the first judger judges that no route information if the first judger judges that no route table item corresponding
table item corresponding to said to said route-related information exists in said route table
route-related information exists in
said route table” Indefinite under 35 U.S.C. § 112(b)
Structure: none disclosed
’839 Claim 9 “a second obtainer configured to Governed by 35 U.S.C. § 112(f)
obtain correlated information of
said route table item and a virtual Function: obtain correlated information of said route table item and a
local area network” virtual local area network
Indefinite under 35 U.S.C. § 112(b)
11
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 13 of 28
Structure: none disclosed
’905 Claim 6 “receiving, from a first wireless Governed by 35 U.S.C. § 112(f)
communication apparatus in a functions underlined in claim language
second communication apparatus,
a reservation request message Indefinite under 35 U.S.C. § 112(b)
instructing the second wireless Structure: none disclosed
communication apparatus to
reserve at least one additional
frequency band for the first
wireless communication apparatus
during a transmission period of the
first wireless communication
apparatus, the at least one
additional frequency band being
requested for use by the first
wireless communication apparatus
while transmitting data on a first
frequency band, wherein the
transmission period is a
transmission opportunity for a
wireless local area network;”
’905 Claim 6 “monitoring for availability of the Governed by 35 U.S.C. § 112(f)
at least one additional frequency functions underlined in claim language
band during the transmission
period of the first wireless Indefinite under 35 U.S.C. § 112(b)
communication apparatus” Structure: none disclosed
’905 Claim 6 “in response to detection of Governed by 35 U.S.C. § 112(f)
availability of the at least one functions underlined in claim language
additional frequency band during
the transmission period of the first Indefinite under 35 U.S.C. § 112(b)
12
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 14 of 28
wireless communication apparatus, Structure: none disclosed
causing transmission of a
reservation response message to
the first wireless communication
apparatus, wherein the reservation
response message indicates that
said at least one additional
frequency band is available for the
first wireless communication
apparatus to use in transmission
during the transmission period of
the first wireless communication
apparatus to enable the first
wireless communication apparatus
to increase the bandwidth of
transmission to comprise the first
frequency band and the at least
one additional frequency band so
that the first wireless
communication apparatus
transmits data during the
transmission period on a
transmission band having
increased bandwidth greater than
that of the first frequency band.”
’071 Claim 1 “a processor for providing image Governed by 35 U.S.C. § 112(f)
data signalling to a projector, the
image data signalling representing Function: providing image data signalling to a projector, the image data
an image to be projected by the signalling representing an image to be projected by the projector
projector”
Structure: an integrated circuit chip customized for a particular use as set
forth in the specification at 4:37-39.
13
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 15 of 28
’071 Claim 14 “computer program code Governed by 35 U.S.C. § 112(f)
configured to, when executed by
one or more processors, cause an Function: executing computer program code configured to cause an
apparatus to perform at least: apparatus to perform (1) receiving movement signalling associated with
receiving movement signalling movement of a projector; and (2) providing image data signalling to the
associated with movement of a projector based on received movement signalling, wherein the movement
projector; and providing image signalling provides an indication of one or more movement criterion of the
data signalling to the projector projector, the movement criterion representing one or more of
based on received movement displacement and movement speed of the projector, and wherein the
signalling, wherein the movement processor is configured to discriminate a movement criterion and to
signalling provides an indication provide associated image data signalling to project associated image data
of one or more movement criterion
of the projector, the movement Indefinite under 35 U.S.C. § 112(b)
criterion representing one or more Structure: None disclosed
of displacement and movement
speed of the projector, and
wherein the processor is
configured to discriminate a
movement criterion and to provide
associated image data signalling to
project associated image data.”
Other Terms
Asserted Claim Claim Term Preliminary Proposed Construction
’505 Claim 1 “data synchronization” Bringing a data file of a source device and a data file of a target device to
the same value.
’505 Claims 1, “remotely located” A device that is unable to connect via local area network to a host device.
14, 23
’505 Claims 1, “[first/second/intermediate] A device with limited computing power.
14, 23 terminal device”
14
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 16 of 28
’505 Claims 1, “formatting” Indefinite under 35 U.S.C. § 112(b)
23 Lack of Written description under 35 U.S.C. § 112(a)
’505 Claim 14 “formatter to format” Indefinite under 35 U.S.C. § 112(b)
Lack of Written description under 35 U.S.C. § 112(a)
’505 Claim 14 “transmitter to transmit” Indefinite under 35 U.S.C. § 112(b)
Lack of Written description under 35 U.S.C. § 112(a)
’505 Claim 14 “data message receiver” Indefinite under 35 U.S.C. § 112(b)
Lack of Written description under 35 U.S.C. § 112(a)
’505 Claims 1, “SMS (Short Message Service)” Cellular based messages of limited size consisting of text and numbers.
14, 23
’505 Claims 1, “remotely located terminal device” A device that is unable to connect via local area network to a host device.
14, 23
’505 Claims 3, “mobile terminal device” A device that is unable to connect via local area network to a host device.
14, 23
’505 Claims 1, “cellular network connection” A device that is unable to connect via local area network to a host device.
14, 23
’505 Claims 1, “short-range connection” A connection between terminal devices using infrared or Bluetooth
23 connection
’505 Claims 11, “short range communication link” Communication link between terminal devices using infrared or Bluetooth
14, 23 connection
’534 Claims 1, 2, “carrier” A continuous frequency analog signal to be modulated and transferred over
4, 5, 6, 7, 8, 9, a communication channel.
10, 11, 13, 16,
17, and 18
’534 Claims 1, 6, “orthogonal frequency sub- A multi-carrier network system in which the frequency separation between
16 carriers” the sub-carriers is chosen so that the sub-carriers are orthogonal to one
another (i.e. the data transmitted on one sub-carrier is not causing
interference on the data sent on the other sub-carriers).
’534 Claims 4, 7 “maximal number of sub-carriers” Indefinite under 35 U.S.C. § 112(b)
’534 Claims 1, 2, “as a function of said indication Arranging the sub-carriers in quality level decreasing order and to select
16 and of said quality levels” the sub-carriers starting with the sub-carrier having the highest quality
15
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 17 of 28
level and continuing to select the sub-carriers with decreasing quality level
until the indication related to a threshold is reached.
’534 Claims 1, 6, “transmitter” A base station of an OFDMA system.
13, 15, 16, and
17
’534 Claims 1, 6, “receiver” A terminal of an OFDMA system.
13, 15, 16, and
17
’534 Claim 5 “calculated at said receiver” Determining at a terminal a quality level for the sub-carriers of a multi
carrier system.
’534 Claim 6 “radio link” A link without connecting wires
’534 Claim 8 “signal-to-interference ratio” The ratio of the magnitude of a given parameter of the desired signal, to
that of the same parameter for any interference present.
’534 Claim 8 “bit error rate” Proportion of erroneously transmitted or received bits.
’534 Claims 1, 2, “quality level” One of a signal-to-interference ratio, a bit error rate, or a modulation
3, 5, 6, 7, 8, 9, scheme.
13, 16, and 17
’929 Claims 1, 3, “handoff” / “determining if a Connection to mobile device is handed-over from base station to another
8, 10, and 15 handoff is desired” base station without breaking the connection.
’929 Claims 1, 6, “serving base station” A base station currently serving a mobile station.
and 11
’929 Claims 1, 2, “target base station” A base station to which a handoff of a mobile station to be performed.
3, 4, 6, 9, 11, and
13
’929 Claims 1, 2, “link” / “establishing a new link” / A communication link between a base station and a mobile station, the
3, 4, 6, 9, 11, and “existing link” / “initiating a new communication link including one or more communication channels.
13 link” / “releasing the existing link”
16
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 18 of 28
’929 Claim 1 “achieving uplink Matching a mobile station's clock and data timing to the same clock and
synchronization” data timing of a base station.
’929 Claim 1 “processed the transmitted active Updating the active set to replace an existing communication link with a
set update message” new communication link.
’929 Claim 8 “measurement reports” Values reported from a mobile station that contain information about
channel quality. Measurement reports assist the network in making
handover and power control decisions.
’929 Claim 11 “buffering bearer traffic” During a handoff process, all data from the mobile station is buffered at the
mobile station or all data at the network side is buffered at the network side
until the handoff process is complete.
’929 Claim 14 “characteristic” Indefinite under 35 U.S.C. § 112(b)
’929 Claim 14 “replacement hysteresis” Indefinite under 35 U.S.C. § 112(b)
’232 Claims 1, “flow control” Regulate movement of a series of data packets
14
’232 Claims 1, “flow of data packets” Movement of a series of data packets
14
’232 Claims 1, “transmission over a link” Indefinite under § 112(b)
14
’232 Claims 1, “backpressure signal” Lacks written description under 35 U.S.C. § 112(a)
14
’232 Claims 1, “period of congestion” Lack of written description under 35 U.S.C. § 112(a)
14
’232 Claims 1, “weighting factor” An assignment of an amount of rate limiting between halting traffic and no
14 rate limiting
’232 Claims 1, “indicates” Indefinite under 35 U.S.C. § 112(b).
14
’232 Claims 1, “the traffic flow control system” Indefinite under 35 U.S.C. § 112(b).
14
17
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 19 of 28
’232 Claim 14 “a non-transitory machine- Lack of written description under 35 U.S.C. § 112(a)
readable storage medium”
’232 Claims 1, “rate limiting” Lack of written description under 35 U.S.C. § 112(a).
14
’232 Claims 1, “content of the backpressure Lack of written description under 35 U.S.C. § 112(a)
14 signal”
’036 Claims 1, “data flow” / “to enable thereby Indefinite under 35 U.S.C. § 112(b)
6-10, 12, 17-21, the control of at least one data
23, 24 flow” / “data flow is controlled” /
“a data flow” / “the data flow”
’036 Claims 1, 3, “network” / “network node in the Indefinite under 35 U.S.C. § 112(b).
12, 14, 23, 24 network” / “network node” / “one
or more network nodes upstream
of the congestion condition”
’036 Claims 1, “congestion condition” / Indefinite under 35 U.S.C. § 112(b).
12, 23, 24 “indication that a congestion
condition exists”
’036 Claims 1, “in a manner tending to reduce the Indefinite under 35 U.S.C. § 112(b)
12, 23, 24 congestion condition” / “the
congestion may be reduced”
’036 Claims 1, “queue” / “queue maximum Indefinite under 35 U.S.C. § 112(b), and/or lacks written description under
12, 23, 24 occupancy is exceeded” / “queue 112(a).
maximum occupancy”
’036 Claims 4, “queue data drop rate” Indefinite under 35 U.S.C. § 112(b), and/or lacks written description under
15 112(a).
’036 Claims 3, “output link capability” Indefinite under 35 U.S.C. § 112(b).
14
18
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 20 of 28
’036 Claims 1, 5, “data drop” / “data dropped” / “an “abandon packets” / “abandoned packets” / “an amount of packets
6-9, 12, 16, 18- amount of data dropped” / “a abandoned” / “a number of packets abandoned over time” / “abandoning”
20, 23, 24 number of data drops over time” /
“dropping”
’036 Claims 7, 8, “those packets associated with the Indefinite under 35 U.S.C. § 112(b)
9, 18, 19, 20 destination address” / “those
packets associated with only the
destination address” / “those
packets associated with the source
and destination addresses”
’036 Claims 9, “the source address end-node Indefinite under 35 U.S.C. § 112(b)
20 being unknown”
’036 Claims 1, “end-node associated with the Written description/enablement under 35 U.S.C. § 112(a)
12, 23, 24 congestion condition”
’036 Claims 11, “an indication of an inability to Indefinite under 35 U.S.C. § 112(b) and /or Written
22 drop packets” description/enablement under 35 U.S.C. § 112(a)
’036 Claims 12, “the MAC address pair” / “the Indefinite under 35 U.S.C. § 112(b)
17, 24 MAC address”
’036 Claims 10, “in accordance with a Service Indefinite under 35 U.S.C. § 112(b)
11, 21, 22 Level Agreement” / “a Service
Level Agreement”
’240 Claims 1, 6, “unattended connectivity Indefinite under 35 U.S.C. § 112(b)
13 verification jobs”
19
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 21 of 28
’240 Claims 1, 6, “verifying connectivity in the Indefinite under 35 U.S.C. § 112(b)
13 network relating to at least Layer-2
and Layer-3 objects”
’240 Claims 1, 6, “a given containment hierarchy” Indefinite under 35 U.S.C. § 112(b)
13
’240 Claims 1, 6 “the performing generates” Indefinite under 35 U.S.C. § 112(b)
’240 Claims 1, 6, “the comparison shows that at Lack of written description under 35 U.S.C. § 112(a)
13 least one of the connectivity
verification results has reached the
specified connectivity verification
threshold”
’240 Claims 1, 6, “the containment hierarchy Lack of written description/enablement under 35 U.S.C. § 112(a)
13 affected by the connectivity
verification result”
’240 Claim 4 “alarm information” Lack of written description/enablement under 35 U.S.C. § 112(a)
’240 Claim 7 “a pair of source and destination One pre-specified source IP managed entity object and one pre-specified
IP objects” destination IP managed entity object
’240 Claims 1, 4, “display” / “displaying” Visually presenting data
6, 13, 15
’240 Claim 16 “the displayed object is one of an The displayed object is of both an OSI Layer 2 object and an OSI Layer 3
OSI Layer 2 and an OSI Layer 3 object
object”
’240 Claim 16 “OSI Layer 3 object” Network layer device including routers and switches
’240 Claim 16 “OSI Layer 2” Data link layer
20
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 22 of 28
’240 Claims 1, 6, “connectivity verification Condition resulting from connectivity verification jobs assessing adherence
13 threshold” to corresponding service level agreements
’240 Claims 1, 6, “Layer-2 objects” Data link layer Media Access Control device
13
’240 Claims 1, 6, “Layer-3 objects” Network layer router
13
’240 Claims 1, 6, “define a connectivity verification Specifying connectivity verification parameters including the type and the
13 job” / “defining a connectivity number of connectivity verification tests to be performed
verification job”
’240 Claim 10 “specifying a threshold for at least Lack of written description / enablement under 35 U.S.C. § 112(a)
one round of trip delay, jitter, and
packet loss”
’240 Claims 11, “ping commands” Directive to send a packet to the desired address and await a response to
18 determine whether an IP address is connected
’240 Claims 1, 6, “the connectivity verification Indefinite under 35 U.S.C. § 112(b)
13 result[s] associated with the
alarm”
’240 Claim 4 “selected connectivity verification Indefinite under 35 U.S.C. § 112(b);
results”
Lack of written description / enablement under 35 U.S.C. § 112(a)
’240 Claims 1, 6, “user-input specification” Lack of written description / enablement under 35 U.S.C. § 112(a)
10, 13
’240 Claim 5 “connectivity profile” / “a Indefinite under 35 U.S.C. § 112(b); enablement under 35 U.S.C. § 112(a).
deviation from the connectivity
profile” / “the results of each
connectivity verification job are
compared against a connectivity
profile”
21
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 23 of 28
’839 Claims 1, 6, “the communication network” Indefinite under 35 U.S.C. § 112(b)
11
’839 Claims 2, 4, “said access device” Indefinite under 35 U.S.C. § 112(b)
7, 9, 11, 12
’839 Claims 1, 3, “route” / “route-related Indefinite under 35 U.S.C. § 112(b).
6, 8, 11 information”
’839 Claims 1, 6, “using time” Claim 6: Indefinite for lack of antecedent basis under 35 U.S.C. § 112(b).
11
“lease time”
’839 Claims 4, 9 “said virtual local area network Indefinite under 35 U.S.C. § 112(b).
configuration is employed between
said access device and each
marginal routers connected with
said access device”
’839 Claims 4, 9 “said virtual local area network Indefinite under 35 U.S.C. § 112(b).
configuration”
’839 Claims 5, “said access response message Indefinite under 35 U.S.C. § 112(b).
10 refers to a dynamic host
configuration protocol message” /
“said access response message
refers to a dynamic host
configuration protocol”
’839 Claim 10 “said dynamic host configuration Indefinite under 35 U.S.C. § 112(b).
protocol response message”
’839 Claim 8 “a first judge” / “a second judger” Indefinite under 35 U.S.C. § 112(b).
22
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 24 of 28
’839 Claim 12 “a digital subscriber line-access Lack of written description / enablement under 35 U.S.C. § 112(a)
multiplexer”
’839 Claims 4, 9 “marginal router” / “marginal Indefinite under 35 U.S.C. § 112(b).
routers”
’839 Claims 3, 8, “a route table item” / “said route Indefinite under 35 U.S.C. § 112(b)
9 table item”
’839 Claim 4 “an access response message” Indefinite under 35 U.S.C. § 112(b)
’839 Claims 5, “the least time” Indefinite under 35 U.S.C. § 112(b).
10
’839 Claims 1, 6 “said predefined using time Indefinite under 35 U.S.C. § 112(b).
indicates[ing] a [the] using time of
said route”
’060 Claims 1 “frequency domain component A group of a plurality of energy levels of the audio signal, wherein each of
and 10 feature of the feature vector” the plurality energy levels corresponds to the energy of an overlapping
band of the audio signal; a value representing a centroid of the frequency
domain spectrum of the audio signal; and a value representing the degree
of flatness of the frequency domain spectrum.
’060 Claims 1 “extracting a feature vector” Indefinite under 35 U.S.C. § 112(b)
and 10
’060 Claims 1 “time domain component feature A gradient index based on the sum of the gradient at points in the audio
and 10 of the feature vector” signal which result in a change in direction of the waveform of the audio
signal; a ratio of the energy of a frame of the audio signal to the energy of
a previous frame of the audio signal; and a voice activity detector
indicating whether a frame of the audio signal is classified as active or
inactive.
’060 Claims 1 “the level value is attenuated” Indefinite under 35 U.S.C. § 112(b)
and 10
23
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 25 of 28
’060 Claims 1 “approaches an estimate” Indefinite under 35 U.S.C. § 112(b)
and 10
’060 Claims 1 “spectral shape parameter” A sub band energy level value or a sub band gain factor based on the sub
and 10 band energy level value.
’905 Claims 1, 6, “transmission opportunity” The interval of time when a particular station is permitted to initiate
12, 18, 25, and transmissions onto the wireless medium.
26
’905 Claims 1, 6, “transmission period” The period of the transmission opportunity.
12, 18, 25, and
26
’905 Claims 1, “determined transmission time The interval of the transmission opportunity.
12, 25 interval”
’905 Claims 5, “during a time interval between Indefinite under 35 U.S.C. § 112(b)
15 data transmission intervals during
the transmission period”
’905 Claims 1, “determining to utilize a Indefinite under 35 U.S.C. § 112(b)
12, 25 bandwidth greater than that of the
first frequency band during the
transmission period”
’905 Claims 5, “at least one frequency channel Indefinite under 35 U.S.C. § 112(b)
16 indicator”
’905 Claims 6, “at least one additional frequency At least one frequency band other than the frequency band that is already
18, 26 band” acquired by the first wireless communication apparatus.
’905 Claims 6, “monitoring for availability” Channel sounding on the least one frequency band to detect an available
18, 26 frequency band.
24
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 26 of 28
’905 Claims 7, “triggering a network allocation Triggering the network allocation vector protection for the reserved
19 vector setting” frequency band for a determined period of time after the transmission of
the reservation message.
’905 Claims 8 “clear-to-send message” A signal sent in response to a request-to-send signal, indicating its
and 20 readiness to receive a transmission
’905 Claims 9, “causing the transmission of the Indefinite under 35 U.S.C. § 112(b)
21 reservation message on each
frequency band separately”
’905 Claims 11, “timing and transmission Indefinite under 35 U.S.C. § 112(b)
23 frequency”
’905 Claims 17, “radio medium” Indefinite under 35 U.S.C. § 112(b)
24
’960 Claims 1, 2, “virtual reference” A group of pixels used as reference material for encoding portions of the
3, 9, 10, 15, 16, video signal, but that does not comprise or represent any portion of the
17, 23, and 24 actual video sequence to be displayed.
’960 Claims 1, 9, “an original video signal” A video signal that includes a sequence of video frames and is to be
15, 23 encoded.
’960 Claims 1, 9, “video frames” A sequence of frames.
15, 23
’960 Claims 1, 9, “subsequent video display” Generating an encoded video signal from an original video signal, the
15, 23 encoded video signal for use in subsequent video display of the original
video signal.
’960 Claims 1, 9, “does not represent any portion of Data generated based on a portion of a video signal but not to be displayed
15, 23 any individual frame of the with the video signal.
original video signal”
’960 Claims 1, “incorporating” / “incorporating Forming an encoded dual block by including a block of encoded original
15 said encoded virtual reference video signal and a block of encoded virtual reference data
data” / “incorporating into the
encoded video signal an
25
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 27 of 28
indication” / “incorporating said
encoded portions of said original
video signal”
’960 Claims 3, “minimize differences” Indefinite under 35 U.S.C. § 112(b)
17
’071 Claims 1, 9, “movement signalling” / Indefinite under 35 U.S.C. § 112(b)
13, 14 “receiv[ing] movement signalling
associated with the movement of
the projector” / “corresponding
movement signalling”
’071 Claim 9 “a movement sensor configured to Indefinite under 35 U.S.C. § 112(b)
detect movement of the apparatus
and/or a projector”
’071 Claims 1, “discriminate” / “discriminate a Indefinite under 35 U.S.C. § 112(b)
13, 14 movement criterion” / “the
processor is configured to
discriminate a movement
criterion”
’071 Claims 1, “provide associated image data Indefinite under 35 U.S.C. § 112(b)
13, 14 signalling to project associated
image data”
’071 Claims 1, 9, “the processor” / “wherein the Indefinite under 35 U.S.C. § 112(b)
13, 14 processor is configured”
26
Case 6:20-cv-00497-ADA Document 66-2 Filed 04/09/21 Page 28 of 28
DATED: February 12, 2021 Respectfully submitted,
/s/Lionel M. Lavenue
Lionel M. Lavenue
Virginia Bar No. 49,005
[email protected]
FINNEGAN, HENDERSON, FARABOW,
GARRETT & DUNNER, LLP
1875 Explorer Street, Suite 800
Reston, VA 20190
Phone: (941)248-9228
Fax: (941)248-9228
ATTORNEY FOR DEFENDANTS
CERTIFICATE OF SERVICE
I hereby certify that all counsel of record, who are deemed to have consented to
electronic service, are being served on February 12, 2021 with a copy of this document via
email.
/s/Lionel M. Lavenue
Lionel M. Lavenue
27
|
483 So. 2d 892 (1986)
Ava R. MARTINEZ and Howard Barnes, Appellants,
v.
GENERAL INSURANCE COMPANY, Appellee.
No. 85-1204.
District Court of Appeal of Florida, Third District.
March 4, 1986.
*893 Feuer, Lustig & Schillinger and Lee H. Schillinger, Miami, for appellants.
Joe N. Unger, Kopplow & Flynn, Miami, for appellee.
Before BARKDULL, NESBITT and DANIEL S. PEARSON, JJ.
DANIEL S. PEARSON, Judge.
The appellants' primary argument on this appeal is that the insurer's retention of the portion of the premium pro rated to the effective date of the cancellation of the policy was an election which precluded the insurer from claiming and the trial court from ruling that there was no coverage for an accident that occurred during the period before the cancellation became effective.
On January 30, 1984, Ava Martinez renewed an existing policy of automobile insurance issued by General Insurance Company (General). At the time of filling out and executing the renewal application, Martinez's son, Howard Barnes, who had first secured a driver's license in December 1983, was living in his mother's household. Martinez's application failed to disclose this fact.
Barnes, still residing with his mother and driving one of the vehicles listed in the policy, was involved in an accident on April 25, 1984. In June 1984, shortly after it was first apprised of the accident, General notified Martinez that it was declining coverage for the accident on the ground that the omission of Barnes' name from the renewal application was material within the meaning of Section 627.409(1), Florida Statutes (1983),[1] and prevented recovery. Several days later, Martinez received from General a notice that the policy was being cancelled effective August 2, 1984.[2] The insurer refunded to Martinez that part of the premium on the policy which would have paid for insurance from August 2, 1984, through the end of the policy period.
There is no doubt that the trial court, as the trier of fact, was entitled to find from the evidence presented that the omission of Barnes' name was sufficiently material to the insurer's acceptance of the risk to warrant a denial of coverage, even if the omission was unintentional. See Continental Assurance Co. v. Carroll, 485 So. 2d 406 (Fla. 1986); Life Insurance Co. of *894 Virginia v. Shifflet, 201 So. 2d 715 (Fla. 1967). The appellants contend, however, that since the insurer, with knowledge of the material omission, chose to keep the portion of the premium earned during the period in which the accident occurred, rather than to rescind the policy from its inception, it thereby effectively reaffirmed the policy and thus waived its right to deny coverage. They rely on Dairyland Insurance Co. v. Kammerer, 213 Neb. 108, 327 N.W.2d 618 (1982), which undeniably supports their position. In the view of the Nebraska court,
"[w]hen learning of the alleged fraud [that the driver of the vehicle was a member of the insured's household], [the insurer] had two choices. Either it could determine that, because of the alleged fraudulent statements made to it, it wished to cancel the policy from its inception and return to [the insured] the entire premium, on the theory that the policy never came into existence, or it could waive the alleged fraud, keep the premium earned to date of cancellation, and accept responsibility under the policy. If [the insurer] elected to rescind the policy from its inception, it must place [the insured] back in the same position [she] was in before the policy was issued, including returning to her all of the premium. But [the insurer] chose not to do so. Both by its notice of cancellation and by its retention of a portion of the premium, [the insurer] elected to recognize the existence of the policy from the date of its issuance ... until the date of its declared cancellation... . Having made that choice, [the insurer] acknowledged that the policy was in effect on the date of the accident . .. and it therefore became liable under the policy. [The insurer] could not, on the one hand, recognize the existence of the policy and retain a portion of the premium and, on the other hand, deny the coverage afforded by the policy because of alleged fraudulent misrepresentations."
Dairyland Insurance Co. v. Kammerer, 213 Neb. at 110, 327 [email protected].
We do not agree with the Nebraska court. The omission in question in Kammerer and here did not serve to vitiate the policy from its inception for claims unrelated to the omission. The failure to list Barnes on the renewal application precluded coverage only for a claim arising out of Barnes' driving a vehicle insured under the policy. Mrs. Martinez herself was covered throughout the entire period that the policy was in force, and it is this coverage, and no other, that was acknowledged by the insurer when it retained the premium. Where an omission or misrepresentation goes to the entirety of coverage, rescission and a return of the premium paid may be a proper remedy. However, to require the insurer, as the Nebraska rule does, to return the premium to the insured where the materially false statement or omission results, as here, in a denial of coverage only for a risk never assumed by the insurer or paid for by the insured is to give the insured an undeserved windfall coverage for nothing. Accordingly, we reject the appellants' argument and affirm the judgment under review.
Affirmed.
NOTES
[1] Section 627.409(1), Florida Statutes (1983), provides:
"(1) All statements and descriptions in any application for an insurance policy or annuity contract, or in negotiations therefor, by or in behalf of the insured or annuitant, shall be deemed to be representations and not warranties. Misrepresentations, omissions, concealment of facts, and incorrect statements shall not prevent a recovery under the policy or contract unless:
"(a) They are fraudulent;
"(b) They are material either to the acceptance of the risk or to the hazard assumed by the insurer; or
"(c) The insurer in good faith would either not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise."
[2] This notice of cancellation was sent pursuant to Section 627.7281, Florida Statutes (1983), which requires that the insured be given at least forty-five days' notice before the cancellation becomes effective.
|
It was contended for the defendant:
1. That the evidence offered did not prove an eviction, as the bargainee never had been in possession.
2. That as to so much of the ninety acres to which Wingfield had title which was not enclosed, the plaintiff could not recover.
3. That if Wingfield was in actual adverse possession of any part of the land at the execution of the deed, the plaintiff could not recover for an eviction of his intestate thereupon by the person having a better title thereto, although the intestate had a good title under (199) the same deed to other parts of the land therein described.
4. That the conveyance being for a less estate than a fee, the rule of damages was not the original purchase money and interest.
5. That the action ought to have been brought by the heir of the intestate, and not by his personal representative.
His Honor, Donnell, J., charged the jury that if they were satisfied that Wingfield was in possession of the ninety acres, under a valid title at the execution of the deed, and cultivating a part of it, which was enclosed, and that he had succeeded in the ejectment brought by the plaintiff's intestate, by setting up his valid title, this was in law such a disturbance of the possession of the intestate as would entitle him to recover in an action upon the covenant of quiet enjoyment, contained in his deed; and further, that the present action was properly brought by the personal representative; and that the rule of damages for the breach of a covenant of quiet enjoyment in a deed conveying a life estate was the same as that in a deed conveying the fee. *Page 172
The jury returned a verdict for the plaintiff, and assessed his damages at $2,334, and the defendant appealed.
All the cases cited for the defendant upon the point of eviction, except one, are those where the bargainee was in possession, and fall within the hard rule which this Court was constrained to adopt inCoble v. Wellborn, 13 N.C. 388. The existence of an encumbrance, or the mere recovery in a possessory action, under which the bargainee has not actually been disturbed, are held, for technical reasons, not to be breaches of a covenant for quiet possession, or, in other words, of our warranties. But that is a very different case from this, in which the bargainee never in fact was in possession, but was kept out by the possession of another, under better title, existing at the time of the sale and deed, and ever since. The case of Kortz v. Carpenter is of the same character. But it is distinguishable from the present, for there had been no attempt in that case to get possession. Here there was, by ejectment. I do not, however, think that was necessary, but the existence of a better title, with an actual possession under it in another, is of itself a breach of the covenant. It is manifestly just that it should be so considered, for otherwise, the covenantee would have no redress but by making himself a trespasser by an actual entry, which the law requires of nobody, or by bringing an unnecessary suit, for the event of that suit proves nothing in the action on the covenant. But upon purely legal grounds it is so. For, as between the bargainor and bargainee, the latter is in by force of the statute of uses. It is upon that idea that the legal title is acquired by a deed of bargain and sale. It passes the use, and the statute carries the possession. It is so in the conveyance by lease and release. There must be a possession for the latter to operate on. But it is not an actual possession; at least, the actual entry need not be proved. The statute transfers the possession, and the lessor cannot say it was not actual for the purpose of defeating his (201) subsequent release. As between the parties, then, the bargainee is, on strict principles, in; but if there be in reality an adverse possession, he can only be held to be in for an instant, for there will be no implication against the truth further than is necessary to make the deed effectual for its purposes. If such adverse possession be upon title paramount, then there is an eviction of the bargainee eo instanti that the possession conferred by the statute takes place, for the eviction need not be by process. Upon general reasoning, therefore, I conclude the case *Page 173
is for the plaintiff on this point. But there is a case in the Supreme Court of the United States directly in point. Duvall v. Craig, 2 Wheat., 45. This was also one of the questions decided in the famous case ofRicketts v. Dickens in this State (1 Murph., 343).
There can be no doubt but Wingfield's possession is coextensive with his title, he being in the actual possession of part. He could have maintained trespass for an entry on the wood land. Whatever may be the rule for damages upon an eviction from a particular estate, after the expiration of a part, this case cannot form an exception to the general rule, because the whole interest was lost, and there was no enjoyment.
The last exception stated in the record is, that the action ought not to have been brought by the executor, but belongs to the heir. This is contrary to well settled law. The case of Lucy v. Livingston, 2 Lev., 26, and 1 Ventris, 175, established that for a breach in the testator's time the executor and not the heir is to sue, because as no estate in the land descends to the heir, there is nothing in him to which the covenant can attach itself, and the demand had become a personal thing in the testator, and so goes to the executor, who represents the person. The case ofKingdom v. Nottle, ubi supra, has been cited to the contrary. It is to be observed that it is directly opposed to the cases of Hamilton v. Wilson, 4 Johns. Rep., 72, and Bennet v. Irwin, 3 id., 363. But if it were not, it is distinguishable from the [email protected]. This is an action on a covenant for quiet possession, where there has been an eviction (202) and the possession lost in the lifetime of the bargainee. Everything, then, was gone before either the heir or the executor could claim, except the right in one of them to recover damages, which right, for the reasons given in Lucy v. Livingston, comes to the personal representative.Kingdom v. Nottle was on covenants of seizin and of a right to convey. It is true this is broken as soon as made, if the covenantor had no title, and for that reason it would seem that the executor ought to sue. And so I should think he certainly ought, if that be the only covenant in the deed, and there be a total defect of title, so that nothing passed under the deed. But if there be other covenants, as, for example, for quiet possession, and some estate or interest did pass, it may make a difference. For the bargainee may choose to keep the estate, such as it is, and rely upon his title becoming good by matter subsequent, rather than treat his own title as defective, while he is enjoying under it. And where the ancestor has not himself elected to treat his title as bad, but on the contrary to depend on the other covenants, and to let it descend, or devise it as good, it would seem reasonable that the executor should not be permitted to interfere with the claims of the heir or devisee, without showing a special damage to the personal estate. This is what *Page 174
I suppose Lord Ellenborough might have meant by saying, the declaration by the executor ought to show some special damage to the testator in his lifetime. It then becomes a personal demand to the extent of that damage. But if the testator treats it as an estate in possession, and will not consider the breach of covenant as destructive of his estate, nor give the latter up for the damages which he might claim on the former, I do not see that the executor can exercise that power against the heir or devisee, or (for it would go thus far) even against an alienee. The executor ought not to make that personalty for his own benefit, which the testator disposed of as realty, unless there be no method by which those who claim it in the latter character could obtain redress for the final loss of the estate. But here, in a case of covenant for quiet possession, broken in the testator's time, the whole loss is then (203) incurred, and there can be nothing but damages had, and they, of course, attach to the person.
Another objection is taken here upon the matter appearing in the record. The damages are laid at $1,500, and found in the verdict to be $2,334. This is fatal in arrest of judgment, unless the plaintiff be allowed to remit the excess, or unless an amendment can be made enlarging the sum in the declaration. The plaintiff does not offer to remit, but moves for leave to make the amendment. This motion is founded on the Acts of 1824 (Rev., ch. 1233) and 1790 (Rev., ch. 318). Certainly there is no other foundation for it, for under the English statutes of amendment it has always been held that there must be something to amend by. But it is plain from the words of the Act of 1790 that any thing may be amended at any time, introduced in the latter part of the section, after the enumeration of many particular instances in which amendments should be allowed, that the Legislature intended amendments to be made in the most liberal manner possible. The expressions seem to have been used, in a spirit of impatience at the reluctance of the courts to allow amendments, and as was expressed by ChiefJustice Taylor, in Grandy v. Sawyer, were designed to overcome the remaining scruples of the courts. In the interpretation of the act there has been a latitude correspondent to its terms. Writs have been amended by striking out defendants (McClure v. Burton, 1 Law Repos., 472), and by striking out some plaintiffs and inserting another. Grandy v. Sawyer, 2 Hawks, 61. Declarations have been amended after a special demurrer (Davisv. Evans, 1 L. Repos., 499), besides other cases equally striking. In fine, the plaintiff has been permitted, not to amend, but to change his process, and make a new action. But this act is confined to amendments made in the court in which the action is originally brought, and does not therefore enable a revising court to either disregard the defect *Page 175
or make the amendment. To remedy this, the Act of 1824 was passed. And the enactment of this last law, after the adjudications on the former, is a legislative declaration of the enlarged construction (204) both ought to receive. By it the Superior Court, upon appeal or writ of error, is authorized to make any amendments the county court could, and the Supreme Court is likewise directed to make them in the same manner as they could have been made in either of those courts, and this "from time to time," and "at any time, in any thing." There is, therefore, no restraint upon this Court but its own discretion, and such as grows necessarily out of the nature of its jurisdiction. The words are as broad as they can be, but they must be construed in reference to the subject-matter. The Court is bound to make every amendment which would be, of course, in the inferior court, and which does not involve the merits. But plainly the act does not contemplate any amendment to be ordered by this Court to be made elsewhere, nor any to be made in this Court but such as may be necessary to support the judgment below, on a verdict on the merits. We cannot make an amendment, then, after judgment, which would leave it at large whether the verdict was upon the merits of the case as amended, nor one which necessarily, or by the equity of the Court, would let in a new plea or replication. For that would not be an amendment in support of what had been done, but one on which the judgment rendered must be reversed, and the parties sent to a new trial. The object of the act, in reference to this Court, is to avoid that. Upon an appeal in the Superior Court it is different, because the cause is there to be tried de novo, and the verdict in the county court is annulled by the appeal. The whole merits are there open, and the Superior Court, from the nature of its functions, may amend anything upon terms. The amendment now moved for does not require repleading, nor admit of it. It is not of a kind which changes the merits as tried, but is made necessary by those merits as found. It hurts nobody but the plaintiff, who discharges the bail and loses his costs thereby. There is no possibility of its doing an injury to the defendant by making him pay more money than he owes, or sooner than he ought, namely, before it is due. Why, then, send the parties to renew their litigation? The acts, in permitting us to avoid that (205) necessity, forbids us from imposing it on the parties. And here I must qualify the expression which dropt from me in Dowell v. Vannoy,ante, 43, on this subject, when I was not aware of the very strong terms used by the Legislature. Probably in that case, I mean a verdict defective only in form by the misprision of the clerk, and where the substance is intelligible, an amendment would be allowed here, as it would be, of course, in the Superior Court. I think, for these reasons, we are bound to amend here, as prayed for. *Page 176
The terms, I think, must be upon the payment of all the costs. The general rule is, that where the defect is not one that is cured by the statutes of jeofail, but which requires an actual amendment, the party who asks it must pay all the costs to that time, unless it be the fault of the officer and not of the party. This is emphatically applicable to cases where the action is changed, in which the plaintiff by his own admission could make no recovery, and would be compelled to pay all the costs if prosecuted to a final decision. It is equally applicable to a case where there can be no judgment for debt or costs, unless the amendment be made, as here. The plaintiff gets more than he asked, and he must pay the expense upon which the gain is founded. The rule is based on two grounds. The one, of duty to the particular party who is defendant, who has a right to ask that the plaintiff shall not enlarge or change his demand, without paying him his costs incurred in defending the former one; the other, of a duty to the profession and the country, which enjoins it on the Court not to encourage ignorance or negligence, by giving them all the advantages of knowledge and diligence. The amendment is allowed, therefore, upon the payment of all the costs, including those of this Court, and upon the record, as amended, the judgment is affirmed, except as to the costs. |
July 25, 1908. The opinion of the Court was delivered by
The plaintiff represents that he and one A.F.C. Cramer were copartners as merchants in the city of Charleston, S.C. in the year 1890, that in September of that year they brought an action against C.L. Schmancke for the sum of $4,205.03, and no answer, demurrer or notice of appearance was served by said Schmancke, and that on the 13th day of December, 1892, the Hon. T.B. Fraser, as Circuit Judge, signed an order which is indorsed on the complaint of the plaintiff for a judgment thereon. That the order for judgment of the said Hon. Thomas B. Fraser was never enrolled in the clerk's office of Charleston county, S.C. nor did the same appear on the "Abstract of Judgments." Without any *Page 83
notice to defendant the plaintiff obtained at chambers anex parte order on the 22d day of June, 1897, from his Honor, Judge Ernest Gary, as follows:
"On motion of George H. Momeier, it is ordered that he be, and is hereby, substituted as the attorney of record in the above entitled cause in the place and stead of J. Ancrum Simons, with leave to enter up the judgment rendered in the said cause on the 13th day of December, 1892, and move the clerk of court to issue execution thereon. Ernest Gary, Presiding Judge. At Chambers, Charleston, S.C. June 22, 1897."
That on the 6th day of July, 1897, the plaintiff, A.F.C. Cramer, assigned his interest in said judgment to his co-plaintiff, J.C. Blohme; that on January 22, 1907, the following summons to show cause was served on the defendant, and filed in the office of the clerk of the court on the 18th day of February, 1907:
"To the defendant above named:
"Whereas, an action in the Court of Common Pleas for Charleston county, between A.F.C. Cramer and J.C. Blohme, copartners, as Cramer Blohme, plaintiffs, and the defendant above named, judgment was duly entered on the 22d day of June, 1897, in the office of the clerk of Court of Common Pleas for said county, in favor of the said plaintiffs against the said defendant, in the sum of four thousand two hundred and twenty-three 18-100 dollars, as appears by Judgment Roll No. 21096, filed and entered in the office of the clerk of said court; and
"Whereas, execution was duly issued on said judgment on the 22d day of June, 1897, and the period of ten years during which said judgment constitutes a lien upon the real estate of the said judgment debtor in the county has nearly expired;
"And whereas, there is actually due and remaining unpaid on said judgment the sum of four thousand two hundred and twenty-three 18-100 dollars, with interest on four thousand two hundred and five 03-100 dollars from December *Page 84
13, 1892, and it is desired to have said judgment renewed for a further period of ten years, in accordance with the provisions of section 309, subdivision 2, of the Code of Civil Procedure of the State of South Carolina, as revised in 1902;
"And whereas, A.F.C. Cramer, on the 6th day of July, 1897, duly assigned his interest in the said judgment to the said J.C. Blohme, who is now the owner and holder thereof;
"Now, therefore, you are summoned and required to show cause to the Court of Common Pleas for the County of Charleston, within twenty days after the service hereof, exclusive of the day of such service, if any you can, why the said judgment should not be revived according to law in favor of the said J.C. Blohme; and if you fail to show such cause within the time aforesaid, the said J.C. Blohme, plaintiff herein, will apply to the Court for a decree reviving the said judgment according to law. George H. Momeier, Plaintiff's Attorney.
"Dated Charleston, S.C. January 22d 1907."
That the following return was made to said summons by C.L. Schmancke:
"The defendant, C.L. Schmancke, herein, in answer to the summons to show cause why a judgment of the Court of Common Pleas for Charleston county, alleged to have been entered in said court on the 22d day of June, 1897, should not be revived for cause, respectfully shows:
First. "That there is no valid judgment existing in favor of plaintiff and against defendant, as alleged, in that the alleged judgment was taken by default without the filing of proof that no appearance or answer or demurrer had been served in said action, as required by law.
Second. "That the entry of judgment alleged to have been made on the 22d day of June, 1897, is null and void, in that the same was not entered within the period of a year and a day from the date of said judgment, and no reason was shown for said delay. *Page 85
Third. "That more than ten years have now elapsed since the date of such judgment and the time when entry thereof should have been made, and the lien thereof, if any, has been lost.
Fourth. "That the judgment alleged to have been entered upon the 22d day of June, 1897, is null, frustrate and of non-effect, in that the said judgment was recovered upon certain void notes alleged to have been executed by this defendant in favor of Cramer Blohme; that the said notes were given by this defendant in favor of Cramer Blohme, in whole or in part, for money lost by reason of contracts entered upon between this defendant and the said A.F.C. Cramer and J.C. Blohme, copartners, as Cramer Blohme, whereby the said Cramer Blohme, acting as the agents of this defendant, contracted for the sale at future times of grain, to wit: under contracts by the said Cramer Blohme, as agents or brokers of this defendant, on or about the 4th day of January, 1886, whereby the said Cramer Blohme undertook to sell twenty thousand (20,000) bushels of wheat for delivery in May, 1886, and also under contracts made by said Cramer Blohme, as agents or brokers as aforesaid, on or about the 30th day of April, 1886, whereby the said Cramer Blohme undertook to sell twenty thousand (20,000) bushels of wheat for delivery in June of said year; that at the time of making such contracts and sales neither this defendant nor the said Cramer Blohme, nor any of of them, was the owner or assignee of the wheat contracts to be sold and transferred at a future time as aforesaid, nor of any part thereof, nor were they or any of them authorized by the owner or assignee thereof, nor by his duly authorized agent, to make or enter into such contract, bargain or agreement for the sale or transfer of such grain; and it was not at the time of making of such contracts, bargains or agreements by the said Cramer Blohme, as agents or brokers as aforesaid, the intention of them, or any of them, or of this defendant, that the grain so agreed to be sold and transferred should be actually delivered in kind, nor was there *Page 86
ever any actual delivery in kind of said grain or any part thereof to the party or parties contracting to receive the same at the time mentioned and specified in any of the said contracts, bargains or agreements made for the transfer and delivery of the same, nor was there any delivery in kind at any time, but the said contracts were naught but gambling in grain futures, and as such utterly null and void. John C.D. Schroder, Attorney for Defendant."
The summons and the return thereto came on to be heard before Judge R.C. Watts, who passed the following order on August 12, 1907:
"This cause came up before me on a summons to show cause why a lien of judgment should not be renewed. On December 13, 1892, judgment was rendered in this case, but no entry was made of the same at that time. At that time J. Ancrum Simons was plaintiff's attorney.
"On June 22d 1897, Mr. Momeier, by an order of Judge Gary, was substituted as attorney in place of Mr. Simons, and leave given to enter up judgment. This order wasex parte and defendant had no notice of it. Thereupon judgment was entered up and execution issued. Now an effort is made to revive lien of judgment. I cannot see how the plaintiff can take advantage of his laches to the detriment of defendant. He should have entered the judgment in a reasonable time; having allowed over ten years to elapse since he obtained judgment, he cannot now by summons revive lien of the judgment. It is, therefore, ordered, decreed and adjudged that the summons to revive lien of judgment herein be dismissed, with costs."
From this order of Judge Watts the plaintiff has appealed upon four grounds, which we will now consider in their order:
1. "Because his Honor erred in deciding that the plaintiff herein is seeking to take advantage of his laches to the detriment of defendant in not having entered his judgment in a reasonable time, and, having allowed over ten years to elapse since he obtained judgment, cannot now revive same; the *Page 87
error being: (a) that there is no law requiring a judgment to be entered within a special time from the date of the order for judgment; (b) the law requires the clerk of the court to enter the judgment and not the plaintiff; (c) that the party injuriously affected by the failure to enter a judgment is the plaintiff and not the defendant, for the reason that before the entry of same no rights or benefits accrue, because before entry a plaintiff has neither legally nor technically a judgment, and therefore, no lien, and the failure to make entry is not only to the detriment of plaintiff and not defendant, but to the latter's advantage."
The judgment in this case was rendered by his Honor, T. B. Fraser, in 1892. The plaintiff sought to revive his judgment in 1897. This act, so far as the plaintiff is concerned, was legal, although Judge Gary's order turned out to be useless, for the simple fact that the act required that when a judgment was revived notice should be given of the time and place to the party defendant, or his personal representative, in case of his death, and in the case at bar, no notice was extended to any of such parties, and while the law has wisely restricted the use of objection or the invalidation of such process to the defendant himself, still it's the defendant here that is raising the objection.
In the case of Mason, etc., v. Music Co., 45 S.C. 11,14, 22 S.E., 755, it is held: "A judgment as defined by the Code is the final determination of the rights of the parties in the action. This final determination of the rights of the parties in the action takes place when the court does all that it is required to do in determining the rights, and it is not the less a judgment because certain requirements of the statute have to be complied with, so as to enforce it by execution, give it a lien on real estate, make it competent evidence or effectual for other purposes."
In the case of Clark v. Melton, 19 S.C. page 498, the Court says: "To give force and effect, however, to this judgment it is true that a formula was required to be prepared and filed in the clerk's office, and to be entered in the *Page 88
book entitled `Abstracts of Judgments,' and under an act of the General Assembly the clerk in whose office this formula was filed was required to date it and indorse his official signature. It will be observed, however, that this formula, etc., did not constitute the judgment of the Court, nor did the date of the signing by the clerk with his official signature add anything to its intrinsic character. The judgment issues from the Court, not from the attorneys or the clerk; it precedes a formula, and is authority for which the formula is prepared; but the formula constitutes no part of the judgment. It is only the evidence of the existence of a judgment that enables the plaintiff to have it enforced. The judgment, as we have said, is the judicial determination of the rights of the parties, but it is not self-operative; it cannot enforce itself; it becomes necessary, therefore, that some machinery should be adopted to secure to the successful party the fruits of his recovery."
Mr. Black, in vol. I, on judgments, says: "That the rendition of a judgment is the judicial act of the Court in pronouncing the sentence of law upon the facts in controversy as ascertained by the pleadings and verdict. The entry of a judgment is a ministerial act, which consists in spreading upon the record a statement of the final conclusion reached by the Court in the matter, thus furnishing external and incontestable evidence of the sentence given, and designed to stand, as a perpetual memorial of its action. It is the formula, therefore, that is the effective result of the litigation. In the nature of things a judgment must be rendered before it can be entered. And not only that, but though the judgment be not entered at all, still it is none the less a judgment. The omission to enter it does not destroy it nor does its vitality remain in abeyance until it is put on record."
But as Judge Gary said in rendering the judgment inMason, etc., v. Music Co., supra, "The failure of the judgment creditor to enter his judgment in the book of `Abstract of Judgments' before issuing execution to enforce the same, was an irregularity, and the Circuit Judge was not in error *Page 89
in granting the order upon which the defendant has appealed."
Thus it will be seen that the rendering by Judge Fraser was a judicial judgment, which is not affected by the failure of the clerk, or any one else, to enter Judge Fraser's judgment in the "Abstract of Judgments." The enforcement of that judgment was a ministerial act; the order made by Judge Ernest Gary, so far as the defendant was concerned, was of no effect, although his conduct was valid, so far as the plaintiff was concerned. It was not in plaintiff's power to disregard Judge Ernest Gary's order until he had taken the proper measures to render it invalid.
The action to be taken by the plaintiff to render Judge Fraser's judgment anything else than a final judgment was conclusive. The plaintiff was bound to regard Judge Fraser's judgment as a final judgment; therefore, it was not in plaintiff's power to prevent the operation of Judge Fraser's order other than as a final judgment on the 13th day of December, 1892, and more than ten years having elapsed before his summons to revive before Judge Watts was heard, rendered it illegal, so far as the defendant was concerned, because more than ten years had elapsed before the summons to revive was issued.
Hence, this first exception must be overruled.
2. "Because his Honor erred in deciding that as plaintiff had allowed over ten years to elapse from the obtaining of the order for the judgment, he cannot now seek to revive the lien of judgment; whereas, he should have held that this being an application to revive the lien of the judgment, and the law providing that such lien is created only by entry and continues ten years therefrom, and that application for revival may be made by service of summons at any time within ten years from the date of original entry, therefore, the time of obtaining the order for judgment has no bearing upon the question of revival, but the sole question is whether or not the application therefor was made within ten years from the date of the original entry of the judgment." *Page 90
The second exception is disposed of in what we have held in regard to the first exception.
3. "That his Honor erred in not deciding that as the date of the original entry of the judgment in this case was June 22, 1897, and that the summons for revival upon defendant was served January 22, 1907, or within ten years as provided by statute, the plaintiff was entitled to an order reviving said judgment, and that his Honor erred in not granting such order."
It was not error in Judge Watts when he decided that the date of the judgment was the 13th of December, 1892, and not June 22, 1897, more than ten years before August 12, 1907, and therefore, it was not in plaintiff's power to renew said judgment by service of summons. This exception is overruled.
4. "That his Honor erred in not holding that there was no good cause shown why the said judgment should not be revived and, therefore, erred in not decreeing that the said judgment should be revived."
His Honor did not err when he held that there was no good cause shown why the judgment should be revived.
This exception is, therefore, overruled.
It is the judgment of this Court that the judgment of the Circuit Court be affirmed.
MESSRS. JUSTICES GARY, JONES AND WOODS concur inthe result. |
Citation Nr: 1535196
Decision Date: 08/17/15 Archive Date: 08/20/15
DOCKET NO. 11-02 578 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Jackson, Mississippi
THE ISSUE
1. Entitlement to an initial, compensable rating for status post residuals of appendectomy (scar), prior to December 8, 2014.
2. Entitlement to a rating in excess of 10 percent for scar, from to December 8, 2014
WITNESS AT HEARING ON APPEAL
The Veteran
ATTORNEY FOR THE BOARD
James R. Springer, Associate Counsel
INTRODUCTION
The Veteran had active service from October 1979 to October 1983.
This matter comes before the Board of Veterans' Appeals (Board) on appeal from an August 2009 rating decision of the Department of Veterans Affairs (VA) Regional Office (RO) in Jackson, Mississippi.
In May 2011, the Veteran testified before a Decision Review Officer (DRO) at a hearing. In April 2013, the Veteran testified at a Travel Board hearing before the undersigned Veterans Law Judge. Transcripts of both hearings have been associated with the record.
In April 2014, the Board remanded the Veteran's claim for additional development. The Board finds that the Agency of Original Jurisdiction (AOJ) substantially complied with the remand orders with regard to the issues decided herein and no further action is necessary in this regard. See D'Aries v. Peake, 22 Vet. App. 97, 105 (2008); Dyment v. West, 13 Vet. App. 141, 146-47 (1999) (remand not necessary under Stegall v. West, 11 Vet. App. 268 (1998), where the Board's remand instructions were substantially complied with), aff'd, Dyment v. Principi, 287 F.3d 1377 (2002)).
At the time of the April 2014 remand, the appeal also encompassed a claim of entitlement to service connection for residuals of a hysterectomy. Subsequent to the development requested by the Board in its April 2014 remand, the RO granted service connection for residuals, hysterectomy and bilateral oophorectomy in a December 2014 rating decision; accordingly that issue is no longer before the Board.
Additionally, following the development requested by the Board in the April 2014, in a December 2014 rating decision, the Veteran's rating for her scar was increased to 10 percent, effective December 8, 2014 (the date of the VA examination). However, a higher rating for her scar, to include whether referral for extra-schedular consideration is appropriate, is available. As such, and because the Veteran is presumed to seek the maximum available benefit for a disability, the Board has characterized the appeal regarding the evaluation of the Veteran's status post residuals of appendectomy as encompassing both matters as set forth on the title page. See AB v. Brown, 6 Vet. App. 35, 38 (1993).
This appeal is now being processed using the Veterans Benefits Management System (VBMS) and Virtual VA paperless claims processing systems.
FINDINGS OF FACT
1. Prior to December 8, 2014, the Veteran's service-connected scar manifested as a deep, non-linear scar with subjective complaints of pain, but did not result in an objectively painful or unstable scar; a superficial and nonlinear scar with an area greater than 144 square inches or greater; a deep nonlinear scar with an area of at least 6 inches; or a scar located on the head, face, or neck.
2. From December 8, 2014, the Veteran's service-connected scar manifested as a superficial, non-linear scar with subjective complaints of pain, as well as objective evidence of pain, but has not resulted in an unstable scar; a superficial and nonlinear scar with an area greater than 144 square inches or greater; a deep nonlinear scar with an area of at least 6 inches; or located on the head, face, or neck.
3. From December 8, 2014, the Veteran's service-connected scar does not present such an exceptional or unusual disability picture with such related factors as marked interference with employment or frequent periods of hospitalization as to render impractical the application of the regular schedular standards regarding this disability.
CONCLUSIONS OF LAW
1. Prior to December 8, 2014, the criteria for an initial, compensable rating for the Veteran's service-connected scar are not met. §§ 1155, 5107 (West 2014); 38 C.F.R. §§ 3.102, 3.321, 4.1-4.10, 4.118, Diagnostic Codes 7801-7805 (2014).
2. From December 8, 2014, the criteria for a rating in excess of 10 percent for the Veteran's service-connected scar are not met. §§ 1155, 5107; 38 C.F.R. §§ 3.102, 3.321, 4.1-4.10, 4.118, Diagnostic Codes 7801-7805.
REASONS AND BASES FOR FINDINGS AND CONCLUSION
VA's Duty to Notify and Assist
As provided for by the Veterans Claims Assistance Act of 2000 (VCAA), the United States Department of Veterans Affairs (VA) has a duty to notify and assist claimants in substantiating a claim for VA benefits. 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5107, 5126 (West 2014); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2014).
Upon receipt of a complete or substantially complete application for benefits, VA is required to notify the claimant and his or her representative, if any, of any information, and any medical or lay evidence, that is necessary to substantiate the claim. 38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b); Quartuccio v. Principi, 16 Vet. App. 183 (2002). Proper notice from VA must inform the claimant of any information and evidence not of record (1) that is necessary to substantiate the claim; (2) that VA will seek to provide; and (3) that the claimant is expected to provide. This notice must be provided prior to an initial unfavorable decision on a claim by the agency of original jurisdiction (AOJ). Mayfield v. Nicholson, 444 F.3d 1328 (Fed. Cir. 2006); Pelegrini v. Principi, 18 Vet. App. 112 (2004).
In addition, the notice requirements of the VCAA apply to all five elements of a service-connection claim, including: (1) Veteran status; (2) existence of a disability; (3) a connection between the Veteran's service and the disability; (4) degree of disability; and (5) effective date of the disability. See Dingess/Hartman v. Nicholson, 19 Vet. App. 473 (2006). Further, this notice must include notice that a disability rating and an effective date for the award of benefits will be assigned if service connection is awarded. Id. at 486.
In this case, VCAA notice requirements were initially sent to the Veteran in April 2009. This letter informed the Veteran of what evidence was needed to substantiate her claim for service connection, as well as her and VA's respective duties for obtaining evidence. Additionally, the letter advised her of the information and evidence necessary to establish a disability rating and effective date in accordance with Dingess/Hartman, supra.
After the grant of service connection in the August 2009 rating decision on appeal, the Veteran appealed with respect to the propriety of the initially assigned rating for her scar. VA's General Counsel has held that no VCAA notice is required for such downstream issues. VAOPGCPREC 8-2003, 69 Fed. Reg. 25180 (May 5, 2004). In addition, the Board notes that the Court held that "the statutory scheme contemplates that once a decision awarding service connection, a disability rating, and an effective date has been made, § 5103(a) notice has served its purpose, and its application is no longer required because the claim has already been substantiated." Dingess v. Nicholson, 19 Vet. App. 473, 490 (2006). In this case, the Veteran's claim for service connection for her scar was granted by the RO in August 2009, and a noncompensable rating was assigned effective February 27, 2009. Therefore, as the Veteran has appealed with respect to the initially assigned rating, no additional 38 U.S.C.A. § 5103(a) notice is required because the purpose that the notice is intended to serve has been fulfilled. Hartman v. Nicholson, 483 F.3d 1311 (Fed. Cir. 2007); Dunlap v. Nicholson, 21 Vet. App. 112 (2007).
VA also has a duty to assist the Veteran in the development of the claim. This duty includes assisting her in the procurement of service treatment records (STRs) and pertinent post-service treatment records and providing an examination when necessary. 38 U.S.C.A. § 5103A; 38 C.F.R. § 3.159. The claims file contains STRs, private and VA medical records, and the Veteran's own contentions. She has also been given multiple VA examinations in conjunction with her claim. She has not alleged that the VA examinations are inadequate for rating purposes. The Board finds that the examinations are adequate in order to evaluate the Veteran's service-connected disabilities as they include interviews with the Veteran, a review of her claims file, and full examinations addressing the relevant rating criteria. Moreover, she has not alleged that her disability has worsened in severity since the December 2014 VA examination. See Palczewski v. Nicholson, 21 Vet. App. 174 (2007) (the passage of time alone, without an allegation of worsening, does not warrant a new examination). Therefore, the Board finds that the examinations of record are adequate to adjudicate the Veteran's claim.
In Bryant v. Shinseki, the Court held that 38 C.F.R. § 3.103(c)(2) requires that the RO Decision Review Officer or Veterans Law Judge who chairs a hearing to fulfill two duties: (1) the duty to fully explain the issues and (2) the duty to suggest the submission of evidence that may have been overlooked. Bryant v. Shinseki, 23 Vet. App. 488 (2010).
Here, during the April 2013 hearing, the undersigned Veterans Law Judge enumerated the issues on appeal. Information was solicited regarding the current nature and severity of the Veteran's scar. Therefore, not only were the issues "explained . . . in terms of the scope of the claim for benefits," but "the outstanding issues material to substantiating the claim," were also fully explained. Id. at 497. As such, the Board finds that, consistent with Bryant, the undersigned complied with the duties set forth in 38 C.F.R. § 3.103(c)(2), and that the Board hearing was legally sufficient.
In April 2014, the Board remanded the Veteran's claim for additional development to include scheduling her for a new VA examination to address the current nature and severity of her service-connected scar, as well as to afford her the opportunity to submit, or complete the necessary authorization to obtain, private medical records. A remand by the Board confers upon the claimant, as a matter of law, the right to compliance with the remand order. Stegall v. West, 11 Vet. App. 268 (1998). In April 2014, a letter was sent to the Veteran requesting that she submit, or complete the necessary authorization to obtain, private treatment records from Dr. Jackson. Additionally, in December 2014, she was afforded a VA examination to address the current nature and severity of her scar. Thereafter, the issue decided herein was readjudicated in a December 2014 supplemental statement of the case. Therefore, the Board finds that the AOJ substantially complied with the April 2014 remand orders.
The Veteran has not identified, and the record does not otherwise indicate, any additional existing evidence that is necessary for a fair adjudication of the claim that has not been obtained. Hence, no further notice or assistance to the Veteran is required to fulfill VA's duty to assist her in the development of the claim. Smith v. Gober, 14 Vet. App. 227 (2000), aff'd 281 F.3d 1384 (Fed. Cir. 2002); Dela Cruz v. Principi, 15 Vet. App. 143 (2001); see also Quartuccio v. Principi, 16 Vet. App. 183 (2002).
Analysis
Disability ratings are determined by applying the criteria set forth in the VA Schedule for Rating Disabilities, found in 38 C.F.R., Part 4. The rating schedule is primarily a guide in the evaluation of disability resulting from all types of diseases and injuries encountered as a result of or incident to military service. The ratings are intended to compensate, as far as can practicably be determined, the average impairment of earning capacity resulting from such diseases and injuries and their residual conditions in civilian occupations. 38 U.S.C.A. § 1155; 38 C.F.R. § 4.1.
Where there is a question as to which of two evaluations shall be applied, the higher evaluation will be assigned if the disability picture more nearly approximates the criteria for that rating. Otherwise the lower rating will be assigned. 38 C.F.R. § 4.7. All benefit of the doubt will be resolved in the Veteran's favor. 38 C.F.R. § 4.3.
A veteran's entire history is to be considered when making disability evaluations. See generally 38 C.F.R. § 4.1; Schafrath v. Derwinski, 1 Vet. App. 589 (1995). In Fenderson v. West, 12 Vet. App. 119 (1999), it was held that evidence to be considered in the appeal of an initial assignment of a rating disability was not limited to that reflecting the then current severity of the disorder. Cf. Francisco v. Brown, 7 Vet. App. 55, 58 (1994) (where entitlement to compensation has already been established and an increase in the disability rating is at issue, the present level of disability is of primary concern).
Nevertheless, the Board acknowledges that a claimant may experience multiple distinct degrees of disability that might result in different levels of compensation from the time the increased rating claim was filed until a final decision is made. Hart v. Mansfield, 21 Vet. App. 505, 509-510 (2007). The following analysis is therefore undertaken with the possibility that "staged rating" (assignment of different ratings may be warranted for distinct periods of time, based on the facts found) may be warranted.
Scars other than those on the face, head, or neck warrant a 10 percent rating for deep, nonlinear scars that cover areas greater than 6 square inches (39 square centimeters (cm)) but less than 12 square inches (77 square cm). A 20 percent rating is warranted if the area is greater than 12 square inches but less than 72 square inches. A deep scar is one associated with underlying tissue damage. 38 C.F.R. § 4.118, Diagnostic Code 7801.
A 10 percent rating is warranted for a superficial and nonlinear scar if the area is 144 square inches (929 square cm) or larger. 38 C.F.R. § 4.118, Diagnostic Code 7802.
A 10 percent rating is also warranted for one or two scars that are unstable or painful. Higher ratings are warranted for more than two such scars. An unstable scar is one where, for any reason, there is frequent loss of covering over the skin. If one or more scars are both unstable and painful, 10 percent is to be added to the total evaluation that is based on the total number of unstable or painful scars. 38 C.F.R. § 4.118, Diagnostic Code 7804.
Prior to December 8, 2014
Prior to December 8, 2014, the Veteran's service-connected scar was rated under the Diagnostic Code for other effects of scars not evaluated under Diagnostic Codes 7801-7804, to include limitation of function of the affected part. 38 C.F.R. § 4.118, Diagnostic Code 7805 (2014). The RO denied a compensable rating because the Veteran's scar was not shown to cause a limitation of function.
In connection with her original claim for service connection, the Veteran was afforded a VA examination in May 2008. The subject of that examination was to determine the nature and etiology of her now service-connected residuals, hysterectomy and bilateral oophorectomy. The examiner did not reference any complications related to her scar. Furthermore, the Veteran's only complaints of pain noted in the examination report refer to internal pelvic pain.
In May 2011, the Veteran testified at a DRO hearing. During the hearing, when asked by the DRO if she had any problems with her scar, and whether it was tender, painful, or uncomfortable, she stated that is was very uncomfortable, and that it caused pain weekly.
In August 2011, the Veteran was afforded a VA scars examination. During the examination, she complained of intra-abdominal pulling pain on a daily basis for which she took over-the-counter pain medication. The examiner noted that this was consistent with adhesions as a result of her in-service surgery. The scar was noted to be a five and a half inch by one-half inch vertical scar located below the umbilicus. The examiner noted that there was no breakdown over the scar, and that the Veteran did not report any pain associated with the scar itself. Instead, she complained of a pulling inside her stomach in the area of her surgery. The examiner found no objective evidence that the scar was painful and noted that there were no signs of skin breakdown. The scar was noted to be deep, but there was no evidence of inflammation, edema, or keloid formation. The examiner also stated that there were no other disabling effects of the scar.
During the April 2013 Travel Board hearing before the undersigned, the Veteran stated that her scar would hurt and that it would sometimes become irritated. The Veteran stated that her scar never became unstable because she continually applied lotion to the area.
The evidence of record does not support an initial compensable rating prior to December 8, 2014, for the Veteran's service-connected scars. While the Veteran reported during her hearing before the undersigned and at the DRO hearing that her scar has caused her pain, the August 2011 VA examination contradicts her statement in that there was no objective evidence of painful scarring. Furthermore, she specifically denied any pain associated with the scar during the examination. Instead, as noted above, the Veteran's complaints of pain were associated with internal pelvic pain as a result of her hysterectomy. In addition, her VA treatment records do not contain any complaints of pain or instability associated with her scar; instead, her complaints have been about internal pelvic pain. The Board notes that a separate rating has been assigned for the residuals of her hysterectomy and bilateral oophorectomy. Finally, the Board notes that, despite the Veteran's complaints of irritation, there is no evidence that the her scar is unstable.
As such, the record does not support an initial compensable rating prior to December 8, 2014, for the Veteran's service-connected scar.
The Board has also considered whether a higher or separate rating is warranted under the other applicable diagnostic codes cited above. However, while the Veteran's scar was found to be deep, it was also noted as being linear, and it does not cover an area of 6 square inches (39 square cm) or greater, and hence do not warrant a rating under 7801. Finally, there is no indication that the scar imposes any loss of function or interferes with activities.
From December 8, 2014
From December 8, 2014, to the present, the Veteran's service-connected scar has been rated under Diagnostic Code 7804 due to an objectively painful scar.
As discussed above, the Veteran was afforded a VA examination in December 2014 to address the current nature and severity of her service-connected scar. The VA examiner noted that the scar was an anterior trunk abdominal scar. During the examination, the Veteran stated that her symptoms included skin irritation, swelling, itching, pain, and redness. She stated that these symptoms occurred approximately three to four times per year, and that she would treat the scar herself with alcohol, Neosporin, Vaseline, and lotion. She denied any on-going medical treatment for sixteen years. Upon examination, the examiner noted that the Veteran's scar was objectively painful; however, the examiner found no signs that the scar was unstable. The scar was characterized as a superficial non-linear scar that was 10 centimeters by .5 centimeters.
The evidence of record does not support a rating in excess of 10 percent from December 8, 2014 for the Veteran's service-connected scar. As noted above, her scar was assigned a 10 percent rating from December 8, 2014, the date of the VA examination revealing objective evidence of a painful scar. Despite the Veteran's complaints of instability and the need to use topical treatments, the examiner found no evidence that her scar was unstable. In addition, the Veteran's VA treatment records do not contain any complaints of instability associated with her scar; instead, she specifically denied any treatment for the past sixteen years. Again, the Board notes that a separate rating has been assigned for her residuals, hysterectomy and bilateral oophorectomy.
Again, the Board has also considered whether a higher or separate rating is warranted under the other applicable diagnostic codes cited above. However, the scar does not cover an area of 6 square inches (39 square cm) or greater, and hence do not warrant a rating under 7801. Additionally, while the Veteran's scar was found to be superficial and non-linear, it did not impact an area of 144 square inches (929 square cm) or greater, and hence does not warrant a rating under 7802. Finally, there is no indication that the scar imposes any loss of function or interferes with activities.
Other Considerations
The Board has considered whether further staged ratings under Fenderson are appropriate for the Veteran's service-connected scar; however, there is no evidence in the record to support any further staged rating than those periods currently assigned.
Additionally, the Board has considered whether the case should be referred for extra-schedular consideration. An extra-schedular disability rating is warranted if the case presents such an exceptional or unusual disability picture with such related factors as marked interference with employment or frequent periods of hospitalization that application of the regular schedular standards would be impracticable. 38 C.F.R. § 3.321(b)(1).
In Thun v. Peake, 22 Vet. App. 111, 115-16 (2008), the Court explained how the provisions of 38 C.F.R. § 3.321 are applied. Specifically, the Court stated that the determination of whether a claimant is entitled to an extra-schedular rating under
§ 3.321 is a three-step inquiry. First, it must be determined whether the evidence presents such an exceptional disability picture that the available schedular evaluations for that service-connected disability are inadequate. In this regard, the Court indicated that there must be a comparison between the level of severity and symptomatology of the claimant's service-connected disability with the established criteria found in the rating schedule for that disability. Under the approach prescribed by VA, if the criteria reasonably describe the claimant's disability level and symptomatology, then the claimant's disability picture is contemplated by the rating schedule, the assigned schedular evaluation is, therefore, adequate, and no referral is required.
Second, if the schedular evaluation does not contemplate the claimant's level of disability and symptomatology and is found inadequate, the RO or Board must determine whether the claimant's exceptional disability picture exhibits other related factors such as "marked interference with employment" and "frequent periods of hospitalization." Third, when an analysis of the first two steps reveals that the rating schedule is inadequate to evaluate a claimant's disability picture and that picture has attendant thereto related factors such as marked interference with employment or frequent periods of hospitalization, then the case must be referred to the Under Secretary for Benefits or the Director of the Compensation and Pension Service to determine whether, to accord justice, the Veteran's disability picture requires the assignment of an extra-schedular rating. Id.
The Board has carefully compared the level of severity and symptomatology of the Veteran's service-connected scar with the established criteria found in the rating schedule. The Board finds that the Veteran's symptomatology throughout the appeal period has been fully addressed by the rating criteria under which the disability is rated. Thus, referral for an extra-schedular rating is not appropriate because the rating criteria fully contemplate the appearance, character, and level of impairment, including pain, caused by her scar. Therefore, the Board need not proceed to consider the second factor, viz., whether there are attendant thereto related factors such as marked interference with employment or frequent periods of hospitalization. Consequently, the Board concludes that referral of this case for consideration of an extra-schedular rating is not warranted. Id.; Bagwell v. Brown, 9 Vet. App. 337, 338-39 (1996); Floyd v. Brown, 9 Vet. App. 88, 96 (1996).
Further, the Board notes that under Johnson v. McDonald, 2013-7104, 2014 WL 3562218 (Fed. Cir. Aug. 6, 2014), a veteran may be awarded an extra-schedular rating based upon the combined effect of multiple conditions in an exceptional circumstance where the evaluation of the individual conditions fails to capture all the service-connected disabilities experienced.
However, in this case, after applying the benefit of the doubt under of Mittleider v. West, 11 Vet. App. 181 (1998), there are no additional service-connected disabilities that have not been attributed to a specific service-connected condition at any point during the appeal. Again, the Board notes that the Veterans complaints of internal pelvic pain are addressed by her separate rating for residuals, hysterectomy and bilateral oophorectomy. Accordingly, this is not an exceptional circumstance in which extra-schedular consideration may be required to compensate the Veteran for a disability that can be attributed only to the combined effect of multiple conditions.
Finally, in Rice v. Shinseki, 22 Vet. App. 447 (2009), the Court held that a claim for a total rating based on individual employability due to service-connected disability (TDIU) is part of an increased rating claim when such claim is expressly raised by the Veteran or reasonably raised by the record. There is no evidence in the record to suggest that the Veteran's scar has affected her ability to obtain gainful employment. Therefore, the Board finds that the issue of entitlement to a TDIU is not expressly raised by the Veteran or reasonably raised by the record at any point during the appeal. Thus, further consideration of such is not necessary.
In reaching this decision, the Board has considered the applicability of the benefit of the doubt doctrine. However, the preponderance of the evidence is against the Veteran's claim for an initial, compensable for rating for her service-connected scar, prior to December 8, 2014, and her claim for a rating in excess of 10 percent from December 8, 2014. Therefore, the benefit of the doubt doctrine is not applicable in the instant appeal and her increased rating claim must be denied. 38 U.S.C.A. § 5107; 38 C.F.R. §§ 4.3, 4.7.
ORDER
Entitlement to an initial, compensable for rating, prior to December 8, 2014, for the Veteran's service-connected scar is denied.
Entitlement to rating in excess of 10 percent, from December 8, 2014, for the Veteran's service-connected scar is denied.
____________________________________________
MARJORIE A. AUER
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs
|
The petition assails an ordinance of the City of Gainesville which regulates the operation of barber-shops, fixing hours for opening and closing, and minimum prices to be charged for services. While extensive averments are made as to the injury which petitioners have sustained and will sustain as a result of the ordinance, the only specific acts upon the part of the municipality to enforce the provisions of the ordinance are that copies of charges have repeatedly been given petitioners, directing them to appear in the municipal court and stand trial under the penal provisions of the ordinance, and that petitioners have been told that additional criminal charges will be made for each violation of the ordinance. The only assignment of error is upon the judgment sustaining a general demurrer and dismissing the petition. Held, that the judgment is sustained by the general rule, that equity will neither aid nor interfere with criminal prosecutions. Code, § 55-102. The following decisions state and estate this rule, and further discussion of them as related to the instant case is not deemed necessary; Phillips v. Stone Mountain, 61 Ga. 386; Mayor c. of Shellman v. Saxon, 134 Ga. 29
(67 S.E. 438, 27 L.R.A. (N.S.) 452); Starnes v. Atlanta, 139 Ga. 531 (77 S.E. 381); Corley v. Atlanta, 181 Ga. 381
(182 S.E. 177); Powell v. Hartsfield, 190 Ga. 839
(11 S.E.2d 33); City of Atlanta v. Miller, 191 Ga. 767
(13 S.E.2d 814), and cit. This case does not come within the rule applied in Great Atlantic Pacific Tea Co.
v. Columbus, 189 Ga. 458 (6 S.E.2d 320), and City of Albany v. Lippitt, 191 Ga. 756 (13 S.E.2d 807), where the petitioners were not being prosecuted; and Walker v. Carrollton, 187 Ga. 237 (200 S.E. 268), where the majority of this court construed the allegations to mean that by frequent "raids and searches" of petitioner's premises, property was being injured in addition to the criminal prosecutions complained of.
Judgment affirmed. All the Justices concur, except Atkinson, P. J., who dissents.
No. 13909. OCTOBER 15, 1941. |
Citation Nr: 0816404
Decision Date: 05/19/08 Archive Date: 05/29/08
DOCKET NO. 07-17 271 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in St.
Petersburg, Florida
THE ISSUE
1 Entitlement to service connection for a cognitive
disorder, not otherwise specified, to include symptoms of
memory loss and attention disorder.
2. Entitlement to an initial evaluation greater than 50
percent for sleep apnea with chronic fatigue.
3. Entitlement to an initial evaluation greater than 20
percent for bladder neck obstruction.
4. Entitlement to an initial compensable evaluation for torn
cartilage, right wrist.
5. Entitlement to an initial compensable evaluation for
allergic rhinitis.
6. Entitlement to an initial compensable evaluation for
chronic sinusitis.
7. Entitlement to an initial compensable evaluation for acid
reflux.
REPRESENTATION
Appellant represented by: The American Legion
WITNESS AT HEARING ON APPEAL
The veteran
ATTORNEY FOR THE BOARD
Rebecca N. Poulson, Associate Counsel
INTRODUCTION
The veteran served on active duty from June 1984 to March
2005. The DD 214 discloses an additional 18 months of active
duty. He is a Gulf War veteran.
This matter is before the Board of Veterans' Appeals (Board)
from a June 2005 decision by the Department of Veterans
Affairs (VA) Regional Office (RO) in St. Petersburg, Florida,
which, in pertinent part, denied service connection for
memory loss and bilateral hearing loss.
In February 2008, the veteran testified at a Central Office
hearing before the undersigned Acting Veterans Law Judge.
During the hearing, the veteran submitted additional evidence
along with a waiver of initial RO consideration. A
transcript of the hearing is associated with the claims
folder.
During the hearing, the veteran withdrew his appeal for
service connection for bilateral hearing loss. Accordingly,
the Board finds that the veteran has effectively withdrawn
his appeal as to the issue of service connection for
bilateral hearing loss. Hence, the issue is as described on
the front page of this decision.
In November 2004, the veteran filed claims for service
connection for frequent urination; sleep apnea with chronic
fatigue; torn cartilage, right wrist; allergic rhinitis;
chronic sinusitis; and acid reflux. In a June 2005 rating
decision, the RO granted service connection for sleep apnea
with chronic fatigue, rating the disability 50 percent, and
for bladder neck obstruction, rating the disability 10
percent, effective April 1, 2005. The RO also granted
service connection for torn cartilage of the right wrist,
allergic rhinitis, chronic sinusitis, and acid reflux,
evaluating these disabilities as noncompensable, effective
April 1, 2005. With respect to the bladder neck dysfunction
claim, the veteran timely filed a NOD in October 2005. In a
June 2006 decision, the RO increased the disability rating to
20 percent. With respect to the remaining claims, the
veteran filed a timely NOD in May 2006. The record reflects
that the RO has not issued the requisite SOC with respect to
these remaining issues pursuant to 38 C.F.R. § 20.200, and
therefore, the Board must remand these issues for proper
issuance of an SOC, and to provide the veteran an opportunity
to perfect an appeal of the issues thereafter by filing a
timely substantive appeal. Manlincon v. West, 12 Vet. App.
238, 240-41 (1999).
FINDINGS OF FACT
1. While the veteran does not have documentation of a
diagnosis of cognitive disorder in service, the service and
post-service medical records indicate complaints of memory
loss and attention disorder during and after service and a
diagnosis of cognitive disorder within three years of
separation from service.
2. The documented history of memory problems and attention
disorder during and since service, the competent evidence of
a diagnosis of cognitive disorder within three years of
service, and the filing of a claim prior to the veteran's
separation from service places the evidence in relative
equipoise as to whether his cognitive disorder began during
or as the result of service.
CONCLUSION OF LAW
Service connection for a cognitive disorder is warranted. 38
U.S.C.A. § 1110, 1131 (West 2002 & Supp. 2007); 38 C.F.R. §§
3.303, 3.304 (2007).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
I. The Veterans Claims Assistance Act (VCAA)
On November 9, 2000, the President signed into law the VCAA,
Pub. L. No. 106-475, 114 Stat. 2096 (2000). This law
redefines the obligations of VA with respect to the duty to
assist and includes an enhanced duty to notify a claimant as
to the information and evidence necessary to substantiate a
claim for VA benefits.
First, VA has a duty to notify the appellant of any
information and evidence needed to substantiate and complete
a claim. 38 U.S.C.A. §§ 5102, 5103; 38 C.F.R.
§ 3.159(b). Second, VA has a duty to assist the appellant in
obtaining evidence necessary to substantiate a claim. 38
U.S.C.A. § 5103A; 38 C.F.R. § 3.159(c) (2006).
As discussed in more detail below, sufficient evidence is of
record to grant the claim for service connection for a
cognitive disorder, not otherwise specified, to include
symptoms of memory loss and attention disorder. Therefore,
no further development is needed with respect to the
veteran's appeal.
II. Laws and Regulations
a. Service Connection
The Court has held that "[f]or service connection to be
awarded, there must be (1) medical evidence of a current
disability; (2) medical evidence, or in certain
circumstances, lay evidence of an in-service incurrence or
aggravation of a disease or injury; and (3) medical evidence
of a nexus between the claimed in-service disease or injury
and the present disease or injury." Coburn v. Nicholson, 19
Vet. App. 427, 431 (2006); accord Disabled Am. Veterans v.
Sec'y of Veterans Affairs, 419 F.3d 1317, 1318 (Fed. Cir.
2005); Shedden v. Principi, 381 F.3d 1163, 1166-67 (Fed. Cir.
2004). If the veteran fails to demonstrate any one element,
denial of service connection will result. Disabled Am.
Veterans, supra; Coburn, supra.
With respect to the "current disability" prong, the Court has
recognized that, "[i]n the absence of proof of a present
disability there can be no valid claim" of service
connection. Brammer v. Derwinski, 3 Vet. App. 223, 225
(1992); Caluza v. Brown, 7 Vet. App. 498, 505 (1995)
(recognizing that "[a] service-connection claim must be
accompanied by evidence which establishes that the claimant
currently has the claimed disability"); see also Chelte v.
Brown, 10 Vet. App. 268, 271, 272 (1997) (holding that the
veteran's claim was not well grounded when the evidence
"establishe[d] only that the veteran had a [disability] in
the past, not that he has a current disability").
Turning to the second, "incurrence in or aggravation by
service" prong, the Court has expressed that "[s]ervice
connection for VA disability compensation . . . will be
awarded to a veteran who served on active duty during a
period of war . . . for any disease or injury that was
incurred in or aggravated by" such service. Caluza, 7 Vet.
App. at 505. VA may grant service connection, despite a
diagnosis after discharge, when all the evidence, including
that pertinent to service, establishes that the veteran
incurred the disease during service. See 38 C.F.R. §
3.303(d); accord Caluza, supra ("When a disease is first
diagnosed after service, service connection may nevertheless
be established by evidence demonstrating that the disease was
in fact 'incurred' during the veteran's service, or by
evidence that a presumption period applied").
With respect to the third, "nexus" prong, the veteran must
demonstrate through medical evidence that "a causal
relationship" exists between the present disability and an
in-service event. Shedden, 381 [email protected]. Where the
determinative issue involves medical causation or a medical
diagnosis, competent medical evidence must demonstrate that
the claim is plausible. Espiritu v. Derwinski, 2 Vet. App.
492, 494 (1992). Mere lay assertions of medical status do
not constitute competent medical evidence. Moray v. Brown, 5
Vet. App. 211, 214 (1993) ("lay persons are not competent to
offer medical opinions"). Alternatively, a veteran can
establish a nexus between service and the current disability
by offering medical or lay evidence of continuity of
symptomatology and medical evidence of a nexus between the
present disability and the symptomatology. See Voerth v.
West, 13 Vet. App. 117, 120 (1999); Savage v. Gober, 10 Vet.
App. 488, 495 (1997).
b. Standard of Review
38 U.S.C.A. § 5107 (West 2002) sets forth the standard of
proof applied in decisions on claims for veterans' benefits.
A veteran will receive the benefit of the doubt when an
approximate balance of positive and negative evidence exists.
38 U.S.C.A. § 5107; 38 C.F.R. § 3.102. Thus, when a veteran
seeks benefits and the evidence is in relative equipoise, the
veteran prevails. Wells v. Principi, 18 Vet. App. 33, 36
(2004); Gilbert v. Derwinski, 1 Vet. App. 49, 54 (1990). A
claim will be denied only if a preponderance of the evidence
is against the claim. See Alemany v. Brown, 9 Vet. App. 518,
519-20 (1996).
III. Analysis
a. Factual Background
Service Medical Records
A November 1983 Report of Medical Examination for Enlistment
discloses a normal clinical assessment of all systems. In
the accompanying Report of Medical History, the veteran
denied having any problems with memory loss. Numerous
examinations between 1984 and 2002 disclose normal clinical
assessments of the neurological system and similar reports by
the veteran indicating no memory loss.
A May 1985 consultation record indicates that the veteran had
a "weakness on performance scores," "serious problems in
his technique for memory," and "problems in attention
span." The veteran's ability to concentrate was also
questioned. The clinician stated that "this may create
problems in radio calls and in handling complex
instructions" and indicated that further testing might be
helpful.
A September 1987 treatment record acknowledges the May 1985
consultation and indicates that while the veteran "may have
had problems with memory in the past," he was cleared for
fit for duty in June 1985. The veteran acknowledged that
"he did sometimes have mild difficulty remembering things
mainly evidenced in radio transmission procedures" but
stated that it was a "very minimal problem now."
An October 1987 treatment record indicates that "since [the
veteran] was cleared for flight status (FFD) by Ft. Rucker
and since unit has not had any real problems with [the
veteran] flying or handling radio transmissions, Division
Surgeon believes [the veteran] can be cleared for PRP."
A November 1987 treatment record indicates that the clinician
discussed the veteran's condition with the unit IP and
determined that there were "no problems whatsoever -
cleared." (Emphasis in original).
A 2004 MRI of the veteran's brain reveals a borderline
cerebellar ectopia, also known as a Chiari I malformation.
An undated attention deficit hyperactivity disorder (ADHD)
self-report checklist indicates that the veteran "very
often" had problems remembering appointments or obligations
and difficulty keeping his attention and concentration.
August 2005 VA Neurological Disorders Examination
The veteran reported difficulty in remembering items after a
few hours or days for 5-10 years' duration. He denied any
other difficulties with performing his job as a helicopter
pilot or with other cognitive tasks. Upon physical
examination, his mental status was alert and his speech was
fluent. He was able to follow three step commands and recall
2/3 objects at three minutes. 1/3 words were missed at five
minutes. The clinician reviewed the SMRs that the veteran
had brought with him and noted that the October 2004 MRI was
normal. He stated that "[i]t is unclear if this is an
attention issue or a memory problem. No history of head
trauma or other cognitive deficits to implicate an
etiology." He recommended more extensive neuropsychological
testing. No diagnosis was given.
Post-Service Treatment Records
A December 2005 VA treatment record indicates that the
veteran reported a declining memory.
Private treatment records from the 96th Medical Group at
Eglin Air Force Base reveal that in May 2006 the veteran gave
a history of memory problems to include forgetting names.
The impression included memory complaints. In June 2006, the
doctor noted that memory testing and an MRI would be
conducted. An August 2006 note indicates that all tests,
including the MRI, were normal and that no neurological cause
for the veteran's memory loss could be identified.
A January 2008 report from the Rock Landing Psychological
Group indicates that the veteran described his memory problem
as a "retrieval issue." The doctor stated that the veteran
"is not clear about the onset of his problems with memory,
but he dated it as 'going back to Desert Storm.'" Upon
physical examination, the rate and volume of his speech were
normal. At time he scrambled some words. His sensori-motor
functions were generally intact. Assessment of attention and
concentration revealed significant deficits.
After conducting a thorough battery of tests, the doctor
diagnosed ADHD, inattentive type. He explained:
[The veteran's] apparent memory problems are likely
to be problems in registration where events do not
make it into short-term memory or in organization
and retrieval. The difficulties [the veteran]
attributes to memory are readily explained by an
attention deficit - e.g., not completing thoughts,
"jumping" topics, repeating what others have said
without recognition that others just said it,
living in a "fog," and disorganization . . . It
is not clear from [the veteran's] account to what
extent he had similar difficulties as a child or
whether the onset coincided with his experience in
Desert Storm.
January 2008 treatment notes from the Rock Landing
Psychological Group reveal that the veteran complained of
memory problems for 10-15 years' duration, mostly after
returning from Desert Storm in 1991. However, he noted that
some of these symptoms were present in grade school.
February 2008 treatment notes include an assessment of ADHD,
inattentive type, and cognitive disorder, not otherwise
specified, etiology uncertain. The doctor prescribed
Ritalin.
A June 2008 VA mental health treatment note indicates that
the veteran reported "a great deal of trouble remembering
things for many years." He complained of forgetting names
and faces of long-time colleagues and friend, difficulty
remembering how to pronounce infrequently used words, and
forgetting to go to an appointment after leaving his house.
Upon physical examination, the veteran was oriented x4. He
exhibited good attention and concentration and maintained
appropriate eye contact. After a thorough battery of tests,
the clinician determined that the veteran had deficits in
both auditory and short-term memory. However, she opined
that his symptoms were the product of memory deficits rather
than a product of inattention. She explained:
Memory impairment of the severity seen in [the
veteran] could resemble a lack of attention,
however he did not have any difficulty completing
the testing tasks in a focused, deliberate and
timely manner. Additionally, [the veteran's] early
academic history does not suggest ADHD. He also
successfully served as a helicopter pilot for over
thirty years, an occupation requiring sustained
attention and concentration. Further, the long
term memory deficits reported, including forgetting
friend's names and words, indicate memory problems,
rather than simple inattention or a lack of
concentration. Although [the veteran] was
previously diagnosed with ADHD and he continues to
exhibit inattention problems, this evaluation found
more explanatory evidence for memory problems
rather than attention and concentration problems.
The Axis I diagnosis was cognitive disorder, not otherwise
specified. The clinician
recommended that he undergo neurological assessment "in
order to better determine the cause of his memory
impairments."
February 2008 Central Office Hearing
The veteran testified that he did not mention his memory
problems after flight school because "if you want to keep
flying, you just don't talk about that stuff." He stated
that "I don't know if this is Desert Storm related at all"
and further indicated that he did not plan on being evaluated
for Gulf War syndrome.
b. Discussion
The Board determines that the evidence falls at least in
relative equipoise with respect to the veteran's claim for
service connection claim for a cognitive disorder, in which
case the veteran receives the benefit of the doubt in his
favor. Specifically, the Board notes that the SMRs reflect
that the veteran was evaluated for memory loss and
concentration problems in 1985 and 1987. The SMRs do not
show a diagnosis of cognitive disorder. The veteran was
separated from active service in March 2005. However, this
disorder apparently had not become resolved upon his service
discharge, as he filed this claim four months prior to
discharge in November 2004. A close temporal proximity
between service discharge and filing of a claim for service-
connected disability is probative when considering the
veteran's claim, as it evidences a continuity of
symptomotology during and after service. See Hampton v.
Gober, 10 Vet. App. 481 (1997).
Post-service, the veteran submitted to a VA neurological
examination in August 2005. The veteran reported having
memory loss. The examiner was unable to determine whether
the veteran suffered from an attention disorder or a memory
problem. However, a June 2008 VA examination indicates that
the veteran suffers from a cognitive disorder manifested by
symptoms of memory loss and attention disorder. Recent
neurological testing by a private provider confirms this
diagnosis.
Accordingly, the Board finds that the competent medical
evidence of record supports the veteran's claim for service
connection for a cognitive disorder, not otherwise specified,
to include symptoms of memory loss and attention disorder.
ORDER
Service connection for a cognitive disorder, not otherwise
specified, to include symptoms of memory loss and attention
disorder is granted.
REMAND
In November 2004, the veteran filed claims for service
connection for frequent urination; sleep apnea with chronic
fatigue; torn cartilage, right wrist; allergic rhinitis;
chronic sinusitis; and acid reflux. In a June 2005 rating
decision, the RO granted service connection for sleep apnea
with chronic fatigue, rating the disability 50 percent, and
for bladder neck obstruction, rating the disability 10
percent, effective April 1, 2005. The RO also granted
service connection for torn cartilage of the right wrist,
allergic rhinitis, chronic sinusitis, and acid reflux,
evaluating these disabilities as noncompensable, effective
April 1, 2005.
With respect to the bladder neck dysfunction claim, the
veteran timely filed a NOD in October 2005. In a June 2006
decision, the RO increased the disability rating to 20
percent. With respect to the remaining claims, the veteran
filed a timely NOD in May 2006.
Under these circumstances, the Board must remand these issues
so that the RO can provide the veteran an SOC, and afford him
an opportunity to perfect an appeal of these issues
thereafter by filing a timely substantive appeal. See
Manlincon, 12 Vet. App. at 240-41.
Accordingly, the case is REMANDED for the following action:
Issue a Statement of the Case to the
veteran and his representative addressing
the issues of entitlement to higher
initial evaluations for sleep apnea with
chronic fatigue; bladder neck obstruction;
torn cartilage, right wrist; allergic
rhinitis; chronic sinusitis; and acid
reflux.
The veteran also must be advised of the
time limit in which he may file a
substantive appeal. 38 C.F.R.
§ 20.302(b).
The appellant has the right to submit additional evidence and
argument on the matter or matters the Board has remanded.
Kutscherousky v. West, 12 Vet. App. 369 (1999).
This claim must be afforded expeditious treatment. The law
requires that all claims that are remanded by the Board of
Veterans' Appeals or by the United States Court of Appeals
for Veterans Claims for additional development or other
appropriate action must be handled in an expeditious manner.
See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2007).
____________________________________________
LILA J. BAKKE
Acting Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs
|
Kermit and Betty Uecker, et al., 1 Petitioners v. Commissioner of Internal Revenue, RespondentUecker v. CommissionerDocket Nos. 16419-79, 16420-79, 16421-79, 16435-79United States Tax Court81 T.C. 983; 1983 U.S. Tax Ct. LEXIS 2; 81 T.C. No. 63; December 19, 1983, Filed 1983 U.S. Tax Ct. LEXIS 2">*2 Decisions will be entered under Rule 155. Petitioners purchased a cattle ranch which consisted of a small amount of lands in fee simple, various physical improvements, and a grazing lease and license with finite durations covering adjacent State and federally owned lands. Pursuant to applicable law, petitioners possessed preferential renewal privileges for an indefinite term concerning the grazing lease and license. Petitioners contend that the allocative portions of the ranch purchase price with respect to the grazing license and lease should be amortized over their stated durations. Held, purchase price of ranch allocated to its various components. Held, further, useful life of Federal grazing license is indefinite due to preferential renewal privileges; hence, no deductions amortizing its cost are permitted. Sec. 167, I.R.C. 1954. Held, further, useful life of State grazing lease is also indefinite due to preferential renewal privileges; hence, no deductions amortizing its cost are permitted. Sec. 178, I.R.C. 1954. Towner Leeper and David Leeper, for the petitioners.James N. Mullen and John R. Eiman, for the respondent. Goffe, Judge. GOFFE81 T.C. 983">*984 The Commissioner determined deficiencies in the petitioners' Federal income tax for the taxable years as follows:PetitionersDocket No.Taxable yearAmountsKermit and Betty Uecker16419-791976$ 5,415.26Kermit W. Uecker16420-7919724,877-980-2543,142.4119741,090.5019756,089.59Ann Uecker16421-7919724,877-980-2543,142.4119741,090.5019756,089.59Jon and Sheridan Hansen16435-79197529,650.00197621,877.001983 U.S. Tax Ct. LEXIS 2">*5 After multiple concessions by the parties, the issues for decision are the respective values and useful lives of various components of a ranch (including attendant grazing privileges) and whether any such components qualify for investment credit pursuant to section 38. 281 T.C. 983">*985 FINDINGS OF FACTSome of the facts have been stipulated. The stipulation of facts, supplemental stipulation of facts, and accompanying exhibits are so found and incorporated herein by reference.Petitioners Kermit and Ann Uecker (now Ann Richardson) were married at all times during taxable years 1972, 1973, 1974, and 1975, filing joint Federal income tax returns for such years with the Internal Revenue Service in Austin, Tex. In 1976, Kermit and Ann Uecker were divorced. Kermit Uecker subsequently remarried and filed a joint Federal income tax return with Betty Uecker for the taxable year 1976 with the Internal Revenue Service in Austin, Tex. Petitioners Jon1983 U.S. Tax Ct. LEXIS 2">*6 and Sheridan Hansen were married at all times during 1975 and 1976 and filed joint Federal income tax returns for such years with the Internal Revenue Service in Austin, Tex. All of the petitioners resided in El Paso, Tex., when they filed their petitions.On April 1, 1975, petitioners Jon and Sheridan Hansen and Kermit and Ann Uecker purchased a ranch in New Mexico (hereinafter referred to as the Mt. Riley Ranch) from Gerald and Barbara Strauss for $ 313,000. Petitioners paid for said ranch by assuming an underlying mortgage with an outstanding principal balance of $ 213,000 and executing a $ 100,000 promissory note payable over a 7-year term. On April 1, 1975, petitioners also agreed to lease back the Mt. Riley Ranch to the Strausses for a 7-year period at an annual rent of $ 17,914 which also equaled petitioners' payment obligations with respect to the $ 100,000 promissory note.For the consideration paid, petitioners received: (1) A fee simple interest in 159.396 acres of land (hereinafter referred to as the patented land) and improvements thereon; and (2) attendant grazing privileges with respect to (a) 75,360 acres of contiguous land owned by the United States and administered1983 U.S. Tax Ct. LEXIS 2">*7 by the Department of Interior's Bureau of Land Management (hereinafter referred to as BLM), and (b) 6,540.76 acres of adjacent land owned by the State of New Mexico. Physical improvements at the Mt. Riley Ranch were primarily located on the patented land and included: (1) A main dwelling; (2) miscellaneous ranching structures consisting of a barn, a garage, and several storerooms; (3) 40 miles of interior fences and a one-half interest in 16.75 miles of exterior fences; (4) 81 T.C. 983">*986 several corrals; (5) assorted wells, pumps, pipelines, and a storage tank; (6) several earthen dams and unimproved roads; and (7) miscellaneous equipment. Much of the fencing was at least 20 years old when petitioners purchased the facility. Petitioners' purchase agreement with the Strausses made no allocations concerning the values of any ranch assets.The parties have agreed that no portion of the ranch's purchase price is allocable to the various unimproved roads or miscellaneous equipment at the Mt. Riley Ranch. The parties have also agreed to allocate portions of the purchase price among several ranch components as follows:ItemAmount(1) Corrals$ 8,000(2) Wells, pumps, pipelines, and storage tank6,570(3) Earthen dams8,000(4) 159.396 acres of patented land4,800(5) State grazing privileges34,3351983 U.S. Tax Ct. LEXIS 2">*8 Given the relatively small size of petitioners' patented land at the ranch, the attendant grazing privileges on both the Federal and State-owned lands are extremely valuable and an essential component of any successful large-scale ranching operation. The tracts comprising such Federal and State grazing areas are intermingled and not separated by physical barriers. There are no differences among them as to their forage producing ability, carrying capacity, or general utility in the ranching industry. Environmental conditions at the Mt. Riley Ranch are generally quite arid although palatable range grasses including tobosa, sacaton, bear grass, curly mesquite, and 6-week grama grass naturally grow in semibare areas during periods of high soil moisture.Grazing privileges on the federally owned lands are generally governed by the Taylor Grazing Act of 1934 (hereinafter sometimes referred to as the act). 3 Section 1 of the act authorizes the Secretary of the Interior to establish grazing districts on various Federal lands and to issue grazing permits to certain qualified persons. 4 Section 3 of the act 5 establishes a 81 T.C. 983">*987 system of priorities concerning the granting of such1983 U.S. Tax Ct. LEXIS 2">*9 grazing privileges and defines the nature of the interest acquired as follows:Preference shall be given in the issuance of grazing permits to those within or near a district who are landowners engaged in the livestock business, bona fide occupants or settlers, or owners of water or water rights * * * Such permits shall be for a period of not more than ten years, subject to the preference right of the permittees to renewal in the discretion of the Secretary of the Interior, who shall specify from time to time numbers of stock and seasons of use * * * but the creation of a grazing district or the issuance of a permit pursuant to the provisions of this chapter shall not create any right, title, interest, or estate in or to the lands.Although the act only addresses the Department of Interior's regulation of grazing privileges through the issuance of permits, no multiyear permit is needed to secure the required BLM grazing license. Specific seasonal use of such lands is actually regulated through annual licensing procedures which also determine the number of animal-unit months (AUMs) 6 a tract can support and the attendant grazing fees. Licensees without multiyear permits are 1983 U.S. Tax Ct. LEXIS 2">*10 still entitled to application and renewal preferences. Finally, as a practical matter in accordance with all statutes, regulations, and customary procedures, once Federal grazing privileges are obtained pursuant to a preference, the landholder's ability to secure additional renewals thereof generally continues indefinitely although subject to possible changes in the AUM levels due to varying range conditions.Grazing privileges on the land owned by the State of New Mexico have slightly different attributes. Lands designated for grazing can be leased1983 U.S. Tax Ct. LEXIS 2">*11 for terms of up to 5 years with no additional annual licensing requirement. 7 A major similarity, however, to the related Federal grazing system concerns the preferential treatment accorded some leasehold applicants. Under New Mexico law, prior lessees of a particular tract have a preferred right of renewal; 8 hence, once leasehold rights to a 81 T.C. 983">*988 given tract are obtained, the user's ability to secure additional renewals thereof generally continues indefinitely. Finally, the State of New Mexico can regulate the degree of use of such leased lands by imposing AUM limits during the term of the lease.Upon petitioners' purchase of the Mt. Riley Ranch, the Strausses transferred to them all interests in and rights to the grazing privileges on both the Federal and State-owned lands. Such grazing privileges included a 1-year BLM grazing license for the period March 1, 1975, to February 29, 1976, with respect to 75,360 acres of land1983 U.S. Tax Ct. LEXIS 2">*12 in the Las Cruces grazing district and a 5-year lease of 6,540.76 acres of State of New Mexico lands which commenced October 1, 1974. The BLM grazing license contained an annual 5,448 AUM limit, while the record is silent concerning similar State restrictions.Petitioners allocated the $ 313,000 Mt. Riley Ranch purchase price among its components and claimed straight-line depreciation deductions for the taxable year 1975 as follows:Useful lifeDepreciation 9ItemAmount(in years)for 1975(1) Fences$ 130,0007$ 6,964(2) Dams, windmills and pipeline45,33472,429(3) Corrals, barn, and storehouse37,00071,982(4) Ranchhouse26,00015650(5) Miscellaneous7,3967396(6) Wells and pumps6,57010352(7) Roads, bridges, and culverts2,7007145255,00012,9181983 U.S. Tax Ct. LEXIS 2">*13 Petitioners allocated an additional $ 40,000 of the purchase price to existing forage on the ranch (including areas subject to Federal and State grazing privileges), and each couple expensed $ 20,000 for the 1975 taxable year as "feed purchased." The remaining balance of the purchase price ($ 18,000) was apparently allocated to nondepreciable assets. Petitioners Kermit and Ann Uecker and Jon and Sheridan Hansen also claimed $ 10,000 of investment credit on each of their 1975 81 T.C. 983">*989 joint Federal income tax returns with respect to the assets at the Mt. Riley Ranch.For the taxable year 1976 (which was the first full year of petitioners' operation of the Mt. Riley Ranch), petitioners continued their straight-line depreciation of the above-referenced components. Petitioners Jon and Sheridan Hansen claimed deductions totaling $ 17,084 with respect to such depreciable assets, while petitioners Kermit and Betty Uecker claimed a total of $ 17,224 of deductions for the same assets. The Commissioner disallowed all of petitioners' claimed depreciation deductions for lack of substantiation; disallowed the claimed feed-expense deductions for failure to establish it was expended for the 1983 U.S. Tax Ct. LEXIS 2">*14 purpose shown on the return; and disallowed the claimed investment credit on the basis that the property did not qualify.ULTIMATE FINDINGS OF FACTThe allocable portions of the Mt. Riley Ranch purchase price with respect to its main dwelling, miscellaneous ranching structures, fencing, and Federal grazing privileges are $ 12,000, $ 2,000, $ 48,375, and $ 188,920, respectively. No portion of the purchase price is attributable to forage. The Federal and State grazing privileges have indefinite useful lives.OPINIONI. Allocation of Purchase PriceThe primary issue for decision concerns the allocation of the purchase price of the Mt. Riley Ranch among its various components. As set forth in the findings of fact, the parties have agreed that $ 61,705 of the $ 313,000 purchase price be allocated among several ranch assets. No agreement was reached with respect to apportioning the balance of the purchase price among the remaining resources which consist of the main dwelling, miscellaneous ranching structures, 56.75 miles of interior and exterior fences, existing forage on the patented and grazing lands, and Federal grazing privileges on 75,360 acres of lands licensed by BLM.81 T.C. 983">*990 1983 U.S. Tax Ct. LEXIS 2">*15 A. Main Dwelling and Miscellaneous Ranching StructuresThe first allocation issue involves that portion of the Mt. Riley Ranch purchase price representing the main dwelling and miscellaneous ranching structures consisting of a barn, a garage, and several storerooms. Petitioners and respondent each presented one expert witness who valued such improvements by multiplying their square footage by selected reproduction cost figures and then discounting the products for accrued depreciation. Petitioners' expert witness valued the main dwelling and miscellaneous ranching structures at $ 22,140 and $ 1,220.80, respectively. Respondent's expert witness valued such improvements at $ 12,000 and $ 2,000, respectively. Petitioners' expert witness, however, was unable to substantiate the replacement costs per square foot utilized in his computations. After considering the appraisal reports and testimony of the expert witnesses, we conclude that the petitioners have failed to carry the burden of proof placed upon them by Rule 142(a). 10 Accordingly, we find that the allocable portions of the purchase price with respect to the main dwelling and miscellaneous ranching structures are $ 12,0001983 U.S. Tax Ct. LEXIS 2">*16 and $ 2,000, respectively.B. FencesThe next disputed allocation concerns 40 miles of interior fences and a one-half interest in 16.75 miles of exterior fences. Although petitioners initially allocated $ 130,000 of the Mt. Riley Ranch purchase price to such structures on their tax returns for depreciation purposes, the parties have subsequently agreed that the reproduction costs of such fences would have been approximately $ 85,000 in 1975. The parties, however, disagree as to the amounts of adjustment necessary for accrued depreciation, which petitioners and respondent contend are 15 percent and 40 percent, respectively. Petitioners' expert witness prepared his valuation by review of BLM records and discussions with BLM personnel and local ranchers, and his appraisal specifically assumes constant maintenance of such structures. The valuation prepared by respondent's expert witness is also partially based upon review of BLM1983 U.S. Tax Ct. LEXIS 2">*17 records, yet respondent's expert also personally inspected 81 T.C. 983">*991 portions of the structures in issue. BLM records concerning improvements on the Mt. Riley Ranch indicate that much of the fencing was over 20 years old when petitioners purchased the ranch. Further, no evidence was presented concerning the constant maintenance of such structures since their construction. Therefore, after considering the appraisal reports and the testimony of the expert witnesses, we conclude that the petitioners have failed to carry the burden of proof placed upon them by Rule 142(a). Accordingly, we find that the allocable portion of the Mt. Riley Ranch purchase price with respect to the 56.75 miles of fencing is $ 48,375.C. ForageThe next allocation issue concerns the forage on the patented land and on the Federal and State grazing acreage at the time petitioners purchased the ranch. Petitioners contend that due to the superior condition of the existing forage on such premises, an additional premium of 50 cents per acre was both warranted and paid by them when they purchased the Mt. Riley Ranch. Therefore, they contend that they could collectively expense $ 40,000 of the $ 313,000 1983 U.S. Tax Ct. LEXIS 2">*18 purchase price as "feed purchased" for taxable year 1975. Respondent contends that any existing renewable forage on such premises is simply a part of the Federal and State grazing privileges and petitioners' real property interest in their patented land.Allocation of part of the purchase price of land to existing crops thereon has been permitted by this Court. Watson v. Commissioner, 15 T.C. 800">15 T.C. 800, 15 T.C. 800">815-816 (1950), affd. 197 F.2d 56">197 F.2d 56 (9th Cir. 1952), affd. 345 U.S. 544">345 U.S. 544 (1953). There, the allocation was necessary to properly apportion sales proceeds between land and unharvested crops to determine the amounts of capital gains and ordinary income, respectively. 11 In the immediate case, however, the petitioners have sought to allocate a portion of the purchase price of a ranch to its existing forage for which they subsequently claimed deductions as "feed purchased."1983 U.S. Tax Ct. LEXIS 2">*19 Deductions are generally permissible for the expenses of a trade or business or for the production of income only if they 81 T.C. 983">*992 are "ordinary and necessary." Secs. 162 and 212, respectively. The burden of clearly showing the right to the claimed deduction is on the taxpayer. Interstate Transit Lines v. Commissioner, 319 U.S. 590">319 U.S. 590 (1943); New Colonial Ice Co. v. Helvering, 292 U.S. 435">292 U.S. 435 (1934).In the instant case, petitioners have failed to satisfy their burden of proving that $ 40,000 of the Mt. Riley Ranch purchase price was properly allocable to its existing forage and that such amount was an ordinary and necessary expense of their ranching operations. There is no evidence that petitioners used the forage on the Mt. Riley Ranch for grazing purposes with respect to animals in which they actually had an interest. Rather, petitioners leased back the ranch and existing forage thereon to the Strausses, the prior owners, on the day they purchased it. Further, no additional charge for the allegedly superior-quality forage was paid for by the Strausses. In fact, the Strausses leased a total of 82,060 acres from petitioners1983 U.S. Tax Ct. LEXIS 2">*20 for a period of 1 year and also acquired an alleged $ 40,000 of forage for a mere $ 17,914. Assuming that petitioners' payment of such expenses was necessary, the record is devoid of evidence indicating that similar transactions of this type are common or frequent in the ranching industry. Deputy v. du Pont, 308 U.S. 488">308 U.S. 488 (1940). Furthermore, petitioners' only evidence concerning the value of such forage was the self-serving testimony of Kermit Uecker, who admitted he was not a rancher, that it was "worth an extra 50 cents an acre." Therefore, we conclude that petitioners have failed to carry their burden of proving that $ 40,000 of the Mt. Riley Ranch purchase price was allocable to its existing forage and that such amount was an ordinary and necessary expense of their ranching operations. Accordingly, no allocation with respect to the forage is warranted and respondent's disallowance of the $ 40,000 "feed purchased" expense is sustained.D. Federal Grazing PrivilegesThe final allocation concerns that portion of the Mt. Riley Ranch purchase price attributable to the Federal grazing privileges on 75,360 acres of land owned by the United States1983 U.S. Tax Ct. LEXIS 2">*21 and administered by BLM. The parties have agreed that once the preceding allocations have been made, the remaining 81 T.C. 983">*993 balance of the purchase price, i.e., $ 188,920, is attributable to such Federal grazing privileges.II. Useful LivesThe parties are in agreement concerning the useful lives of the ranch's physical improvements over which depreciation deductions may be claimed. They also agree that the patented land is nondepreciable. The parties, however, do not agree on the useful lives of the Federal and State grazing privileges. Petitioners note the absence of specific renewal options in their grazing agreements with BLM and the State of New Mexico. Therefore, they contend that pursuant to sections 162(a)(3) and 178 and section 1.162-11(a), Income Tax Regs., the allocable portions of the ranch purchase price with respect to the Federal and State grazing privileges must be amortized and deducted over the specific terms of such grazing agreements, i.e., 1 and 5 years, respectively. Respondent contends that such grazing privileges have indeterminate lives due to preferential application and renewal privileges; hence, deductions amortizing their respective costs are not1983 U.S. Tax Ct. LEXIS 2">*22 permitted.A. Federal Grazing PrivilegesUpon petitioners' purchase of the Mt. Riley Ranch, they acquired grazing privileges with respect to 75,360 acres of lands which are administered by BLM through annual licensing procedures. In Shufflebarger v. Commissioner, 24 T.C. 980">24 T.C. 980 (1955), we determined that Federal grazing privileges with respect to public lands are an intangible asset. Section 167 allows as a deduction a reasonable allowance for the exhaustion of property used in a taxpayer's trade or business. Section 1.167(a)-3, Income Tax Regs., provides that:If an intangible asset is known from experience or other factors to be of use in the business or in the production of income for only a limited period, the length of which can be estimated with reasonable accuracy, such an intangible asset may be the subject of a depreciation allowance. * * * An intangible asset, the useful life of which is not limited, is not subject to the allowance for depreciation. * * *After considering all of the evidence presented on this issue, we conclude that petitioners have failed to carry their burden of proving that the Federal grazing privileges are intangible1983 U.S. Tax Ct. LEXIS 2">*23 assets useful "for only a limited period, the length of which 81 T.C. 983">*994 can be estimated with reasonable accuracy." Pursuant to the Taylor Grazing Act, attendant regulations, and established Department of Interior policies, by virtue of petitioners' ownership of the patented land at the Mt. Riley Ranch, they are entitled to preferential renewal privileges concerning BLM's licensing of future Federal grazing privileges with respect to the 75,360 acres of lands in BLM's Las Cruces grazing district. Further, the BLM's Las Cruces district area manager testified that the owners of the patented land at the Mt. Riley Ranch have had preferential application and renewal rights concerning Federal grazing privileges since 1935. Although the AUM limits accompanying such Federal grazing lands may be altered due to varying range conditions, any adjustments in the Mt. Riley Ranch AUM levels would be made on a proportional basis with other similarly licensed individuals. 12 Thus, despite the annual licensing procedures utilized by BLM to administer such public lands, it appears unlikely that petitioners would ever suffer an involuntary and complete cancellation of their grazing privileges.1983 U.S. Tax Ct. LEXIS 2">*24 This Court has previously examined the useful lives of grazing privileges arising under section 3 of the act. 13 Further, in 24 T.C. 980">Shufflebarger v. Commissioner, supra, we reviewed similar U.S. Department of Agriculture grazing privileges which also possessed preferential rights of renewal. In both cases, we held that the useful lives of the grazing privileges were not delimited by the term of the current grazing permit or license, but were of indefinite duration.Petitioners' reliance upon section 178, which concerns the amortization and depreciation of leasehold costs and improvements, is misplaced. Petitioners' 1-year grazing license and preferential application and renewal privileges arising by virtue of their ownership of adjacent patented lands do not confer upon them "any right, title, interest, or estate in or to the lands." 43 U.S.C. sec. 315b1983 U.S. Tax Ct. LEXIS 2">*25 (1964). Black's Law Dictionary 1036 (4th ed. 1968), defines the term "leasehold" as "An estate in realty held under a lease." Therefore, petitioners do not possess a leasehold interest as to the Federal grazing privileges 81 T.C. 983">*995 within the purview of section 178 and even if they did, the result would be the same. 14 Finally, petitioners' contention that section 162(a)(3) and section 1.162-11(a), Income Tax Regs., permit them to deduct the cost of acquiring the Federal grazing privileges over the unexpired term of their 1-year grazing license must be rejected in that the Federal grazing privileges constitute an asset whose useful life exceeds 1 taxable year; hence, deductions amortizing its cost, if any, must be computed pursuant to depreciation provisions. Shutler v. United States, 470 F.2d 1143">470 F.2d 1143 (10th Cir. 1973), cert. denied 411 U.S. 982">411 U.S. 982 (1973); Howard v. Commissioner, 39 T.C. 833">39 T.C. 833 (1963).1983 U.S. Tax Ct. LEXIS 2">*26 Therefore, we conclude that petitioners have failed to carry their burden of proving under Rule 142(a) that such Federal grazing privileges have a useful life which can be estimated with reasonable accuracy. Accordingly, no deductions amortizing any portion of the costs of acquiring such grazing privileges are permissible. 470 F.2d 1143">Shutler v. United States, supra;Toledo TV Cable Co. v. Commissioner, 55 T.C. 1107">55 T.C. 1107 (1971), affd. 483 F.2d 1398">483 F.2d 1398 (9th Cir. 1973); sec. 1.167(a)-3, Income Tax Regs.B. State Grazing PrivilegesUpon petitioners' purchase of the Mt. Riley Ranch, they also acquired a 5-year lease, which commenced October 1, 1974, granting grazing privileges with respect to 6,540.76 acres of land owned by the State of New Mexico.Section 178 governs the amortization and depreciation of leasehold costs and improvements, and relevant portions thereof are set forth in the margin. 151983 U.S. Tax Ct. LEXIS 2">*28 Subsections (a) and (c) 81 T.C. 983">*996 incorporate "more probable" and "reasonable certainty" tests, respectively, for determining the depreciation term of leasehold costs and improvements. Although petitioners' State grazing1983 U.S. Tax Ct. LEXIS 2">*27 lease does not specifically include a renewal option, pursuant to New Mexico law, petitioners, as prior lessees of the State grazing lands, have preferred renewal rights to the leased lands which would always give them at least the opportunity to continue the grazing lease. 16Section 178-1(b)(1), Income Tax Regs., states that the renewal option need not be specifically provided for in the lease. Therefore, such preferred renewal rights constitute a renewal option for the purposes of section 178. Applying even the more stringent test of section 178(c) to the evidence presented, we conclude that the facts show with reasonable certainty that the State grazing privileges would be renewed, extended, or continued for an indefinite term upon petitioners' purchase of the Mt. Riley Ranch.Due to the relatively small size of petitioners' patented land at the Mt. Riley Ranch, the Federal and State grazing privileges are an essential component of any successful ranching operation. Yet the Federal and State lands are intermingled with no physical barriers separating them. Therefore, in order to prevent the loss of livestock and to avoid actionable trespass on the lands of another when grazing one's 81 T.C. 983">*997 herds, it follows that any user of the Mt. Riley Ranch patented land would necessarily utilize both the Federal and State grazing acreages.In Shutler v. United States, 470 F.2d 1143">470 F.2d 1143 (10th Cir. 1973), cert. denied 411 U.S. 982">411 U.S. 982 (1973), the court considered the issue of whether a reasonable certainty of renewal existed with respect to a 5-year State of Oklahoma agricultural lease which was subject to various renewal preferences. There, the court reversed the trial court's finding and held that, although the lease itself did not contain a renewal option, Land Office of the State of Oklahoma1983 U.S. Tax Ct. LEXIS 2">*29 regulations and policy creating preferential renewal privileges for prior lessees established a reasonable certainty of renewal. Further, the court held that pursuant to section 1.167(a)-3, Income Tax Regs., no amortization of the cost of the grazing privileges was proper because their useful lives could not be computed with reasonable accuracy.The renewal preferences accompanying the Oklahoma agricultural lease in Shutler and petitioners' New Mexico grazing lease are extremely similar. Therefore, we adopt the court's analysis of the renewal preferences in Shutler and hold that the facts show with reasonable certainty that petitioners' State grazing privileges would be renewed, extended, or continued for an indefinite term when they purchased the Mt. Riley Ranch; hence, no deductions amortizing any part of the cost of such State grazing privileges are permissible under section 178. Further, given the indefinite term of petitioners' State grazing privileges, we hold that petitioners have also failed in their burden of proof to establish the useful life of this asset with reasonable accuracy. Rule 142(a); sec. 1.167(a)-3, Income Tax Regs.Petitioners' alternate claim that1983 U.S. Tax Ct. LEXIS 2">*30 the acquisition costs of the State grazing privileges can be deducted pursuant to section 162(a)(3) over the remaining unexpired term of the grazing lease must also be rejected. The State grazing privileges constitute an intangible asset whose useful life is not delimited by its stated term. Shufflebarger v. Commissioner, 24 T.C. 980">24 T.C. 980 (1955). Therefore, any deductions amortizing its cost are permissible only if petitioners can establish its useful life with reasonable accuracy and we have held that they failed to carry 81 T.C. 983">*998 their burden of proof. Rule 142(a); sec. 1.167(a)-3, Income Tax Regs.Accordingly, we conclude that upon the evidence presented, the facts show with reasonable certainty that at the time of petitioners' purchase of the Mt. Riley Ranch, the State grazing lease would be renewed, extended, or continued for an indefinite term, which thus precludes deductions amortizing the cost of acquiring the leasehold under section 178. Further, due to petitioners' failure to carry their burden of proof that this asset has a useful life which can be established with reasonable accuracy, no deductions amortizing any part of the cost of this 1983 U.S. Tax Ct. LEXIS 2">*31 asset are permissible. 470 F.2d 1143">Shutler v. United States, supra;55 T.C. 1107">Toledo TV Cable Co. v. Commissioner, supra; sec. 1.167(a)-3, Income Tax Regs.III. Investment CreditThe remaining issue for decision concerns whether any of the ranch components qualify for investment credit pursuant to section 38. The Commissioner denied petitioners' claimed credit on the basis that the property did not qualify. Petitioners presented no evidence on this issue, and the record is unclear as to the assets for which petitioners claimed investment credit. Petitioners' only reference to this issue in their briefs is their statement that they "are entitled to investment credit which flows from the Court's allocation of costs to the assets acquired." Petitioners have clearly failed to carry their burden of proving their entitlement to such investment credit. Rule 142(a). Accordingly, subject to the preceding allocations of the Mt. Riley Ranch purchase price, the Commissioner's disallowance of the claimed investment credit is approved.Finally, we must deny petitioners' request for reasonable attorney fees because we cannot lawfully award such in the immediate1983 U.S. Tax Ct. LEXIS 2">*32 proceeding. 17Decisions will be entered under Rule 155. Footnotes1. Cases of the following petitioners were consolidated herewith for trial, briefing, and opinion: Kermit W. Uecker, docket No. 16420-79; Ann Uecker (now Ann Richardson), docket No. 16421-79; Jon and Sheridan Hansen, docket No. 16435-79.↩2. All section references are to the Internal Revenue Code of 1954 as amended.↩3. 43 U.S.C. sec. 315 et seq. (1964)↩.4. 43 U.S.C. sec. 315 (1964)↩.5. 43 U.S.C. sec. 315b (1964)↩.6. An animal-unit month (AUM), as applied to Federal range grazing privileges, is the ability to graze one cow or its equivalent for a period of 1 month. 43 C.F.R. sec. 4110.0-5↩(o) (1974). Thus, a cow grazing for an entire calendar year requires 12 AUMs.7. N.M. Stat. Ann. sec. 7-8-31↩ (1953).8. N.M. Stat. Ann. sec. 7-8-51↩ (1953).9. Both Kermit and Ann Uecker and Jon and Sheridan Hansen claimed depreciation deductions on their joint Federal income tax returns in such amounts pursuant to their respective 50-percent ownership interests in the Mt. Riley Ranch.↩10. All references to Rules are to the Tax Court Rules of Practice and Procedure.↩11. We note that, with the adoption of sec. 1231(b)(4), this allocation is no longer necessary in all instances.↩12. 43 C.F.R. sec. 4111.4↩ (1974).13. Central Arizona Ranching Co. v. Commissioner, T.C. Memo. 1964-217↩.14. See our analysis of sec. 178↩ in the following pages.15. Sec. 178 provides as follows:SEC. 178. DEPRECIATION OR AMORTIZATION OF IMPROVEMENTS MADE BY LESSEE ON LESSOR'S PROPERTY.(a) General Rule. -- Except as provided in subsection (b), in determining the amount allowable to a lessee as a deduction for any taxable year for exhaustion, wear and tear, obsolescence, or amortization -- (1) in respect of any building erected (or other improvement made) on the leased property, if the portion of the term of the lease (excluding any period for which the lease may subsequently be renewed, extended, or continued pursuant to an option exercisable by the lessee) remaining upon the completion of such building or other improvement is less than 60 percent of the useful life of such building or other improvement, or(2) in respect of any cost of acquiring the lease, if less than 75 percent of such cost is attributable to the portion of the term of the lease (excluding any period for which the lease may subsequently be renewed, extended, or continued pursuant to an option exercisable by the lessee) remaining on the date of its acquisition,the term of the lease shall be treated as including any period for which the lease may be renewed, extended, or continued pursuant to an option exercisable by the lessee, unless the lessee establishes that (as of the close of the taxable year) it is more probable that the lease will not be renewed, extended, or continued for such period than that the lease will be so renewed, extended, or continued.* * * *(c) Reasonable Certainty Test. -- In any case in which neither subsection (a) nor subsection (b) applies, the determination as to the amount allowable to a lessee as a deduction for any taxable year for exhaustion, wear and tear, obsolescence, or amortization -- (1) in respect of any building erected (or other improvement made) on the leased property, or(2) in respect of any cost of acquiring the lease,↩shall be made with reference to the term of the lease (excluding any period for which the lease may subsequently be renewed, extended, or continued pursuant to an option exercisable by the lessee), unless the lease has been renewed, extended, or continued or the facts show with reasonable certainty that the lease will be renewed, extended, or continued.16. N.M. Stat. Ann. sec. 7-8-51↩ (1953).17. Although this Court can award attorney fees pursuant to sec. 7430 in actions commenced after Feb. 28, 1983, it has no similar authority with respect to proceedings begun prior to such date. McQuiston v. Commissioner, 78 T.C. 807">78 T.C. 807 (1982), affd. without published opinion 711 F.2d 1064">711 F.2d 1064↩ (9th Cir. 1983). |
679 F. Supp. 625 (1988)
Harold V. BEIGHLEY and wife, Mary Beighley, and El Rancho Pinoso, Inc., Plaintiffs,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, Receiver of Moncor Bank, N.A., Hobbs, New Mexico, and Federal Deposit Insurance Corporation, in its Corporate Capacity, Defendants.
Civ. A. No. CA-5-85-324.
United States District Court, N.D. Texas, Lubbock Division.
February 10, 1988.
*626 Johnny Roy Phillips, Seminole, Tex., Thomas W. George and Lee Vickers, Austin, Tex., for plaintiffs.
Harold H. Pigg, Brock, Morton & Pigg, Lubbock, Tex., for defendants.
ORDER
WOODWARD, Senior District Judge.
On October 22, 1987, defendant moved for summary judgment on plaintiffs' complaint and on its own counterclaim. By Order of December 30, 1987, 676 F. Supp. 130, this court indicated that it would enter judgment for the defendant, Federal Deposit Insurance Corporation (FDIC), "unless plaintiffs provide[d] a clear statement of which documents they claim satisfy 12 U.S.C. § 1823(e)(1), which satisfy § 1823(e)(2), which satisfy § 1823(e)(3), and which satisfy § 1823(e)(4)." On January 12, 1988, plaintiffs filed a brief attempting to satisfy the directive of that Order. Plaintiffs also raised questions about discovery and sought reconsideration of rulings on other issues in the December 30, 1987, Order. Also on January 12, 1988, defendant's First Amended Answer and Counterclaim and plaintiffs' Second Amended Complaint were filed.
Since then, plaintiffs and defendant have responded to and answered each other's amended pleadings and defendant has moved to dismiss and has reasserted its summary judgment motion. Plaintiffs have now responded.
I. 12 U.S.C. § 1823(e)
In their most recent responses, plaintiffs argue energetically that they have raised a factual dispute regarding whether they satisfied 12 U.S.C. § 1823(e). If they have, then summary judgment on that basis must be denied. Fed.R.Civ.P. 56. However, there is no factual issue. The documents and depositions plaintiffs offer are not disputed. The dispute, rather, concerns only the legal significance of those documents and depositions: whether they satisfy the requirements of § 1823(e).
According to the United States Supreme Court, 12 U.S.C. § 1823(e) serves two purposes. It "allow[s] federal and state bank examiners to rely on a bank's records in evaluating the worth of the bank's assets." Langley v. FDIC, ___ U.S. ___, ___, 108 S. Ct. 396, 401, 98 L. Ed. 2d 340 (1987). It also "ensure[s] mature consideration of unusual loan transactions by senior bank officials, and prevent[s] fraudulent insertion of new terms, with the collusion of bank employees, when a bank appears headed for failure." Id. at ___, 108 S.Ct. at 401.
To achieve those ends, congress established the requirement that
No agreement which tends to diminish or defeat the right, title or interest of the [FDIC] in any asset acquired by it under this section, either as security for a loan or by purchase, shall be valid against the Corporation unless such agreement (1) shall be in writing, (2) shall have been executed by the bank and the person or persons claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the bank, (3) shall have been approved by the board of directors of the bank or its loan committee, which approval *627 shall be reflected in the minutes of said board or committee, and (4) shall have been, continuously, from the time of its execution, an official record of the bank.
12 U.S.C. § 1823(e).
These provisions are, and must be if they are to function as the Court has said they do, precise. Section 1823(e) is, the Court concluded, "categorical." Langley, ___ U.S. at ___, 108 S.Ct. at 403.
Plaintiffs have provided seventy-one (71) exhibits which they contend satisfy the requirements of § 1823(e). There is little doubt that when the exhibits are read together the agreement upon which plaintiffs rely can be inferred. But § 1823(e) does not deal with inference. It demands "categorical" compliance, and that is something plaintiffs' exhibits do not provide.
For example, plaintiffs assert that exhibits 1, 7, 8, 9, 10, and 11, taken together, satisfy § 1823(e)(2) which requires that the agreement be "executed by the bank and the person or persons claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the bank." It is true that the terms of the alleged agreement can be derived from these exhibits. And it is true that the exhibits can be said to have been executed by the appropriate persons and entities "contemporaneously with the acquisition of the asset." What is not true is that these exhibits are a written agreement executed "contemporaneously with the acquisition of the asset." At best they are strong evidence of the agreement.
Evidence of the agreement, however, is not what § 1823(e) requires. "The short of the matter is that congress opted for the certainty of the requirements set forth in § 1823(e). An agreement that meets them prevails even if the FDIC did not know of it; and an agreement that does not meet them fails even if the FDIC knew." Langley, ___ U.S. at ___, 108 S.Ct. at 403. In this case, the agreement does not meet the requirements of § 1823(e). It necessarily fails.
II. Discovery
Plaintiffs' brief also asserted that failures by the FDIC and by the Office of the Comptroller of the Currency to produce documents plaintiffs had requested is prejudicial to their case. They contend that entry of judgment against them must be improper as long as "official records" they believe exist are not produced.
The difficulty is that there is neither evidence that such records actually do exist nor evidence that such records, if they do exist, would materially strengthen, or even be relevant to plaintiffs' position. Plaintiffs cite to a statement in a deposition in support of the proposition that certain of the documents did once exist, and they speculate that the documents they hope to discover "may lead to further documentation in satisfaction of 1823(e)." Brief in Response to Court's Order of December 30, [email protected]. Plaintiffs acknowledge that FDIC has tried and failed to locate the documents they seek. And plaintiffs declare that they are continuing discovery with the Comptroller in hopes of finding further evidence.
This cause had been set for trial on December 7, 1987, with a discovery deadline established of November 23, 1987. Absent evidence of bad faith on the part of either the FDIC or the Comptroller of the Currency, and absent evidence that the documents and records sought actually exist, and absent more than speculation that if the documents and records exist and are discovered they would have any impact on the matters at hand, this court will no longer prolong the entry of judgment.
III. Request for Reconsideration
Plaintiffs have also asked the court to reconsider its holding that § 1823(e) and the Supreme Court's decision in Langley are not applicable to affirmative actions against the FDIC. For the reasons set forth in its Order of December 30, 1987, the court reaffirms its ruling. Allowing parties to apply in affirmative actions against the FDIC agreements congress has specifically precluded them from using in defensive actions is to allow "an end run around § 1823(e)," FDIC v. Lattimore *628 Land Corp., 656 F.2d 139, 146 n. 13 (5th Cir. Unit B 1981).
Plaintiffs have also sought a reconsideration of the court's ruling that the FDIC in its corporate capacity is a proper party to this suit and, therefore, can maintain a counterclaim. For the reasons set forth in its Order of December 30, 1987, the court rejects that request. Moreover, plaintiffs' Second Amended Complaint does allege a cause of action against the FDIC in its corporate capacity, and therefore a counterclaim by FDIC in its corporate capacity is properly pled in this case. Plaintiffs' contention is now, therefore, moot.
Accordingly, it is ORDERED, ADJUDGED and DECREED that plaintiffs take nothing from defendants.
It is further ordered that judgment should be entered for the defendants on their counterclaims.
The trial setting of this cause is hereby vacated.
|
526 F.3d 1046 (2008)
Gregory G. SAMUELSON, Plaintiff-Appellant,
v.
LaPORTE COMMUNITY SCHOOL CORPORATION, Kenneth Blad, individually and in his official capacity as superintendent of schools, Mitch Feikes, individually and in his official capacity as Trustee, et al., Defendants-Appellees.
No. 06-4351.
United States Court of Appeals, Seventh Circuit.
Argued December 6, 2007.
Decided May 22, 2008.
*1047 Stanley F. Wruble (argued), Leone, Halpin & Konopinski, South Bend, IN, for Plaintiff-Appellant.
Bryan E. Curry (argued), Bullaro, Carton & Stone, Chicago, IL, for Defendants-Appellees.
Before EASTERBROOK, Chief Judge, and CUDAHY and RIPPLE, Circuit Judges.
RIPPLE, Circuit Judge.
Gregory Samuelson brought this action under 42 U.S.C. § 1983 in the district court against LaPorte Community School Corporation ("LSC"). His complaint alleged violations of the First and Fourteenth Amendments and the Indiana Constitution.[1] After discovery, Mr. Samuelson and LSC filed cross-motions for summary judgment. Mr. Samuelson's response to LSC's motion abandoned his claims under the Fourteenth Amendment and the Indiana Constitution. The district court granted summary judgment on Mr. Samuelson's remaining First Amendment claims. Mr. Samuelson timely appealed.[2] For the reasons stated in this opinion, we affirm the judgment of the district court.
I
BACKGROUND
Mr. Samuelson became a teacher at LSC in 1992. Over the years, Mr. Samuelson also had other duties collateral to his instructional obligations. These duties included service on a technology committee that provided information and recommendations to the Superintendent and School Board, service as the union representative on a hiring committee that recommended candidates for a principal's position, and coaching at both the middle school and high school levels. At least some of these coaching positions were undertaken on the basis of a separate contractual arrangement with LSC. In 2003, the Board declined to renew Mr. Samuelson's contract as coach of the high school girls' varsity basketball team. That decision did not affect Mr. Samuelson's contract as a teacher.
A.
LSC has a chain-of-command policy. That policy is embodied in LSC's guidelines and bylaws. Guideline 1110, which is entitled "Line and Staff Relations," states:
*1048 All staff members shall be responsible to the Board through the Superintendent. Each shall refer matters requiring administrative action to the person in charge of the department, who shall refer such matters to the next higher authority, when necessary.
Each staff member is to keep the person s/he is immediately responsible to informed of his/her activities by whatever means the supervisor deems appropriate.
All staff members have the right to appeal any decision made by an administrative officer, through approved procedures as defined by contract, agreements, policies, administrative guidelines, or by State law.
R.59.
Guideline 1110A, "Definition of Management Team," states in part:
The ultimate decision concerning policy in the School Corporation resides by law with the Board of School Trustees under the leadership of the Superintendent of Schools. The management team concept, or shared decision making, is the process by which a recommendation for Board of School Trustees action is developed and the decision implemented.
The management team represents a means of establishing orderly lines of organization and communication as management personnel unite with the Board of Trustees to promote an effective educational program for the students and the community. It is more than an organizational system since it does establish a climate in which team members are able to experience a feeling of mutual trust, support and a sense of professional dignity.
R.74, Ex. F.
The Guidelines are supplemented by Bylaw 3310, entitled "Freedom of Speech in Noninstructional Settings," which states:
The School Board acknowledges the right of its professional staff members, as citizens in a democratic society, to speak out on issues of public concern. When those issues are related to the Corporation, however, the professional staff member's expression must be balanced against the interests of this Corporation.
In situations in which the professional staff member is not engaged in the performance of professional duties s/he should state clearly that his/her expression represents personal views and not necessarily those of the School Corporation.
R.74, Ex. G.
The record reveals that Mr. Samuelson expressed publically his view on issues related to LSC. In some instances, he addressed his opinions directly to the Board, to individual Board members or to other community members without first addressing those concerns to his supervisor. More precisely, he engaged in four instances of expression that, he contends, motivated the Board to decline to renew his contract as head coach of the girls' varsity basketball team.
First, Mr. Samuelson spoke to the Board about LSC's treatment of the girls' sports programs as compared to the boys' programs. [email protected]. Beginning in 1993, Mr. Samuelson spoke with individual Board members, LSC's athletic directors, parents and members of the community about disparities he perceived in the treatment of girls' sports programs. He also objected to the pay of coaches involved in those programs as compared to similar boys' teams. In the same vein, he provided an athletic club at LSC with information that he had obtained from a conference and that may have encouraged the club's subsequent Title IX complaint against LSC in 1995. In 2003, Mr. Samuelson *1049 wrote an e-mail to Superintendent Blad requesting information on how to file a Title IX suit against LSC.
Second, in 2000, Mr. Samuelson voiced his disapproval about the LSC's selection and hiring of a middle school principal. R.39. Mr. Samuelson had been appointed to the hiring committee by the teachers' union. The committee recommended that the Board hire Gwen Taylor, but Mr. Samuelson opposed the recommendation. The Board called a special meeting to hear the majority and minority opinions of the committee; at that meeting, he discussed with the Board his reasons against hiring Taylor. He also received phone calls from individual Board members at this time about his opinion and spoke with them about his conclusions.
Third, in the spring of 2002, Mr. Samuelson spoke to Board members about proposed technology changes in the school's computer platform. At the time, he was a serving as a member of the middle school technology committee. He discussed his opposition to the committee's proposal with individual Board members.
Fourth, in 2003, Mr. Samuelson spoke with a Board member, Ruth Minich, about his objections to a proposed school redistricting plan.
B.
In 1999, Mr. Samuelson became head coach of LSC's high school girls' basketball team. The team won a Class 4-A sectional championship in 2000, but it faced internal troubles. The season after winning that championship, twenty-eight girls from the basketball program signed a petition requesting that the Board not renew Mr. Samuelson's coaching contract. A second petition containing similar demands was signed by more than 70 representatives of LSC families. Mr. Samuleson refused to resign as coach, and the Board renewed his contract.
There were other problems as well. After a game in January 2003, the middle school girls' basketball coach engaged Mr. Samuelson in a physical altercation: He walked up to Mr. Samuelson and forcibly attempted to drag him off the court and outside of the arena. LSC's athletic director intervened and separated the two men. The day after the incident, every member of the girls' varsity team signed a petition refusing to play under Mr. Samuelson, although they in fact continued to compete. The physical altercation also affected Mr. Samuelson; three weeks later, he was ordered by his physician not to coach because of the stress the incident had caused him.
Early in February 2003, Superintendent Blad asked Athletic Director Gilliland and Principal Handel to provide him with recommendations about the girls' basketball program under Mr. Samuelson. Both men recommended that the Board not renew Mr. Samuelson's contract or the contracts of the assistant coaches. Director Gilliland's evaluation criticized Mr. Samuelson's coaching technique and work ethic. The recommendations primarily focused on (1) the unrest among players, parents and coaches, (2) Mr. Samuelson's poor fund-raising and unauthorized spending of team funds and (3) his coaching ability.
Superintendent Blad submitted Principal Handel's and Director Gilliland's recommendations to the Board. He also personally recommended that the Board terminate Mr. Samuelson's contract. His memorandum to the Board stated in part that the girls' basketball program was "totally dysfunctional." R.74, Ex. H. It described the "constant series of complaints from players and their parents about Mr. Samuelson" regarding his treatment of players, his lack of organizational skills and his inability to work cooperatively with his assistant coaches. Id. *1050 It further stated that Mr. Samuelson "never follows the appropriate chain-of-command and frequently gets himself in trouble by doing things that are outside of the responsibilities of his position (i.e. Purchasing new team uniforms without the permission of the Athletic Director or Principal and without the money to do so.)." Id.
Mr. Samuelson declined an invitation to submit a self-evaluation to the Board for consideration along with the other recommendations. On February 14, he e-mailed Superintendent Blad and Assistant Superintendent Adams and asked them about the proper method by which to file a Title IX suit. He also inquired about the remedies available to him if LSC retaliated against him in response to his past and present Title IX complaints.
On February 17, Superintendent Blad composed and transmitted a memorandum to Mr. Samuelson that described his concerns with Mr. Samuelson's conduct as an employee of LSC. He cited Mr. Samuelson's speaking to newspapers, Board members and private citizens about "harassment" without following the harassment policy procedures. R.60. He also mentioned Mr. Samuelson's outspoken opposition to the proposed computer platform changes and Mr. Samuelson's failure to first address those concerns to the appropriate staff member. Id. Additionally, his memorandum focused on his concerns about Mr. Samuelson's poor fundraising and excessive spending, his negative relationship with parents, and his failure to follow the chain-of-command policy, "specifically, by calling, visiting, and working behind the scenes to influence Board member decisions without first discussing perceived problems with [his] immediate supervisors" as required by Guideline 1110. R.60 at 1. Superintendent Blad ordered Mr. Samuelson to "comply with the following directives":
You will follow the chain-of-command that is outline [sic] in Board policy. That means that should you take issue with an administrative directive or experience a problem, you will discuss the problem with your Department Chair, Principal, Personnel Director and/or Superintendent. If you are still unsatisfied by the decision, the Superintendent will contact the Board and establish a meeting at which time all Board members can hear and decide your complaint. You will not directly contact Board members without first following the chain-of-command!
R.60 at 2 (emphasis in original). He concluded by stating that Mr. Samuelson would be disciplined and possibly terminated if he failed to comply with the directives. Id.
On February 18, 2003, the Board voted unanimously not to renew Mr. Samuelson's coaching contract. One Board member, Minich, abstained from the vote. Minich later told Mr. Samuelson that she believed that the motivation for his termination came in part from his opposition to the hiring of Taylor as principal, which he had related to the Board in 2000. [email protected].
C.
On February 17, 2005, Mr. Samuelson filed this section 1983 action against LSC. He alleged four causes of action: that LSC's chain-of-command policy violated his First Amendment rights as an unconstitutional prior restraint; that his coaching contract had not been renewed in retaliation for his speaking out on matters of public importance concerning LSC, also in violation of the First Amendment; that LSC's actions deprived him of due process and the privileges and immunities guaranteed to him by the Fourteenth Amendment; *1051 and that LSC's actions had violated his rights under the Indiana Constitution.
Mr. Samuelson moved for partial summary judgment; LSC moved for summary judgment on all claims. In response to LSC's motion, Mr. Samuelson defended only his First Amendment claims. Consequently, the district court determined that Mr. Samuelson had abandoned his claims under the Fourteenth Amendment and the Indiana Constitution by failing to defend them.
With respect to the First Amendment claims, the court granted summary judgment to LSC. It held that Guideline 1110 was not an unconstitutional prior restraint. It further determined that LSC had not retaliated against Mr. Samuelson's exercise of a First Amendment right because, even if some of Mr. Samuelson's speech was protected by the First Amendment and even if LSC had been motivated partially by Mr. Samuelson's protected speech, Mr. Samuelson had not shown that LSC's stated reasons for the non-renewal were pretextual.
II
DISCUSSION
The general principles that guide our review of a case coming to us on summary judgment are well-established. We review de novo a district court's decision on a motion for summary judgment. Cherry v. Auburn Gear, Inc., 441 F.3d 476, 481 (7th Cir.2006). On cross-motions for summary judgment, the court construes facts and draws inferences "in favor of the party against whom the motion under consideration is made." In re United Air Lines, Inc., 453 F.3d 463, 468 (7th Cir.2006) (citation omitted). 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 a judgment as a matter of law." Id. (quoting Fed.R.Civ.P. 56(c)). We may affirm summary judgment on any ground for which there is support in the record. Hill v. Am. Gen. Fin., Inc., 218 F.3d 639, 642 (7th Cir.2000).
A.
We first consider whether LSC's chain-of-command policy, Guideline 1110, constitutes a prior restraint. As we noted earlier, this guideline requires staff members to "refer matters requiring administrative action to the person in charge of the department, who shall refer such matters to the next higher authority, when necessary." R.59.
The term "prior restraint" is used to describe "administrative and judicial orders forbidding certain communications when issued in advance of the time that such communications are to occur." Alexander v. United States, 509 U.S. 544, 550, 113 S. Ct. 2766, 125 L. Ed. 2d 441 (1993) (quoting Melville Nimmer, Nimmer on Freedom of Speech, § 4.03, p. 4-14 (1984) (emphasis added)). A restriction is a prior restraint if it meets four elements: (1) the speaker must apply to the decision maker before engaging in the proposed communication; (2) the decision maker is empowered to determine whether the applicant should be granted permission on the basis of its review of the content of the communication; (3) approval of the application requires the decision maker's affirmative action; and (4) approval is not a matter of routine, but involves "appraisal of facts, the exercise of judgment, and the formation of an opinion" by the decision maker. See SE. Promotions, Ltd. v. Conrad, 420 U.S. 546, 554, 95 S. Ct. 1239, 43 L. Ed. 2d 448 (1975); see also Thomas v. Chicago Park Dist., 534 U.S. 316, 321, 122 S. Ct. 775, 151 L. Ed. 2d 783 (2002); Cantwell v. Connecticut, 310 U.S. 296, 305, 60 S.Ct. *1052 900, 84 L. Ed. 1213 (1940). However, before applying this test to LSC's guideline, we first must determine whether that policy applies to speech that is protected by the First Amendment. See United States v. Nat'l Treasury Employees Union, 513 U.S. 454, 465-66, 115 S. Ct. 1003, 130 L. Ed. 2d 964 (1995) ("NTEU"); Crue v. Aiken, 370 F.3d 668, 678 (7th Cir.2004). For the restriction to qualify as a prior restraint, the employee must have an interest in the speech as a citizen commenting upon a matter of public concern. See NTEU, 513 U.S. at 465-66, 115 S. Ct. 1003; Crue, 370 [email protected]. "[W]hen public employees make statements pursuant to their official duties, the employees are not speaking as citizens for First Amendment purposes." Garcetti v. Ceballos, 547 U.S. 410, 421, 126 S. Ct. 1951, 164 L. Ed. 2d 689 (2006).
LSC's chain-of-command policy, when fairly read in its totality, does not constitute a prior restraint because it does not restrict any speech protected by the First Amendment. LSC Guideline 1110 requires staff members to follow the chain of command only on matters "requiring administrative attention," R.59, that is, issues that their job responsibilities require them to report to a supervisor. See Garcetti, 547 U.S. at 421, 424, 126 S. Ct. 1951. The speech addressed by LSC's chain-of-command policy is speech grounded in the public employee's professional duties and therefore is not protected by the First Amendment. See id. at 421-22, 126 S. Ct. 1951.
Our understanding of the scope of Guideline 1110 finds support in the language of Guideline 1110A, which establishes that the process for decision making at LSC is one that utilizes a linear chain of command that culminates with the Board. Guideline 1110A "establish[es] orderly lines of organization and communication" for "the process by which a recommendation for Board of School Trustees action is developed and the decision implemented." R.74, Ex. F. Guideline 1110 requires employees to use those "lines of organization," id., by first discussing a matter "requiring administrative action," R.59, with a direct supervisor rather than someone further along the line.
This interpretation of LSC's chain-of-command policy also finds support in the bylaws, including Bylaw 3310, which explicitly acknowledges that staff members may "speak out on issues of public concern" whenever they are speaking as citizens. R.74, Ex. G. The bylaws simply require that, when speaking out about a matter of public concern not within the professional cognizance of the staff member, the staff member must ensure that he conveys that he is speaking as a citizen and not on behalf of LSC. This requirement hardly limits a staff member's right to speak in public about issues related to LSC. It ensures that, when a staff member does speak about a matter of public interest on which he has no professional responsibility, his views are not attributed to the LSC. When Bylaw 3310 is read in conjunction with Guidelines 1110 and 1110A, it is clear that LSC seeks to restrain only expression related to a staff member's professional responsibilities to the school corporation. The guidelines merely establish a chain of command in order to maintain efficient resolution of issues that an employee's duties require him to address in the course of his employment. Such expression, the Supreme Court has made clear, is not protected by the First Amendment. See Garcetti, 547 U.S. at 421-22, 126 S. Ct. 1951. Consequently, restriction of that expression cannot constitute a prior restraint. See NTEU, 513 U.S. at 465-66, 115 S. Ct. 1003; Crue, 370 [email protected]. The district court properly granted summary judgment for LSC on this claim.
*1053 B.
We next consider Mr. Samuelson's allegation that LSC retaliated against him for engaging in speech protected by the First Amendment. We apply a three-step analysis in evaluating a First Amendment retaliation claim. Vukadinovich v. Bd. of Sch. Trs., 278 F.3d 693, 699 (7th Cir.2002). We first determine whether the employee's speech was constitutionally protected. Id. If it was, we determine whether the protected speech was a motivating factor for the employer's action. Id. If the employee can show that his constitutionally protected speech was a substantial or motivating factor in his termination, we examine whether the employer can show that it would have taken the same action in the absence of his exercise of his rights under the First Amendment. Id.
Mr. Samuelson relies on four instances of expressive activity to support his claim that the Board retaliated against him in violation of his rights under the First Amendment: his statements regarding Title IX and the treatment of the girls' programs, his comments regarding LSC's hiring policies, his statements regarding technology changes at LSC and his discussion with a Board member regarding a possible school redistricting. Even assuming, arguendo, that these instances were not a product of his employment duties, and thus were protected by the First Amendment, Mr. Samuelson has failed to show that his nonrenewal as coach was motivated by any of these instances. See Mullin v. Gettinger, 450 F.3d 280, 284 (7th Cir.2006).
Mr. Samuelson has the burden to establish, by a preponderance of the evidence, that protected First Amendment activity was a motivating factor in the nonrenewal of his coaching contract. Spiegla v. Hull, 371 F.3d 928, 942 (7th Cir.2004), cert. denied, ___ U.S. ___, 128 S. Ct. 441, 169 L. Ed. 2d 308 (2007). "A motivating factor does not amount to a but-for factor or to the only factor, but is rather a factor that motivated the defendant's actions." Mullin, 450 F.3d at 284 (internal quotation marks omitted). Mr. Samuelson can meet this burden by "showing that the protected speech caused, or at least played a substantial part in, the employer's decision to take adverse employment action against" him. Id. Once the plaintiff has established that protected expression was a motivating factor, the burden shifts to the defendant to prove, by a preponderance of the evidence, that the same actions would have occurred in the absence of the protected speech. Id. at 285-86.
Mr. Samuelson relies on the timing of the nonrenewal of his coaching contract to demonstrate that the Board's action was motivated by his speech.[3] He notes that he was removed as coach two days after he asked Superintendent Blad in an e-mail about the proper procedure for filing a Title IX complaint and one day after Superintendent Blad ordered him not to speak to Board members without following the chain of command. "A plaintiff may demonstrate improper motive with evidence that an adverse employment action took place on the heels of protected activity." Id. at 285 (internal quotation marks omitted). That period begins when the defendant learned of the protected speech. Id.
*1054 Mr. Samuelson has put forward no evidence that the Board ever saw or considered his e-mail exchange with Superintendent Blad. Although Mr. Samuelson's coaching contract was not renewed just days after that e-mail exchange, there is no evidence of a connection between his speech and the alleged retaliation that makes the timing significant. Id. ("[T]he fact that a plaintiff's protected speech may precede an adverse employment decision alone does not establish causation."). His motivation evidence is therefore insufficient. See id.
Mr. Samuelson also has put forward no evidence that the Board was motivated to retaliate against him by the other incidences of speech upon which he relies. He has not shown that the Board considered any of those incidents. Moreover, standing alone, the timing of Mr. Samuelson's expressions regarding the technology changes and Taylor's hiring also cannot suffice to demonstrate that the Board was motivated by those incidents because they occurred more than a year before the Board's decision. See id. (holding that a one-year gap was too attenuated to provide evidence that an employee's speech was a motivating factor). With respect to his comments on redistricting, only one Board member was aware of his position on that subject, and she abstained from the vote.
Stated simply, the record supports firmly the conclusion that Mr. Samuelson's contract as coach was not renewed because of the troubled state of the girls' basketball program. Every Board member who voted on Mr. Samuelson's coaching contract testified that he or she had no knowledge of Mr. Samuelson's position on any of the matters about which he claims to have spoken publically. Furthermore, the members stated that the sole basis for the Board's vote was the troubled state of the girls' basketball program and that the Board did not discuss or consider Mr. Samuelson's opinions on any other issue. Mr. Samuelson has put forward no evidence contesting these statements or demonstrating that any of the voting Board members even knew that he had spoken out about any possibly protected issues.
In short, Mr. Samuelson has failed to establish that the instances that he claims are protected expression played a role in the decision of the Board. Consequently, the district court properly granted summary judgment to LSC on Mr. Samuelson's First Amendment retaliation claims.
Conclusion
Accordingly, we affirm the judgment of the district court.
AFFIRMED
NOTES
[1] The district court had jurisdiction over these claims under 28 U.S.C. §§ 1331 and 1367.
[2] We have jurisdiction over this appeal under 28 U.S.C. § 1291.
[3] We note for the sake of completeness that Mr. Samuelson cannot rely on the Superintendent's unhappiness with his failure to follow the guidelines with respect to speech that was a product of Mr. Samuelson's employment. As we already have noted, LSC's chain-of-command policy did not constitute a prior restraint; the Superintendent did not violate Mr. Samuelson's First Amendment rights merely by requiring him to comply with that policy.
|
ESCROW AGREEMENT
This Escrow Agreement (this “Agreement”) is made and entered into as of June 15,
2007, by and among the undersigned West Coast Opportunity Fund, LLC, a Delaware
limited liability company (the “Purchaser”), Atlas Technology Group (US), Inc.,
a Delaware corporation (the “Maker”), and Wells Fargo Bank, National Association
(the “Escrow Agent”).
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of the
date hereof, by and between the Maker and Purchaser (the “Securities Purchase
Agreement”), Purchaser will purchase from the Maker and the Maker will issue and
sell to the Purchaser a promissory note in the amount of $2,500,000 on the date
set forth above (the “Initial Note”);
WHEREAS, pursuant to the Securities Purchase Agreement, Purchaser will purchase
from the Maker and the Maker will issue and sell to the Purchaser a promissory
note in the amount of $2,500,000 on July 10, 2007 (the “Secondary Note” and
collectively with the Initial Note, the “Notes”);
WHEREAS, the Maker and Purchaser have decided to hold the purchase price for the
Notes paid by Purchaser in escrow, to be released in accordance with the
provisions set forth in Section 4 below;
WHEREAS, the Escrow Agent is willing to hold and administer the Escrowed Funds
(as defined below) in escrow in accordance with the terms of this Escrow
Agreement and the Notes; and
WHEREAS, the Securities Purchase Agreement requires each of the Maker and
Purchaser to enter into this Agreement with the Escrow Agent.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, the parties hereto, intending to be legally bound,
hereby covenant and agree as follows:
1. Deposits and Appointment of Escrow Agent.
(a) Upon execution of the Securities Purchase Agreement, the Initial Promissory
Note, the Warrant, and this Agreement, Purchaser shall deposit cash funds with
Escrow Agent in the amount of $1,500,000 as partial payment for the securities
purchased in the Securities Purchase Agreement in accordance with the following
wire transfer instructions (the aggregate amount of such deposit being the
“First Deposit”):
Bank Name:
Wells Fargo Bank, N.A.
ABA Routing No.:
121000248
Beneficiary Account No.:
_______________
Beneficiary Account Name:
Corporate Trust Wire Clearing
For further credit to:
22362000, West Coast Opportunity Fund / Atlas Technology Group (US), Inc. Escrow
Account
--------------------------------------------------------------------------------
(b) On July 10, 2007, upon execution of the Second Note, subject to the
satisfaction of the Conditions set forth in Sections 6 and 7 of the Securities
Purchase Agreement, as applicable, Purchaser shall deposit additional cash funds
with Escrow Agent in the amount of $2,500,000 in accordance with its obligations
under the Securities Purchase Agreement in accordance with the above wiring
instructions (the aggregate amount of such deposit being the “Second Deposit,”
and collectively, with the First Deposit, the “Deposits”). The Deposits shall be
held in escrow under the terms hereof. The Deposits, together with any interest
that may accrue thereto, are hereinafter referred to as the “Escrowed Funds”.
Escrow Agent is hereby appointed by each of the Maker and Purchaser to act as
the escrow agent pursuant to the terms of this Agreement.)
2. Investment of the Escrowed Funds.
(a) The Escrowed Funds shall be invested by Escrow Agent in such investments as
the Maker and Purchaser shall jointly direct in writing in the form of Exhibit A
to this Agreement. The Escrow Agent shall invest the Escrowed Funds in
alternative investments in accordance with the joint written instructions of the
Maker and Purchaser as may from time to time be provided to the Escrow Agent. In
the absence of such joint written direction, the Escrow Agent is hereby directed
to invest the Escrowed Funds in the Wells Fargo Advantage Funds, 100% Treasury
Money Market Fund, Service Class Shares. Any investment earnings and income on
the Escrowed Funds shall become part of the Escrowed Funds, and shall be
disbursed in accordance with Section 3 of this Agreement.
(b) The Escrow Agent is hereby authorized and directed to sell or redeem any
such investments as it deems necessary to make any payments or distributions
required under this Agreement. Escrow Agent shall have no responsibility or
liability for any loss which may result from any investment or sale of
investment made pursuant to this Agreement. The Escrow Agent is hereby
authorized, in making or disposing of any investment permitted by this
Agreement, to deal with itself (in its individual capacity) or with any one or
more of its affiliates, whether it or any such affiliate is acting as agent of
the Escrow Agent or for any third person or dealing as principal for its own
account. The Maker and Purchaser acknowledge that the Escrow Agent is not
providing investment supervision, recommendations, or advice.
3. Escrow Agent’s Duties. Escrow Agent shall have no implied duties under this
Agreement, but only the express duties set forth herein which shall be deemed
purely ministerial in nature. The Escrow Agent may perform any and all of its
duties through its agents, representatives, attorneys, custodians, and/or
nominees.
4. Disbursement of Escrowed Funds. Each of the Maker and Purchaser hereby
unequivocally and irrevocably authorizes, directs, and empowers Escrow Agent to
hold the Deposits, or such amount of the Deposits remaining in escrow hereunder
from time to time after giving effect to one or more disbursements authorized
hereby in escrow and to disburse the Escrow Funds in the following manner:
(a) After entering into contracts for its products with one of the entities set
forth on Schedule 1 (the “Entities”) totaling $1,000,000 in annual,
non-contingent future revenues to the Maker, (i) the Maker shall send written
notice of such to the Escrow Agent and (ii) the Purchaser and shall deliver
written instructions to the Escrow Agent directing the Escrow Agent to disburse
$1,500,000 of the Escrowed Funds (the “Initial Payment”). Upon receipt by Escrow
Agent of such written instructions from the Maker and the Purchaser, the Escrow
Agent shall disburse the Initial Payment according to such instructions.
2
--------------------------------------------------------------------------------
(b) After entering into contracts for its products with one or more of the
Entities, totaling at least $5,000,000 in non-contingent future revenues to the
Maker during the term(s) of such contract(s), (i) the Maker shall send written
notice of such to the Escrow Agent and (ii) the Purchaser shall deliver written
instructions to the Escrow Agent directing the Escrow Agent to disburse the
remaining Escrowed Funds (the “Final Payment”). Upon receipt by Escrow Agent of
such written instructions from the Maker and the Purchaser, the Escrow Agent
shall disburse the Final Payment according to such instructions.
(c) If, as of 5:00 p.m. on December 31, 2007 Pacific Standard Time (“PST”), the
Escrow Agent has not received (i) notice from the Maker that the Maker has
entered into contracts with one of the Entities totaling at least $1,000,000 in
annual, non-contingent future revenue and (ii) written instructions from the
Purchaser directing the Escrow Agent to disburse the Initial Payment, then the
Escrow Agent shall disburse from the Escrowed Funds an amount equal to the First
Deposit to the Purchaser in accordance with written instructions from the
Purchaser (the “First Return”).
(d) If, as of 5:00 p.m. on December 31, 2007, PST the Escrow Agent has not
received (i) notice from the Maker that the Maker has entered into contracts
with one or more of the Entities totaling at least $5,000,000 in non-contingent
future revenues to the Maker during the term(s) of such contract(s) and (ii)
written instructions from the Purchaser directing the Escrow Agent to disburse
the Final Payment, then the Escrow Agent shall disburse from the Escrowed Funds
an amount equal to the Second Deposit to the Purchaser in accordance with
written instructions from the Purchaser (the “Second Return”).
(e) The Escrow Agent shall disburse any Escrowed Funds remaining following the
First Return and the Second Return to the Maker in accordance with written
instructions from the Maker.
5. Right Not Duty Undertaken. The permissive right of the Escrow Agent to do
things enumerated in this Agreement shall not be construed as duties.
6. Termination of Escrow Agent’s Duties. Upon disbursement of the full amount
of the Escrowed Funds (including any accrued interest thereon under Section 4
hereof), all of Escrow Agent’s duties in connection with this Agreement shall
immediately terminate.
7. Escrow Agent’s Standard of Care. Escrow Agent shall not be liable for
anything that it may do or refrain from doing in connection with this Agreement,
except for its own gross negligence or willful misconduct. Under no
circumstances will the Escrow Agent be deemed to be a fiduciary to Purchaser,
Maker or any other person under this Agreement. Escrow Agent shall not incur any
liability or be responsible for the consequences of any breach on the part of
either the Maker or the Purchaser of any of the covenants herein contained or of
any acts of agents, attorneys-in-fact, or employees of either the Maker or the
Purchaser. The Escrow Agent shall neither be responsible for, nor chargeable
with, knowledge of the terms and conditions of any other agreement, instrument,
or document other than this Agreement, whether or not an original or a copy of
such agreement has been provided to the Escrow Agent; and the Escrow Agent shall
have no duty to know or inquire as to the performance or nonperformance of any
provision of any such agreement, instrument, or document.
3
--------------------------------------------------------------------------------
8. Indemnification of Escrow Agent. Each of the Maker and the Purchaser hereby
irrevocably agrees, jointly and severally, to indemnify and hold Escrow Agent
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, and disbursements of
every kind whatsoever, including reasonable attorneys’ fees in defending against
any of the foregoing, incurred by or asserted against it relating to or arising
out of this Agreement or any action taken or omitted by it under this Agreement,
save only those resulting from Escrow Agent’s own gross negligence or willful
misconduct.
9. Limitation of Liability. THE ESCROW AGENT SHALL NOT BE LIABLE, DIRECTLY OR
INDIRECTLY, FOR ANY (I) DAMAGES, LOSSES OR EXPENSES ARISING OUT OF THE SERVICES
PROVIDED HEREUNDER, OTHER THAN DAMAGES, LOSSES OR EXPENSES WHICH HAVE BEEN
FINALLY ADJUDICATED TO HAVE DIRECTLY RESULTED FROM THE ESCROW AGENT’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, OR (II) SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGES OR LOSSES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST
PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF ACTION.
10. Escrow Agent’s Acts; No Responsibility and No Implied Knowledge. Escrow
Agent shall be protected in acting upon any written notice, request, waiver,
consent, certificate, receipt, authorization, or other paper or document which
Escrow Agent believes to be genuine and what it purports to be. Concurrent with
the execution of this Agreement, the Maker and Purchaser shall deliver to the
Escrow Agent authorized signers’ forms in the form of Exhibit B-1 and Exhibit
B-2 to this Agreement. Escrow Agent is not responsible or liable in any manner
whatsoever for the sufficiency, correctness, genuineness, or validity of the
subject matter of this Agreement or any instructions or directions delivered
pursuant hereto. Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth in this Agreement. Escrow Agent shall
not be liable for any action taken or omitted by it in good faith and believed
by it to be authorized hereby, except to the extent such action taken or omitted
constitutes gross negligence or willful misconduct on the part of Escrow Agent.
The Escrow Agent shall be entitled to rely on and shall not be liable for any
action taken or omitted to be taken by the Escrow Agent in accordance with the
advice of counsel or other professionals retained or consulted by the Escrow
Agent. No provision of this Agreement shall require the Escrow Agent to risk or
advance its own funds or otherwise incur any financial liability or potential
financial liability in the performance of its duties or the exercise of its
rights under this Agreement.
11. Submission of Disputes to Court. In the event that Escrow Agent is in doubt
as to what action is to be taken hereunder, Escrow Agent may, at its option,
refuse to comply with any claims or demands on it or refuse to take any other
action hereunder so long as such doubt exists. In any such event Escrow Agent
shall not be or become liable in any way or to any person for its failure or
refusal to act, and Escrow Agent shall be entitled to continue to so refrain
from acting until (i) the rights of all parties have been fully and finally
adjudicated by a court of competent jurisdiction, or (ii) all differences shall
have been adjudged and all doubt resolved by agreement among all of the
interested persons, and Escrow Agent shall have been notified thereof in a
writing signed by all such persons, or (iii) files an interpleader action in any
court of competent jurisdiction, and upon the filing thereof, the Escrow Agent
shall be relieved of all liability as to the Escrowed Funds and shall be
entitled to recover attorneys’ fees, expenses and other costs incurred in
commencing and maintaining any such interpleader action. In addition to the
foregoing remedies, Escrow Agent is hereby authorized in the event of any doubt
as to the course of action it should take under this Agreement, to petition a
State District Court of King County, Washington or a United States Federal
District Court in the Western District of Washington, for instructions. The
parties agree to the jurisdiction of any of said courts over their persons as
well as all or any portion of the Escrowed Funds. Each of the Maker and
Purchaser waive personal service of process, and agree that service of process
by certified or registered mail, return receipt requested, to the address set
forth beside such party’s signature to this Agreement shall constitute adequate
service. The Maker and Purchaser hereby agree to indemnify and hold Escrow Agent
harmless from any liability or losses occasioned thereby and to pay any and all
of Escrow Agent’s costs, expenses, and attorneys’ fees incurred in any such
action and agree that upon the filing of such petition and deposit of the
Escrowed Funds into the registry of the court in which such petition or
interpleader action is filed that Escrow Agent will be relieved of any further
liability hereunder. In case the Escrowed Funds held by Escrow Agent hereunder
shall be the subject of any order of any court or the delivery thereof shall be
stayed or enjoined by any judgment or order of any court affecting the Deposits,
Escrow Agent hereby is expressly authorized in its sole discretion to obey and
comply with all judgments and orders so entered or issued and in case Escrow
Agent obeys and complies with any such judgment or order, Escrow Agent shall
give written notice of such compliance to each of the Maker and Purchaser, and
Escrow Agent shall not be liable to any of the other parties hereto, their
successors or assigns or to any other person, firm, or corporation by reason of
such compliance.
4
--------------------------------------------------------------------------------
12. Resignation of Escrow Agent. Escrow Agent may resign and be discharged from
all further duties and liabilities hereunder by giving to each of the Maker and
Purchaser at least ten (10) days prior notice in writing and stating in such
notice the effective date of the resignation. If Escrow Agent resigns as
aforesaid, a new escrow agent shall, prior to the effective date of such
resignation, be appointed by the Maker and Purchaser. If no such person shall
have been designated by the effective date of such resignation, all obligations
of Escrow Agent, except as provided in the immediately following sentence, shall
nevertheless cease and terminate. Escrow Agent’s sole responsibility thereafter
shall be to keep, in accordance with the standard of care set forth in Section 4
hereof, the Escrowed Funds held by it and to deliver the same to a person
designated by all other parties executing this Agreement or in accordance with
the final order or judgment of a court of competent jurisdiction. On any new
appointment, the new Escrow Agent shall be vested with the same powers, rights,
duties, and responsibilities as if it had been originally named herein as escrow
agent without any further assurance, conveyance, act, or deed. If the Maker and
Purchaser have failed to appoint a successor escrow agent prior to the effective
date of such resignation, the Escrow Agent may petition any court of competent
jurisdiction for the appointment of a successor escrow agent or for other
appropriate relief, and any such resulting appointment shall be binding upon the
Maker and Purchaser.
13. Fees and Expenses of Escrow Agent. The Maker hereby agrees to pay the
Escrow Agent compensation for its services as stated in the fee schedule
attached hereto as Exhibit C. The Maker further agrees that the Escrow Agent
shall be reimbursed upon request for expenses, disbursements and advances,
including reasonable attorney’s fees, incurred or made by Escrow Agent in
connection with carrying out its duties hereunder; provided, however, that
between the Maker and Purchaser, any expenses, disbursements, and fees of Escrow
Agent that shall be incurred by Escrow Agent as the result of any claim,
dispute, or any other controversy arising hereunder shall be the obligation of
the party responsible for such expense, disbursement or fee. The fee agreed upon
for the services rendered hereunder is intended as full compensation for the
Escrow Agent's services as contemplated by this Agreement; provided, however,
that in the event that the conditions for the disbursement of funds under this
Agreement are not fulfilled, or the Escrow Agent renders any service not
contemplated in this Agreement, or there is any assignment of interest in the
subject matter of this Agreement, or any material modification hereof, or if any
material controversy arises hereunder, or the Escrow Agent is made a party to
any litigation pertaining to this Agreement or the subject matter hereof, then
the Escrow Agent shall be compensated for such extraordinary services and
reimbursed for all costs and expenses, including reasonable attorneys’ fees and
expenses, occasioned by any such delay, controversy, litigation or event. If any
amount due to the Escrow Agent hereunder is not paid within thirty (30) days of
the date due, the Escrow Agent in its sole discretion may charge interest on
such amount up to the highest rate permitted by applicable law. The Escrow Agent
shall have, and is hereby granted, a prior lien upon the Escrowed Funds with
respect to its unpaid fees, non-reimbursed expenses and unsatisfied
indemnification rights, superior to the interests of any other persons or
entities and is hereby granted the right to set off and deduct any unpaid fees,
non-reimbursed expenses and unsatisfied indemnification rights from the Escrowed
Funds.
5
--------------------------------------------------------------------------------
14. Income Tax Allocation and Reporting.
(a) The Maker and Purchaser agree that, for tax reporting purposes, all
interest and other income from investment of the Escrow Property shall, as of
the end of each calendar year and to the extent required by the Internal Revenue
Service, be reported as having been earned by the Maker, whether or not such
income was disbursed during such calendar year.
(b) Prior to closing, the Maker and Purchaser shall provide the Escrow Agent
with certified tax identification numbers by furnishing appropriate forms W-9 or
W-8 and such other forms and documents that the Escrow Agent may request. The
Maker and Purchaser understand that if such tax reporting documentation is not
provided and certified to the Escrow Agent, the Escrow Agent may be required by
the Internal Revenue Code of 1986, as amended, and the Regulations promulgated
thereunder, to withhold a portion of any interest or other income earned on the
investment of the Escrowed Funds.
(c) To the extent that the Escrow Agent becomes liable for the payment of any
taxes in respect of income derived from the investment of the Escrowed Funds,
the Escrow Agent shall satisfy such liability to the extent possible from the
Escrowed Funds. The Maker and Purchaser shall indemnify, defend and hold the
Escrow Agent harmless from and against any tax, late payment, interest, penalty
or other cost or expense that may be assessed against the Escrow Agent on or
with respect to the Escrowed Funds and the investment thereof unless such tax,
late payment, interest, penalty or other expense was directly caused by the
gross negligence or willful misconduct of the Escrow Agent. The indemnification
provided by this Section 14(c) is in addition to the indemnification provided in
Section 8 and shall survive the resignation or removal of the Escrow Agent and
the termination of this Agreement.
6
--------------------------------------------------------------------------------
15. Miscellaneous Provisions.
(a) Failure by any party to insist upon or enforce any of its rights under this
Agreement shall not constitute a waiver thereof by such party or a waiver of any
subsequent breach of the same or a different provision hereof.
(b) Neither this Agreement nor any right created hereby shall be assignable by
any of the parties hereto without the written consent of the other of such
parties hereto.
(c) Subject to the provisions of Section 15(b), this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
(d) This Agreement may not be amended or changed in any respect except by a
written instrument signed by all parties hereto. Escrow Agent shall not be bound
by any modification, amendment, termination, cancellation, rescission, or
supersession of this Agreement unless the same shall be in writing and signed by
all of the other parties hereto and, if its duties as Escrow Agent hereunder are
affected thereby, unless it shall have given prior written consent thereto.
(e) All certifications, notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed duly given if delivered
personally, if sent by delivery service, if given by facsimile or other similar
form of communication (with receipt confirmed) or if given by depositing the
same in the United States mail first class, postage prepaid, certified or
registered. The same shall be deemed to have been duly given when received by
the person to whom the notice was directed; provided, however, that notice to
each of the Maker or Purchaser, but not Escrow Agent, shall be conclusively
deemed given at 10:00 a.m. PST on the third business day after the date of
deposit in the United States mail when sent by certified or registered mail,
postage prepaid, return receipt requested. Notice shall be given to the parties
at the addresses set forth on the signature pages hereto (or at such other
address as shall be given in writing by any party to the other parties). Notices
to Escrow Agent will be effective only upon actual receipt thereof.
(f) This Agreement and the terms and provisions hereof shall be construed and
enforced in accordance with the laws of the State of Delaware without regard to
the conflicts of laws provisions thereof. This Agreement is performable in King
County, Washington, and venue in any litigation pursuant hereto shall be in King
County, Washington.
(g) Each of the parties hereto acknowledges and agrees that the remedy at law
in the event of a breach of any provision of this Agreement by each such party
would be inadequate, and each party hereto agrees that the other, non-breaching
party, in addition to all other remedies such other party may have, shall have
the right to injunctive relief.
(h) This Agreement supersedes any and all other agreements, either oral or
written, between the parties hereto with respect to the subject matter hereof
and contains all of the covenants and agreements between the parties with
respect thereto.
(i) If any party hereto is required to institute legal proceedings in order to
enforce its rights hereunder, then the party prevailing in any such legal
proceedings shall be reimbursed by the non-prevailing party for its legal fees
and court costs in connection therewith.
7
--------------------------------------------------------------------------------
(j) This Agreement may be executed in multiple counterparts, each of which will
be deemed an original, but all of which together shall constitute one and the
same agreement. Facsimile transmission of any signed original document and/or
retransmission of any signed facsimile transmission will be deemed the same as
delivery of an original. At the request of any party, the parties will confirm
facsimile transmission by signing a duplicate original document
16. Merger or Consolidation. Any corporation or association into which the
Escrow Agent may be converted or merged, or with which it may be consolidated,
or to which it may sell or transfer all or substantially all of its corporate
trust business and assets as a whole or substantially as a whole, or any
corporation or association resulting from any such conversion, sale, merger,
consolidation or transfer to which the Escrow Agent is a party, shall be and
become the successor escrow agent under this Agreement and shall have and
succeed to the rights, powers, duties, immunities and privileges as its
predecessor, without the execution or filing of any instrument or paper or the
performance of any further act.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first written above.
MAKER:
ATLAS TECHNOLOGY GROUP (US), INC.
a Delaware corporation
By: Name:
--------------------------------------------------------------------------------
Peter B. Jacobson Title:
President
Address for Notice:
Atlas Technology Group (US), Inc.
2001 152nd Avenue NE
Redmond, Washington 98052
Attn: Peter B. Jacobson
Facsimile: 403-373-2178
With a Copy (which shall not constitute notice) sent to:
Hughes & Luce LLP
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attn: I. Bobby Majumder, Esq.
Facsimile: 403-373-2178
--------------------------------------------------------------------------------
ESCROW AGENT:
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: Name:
--------------------------------------------------------------------------------
Scott Thompson Title:
Vice President
Address for Notice:
Wells Fargo Bank, N.A.
Corporate Trust Services
1300 SW Fifth Avenue, 11th Floor
MAC P6101-114
Portland, OR 97201
Attn: Scott Thompson
Facsimile: 403-373-2178
[Signature Page to Escrow Agreement]
--------------------------------------------------------------------------------
PURCHASER:
WEST COAST OPPORTUNITY FUND, LLC
a Delaware limited liability company
By: Name:
--------------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Address for Notice:
2151 Alessandro Drive, Suite 100
Ventura, CA 93001
Attn: Atticus Lowe, CFA
Facsimile: 403-373-2178
With a Copy (which shall not constitute notice) sent to:
McDermott Will & Emery LLP
340 Madison Avenue
New York, New York 10173
Attn: Stephen E. Older, Esq.
Meir A. Lewittes, Esq.
Facsimile: 403-373-2178
[Signature Page to Escrow Agreement]
--------------------------------------------------------------------------------
EXHIBIT A
Agency and Custody Account Direction
For Cash Balances
Direction to use Wells Fargo Advantage Funds for Cash Balances for the escrow
account or accounts (the “Account”) established under the Escrow Agreement to
which this Exhibit A is attached.
You are hereby directed to invest, as indicated below or as I shall direct
further from time to time, all cash in the Account in the following money market
portfolio of Wells Fargo Advantage Funds (the “Fund”) or another permitted
investment of my choice (Check One):
___ Wells Fargo Advantage Funds, 100% Treasury Money Market Fund
___ Wells Fargo Advantage Funds, Government Money Market Fund
___ Wells Fargo Advantage Funds, Cash Investment Money Market Fund
___ Wells Fargo Advantage Funds, Prime Investment Money Market Fund
___ Wells Fargo Advantage Funds, Treasury Plus Money Market Fund
I acknowledge that I have received, at my request, and reviewed the Fund’s
prospectus and have determined that the Fund is an appropriate investment for
the Account. Each Fund’s prospectus can be downloaded from the Wells Fargo
website at
http://www.wellsfargoadvantagefunds.com/html/welcome/fund_list/service.htm
I understand from reading the Fund's prospectus that Wells Fargo Funds
Management, LLC ("Wells Fargo Funds Management"), a wholly-owned subsidiary of
Wells Fargo & Company, provides investment advisory and other administrative
services for the Wells Fargo Advantage Funds. Other affiliates of Wells Fargo &
Company provide sub-advisory and other services for the Funds. Boston Financial
Data Services serves as transfer agent for the Funds. The Funds are distributed
by Wells Fargo Funds Distributor, LLC, Member NASD/SIPC, an affiliate of Wells
Fargo & Company. I also understand that Wells Fargo & Company will be paid, and
its bank affiliates may be paid, fees for services to the Funds and that those
fees may include Processing Organization fees as described in the Fund's
prospectus.
I understand that you will not exclude amounts invested in the Fund from Account
assets subject to fees under the Account agreement between us.
I understand that investments in the Fund are not obligations of, or endorsed or
guaranteed by, Wells Fargo Bank or its affiliates and are not insured by the
Federal Deposit Insurance Corporation.
I acknowledge that I have full power to direct investments of the Account.
I understand that I may change this direction at any time and that it shall
continue in effect until revoked or modified by me by written notice to you.
I understand that if I choose to communicate this investment direction solely
via facsimile, then the investment direction will be understood to be
enforceable and binding.
--------------------------------------------------------------------------------
Authorized Representative
West Coast Opportunity Fund, LLC
--------------------------------------------------------------------------------
Authorized Representative
Atlas Technology Group (US), Inc.
--------------------------------------------------------------------------------
Date
--------------------------------------------------------------------------------
Date
--------------------------------------------------------------------------------
EXHIBIT B-1
CERTIFICATE AS TO AUTHORIZED SIGNATURES
The specimen signatures shown below are the specimen signatures of the
individuals who have been designated as authorized representatives of West Coast
Opportunity Fund, LLC and are authorized to initiate and approve transactions of
all types for the escrow account or accounts established under the Escrow
Agreement to which this Exhibit B-1 is attached, on behalf of West Coast
Opportunity Fund, LLC.
Name / Title
Specimen Signature
Name
Signature
Title
Name
Signature
Title
Name
Signature
Title
Name
Signature
Title
--------------------------------------------------------------------------------
EXHIBIT B-2
CERTIFICATE AS TO AUTHORIZED SIGNATURES
The specimen signatures shown below are the specimen signatures of the
individuals who have been designated as authorized representatives of Atlas
Technology Group (US), Inc. and are authorized to initiate and approve
transactions of all types for the escrow account or accounts established under
the Escrow Agreement to which this Exhibit B-2 is attached, on behalf of Atlas
Technology Group (US), Inc.
Name / Title
Specimen Signature
Name
Signature
Title
Name
Signature
Title
Name
Signature
Title
Name
Signature
Title
--------------------------------------------------------------------------------
EXHIBIT C
FEES OF ESCROW AGENT
ADMINISTRATION FEE:
$1,500.00
Administration Fee compensates Wells Fargo for normal administrative duties
including routine account management, investment transactions, cash transaction
processing (including wires and check processing), disbursement of the funds in
accordance with the agreement, and mailing of account statements to all
applicable parties.
The Administration Fee is payable in advance at the time of Escrow Agreement
execution. The Administration Fee will not be prorated in case of early
termination.
OUT-OF-POCKET EXPENSES:
AT COST
Wells Fargo reserves the right to bill at cost for out-of-pocket expenses such
as, but not limited to, express mail, wire charges and travel expenses, if
required, incurred in connection with a closing.
ASSUMPTIONS:
·
Number of funds/accounts: One (1)
·
Number of Deposits: Two (2)
·
Number of Withdrawals: Two (2 )
·
Term of the Escrow Account: Less than One Year
NOTE:
The transaction underlying this proposal, and all related legal documentation,
is subject to review and acceptance by Wells Fargo Bank in accordance with
industry standards. Should the actual transaction materially differ from the
assumptions used herein, Wells Fargo Bank reserves the right to affirm, modify
or rescind this proposal. Acceptance of the appointment as Escrow Agent is
subject to the receipt of requested Due Diligence information on each of the
signing parties to the agreement as required by the USA Patriot Act. All funds
will be received from or distributed to a domestic or an approved foreign
entity. Fees are subject to periodic review and adjustment
--------------------------------------------------------------------------------
|
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 1 of 14
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
Elvena Devone Nelson, )
)
Plaintiff, ) C/A No. 9:19-3460-MBS
)
v. )
) OPINION AND ORDER
Andrew M. Saul, Commissioner of )
Social Security, )
)
Defendant. )
____________________________________)
On December 12, 2019, Plaintiff Elvena Devone Nelson filed the within action pursuant
to 42 U.S.C. §§ 405(g) and 1383(c)(3) seeking judicial review of a final decision of Defendant
Commissioner of Social Security (the “Commissioner”) denying her claim for disability insurance
benefits and supplemental security income.
I. RELEVANT FACTS AND PROCEDURAL HISTORY
On May 8, 2015, Plaintiff protectively filed an application for a period of disability and
disability insurance benefits. The same day, Plaintiff also protectively filed an application for
supplemental security income. In both applications, Plaintiff alleged disability beginning on
September 30, 2014. R. 19. Plaintiff’s claims were denied both initially and upon reconsideration.
A hearing was held before an Administrative Law Judge (“ALJ”) on May 8, 2015. Plaintiff
testified that she was fifty-four years old and had earned an associate’s degree as a medical
administrative assistant. R. 39. Plaintiff testified that she constantly is in excruciating pain in her
back down to the bottom of her legs, especially on the left side. Id. She also testified that she has
fibromyalgia on the left side, in the hip area. Id. In addition, Plaintiff was diagnosed with post-
traumatic stress disorder (PTSD), which causes her nightmares, anxiety, depression, disassociation,
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 2 of 14
insomnia, and an inability to be around others. R. 40. Plaintiff testified that she was not able to do
housework, including cooking, cleaning, and laundry. Plaintiff does not do any grocery shopping.
Id. Plaintiff testified that she wakes up in the night and gets up early. During the day she cannot
stand up long. She has to hold onto things because her legs give out. She will watch television but
cannot sit through an entire program. Plaintiff has had surgery, but it did not help. R. 41. Plaintiff
also has had injections, but they provide relief only for three or four days, a week at the most. R.
42.
Plaintiff testified that she can only stand and walk about twenty minutes, and then she starts
getting a lot of pain down her leg. R. 43. She can sit about twenty minutes, but has to twist and turn
and push up to keep pressure off her spine. She sits in a Pilate chair. Plaintiff testified that her
hands are nervous and sometimes the left side goes numb. According to Plaintiff, her blood pressure
level is constantly elevated because of the pain. Plaintiff testified that she has degenerative disc
disease that causes her back pain and peripheral neuropathy in her feet. R. 44-45. Plaintiff also
testified that she has a torn meniscus in her left knee, but must get relief for her back before the torn
meniscus is treated. R. 45. Plaintiff testified that she is incontinent and that she takes a long list of
medications. According to Plaintiff, the medications make her constantly nauseated and sometimes
depressed. She has brain fog and is constantly frustrated. R. 46. Plaintiff testified that she can drive
if she needs to. R. 49.
The ALJ issued his opinion on September 26, 2018. The ALJ determined that Plaintiff
suffered from severe impairments of anxiety, depression, obesity, and degenerative disc disease
status post-surgical intervention. R. 21. The ALJ found that these medically determinable
impairments significantly limit the ability to perform basic work activities as required by SSR 85-28.
The ALJ concluded that Plaintiff’s fibromyalgia is non-severe with an unclear diagnosis for the
2
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 3 of 14
condition. The ALJ determined that Plaintiff’s care showed intermittent improvement using
medications. R. 22.
The ALJ found that Plaintiff does not have an impairment or combination of impairments
that meets or medically equals the severity of one of the listed impairments in 20 C.F.R. Part 404,
Subpart P, Appendix 1. R. 55. The ALJ noted a moderate limitation in Plaintiff’s ability to
understand, remember, or apply information. The ALJ stated that a consultative examination found
that Plaintiff remained logical, oriented, and with reduced recall, and support for a diagnosis of
mental health issues likely to improve with care. R. 22-23. The ALJ determined that Plaintiff has
a moderate limitation in interacting with others. According to the ALJ, Plaintiff received very
limited mental health intervention and presented capable of communicating with normal mood and
appropriate affect, even after having discontinued medications. The ALJ noted that Plaintiff
presented at times anxious and sought some medication interference. R. 23.
The ALJ next determined that Plaintiff has a mild limitation with respect to concentrating,
persisting, or maintaining pace. The ALJ found Plaintiff to have presented oriented and logical,
capable of performing during a consultative examination. The ALJ determined that Plaintiff
received medication management with notes indicating she remained cognitively intact. The ALJ
then stated that Plaintiff has no greater than a moderate interference given examination findings and
the degree of care.1 The ALJ also determined that Plaintiff has a mild limitation for adapting or
managing herself. The ALJ found that Plaintiff managed to obtain medical care, demonstrated
retained functioning to report ongoing issues in an effort to benefit. R. 23.
The ALJ concluded that Plaintiff has the residual functional capacity to perform light work
1
It is not clear whether the ALJ determined Plaintiff has a mild or moderate limitation, as the ALJ
refers to both in his decision. R, 24, third paragraph.
3
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 4 of 14
as defined in 20 C.F.R. §§ 404.1567(b) and 416.967(b), except she is limited to understanding,
remembering, and carrying out simple instructions; and no frequent public interaction. The ALJ
determined that Plaintiff’s medically determinable impairments could reasonably be expected to
cause the alleged symptoms; however, that Plaintiff’s statements concerning the intensity,
persistence, and limiting effects of the symptoms were not entirely consistent with the medical
evidence and other evidence in the record. R. 24. The ALJ noted that Plaintiff is unable to perform
any past relevant work as a cosmetologist, and that, at fifty years old, she was an individual closely
approaching advanced age on the alleged disability onset date. The ALJ concluded that, considering
Plaintiff’s age, education, work experience, and residual functional capacity, there are jobs that exist
in significant numbers in the national economy that Plaintiff can perform. R. 28. Accordingly, the
ALJ concluded that Plaintiff is not disabled under sections 216(i) and 223(d) of the Social Security
Act, or under section 1614(a)(3)(A) of the Social Security Act. R. 29.
Plaintiff appealed the ALJ’s decision to the Appeals Council. The Appeals Council issued
a decision on October 18, 2019, in which it observed that the ALJ’s finding regarding Plaintiff’s
RFC would have resulted in a finding of disabled at age 55, less than a month after the ALJ issued
his decision. Accordingly, the Appeals Council determined that Plaintiff was entitled to a period
of disability beginning on September 26, 2018, the date of the ALJ’s decision, and to disability
insurance benefits under sections 216(i) and 223(d) of the Social Security Act. The Appeals
Counsel’s partially favorable decision became the final administrative action of the Commissioner.
Plaintiff’s request for judicial review followed.
Plaintiff raises the following issues:
4
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 5 of 14
I. THE ALJ’S STEP TWO FINDINGS ARE NOT SUPPORTED BY
SUBSTANTIAL EVIDENCE; AND
II. THE ALJ’S RFC ASSESSMENT IS NOT SUPPORTED BY SUBSTANTIAL
EVIDENCE; AND
III. THE ALJ DID NOT ASSESS THE COMBINED EFFECT OF MS. NELSON’S
MULTIPLE IMPAIRMENTS; AND
IV. THE ALJ FAILED TO CARRY HIS BURDEN AT STEP FIVE OF THE
SEQUENTIAL EVALUATION PROCESS.
ECF No. 12.
First, Plaintiff asserts that the ALJ failed to take into account Plaintiff’s left knee impairment
or her cervical spine problems. According to Plaintiff, the ALJ’s reference to degenerative disc
disease refers to issues she had with her lumbar spine. Referring to the medical records, Plaintiff
notes that on February 8, 2017, she complained to Dr. Lominchar of left knee pain with difficulty
walking. R. 892-95. Plaintiff presented to Charleston Bone and Joint on February 20, 2017. R.
926-27. On exam, she had tenderness along the medial joint line with some pain with McMurray
testing. Plaintiff’s reflexes were hypoactive, but equal. Plaintiff’s x-ray revealed some medial
compartment spurring and mild narrowing of the medial side consistent with medial compartmental
arthritis. Plaintiff reported some improvement after receiving an injection. Plaintiff also was
assessed with a tear of the medial meniscus that could require surgery. R. 927.
Plaintiff presented to Neurosurgery and Spine Specialists on April 15, 2016 with complaints
of lower back, neck, and upper back pain following a car accident. R. 639-40. It was noted that
Plaintiff had swelling in the juncture of the right side of the neck in the trapezius muscle which
appeared to be soft tissue/trigger point related. An MRI about a month later showed disc protrusions
at C4-5, C5-6, and C6-7, which caused mild cord deformity. At a follow-up, it was noted that her
condition did not require surgery, but that she did need a rheumatologist and pain management. R
5
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 6 of 14
636-37. Plaintiff argues that the ALJ’s failure to rate these impairments or even mention them in
his decision constitutes error.
Second, Plaintiff contends the ALJ failed to consider whether Plaintiff can perform the
assigned residual functional capacity of “light” work activities on a regular and continuing
basis–that is, during a regular work week– as required by 20 C.F.R. § 404.1545. Plaintiff contends
that the functions of continuous lifting, standing, and walking are at issue, along with Plaintiff’s
knee impairment, which was not mentioned by the ALJ. Plaintiff argues that, although the ALJ
purported to rely on the opinions of the state agency’s chart reviewers in reaching his conclusions,
the ALJ did not address the extensive postural limitations set out in the opinions.2 Plaintiff further
asserts that the chart reviewers based their opinions on less than the full record.
Regarding her complaints of pain, Plaintiff contends that the ALJ failed to consider the entire
record as required by SSR 16-3p. SSR 16-3p provides that, in addition to using all of the evidence
to evaluate the intensity, persistence, and limiting effects of an individual’s symptoms, the ALJ
should take into account the following factors:
1. Daily activities;
2. The location, duration, frequency, and intensity of pain or other symptoms;
3. Factors that precipitate and aggravate the symptoms;
4. The type, dosage, effectiveness, and side effects of any medication an individual
takes or has taken to alleviate pain or other symptoms;
2
In September 2015, state agency physician Mary Lang, M.D. opined that Plaintiff could perform
light work. R. 89-90. In July 2016, state agency physician Bonnie Lammers, M.D. opined that
Plaintiff could lift twenty pounds occasionally and ten pounds frequently; stand and walk for six
hours in an eight-hour day; sit for six hours in an eight-hour day; occasionally perform postural
maneuvers (climbing, stooping, kneeling, crouching, and crawling) except was unlimited in
balancing and had to avoid even moderate exposure to hazards. R. 95-96.
6
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 7 of 14
5. Treatment, other than medication, an individual receives or has received for relief
of pain or other symptoms;
6. Any measures other than treatment an individual uses or has used to relieve pain
or other symptoms (e.g., lying flat on his or her back, standing for 15 to 20 minutes
every hour, or sleeping on a board); and
7. Any other factors concerning an individual’s functional limitations and restrictions
due to pain or other symptoms.
According to Plaintiff, the ALJ relied on examinations where Plaintiff presented with intact
gait, no neurological deficits, and intact strength. Plaintiff argues the ALJ merely acknowledged
the records showing Plaintiff presented with tenderness, sometimes positive straight leg raising,
occasional numbness in the right leg, and limited range of motion, but failed to explain why these
findings were entitled to less weight that the normal findings on which he relied. Plaintiff further
contends that the ALJ did not take into account any of the criteria set forth in SSR 16-3p.
Third, Plaintiff argues that the ALJ did not expressly consider the combined effect of all her
impairments, as required by 20 C.F.R. § 404.1545(a)(2). Plaintiff states that the ALJ did not
mention several impairments and never mentioned those he determined were not severe, such that
his decision cannot demonstrate consideration of the combined effect of Plaintiff’s impairments.
Plaintiff further states that the ALJ offered only a limited summary of her mental health issues and
made no particularized findings regarding Plaintiff’s physical and mental impairments as well as the
side effects of her necessary medications.
Finally, Plaintiff asserts that the ALJ erred in finding that Plaintiff has non-exertional
limitations that limited her to unskilled work and no frequent public interaction without considering
that the non-exertional limitations significantly eroded the occupational base. Plaintiff contends that
the ALJ should be instructed to include the testimony of a vocational expert in further proceedings.
In accordance with 28 U.S.C. § 636(b) and Local Rule 73.02 (D.S.C.), this matter was
7
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 8 of 14
referred to United States Magistrate Judge Molly H. Cherry. On January 27, 2021, the Magistrate
Judge issued a Report and Recommendation in which she thoroughly recounted Plaintiff’s medical
records. The Magistrate Judge agreed with Plaintiff that the ALJ had erred by failing to assess
Plaintiff’s work-related abilities–particularly those pertaining to lifting, standing, and walking–on
a function-by-function basis. The Magistrate Judge found that the ALJ’s residual functional
capacity was based entirely on SSR 16-3p. The Magistrate Judge determined that the ALJ failed
to follow the proper order of residual functional capacity analysis: evidence, logical explanation,
and conclusion. ECF No. 15, 17 (citing Thomas v. Berryhill, 915 F.3d 307, 311 (4th Cir. 2019)).
According to the Magistrate Judge, the ALJ commenced with the conclusion and then found that the
limitations caused by Plaintiff’s impairments were consistent with the her residual functional
capacity. The Magistrate Judge also determined that the ALJ did not properly assess the extent
to which Plaintiff’s alleged physical impairments impacted her ability to work. The Magistrate
Judge observed that Plaintiff’s testimony, adult function reports, and medical records show
Plaintiff’s chronic pain affected her ability to sit, stand, walk, and perform daily activities, and that
her pain was increased by bending and rotation. The Magistrate Judge determined that the ALJ
should have analyzed and provided a narrative discussion describing how Plaintiff’s alleged
limitations in performing each of these functions affected her ability to perform job-related tasks for
a full workday. The Magistrate Judge stated that the ALJ’s analysis of Plaintiff’s residual functional
capacity contains too little logical explanation to enable the court to conduct meaningful review.
On this ground, the Magistrate Judge recommended remand to the Commissioner for further
proceedings. The Magistrate Judge did not address Plaintiff’s other allegations of error, observing
that the ALJ could reconsider and re-evaluate the evidence in toto as part of the reconsideration.
The Commissioner filed objections to the Report and Recommendation on February 10, 2021, to
8
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 9 of 14
which Plaintiff filed a reply on February 18, 2021.
This matter is now before the court for review of the Magistrate Judge’s Report and
Recommendation. The court is charged with making a de novo determination of any portions of the
Report to which a specific objection is made. The court may accept, reject, or modify, in whole or
in part, the recommendation made by the Magistrate Judge or may recommit the matter to the
Magistrate Judge with instructions. 28. U.S.C. § 636(b).
II. STANDARD OF REVIEW
A court should review de novo only those portions of a Magistrate Judge’s Report to which
specific objections are filed and review those portions to which only “general and conclusory”
objections have been made – for clear error. Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d
310 (4th Cir. 2005); Camby v. Davis, 718 F.2d 198, 200 (4th Cir. 1983); Opriano v. Johnson, 687
F.2d 44, 77 (4th Cir. 1982).
The role of the federal judiciary in the administrative scheme established by the Social
Security Act is a limited one. Section 205(g) of the Act provides that “[t]he findings of the
Commissioner of Social Security as to any fact, if supported by substantial evidence, shall be
conclusive . . . .” 42 U.S.C. § 4059(g). “Substantial evidence has been defined innumerable times
as more than a scintilla, but less than a preponderance.” Thomas v. Celebrezze, 331 F.2d 541, 543
(4th Cir. 1964). This standard precludes a de novo review of the factual circumstances that
substitutes the court’s findings for those of the Commissioner. Vitek v. Finch, 438 F.2d 1157 (4th
Cir. 1971). The court must uphold the Commissioner’s decision as long as it is supported by
substantial evidence. Blalock v. Richardson, 483 F.2d 773, 775 (4th Cir. 1972). “From this it does
not follow, however, that the findings of the administrative agency are to be mechanically accepted.
The statutorily granted right of review contemplates more than uncritical rubber stamping of the
9
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 10 of 14
administrative action.” Flack v. Cohen, 413 F.2d 278, 279 (4th Cir. 1969). “[T]he courts must not
abdicate their responsibility to give careful scrutiny to the whole record to assure that there is a
sound foundation for the [Commissioner’s] findings, and that [her] conclusion is rational.” Vitek,
438 [email protected].
The Commissioner’s findings of fact are not binding if they were based upon the application
of an improper legal standard. Coffman v. Bowen, 829 F.2d 514, 517 (4th Cir. 1987). However, the
Commissioner’s denial of benefits shall be reversed only if no reasonable mind could accept the
record as adequate to support that determination. Richardson v. Perales, 402 U.S. 389, 401 (1971).
III. APPLICABLE LAW
An individual is eligible for disability insurance benefits under Title II of the Social Security
Act (“Act”), 42 U.S.C. §§ 401-433, if he or she is insured, has not attained retirement age, has filed
an application for disability insurance benefits, and is under a disability as defined in the Act. 42
U.S.C. § 423(a)(1). Under Title XVI of the Act, 42 U.S.C. §§ 1381-3(f), benefits are available to
an individual who is financially eligible, files an application, and is disabled as defined in the Act.
42 U.S.C. § 1382. An individual is determined to be under a disability only if his “physical or
mental impairment or impairments are of such severity that he is not only unable to do his previous
work but cannot, considering his age, education, and work experience, engage in any other kind of
substantial gainful work which exists in the national economy . . . .” 42 U.S.C. § 423(d)(2)(A). The
disabling impairment must last, or be expected to last, for at least twelve consecutive months. See
Barnhart v. Walton, 535 U.S. 212, 214-15 (2002). Additionally, for disability insurance benefits,
the claimant must prove he was disabled prior to his date last insured. Bird v. Comm’r, 699 F.3d
337, 340 (4th Cir. 2012) (citing 42 U.S.C. § 423(a)(1)(A), (c)(1); 20 C.F.R. §§
404.101(a), 404.131(a)).
10
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 11 of 14
The Commissioner has developed the following five-step evaluation process for determining
whether a claimant is disabled under the Act: (1) whether the claimant engaged in substantial gainful
activity; (2) whether the claimant has a severe medically determinable impairment; (3) whether the
impairment meets or equals the severity of an impairment included in the Administration’s Official
Listings of Impairments found at 20 C.F.R. Pt. 404, Subpt. P, App. 1; (4) whether the impairment
prevents the claimant from performing past relevant work; and (5) whether the impairment prevents
the claimant from having substantial gainful employment. 20 C.F.R. § 404.1520(a)(4)(v). Through
the fourth step, the burden of production and proof is on the claimant. Grant v. Schweiker, 699 F.2d
189, 191 (4th Cir. 1983). At step five, the burden shifts to the Commissioner to produce evidence
that other jobs exist in the national economy that the claimant can perform, considering the
claimant’s age, education, and work experience. Id. If at any step of the evaluation the ALJ can
find an individual is disabled or not disabled, further inquiry is unnecessary. 20 C.F.R. §
404.1520(a); Hall v. Harris, 658 F.2d 260, 264 (4th Cir. 1981).
IV. DISCUSSION
The Commissioner objects to the Report and Recommendation on the grounds that none of
the purported errors identified warrant remand. The court disagrees.
The Commissioner first asserts that the Magistrate Judge erred in finding the ALJ did not
cite the relevant regulations. According to the Commissioner, both the ALJ and the Appeals
Council cited to the relevant regulations and assessed Plaintiff’s residual functional capacity under
their broad auspices. In the court’s view, the Commissioner understates the Magistrate Judge’s
analysis. The Magistrate Judge noted that the Commissioner cited to SSR 16-3p, Titles II and XVI:
Evaluation of Symptoms in Disability Claims. A correct analysis of Plaintiff’s residual functional
capacity would follow the strictures of SSR 96-8p, Policy Interpretation Ruling Titles II and XVI:
11
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 12 of 14
Assessing Residual Functional Capacity in Initial Claims, and associated regulations. In making her
finding, the Magistrate Judge relied on Dowling v. Commissioner of Social Security Administration,
986 F.3d 377, 387 (4th Cir. 2021), wherein the Court of Appeals for the Fourth Circuit held:
Of course, a claimant’s symptoms, and the extent to which the alleged severity of
those symptoms is supported by the record, is relevant to the RFC [residual
functional capacity] evaluation. See 20 C.F.R. § 416.945(a)(3) (stating that when
evaluating an RFC, an ALJ should consider “limitations that result from [the
claimant’s] symptoms, such as pain”). But an RFC assessment is a separate and
distinct inquiry from a symptom evaluation, and the ALJ erred by treating them as
one and the same.
As the Magistrate Judge properly noted, in this case, as in Dowling, the ALJ’s citation to an
the incorrect regulation resulted in the ALJ’s failing to follow the proper order of a residual
functional capacity analysis and failing to take into account the extent to which Plaintiff’s alleged
physical impairments impacted her ability to work.3 The Commissioner’s objection is without merit.
The Commissioner next contends substantial evidence supports the ALJ’s decision,
regardless of whether the ALJ followed the proper order of a residual functional capacity analysis
or properly analyzed whether Plaintiff could perform certain work-related physical activities. The
Commissioner argues that the ALJ set forth the evidence that supported his residual functional
capacity under Paragraph 5, which reads, “After careful consideration of the entire record, I find that
the claimant has the residual functional capacity to perform light work as defined in 20 C.F.R.
404.1567(b) and 416.967(b) except that she is limited to understanding, remembering, and carrying
out simple instructions and no frequent public intervention.” R. 24-27. The court disagrees.
3
The Commissioner also submits that the ALJ’s reference to the correct regulations and policy
statements in the boilerplate language at the beginning of the decision is adequate. As other courts
in this district have found, the ALJ’s mere reference to these regulations and rulings in the
“applicable law” section of the decision is insufficient where the ALJ’s analysis fails to conform
with the mandates of those regulations and rulings. See Patterson v. Saul, Civil Act No. 9:19-3378-
BHH, 2021 WL 912419, *3 (D.S.C. Mar. 10, 2021).
12
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 13 of 14
As the Magistrate Judge properly found, the ALJ failed to analyze how Plaintiff’s alleged
limitations affected her ability to perform job-related functions for a full workday. The Magistrate
Judge also found that the ALJ failed to accompany a function-by-function analysis with a narrative
describing the evidence. The ALJ simply recited medical evidence without specifically describing
how the evidence supported his conclusions, as required by SSR 96-8p.
According to the Commissioner, the Magistrate Judge improperly applied a categorical rule
to recommend remand based on her view that the ALJ failed to perform an explicit function-by-
function analysis. It is true that analysis of social security disability claims does not lend itself to
categorical rules, because the inquiry is case-by-case. Biestek v. Berryhill, 139 S. Ct. 1148 (2019).
The Magistrate Judge acknowledged that the Court of Appeals for the Fourth Circuit has not adopted
“‘a per se rule requiring remand when the ALJ does not perform an explicit function-by-function
analysis.’” ECF No. 15, 20 (citing Mascio v. Colvin, 780 F.3d 632, 636 (4th Cir. 2015)). As the
Magistrate Judge properly found, however, remand is justified in this case, where the ALJ’s errors
undermine the stated bases for the ALJ’s conclusions. The court agrees with the Magistrate Judge
that a remand is necessary for a proper evaluation of the record. The Commissioner’s objection is
without merit.
V. CONCLUSION
After reviewing the entire record, the applicable law, the briefs of the parties, the findings
and recommendations of the Magistrate Judge, and the Commissioners’s objections, the court adopts
the Magistrate Judge’s Report and Recommendation and incorporates it herein by reference. For
the reasons set out herein and in the Report and Recommendation, the Commissioner’s final
decision is reversed and remanded pursuant to sentence four of 42 U.S.C. § 405 for further
13
9:19-cv-03460-MBS Date Filed 03/29/21 Entry Number 20 Page 14 of 14
administrative review.
IT IS SO ORDERED.
/s/ Margaret B. Seymour
Senior United States District Judge
Charleston, South Carolina
March 29, 2021.
14
|
Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We consent to the reference of our firm under the caption “Experts” in the Registration Statement (Form S-3) and related Prospectus of Lincoln National Corporation for the registration of Deferred Compensation Obligations under The Lincoln National Life Insurance Company Deferred Compensation Plan for Agents and to the incorporation by reference therein of our reports dated March 1, 2013, with respect to the consolidated financial statements and schedules of Lincoln National Corporation, and the effectiveness of internal control over financial reporting of Lincoln National Corporation, included in its Annual Report (Form 10-K) for the year ended December 31, 2012, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Philadelphia, PA March 15, 2013
|
Fax from 817 341 0822 94-86-15 88:48 Pg:
RECEIVED
FAX
APR-6 2015 Joseph F. Palazzolo
CtX-riT OF ArFSAL3 602 Greenwood Cut Off Rd.
rr..-.-.ri:-, fy.sTpiST OF ' -X*5 Weatherford, TX. 76088
April 6, 2015
1%
Clerk of the Court *& e?^-n
Second Court of Appeals
Tim Curry Criminal Justice Center to
401 West Belknap, Suite 9000 ft
<3* l*
Fort Worth, Texas 76195-0211 i*
fe
In The Matter Of:
No. 02-14-00262 - CV
Fort Worth Independent School District
Appellant
v.
Joseph Palazzolo
Appellee
RE: Motion to Withdraw of: Kristine Skocpol-Saleh, Texas Bar No. 24066713
Dear Clerk of the Court,
I have read the above referenced document filed by Kristine Skocpol-Saleh, Texas Bar
No. 24066713 last night ' "*
Iherewith offer three of several letters (attached) Isentto Ms. Skocpol-Saleh beginning
March 18, 2015 along with proof of service. I hope this will reaffirm my original letter and
aid in the Court's decision making process.
Iam in the process ofsecuring appellate counsel who has practiced beforethis Court
but will need time to retrieve files from Ms. Skocpol-Saleh. The Declaratory judgment
related to this Appeal remains pending in District Court.
Thank you for your attention to this matter.
(779)266-4252 hm/fax
(779)266-4252 cell
Fax from : (779)266-4252 04-86-15 88:41 Pg:
FAX
Joseph F. Palazzolo
602 Greenwood Cut Off Rd.
Weatherford, TX. 76088
March 20, 2015
D. KRISTINE SKOCPOL-SALEH
500 E. Henry Street
Hamilton, Texas 76531
(779)266-4252 (Telephone)
(779)266-4252 (Fax)
[email protected]
RE: Formal Termination
Dear Kristine,
It is Friday morning. Ihave tried calling you this morning three (3) times per your
instruction, to no avail.
Ijust learned that you had not even filed an entry ofappearance with the Court of
Appeals for the Second District ofTexas until February 11, 2015.
Ihave contacted the Court Clerk for the Court of Appeals and have notified them that
you have been TERMINATED.
The Clerk advised that you must file the notice of your termination with the Court along
m}lT^0J,On for Extension ofTirne or in the Alternative, Motion to Abate the Appeal
ofFWtSD Based on Pendency ofUnderlying Declaratory Judgment as I have
repeatedly requested.
If you wish to withdraw from both the TOMA and Dansby cases, please advise.
You have violated our trust in you, the terms of our contract, and have put me at great
Ineed to secure all of my legal files necessary for the Appeal (and other cases if
necessary) as soon as possible. This should include the original documents file and
disk jgave you atour first meeting and which Ihave been requesting from you since
October 2014.
Acopy of this notice will be sent to the Court Clerk for the Court of Appeals.
Thank yoiTfor your attention to this matter.
Fax frotn : (779)266-4252 84-86-15 08:41 Pg: 3
HP OfficeJet Pro 8500 A910 All-in-One series Fax Log for
Diamond P Ranch
(779)266-4252
Mar 20 2015 11:09AM
Last Transaction
Date Time Type Station ID Duration Pages Result
Digital Fax
Mar 20 11:07AM Fax Sent (779)266-4252 0:56 OK
N/A
Fax from (779)266-4252
84-86-15 88:41 Pg:
FAX
Joseph F. Palazzolo
602 Greenwood Cut Off Rd.
Weatherford. TX. 76088
March 20, 2015
D. KRISTINE SKOCPOL-SALEH
500 E. Henry Street
Hamilton, Texas 76531
(779)266-4252 (Telephone)
(779)266-4252 (Fax)
[email protected]
Dear Kristine,
It is Friday morning. Per your text last night Ihave attempted to phone and text you. You
did notadvise that you would be in Court. You advised youwould be available.
I need to know ifyou are going to file the Motion for Extension of Time or in the
Alternative, Motion to Abate the Appeal of FWISD Based on Pendency of Underlying
Declaratory Judgment as I requested yesterday.
Please advise ASAP or Iwill be forced to notify the Appeals Courtthat I have
terminated ouragreement and will proceed with filing the BAR complaint.
Thank you for your attention to this matter.
Sii
Fax from : (779)266-4252
84-86-15 88:42 Pg: 5
HP OfficeJet Pro 8500 A910 All-in-One series Fax Log for
Diamond P Ranch
(779)266-4252
Mar 20 2015 8:52AM
Last Transaction
Date Time Type Station ID Duration Pages Result
Digital Fax
Mar 20 8:51AM Fax Sent (779)266-4252 0:47 1 OK
N/A
Fax fron : (779)266-4252
04-86-15 08:42 Pg:
FAX
Joseph F. Palazzolo
602 Greenwood Cut Off Rd.
Weatherford, TX. 76088
March 18,2015
D. KRISTINE SKOCPOL-SALEH
500 E. Henry Street
Hamilton, Texas 76531
(779)266-4252 (Telephone)
(779)266-4252 (Fax)
[email protected]
Dear Kristine,
Ijust learned that the appeal brief is due from you on Monday March 23.
The Appellate Court has no motion for an extension. Ineed to know what is going on
and I need anarjswertoday.
Sincerity,
Fax fron : (779)266-4252
04-06-15 08:42 Pg: 7
HP OfficeJet Pro 8500 A910 AJI-in-One series Fax Log for
Diamond P Ranch
(779)266-4252
Mar 18 2015 12:06PM
Last Transaction
Date Time Type Station ID Duration Pages Result
Digital Fax
Mar 18 12:04PM Fax Sent (779)266-4252 1:10 1 OK
N/A
|
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant To Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant þ Filed by a Party other than the Registrant ¨ Check the appropriate box: ¨ Preliminary Proxy Statement ¨ Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) ¨ Definitive Proxy Statement þ Definitive Additional Materials ¨ Soliciting Materials Pursuant to §240.14a-12 CHYRON CORPORATION (Name of Registrant as Specified in its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): þ No fee required. ¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. Title of each class of securities to which the transaction applies: Aggregate number of securities to which transaction applies: Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): Proposed maximum aggregate value of transaction: Total fee paid: ¨ Fee paid previously with preliminary materials. ¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Form, Schedule or Registration Statement No.: Filing Party: Date Filed: Filed by Chyron Corporation Pursuant to Rule 14a-12 Under the Securities Exchange Act of 1934 CHYRON 4Q2-MARCH 11, 2013 Corporate Participants Michael I. Wellesley-Wesley – President & Chief Executive Officer Jerry Kieliszak – Senior Vice President & Chief Financial Officer Other Participants John A. Gibbons – Managing Partner, Odin Partners LP Ralph Weil – Analyst, R Weil Investment Management MANAGEMENT DISCUSSION SECTION Operator:Good day, ladies and gentlemen and welcome to the Chyron Corporation Q4 2012 Earnings Conference Call. At this time, all lines are in a listen-only mode. Later we’ll conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s conference call is being recorded. I would now like to turn the conference over to your host, Michael Wellesley-Wesley, President and CEO. Please begin. Michael I. Wellesley-Wesley, President & Chief Executive Officer Thank you, Sean. Good morning and thank you all for joining us on the call today. As the conference call operator Sean indicated, my name is Michael Wellesley-Wesley, Chyron’s President and CEO. Joining me on the call today is Jerry Kieliszak, Chyron’s Chief Financial Officer. Before we begin, let me turn you over to Jerry to submit for the record the required Safe Harbor language prior to discussing our financial results and other matters. Jerry? Jerry Kieliszak, Senior Vice President & Chief Financial Officer Thank you, Michael, and good morning everyone. Before market opened today, we issued a press release containing the company’s financial results for the fourth quarter and fiscal year ended December 31, 2012. If anyone participating on today’s call does not have a full text copy of the release, you could retrieve it off the company’s [email protected] or numerous other financial sites on the Internet. And now to the Safe Harbor language. We submit for the record the following statements. From time to time, including on this conference call, management may make forward-looking statements relating to such matters as the company’s anticipated financial performance, business prospects, technological developments, changes in the industry, new products, R&D activities and similar matters that involve risks and uncertainties that may cause actual results to differ from results discussed in the forward-looking statements. Factors that might cause such a difference include those set forth in the earnings release and the company’s filings with the SEC. Please review those risks in the 10-K for 2012 as well as any updates that are filed from time to time with the SEC. Michael? Michael I. Wellesley-Wesley, President & Chief Executive Officer Thanks, Jerry. Now shortly, Jerry will provide a brief recap of our financial results for the fourth quarter and for the full year ended December 31, 2012, but before we get into the detail of our financial results, I wanted to share a significant piece of breaking news with you all. Earlier this morning, we announced that we have signed a definitive agreement to acquire a privately held company, the Hego Group. The Hego Group is the leading provider of powerful graphics and data visualization solutions for TV and for sports. Hego is based in Stockholm, Sweden with operations in Norway, Finland, Czech Republic, the Republic of Slovakia, the United Kingdom and of course the U.S.A. The combined company is going to be rebranded as ChyronHego and the symbol will remain CHYR and will continue to be quoted on NASDAQ. The transaction will take the form of a stock transaction, whereby Chyron will issue a number of shares of Chyron common stock which will represent 40% of its aggregate shares of common stock outstanding, including certain outstanding options after the closing, in exchange for all of Hego’s outstanding capital stock. Upon the achievement of certain revenue milestones during 2013, 2014, and/or 2015, Hego’s shareholders will also be entitled to receive additional shares of Chyron common stock, such that the total number of shares of Chyron common issued in the transaction is equal to 50% of the aggregate shares of Chyron common outstanding after the closing. As is always the case, the transaction is subject to customary closing conditions, including approval by Chyron’s shareholders and is expected to close in the second quarter of 2013. Chyron’s board of directors unanimously approved the transaction, and Chyron shareholders representing 40% of Chyron’s outstanding shares have committed to vote in favor of the transaction. At the closing, Johan Apel, Chairman and CEO of Hego Group, will be elected to Chyron’s board of directors and will be appointed President and Chief Operating Officer of ChyronHego. I will continue to serve as ChyronHego CEO. Hego’s shareholders will also be entitled to appoint one other member to Chyron’s board of directors. Morpheus Capital Advisors acted as exclusive financial advisor and provided a fairness opinion to Chyron’s board that the transaction was fair to Chyron and its shareholders from a financial point of view. The selling Hego shareholders are all management and employees of Hego and they will become ChyronHego management and employees after the closing. Everyone involved, including major Chyron shareholders, will enter a 15-month lockup of their Chyron shareholding. And no money is being taken off the table. Although technically an acquisition, both of these companies – both of our companies, I should say – view this as a full merger of equals. The merger of Chyron and Hego brings together two pioneering companies to create a global leader in broadcast graphics creation, playout, and real-time data visualization. This is a truly transformative transaction for Chyron. By combining the teams and resources of Chyron and Hego, we will deliver to our customers a highly diverse and compelling broadcast graphics capability. Chyron and Hego product lines are complementary with very little overlap. Hego Solutions predominantly address the needs of live sports production with product categories such as augmented reality and virtual product placement, also telestration and production services offerings based around their proprietary image and player tracking solutions. For our part, Chyron has recently been more focused on graphic solutions for live and near live news production work flows. We anticipate that ChyronHego will vault to second place in terms of global market share in our industry space once the merger is completed. Hego is a well-managed, fast growing profitable company with state-of-the-art products. ChyronHego will be focused on near and long-term value creation for its shareholders. And we believe our comprehensive and competitive product portfolio will quickly make us the market leader in our industry. With this merger we’re looking forward to integrating Hego and Chyron solutions and working together to innovate new products and services. Our objective is to develop powerful, easy to use solutions for sports, news and live television. Hego has grown quickly over the last few years and this merger will allow us to take their business to a whole new level, especially in North and South America, where their offerings have already been generating significant interest. We’re excited about this combination and I believe that our customers and our shareholders will be the real beneficiaries. I’ll be happy to answer questions a little later, but first Jerry will take us through a brief summary of our Q4 and 2012 financial results. Jerry? Jerry Kieliszak, Senior Vice President & Chief Financial Officer Thanks, Michael. Knowing that our listeners are anxious to ask questions and learn more about the Hego transaction, I’ll make my remarks brief. Fourth quarter revenues of $7.4 million were down 9% as compared to $8.1 million in the fourth quarter of 2011. While services revenues of $2.2 million increased 6%, product revenues of $5.2 million decreased 13%. Operating expenses for the quarter were $5.7 million, down 8%. This resulted in an operating loss of $0.57 million for the quarter as compared $0.43 million operating loss in the fourth quarter of 2011. Net loss for the quarter was $20 million as compared to a net loss of $0.4 million in the 2011 fourth quarter. Included in the $20 million loss was a $19.5 million valuation allowance against the company’s deferred tax assets. The deferred tax assets represent the estimated amount of tax that the company would not be required to pay after applying its net loss carry forwards against taxable income in the future. As required by GAAP, we assessed the likelihood that the company’s deferred tax assets will be realizable in the future through the generation of taxable income. In making this assessment, we considered all available evidence, positive and negatives, in determining whether it was more likely or not that the deferred tax assets will be realized. Negative evidence included that the company had losses in 2012 and prior years and that near term market and economic conditions remain uncertain. Based on our evaluation, we recorded a $19.5 million allowance. This does not mean that the NOLs disappear, they remain available to offset future taxable income and expire between 2018 and 2031. For the full year 2012, revenues were $30.2 million compared to $31.6 million in the full year 2011. Service revenues of $8.5 million were up 11% and product revenues of $21.7 million were down 9%. Operating expenses for 2012 were $24.7 million, up 2%. R&D was up 10%, sales and marketing up 4%, but G&A was down 12%. Operating loss was $3.7 million for 2012 as compared to an operating loss of $1.9 million for 2011. Net loss for 2012 was $22.3 million as compared to net loss of $4.2 million for 2011. Included in 2012’s net loss was the aforementioned $19.5 million valuation allowance. Excluding that allowance, 2012’s net loss would have been $2.8 million. This concludes my financial recap. I’m happy to answer questions in the Q&A session, and turn it back over to Michael. Michael I. Wellesley-Wesley, President & Chief Executive Officer Thanks, Jerry. So with that, let’s open the call up for your questions. Sean, please instruct our listeners on how to queue up for questions. QUESTION AND ANSWER SECTION Operator:Thank you, ladies and gentlemen. [Operator Instructions] I have a question from Ted Sowlakis with GTS Investments. Please go ahead with your question. : Yeah, hi, guys. : Hey, Ted. : Are you able to give us any financials on the Hego Corporation? : Sure. Obviously this will be – so you’ll get far more detail in the proxy when that goes out in the next couple of weeks. But in – they have a similar yearend to us – as they have a financial year, that’s the calendar year. They did $14.8 million in revenue in calendar 2012, up from $10.8 million in calendar 2011. So, I guess that’s about a 40%-ish growth rate, and they made in 2012 $1.6 million operating profit. And, so that kind of gives – and there are about 100 people spread across Europe and the Scandinavian region. : I’m sorry, my connection is not good, did you say $14 million or $40 million? : 1-4, $14.8 million. : How long have they’ve been in business? : 40 years. : That’s great. That appears to be challenging. Anything else you can tell us about the company? : Yes, certainly. They – the background of the company is in sports production services. They started off way back when – providing timing solutions for Swedish television winter sports coverage, but then they, over the – their growth has really come in the past four or five years. Up until about five years ago, they were a very local company providing production services to some one or two Scandinavian broadcasters. But they’ve emerged as a leader in sports broadcast special effects. I’m trying to – one of the best examples of which, if you have watched Fox’s coverage of the NFL last season, was the graphics bubbles and the pointers that are above all of the – above the players. And last weekend, the Daytona 500 for Fox, they were doing similar things for race cars. So they are very, very strong in what we call augmented reality and telestration, which is the ability to paint an arrow on to the TV screen to show where the quarterback should have run rather than where he did run. Putting little stuff also around players so you can track players around the field of play. And a lot of this is based around some very good proprietary technology for image processing and player tracking. And they can track in real time every moving object on a field of play including the ball and also place – digitize that and place each moving object in relation to every other moving object. So, you can imagine a huge amount of statistics coming out of this and an awful lot of ability for broadcasters to add all kinds of attractive special effects to their coverage of the game. And one of the benefits of this merger is that we will be able to go to our large installed base of sports broadcasters in the Americas and offer these services and these products to them, when – and we know there will be strong demand for that. : Okay. What about the president of the company, what is his name and what kind of background does he have? : His name is Johan Apel; that’s J-O-H-A-N and then A-P-E-L. He had originally an accounting background and then he worked in marketing for, I think, P&G in Scandinavia and he joined Hego about six years ago and has been, along with his colleague, the principal architect for their growth. : And he will be the president? : He will become the president and chief operating officer of the combined company, which will be called ChyronHego, and I’ll remain the chief executive officer. : And he’ll be located in Long Island or : Yes, he is going to – he and his family are going to relocate to Long Island. : And how old is he? : 41. : 41? Well, it sounds like we’re going into another exciting era. : Yes, I think hugely exciting. This is a transformative deal for Chyron. It makes us as strong in sports graphics as we are in news graphics. There is a lot of money in sports broadcasting, many of our customers have paid large sums of money to secure the rights to major sport and they want to maximize the viewership, not just on TV, but also of course online and on tablets, et cetera., and in order to do that, they want to create a wonderful viewing experience. And part of that viewing experience is all of this type of in-depth analytics and data visualization capabilities that Hego bring. And so I think this is very, very exciting and of course, we have a very strong footprint in arenas and stadiums and with outside broadcast trucks that cover college games and high school games. So, we believe that very quickly we can integrate our product lines and have some fabulous offerings for our sports broadcast customers in exactly the same way that we do for our news customers today. : So, what is the debt situation with both Chyron and Hego? : Negligible, but I’ll hand that off to Jerry, who is better qualified to debt situations. Jerry? : Yes, Ted. As of today, Chyron owes about $600,000 on the term loan that we initiated in the fourth quarter of 2012. Having reviewed the due diligence materials and financials for Hego, they have debt on their books of roughly about $1.4 million and that’s spread over the parent and several of the subsidiary companies. : So, total is about $2 million debt? : Yes, on a consolidated basis. : So, if there’s 17 million shares now at Chyron, there’ll be 34 million of the new company, roughly? : Well, it – the Hego’s shareholders will receive 40%. : 40%, okay. : And then they have the possibility to earn a further 10%. : Okay. Well, like I say, we’re going into a new era and I hope everything works out. : Thank you. : Thank you very much, Ted. : Thank you. Operator:[Operator Instructions] I’m not showing any other questions in the queue at this time. : We’ll give them just a moment or so more. Operator:Okay. [Operator Instructions] We do have a question from Frank Turner, a private investor. : Good morning. : Good morning, Frank. : My question is regarding the share price. I know that we ran into a problem of possibly being de-listed from the NASDAQ, and now we, as of today, have dipped down below that magical dollar share price again. Is there a concern that the share price, with this – you pouring out more shares and sharing, that could dip again, that we might run into problems the de-listing once again as this transaction moves forward? : There is always a possibility, one can certainly say never – never say never. However, I believe that, when our shareholders and investors understand why this transaction is so transformative for the company, that the share price would – will respond accordingly. So, I personally do not believe that we’re going to run into the kind of risks you just described. I think we’re creating a significantly valuable company here and I think that will be recognized by investors. : Okay. Thank you. That’s all I have. Operator:Our next question comes from John Gibbons of Odin Partners. Please go ahead with your question. : Hi Michael. I have been in and out of the call, so if this has been asked, I apologize. But this is transformative and I wish you well on it. My question is, as for the loss carry-forwards, we – is Hego profitable and can we use the U.S. loss carry-forwards against its income? And then – number one. And if so, number two, related to that – I understand the charge, but it seems like it was only two, three years ago that you did just the reverse. So, are we going to have a situation where at this time next year, you’re going to reverse the reversal on the? : Both of these questions, John, fall right into Jerry’s wheelhouse. So, I’ll let him answer them properly and then I’ll jump in at the end and screw it up. : Okay. Good morning, John. : Good morning. : John, with respect to your first question on the NOLs. As you know, Chyron has a significant amount of NOLs. We have done an analysis of those NOLs and with respect to Section 382, we believe we won’t run afoul of 382, which will give us continued full utilization, there’s going to be a profit. We have identified, and as soon as the deal closes, we’ll commence implementing some tax strategies that will make as much of the foreign source income as possible taxable in the U.S., so as to offset that income with the U.S. NOLs. : Got it. : With respect to the DTA allowance, you obviously have tracked us around, you know our history, you’re absolutely right. Back in the mid 2000s, we had set up a valuation allowance against our NOLs. Based on subsequent years’ profitability, we released that valuation allowance, effectively putting the deferred tax assets back on the books in the third quarter of 2008. Since that time, we’ve had losses in 2009, 2010, 2011 and 2012, not significant amounts but nonetheless losses and following the guidance within U.S. GAAP, we really did not have much choice but to face the fact that we would need to demonstrate future profitability in order to retain those DTAs. Now the interesting thing is that U.S. GAAP does not permit one to consider the benefit which would, to us, would be a benefit of the combined activities with Hego in producing taxable income in the future until such time as the transaction closes. : Right. : And so, since the close is likely in the early May timeframe, only after that point will we be able to begin measuring the company on a combined basis and start to build the track record that we need to again reverse this valuation allowance. : So, you could reverse it again. That’s what I thought. : Yeah. But I want to emphasize that the NOLs, which are the really valuable portion, those remain intact. They expire in varying amounts and varying years from 2018 out through 2031. So, we have a good amount of future ahead of us to be able to utilize those NOLs and avoid roughly $20 million worth of taxes. : And one of them just expired recently, right? : Yes, we actually had a small tranche of NOLs expire unutilized at the end of 2012 and we had in fact, earlier in 2012, set up a valuation allowance against that, I believe it was in the third quarter, on our prediction or projection that we would not have taxable income for the year 2012 before they expired. : And what’s the next tranche – what’s the expiration of the next tranche? : 2018. : Oh good, so you’ve got plenty of time. : Oh, we got a lot of time. The remaining $47 million of NOLs expire anywhere from 2018 all the way out through 2031, with the majority of that being in the early 2020s : Great. : To mid 2020s. : So, if this all works out as Michael is enthusiastic about, we’ll not only have a good result – good earnings, we’ll have a lot of free cash flow. : We certainly hope so. : Good luck. : Yup. : Thank you. : Thank you, John. Operator:[Operator Instructions] Our next question comes from Ralph Weil with R Weil Investments. Please go ahead with your question. : Good morning. : Hi, Ralph. : How are you? Could you comment on the Axis product line? What have been your major challenges to getting faster growth, the faster growth that had been anticipated in the past, and what if anything are you doing, or able to do, to enhance it going forward? : Thank you very much indeed Ralph. Let me sort of start with the tail end of that question first, because it will set the context. We’re about to launch – there are some exciting things happening with Axis. The first thing is that we launched it in Europe last year in the middle of a major deployment with a European broadcaster whose name I’m not yet allowed to mention who are deploying Axis and they’ll be the first major user of Axis in Europe. The second thing is that we are launching at NAB in two or three weeks time Axis version 2, which is a completely revamped, updated Axis capability whether for news graphics content creation, search, the creation of maps, et cetera, it’s a step change in terms of power, speed, usability, and features from the first Axis. And we’ve shown that to existing Axis customers, who as you know, are a couple of hundred stations, 5,000 users, and they’re very enthusiastic about it and they’re going to upgrade here in the U.S. as we roll it out. So, a big part of the answer to why Axis has gone quiet over the past 15 months is that we’ve been in a full development cycle for the new version, which is about to be launched at NAB Trade Show in April, which is our major trade show of the year. So, I have great enthusiasm and I’m very optimistic for the way the new Axis products will be received by broadcasters. I think perhaps originally we underestimated the speed at which broadcasters would – or overestimated the speed with which they would change their workflow to adopt these new types of technology. But I think that over the past couple of years there has been a much more general acceptance of cloud services; I think a lot of us are storing files in the cloud, a lot of us are building things in the cloud, and it’s a technology and an approach whose time has come in my belief. And, am I disappointed with speed at which it’s developed for us? Yes, I am, but I’m absolutely convinced as market leaders and actually unique in having this particular product in our space that it’s going to pay-off very well in the future. One other thing I’d like to just add to this is that we’re going to put an awful lot of sports data into the cloud. So that people in broadcasters, in trucks and in studios, when they want to pull down headshots of players and rosters and line-ups, et cetera, as well as all of the statistics are going to do that over the internet from Axis and build graphics accordingly. So, I think that this Hego transaction gives Axis a completely new dimension in the area of sports data to add to its exciting set of services for news customers. : Okay. May I ask another question? : Certainly. : Are there – in the Hego Transaction, are there any restrictions, have any restrictions been put on the sale of stock, which will be received by the Hego holders or insiders or will they be able to sell whenever they’d like? : No, certainly not. I thought I’d said that in the – in my opening remarks, that there’s a 15 months lock-up. : Honestly, I got on the call about 10 minutes late. : Oh, no problem. Sorry, Ralph. Yeah, I wasn’t concerned about you not hearing it. I was just suddenly worried I haven’t said it. But there’s a 15 months lock-up. They’re getting restricted stock down the road. We’ll probably file an S-3 to cover that, but it’s 15 months out. Also major shareholders of Chyron, 40% of the stockholders of Chyron have pledged to vote their share for this transaction and they are also subject to a 15-month lock-up. : Okay, thank you. : So, it’s very large. I mean, all the shares involved in this transaction certainly from – on the Hego side are locked up for the foreseeable future. : Thank you. Operator:I’m not showing any other questions in the queue at this time. Michael I. Wellesley-Wesley, President & Chief Executive Officer Okay. Well, I think, if there’s no more questions. I’d just like to thank everybody for participating on today’s call. This is a very exciting and significant moment for Chyron. And I look forward to reporting to you again at the conclusion of the current quarter. Have a great day. Thank you. Operator:Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the conference. You may now disconnect. Good day. Cautionary Statement Regarding Forward-Looking Statements This document contain forward-looking statements. Statements that are not historical facts, including statements about beliefs or expectations, are forward-looking statements. These statements are based on plans, estimates and projections at the time the Company makes the statements, and readers should not place undue reliance on them. In some cases, readers can identify forward-looking statements by the use of forward-looking terms such as “may,” “will,” “should, “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other comparable terms. Forward-looking statements involve inherent risks and uncertainties, and the Company cautions readers that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statement. Factors that could cause actual results to differ materially from those described in this document include, among others: the occurrence of any event, change or other circumstances that could give rise to the termination of the stock purchase agreement and the inability to complete the proposed transaction due to the failure to obtain shareholder approval for the proposed transaction or the failure to satisfy other conditions to complete the proposed transaction. Additional risks are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and its subsequently filed reports with the Securities and Exchange Commission (“SEC”). Readers are cautioned not to place undue reliance on the forward-looking statements included in this document, which speak only as of the date hereof. The Company does not undertake to update any of these statements in light of new information or future events. Important additional information will be filed with the SEC and distributed to shareholders of Chyron. Chyron intends to file with the SEC and mail to its shareholders a Proxy Statement on Schedule 14A pursuant to Section 14(a) of the Exchange Act in connection with the proposed transaction described in this document. The Proxy Statement will contain important information about Chyron, Hego, the proposed transaction, and other related matters. Chyron’s investors and security holders are urged to read this document carefully when it is available. Chyron’s investors and security holders will be able to obtain free copies of the Proxy Statement and other documents to be filed with the SEC by Chyron regarding the transaction through the web site maintained by the [email protected]. Chyron and its directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the transactions contemplated by the purchase agreement. Information regarding Chyron’s directors and executive officers is contained in Chyron’s Form 10-K for the year ended December 31, 2012 and its most recent proxy statement dated April 6, 2012, which are filed with the SEC. Chyron’s proxy statement dated April 6, 2012 also contains information regarding the beneficial ownership of Chyron’s stock by Chyron’s directors and executive officers. A complete description of any interests of Chyron’s directors and executive officers in the transactions contemplated by the purchase agreement will be provided in the Proxy Statement. 14306702v.1
|
Case 1:18-cv-01568-TDC Document 49 Filed 02/11/19 Page 1 of 2
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
THE NATIONAL FEDERATION OF )
THE BLIND, et al. )
)
Plaintiffs, )
) Civil Action No. 18-01568 (TDC)
v. )
)
UNITED STATES DEPARTMENT OF )
EDUCATION, et al. )
)
Defendants. )
DEFENDANTS’ MOTION TO DISMISS
PLAINTIFFS’ SECOND AMENDED COMPLAINT
Defendants, by and through counsel, respectfully submit this Motion to Dismiss
Plaintiffs’ Second Amended Complaint. As set forth in Defendants’ accompanying
Memorandum of Law, this case, brought by Plaintiffs, the National Federation of the Blind,
the Council of Parent Attorneys and Advocates, and the National Association for the
Advancement of Colored People, Inc. on behalf of themselves and their respective members,
should be dismissed for lack of subject matter jurisdiction pursuant to Federal Rule of Civil
Procedure 12(b)(1), or alternatively for failure to state a claim up which relief can be granted
pursuant to Federal Rule of Civil Procedure 12(b)(6).
Case 1:18-cv-01568-TDC Document 49 Filed 02/11/19 Page 2 of 2
Dated: February 11, 2019 Respectfully submitted,
JOSEPH H. HUNT
Assistant Attorney General
ROBERT K. HUR
United States Attorney
CARLOTTA WELLS
Assistant Branch Director
/s/ Tamra T. Moore
TAMRA T. MOORE (D.C. Bar No.488392)
Senior Counsel
United States Department of Justice
Civil Division, Federal Programs Branch
20 Massachusetts Avenue, Room 5375
Washington, DC 20001
Tel: 7085220701
Fax: 7085220701
E-mail: [email protected]
Attorneys for Defendants
2
|
261 F.3d 715 (7th Cir. 2001)
Ellis Leroy Crabtree, Plaintiff-Appellant,v.National Steel Corporation, Granite City Steel Division, Defendant-Appellee.
No. 00-1355
In the United States Court of Appeals For the Seventh Circuit
Argued January 10, 2001Decided August 20, 2001
Appeal from the United States District Court for the Southern District of Illinois. No. 98-38-GPM--G. Patrick Murphy, Chief Judge.[Copyrighted Material Omitted][Copyrighted Material Omitted]
Before Ripple, Kanne, and Williams, Circuit Judges.
Williams, Circuit Judge.
1
Ellis (Jim) Crabtree filed this suit alleging that his former employer, Granite City Steel Division of National Steel Corporation ("Granite City Steel"), failed to rehire him in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. sec. 621 et seq. The jury found in favor of Granite City Steel, and the district court denied Crabtree a new trial. On appeal, Crabtree raises a variety of discovery, evidentiary and trial issues. We reject each argument and affirm.
I. BACKGROUND
2
Crabtree was discharged from Granite City Steel pursuant to a reduction in force ("RIF"). In exchange for a severance package, he signed a waiver and release of claims relating to his discharge. Later that same year, Crabtree applied for various vacant positions advertised by Granite City Steel. Granite City Steel decided not to rehire Crabtree because it determined that Crabtree was volatile and not a team player based on reports that he engaged in violent confrontations with co-workers and his involvement in a domestic violence incident that was publicized in the local newspaper. Crabtree sued Granite City Steel alleging that its failure to rehire him was on account of his age. He did not challenge his discharge, although the theory of his claim was that the RIF began the process by which Granite City Steel terminated older supervisors and replaced them with younger ones. After much wrangling with the district court over continuances, discovery disputes, and evidentiary rulings, Crabtree's failure to rehire claim went to trial.1 The jury returned a verdict in favor of Granite City Steel and Crabtree moved for a new trial. He appeals the district court's denial of that motion.
II. ANALYSIS
3
Most of the wrangling with the district court appeared to be a result of the judge's dissatisfaction with how the par ties handled their discovery disputes and were preparing for trial. On appeal, Crabtree argues that the district court erred in: 1) failing to adequately monitor and manage the parties' discovery disputes; 2) limiting the trial time; 3) excluding evidence that Granite City Steel destroyed documents; 4) tendering certain jury instructions; and 5) excluding the testimony of two [email protected]. We review a denial of a motion for a new trial for abuse of discretion. May all v. Peabody Coal Co., 7 F.3d 570, 572 (7th Cir. 1993). But, even if we find that the district court abused its discretion, we will not reverse a jury verdict if the error is harmless, i.e., does not affect the substantial rights of the parties. Fed. R. Civ. P. 61.2
A. Discovery Matters
4
We will first consider Crabtree's argument that he is entitled to a new trial because the district court did not adequately manage discovery in that it failed to: 1) rule on his discovery abuse and ex parte contact motions in a timely fashion, 2) grant him a continuance of the trial date, and 3) impose sanctions against Granite City Steel for its alleged discovery abuses. We find no error on these grounds.
5
Here, the district court ruled on Crabtree's motions for sanctions for discovery abuse and to allow him to conduct ex parte interviews with former and current Granite City Steel employees two months after the motions were filed. Such a short delay cannot be the basis of a new trial when, as here, there is no evidence that Crabtree was prejudiced by the delay because the motion for sanctions was baseless (see discussion infra), and most of the information Crabtree sought to obtain from the interviews was either cumulative or irrelevant, and therefore, [email protected].
6
As for the court's refusal to continue the trial date to conduct further discovery, we have held that:
7
the common thread in the rare cases that reverse the denial of a continuance is the existence of changed circumstances to which a party cannot reasonably be expected to adjust without an extension of time. The typical 'changed circumstances' include illness of a key witness, illness of counsel on the eve of trial, or newly discovered evidence. On the other hand, where there are no changed circumstances and a litigant fails to take advantage of opportunities to conduct discovery, [we have] upheld the denial of additional time to conduct discovery.
8
Daniel J. Hartwig Assocs., Inc. v. Kanner, 913 F.2d 1213, 1222-23 (7th Cir. 1990) (citations omitted).
9
Crabtree's counsel served his first set of discovery requests only six weeks after he filed his appearance. Early in the case, he informed the court of his schedule and the problems in obtaining certain pieces of information from Granite City Steel. Throughout the pendency of the litigation, he persistently moved for a continuance of the trial date due to the same problems.3 We believe that considering the flood of documents exchanged between the parties and the multitude of discovery dispute hearings held the month before the trial began, the district judge should have granted a continuance. The problem for Crabtree, however, is that none of his requests was based on changed circumstances and the court actually granted a two-week extension of the trial date. So, although we have problems with the court's decision to force the parties to trial under the circumstances present in this case,4 we are constrained by our standard of review. Therefore, we conclude that the district court did not abuse its discretion in failing to grant more than a two-week extension of the trial date.
10
Likewise, the court did not abuse its discretion in failing to impose sanctions. Sanctions may be imposed when a party persistently fails to comply with a discovery order, see Ladien, M.D. v. Astrachan, 128 F.3d 1051, 1056 (7th Cir. 1997), and "displays wilfulness, bad faith or fault" in doing so. Philips Med. Sys. Int'l, B.V. v. Bruetman, 982 F.2d 211, 214 (7th Cir. 1992) (citing Roland v. Salem Contract Carriers, Inc., 811 F.2d 1175, 1179 (7th Cir. 1987)). Here, there was no evidence that Granite City Steel persistently, wilfully, or in bad faith, failed to comply with the court's scheduling order,5 and Crabtree admitted as much in his motion for sanctions ("Plaintiff is not, at this time, claiming bad faith."), and again at an April 20, 1999 hearing on outstanding discovery issues ("Your Honor, there has been fairly substantial compliance with the requests that I've been making and I think Mr. Konzen and Granite City Steel are making really strong efforts in getting me materials. The trouble is that they're coming fast and furious. What I'm missing, though, is just statements of what I have and don't have."). Accordingly, the district court did not abuse its discretion in refusing to impose sanctions on Granite City Steel.
B. Limitation on Length of Trial
11
Crabtree also takes issue with the district court's decision to limit the length of the trial (including voir dire, opening statements, and closing arguments) to four days. We find that the district court committed no error.
12
A district court that fixes a period of time for the trial as a whole does not per se commit an abuse of discretion so long as the time limit is flexible enough to accommodate adjustment if it appears during the trial that the court's initial assessment was too restrictive. MCI Communications Corp. v. Am. Tel. & Tel. Co., 708 F.2d 1081, 1171 (7th Cir. 1983).
13
At a status conference on the day before the trial was to begin, the district judge limited Crabtree's time to present his case to 1" days with a one-hour rebuttal, and Granite City Steel's to one day. The judge felt that this was an appropriate amount of time based on his experience in trying employment discrimination cases before a jury, his beliefs that this was an uncomplicated case and that much of the evidence Crabtree wanted to present was cumulative or inadmissible. Although we believe that in an appropriate case a district court's decision to significantly cut the length of the trial on the eve of trial could be problematic, the court did not abuse its discretion here because it was necessary to constrain Crabtree's case and prune out cumulative (i.e., redundant testimony regarding Crabtree's management style) and irrelevant (i.e., testimony regarding the bad management style of younger managers) evidence. See McKnight v. Gen. Motors Corp., 908 F.2d 104, 115 (7th Cir. 1990) (noting that we commend district court judges who manage trials with an iron hand by scrutinizing witness and exhibit lists, and pruning redundant or marginal evidence). Additionally, once it became apparent during the trial that Crabtree needed more time, the judge allowed Crabtree more rebuttal time than originally estimated. Finally, there was no prejudice to Crabtree because even with the time constraints he was able to present several witnesses in addition to himself (six in his case-in-chief and nine in rebuttal) to testify to his management style and/or other employees' violent confrontations in the workplace for which no disciplinary action was taken.
C. Destruction of Documents
14
The next argument we consider is Crabtree's assertion that the district court erred in excluding evidence that Granite City Steel improperly destroyed documents related to the RIF and applications and/or resumes of persons who applied for the positions Crabtree sought. We find no error here.
15
"The prevailing rule [in this circuit] is that bad faith destruction of a document relevant to proof of an issue at trial gives rise to a strong inference that production of the document would have been unfavorable to the party responsible for its destruction." Coates v. Johnson & Johnson, 756 F.2d 524, 551 (7th Cir. 1985); see also Partington v. Broyhill Furniture Indus., Inc., 999 F.2d 269, 272 (7th Cir. 1993) ("[I]f, being sensitive to the possibility of a suit, a company then destroys the very files that would be expected to contain the evidence most relevant to such a suit, the inference arises that it has purged incriminating evidence.").
16
Although Granite City Steel destroyed most of the RIF documents while Crabtree's claim was pending before the Illinois Department of Human Rights ("IDHR"), there was no evidence that they were destroyed in bad faith. Granite City Steel destroyed the RIF documents only after maintaining them for two years (one year longer than required under company policy) and only after giving notice to the IDHR that it was doing so. Additionally, most of the RIF documents were not relevant to Crabtree's case because his lawsuit did not challenge the RIF, and those that were relevant-- Crabtree's own RIF evaluations--were preserved and produced.6
17
As for the applications, they were also destroyed in accordance with company policy. Moreover, the district court found that the applications did not contain the applicants' ages. Although Crabtree asserted that the ages were on the "short form" applications maintained by the Illinois Department of Employment Security, the district court found that no one from Granite City Steel saw that information. It may have been error to exclude evidence that Granite City Steel destroyed resumes that contained high school graduation dates, but due to the strength of the evidence supporting Granite City Steel's reason for not rehiring Crabtree, there was not a significant chance that the exclusion of the resumes affected the outcome of the trial. See Old Republic Ins. Co. v. Employers Reinsurance Corp., 144 F.3d 1077, 1082 (7th Cir. 1998).
D. Jury Instructions
18
We also reject Crabtree's objections on various grounds to three instructions tendered to the jury. We review jury instructions to determine if, as a whole, they were sufficient to inform the jury of the applicable law. See Mayall, 7 [email protected]. Because most of Crabtree's arguments are frivolous, we will only discuss two of his objections.
19
First, Crabtree argues that jury instruction # 9 improperly placed the burden of persuasion entirely on him, and that once he presented direct evidence of age discrimination, the burden should have shifted to Granite City Steel. See id. at 573-74 ("'[O]nce the plaintiff in a civil rights case has shown that a forbidden purpose was a substantial factor in the decision to fire him, the burden shifts to the employer to persuade the court that the plaintiff would have been fired anyway, even if that purpose had not existed.'") (quoting Visser v. Packer Eng'g Assocs., Inc., 924 F.2d 655, 658 (7th Cir. 1991)).
Jury instruction # 9 provided that:
20
It is Jim Crabtree's burden to prove by a preponderance of the evidence that he was not re-hired by National Steel Corporation . . . because of his age. In order for you to determine whether Jim Crabtree was not re-hired because of his age, you must decide whether National Steel Corporation would not have re-hired Jim Crabtree had he been younger and everything else had remained the same.
21
This instruction was taken directly from an instruction that we upheld in Achor v. Riverside Golf Club, 117 F.3d 339 (7th Cir. 1997), as properly setting forth the burdens, and for the same reasons expressed in that opinion, we believe there was no error in giving it to the jury.
22
Crabtree also argues that jury instruction # 6 was improper when viewed in combination with instructions 9 and 107 because there was no definition of "preponderance of the evidence." Crabtree did not, however, raise this challenge below, and plain error review does not apply to jury instructions in civil cases. See Fed. R. Civ. P. 51; Achor, 117 F.3d at 342; Deppe v. Tripp, 863 F.2d 1356, 1361 (7th Cir. 1988). Therefore, this challenge is waived.
23
Even if Crabtree had not waived this challenge, if there was any error in giving instruction # 6 along with instructions 9 and 10, we find that it was harmless. Instruction # 6 did not specifically state that it was defining "preponderance of the evidence," but it provided that:
24
When I say that a party has the burden of proof on any proposition, or use the expression 'if you find,' or 'if you decide,' I mean you must be persuaded, considering all the evidence in the case, that the proposition on which he has the burden of proof is more probably true than not true.
25
(emphasis added). We find this explanation of the burden of proof sufficient to inform the jury of the applicable meaning of "preponderance of the evidence." Moreover, considering the overwhelming evidence of statistics showing no age disparity after the RIF and of Crabtree's own violent demeanor (most of which we learned at oral argument was initially placed before the jury by Crabtree's counsel in his case- in-chief), if there was any error at all, it was harmless.
E. Exclusion of Testimony
26
Crabtree's final argument is that the district court improperly excluded evidence that a supervisor told two employees who were both over the age of 40 that they "were too old to go with him through the millennium." The supervisor did not participate in the decision whether to rehire Crabtree and made the comment two years after the decision was made. Stray remarks made by non- decisionmakers are not evidence that the decision had a discriminatory motive. Hunt v. City of Markham, Illinois, 219 F.3d 649, 652 (7th Cir. 2000); Cullen v. Olin Corp., 195 F.3d 317, 323 (7th Cir. 1999); Cianci v. Pettibone Corp., 152 F.3d 723, 727 (7th Cir. 1998). Accordingly, the court did not abuse its discretion in excluding the remark.
III. CONCLUSION
27
For the foregoing reasons, the judgment of the district court is AFFIRMED.
Notes:
1
The court refused to consider Granite City Steel's motion for summary judgment because it was untimely filed.
2
Rule 61 of the Federal Rules of Civil Procedure provides:
No error in either the admission or the exclusion of evidence . . . is ground for granting a new trial or for setting aside a verdict or for vacating, modifying, or otherwise disturbing a judgment or order, unless refusal to take such action appears to the court inconsistent with substantial justice.
3
Crabtree's counsel asserts that the judge was required to consider his status as a sole practitioner in determining whether to grant a continuance. In United States v. Windsor, 981 F.2d 943, 948 (7th Cir. 1992), we identified factors that should be considered in granting or denying a continuance, and being a sole practitioner is not among them.
4
At the final pretrial conference two weeks before trial, Judge Murphy stated:
"But I'm not going to continue the case. And if I absolutely put everybody on both sides of this case, and including your client, into the hospital for a transfusion because they're exhausted getting it done, that's the way it's going to be."
5
Once the district court became aware that the discovery disputes were continuing as the trial date quickly approached, it required Granite City Steel's in-house counsel to testify at a hearing and to swear in an affidavit as to what documents had been produced and that the production was complete, accurate, and in compliance with the Federal Rules of Civil Procedure. Granite City Steel did so.
6
Crabtree's evaluations were relevant because Granite City Steel scored each employee on various factors including management style in order to determine who would be discharged pursuant to the RIF. Apparently, a manager stated that Crab- tree was not rehired because he was part of the RIF. Thus, the evaluations could have tended to prove that Crabtree was or was not rehired because of his violent demeanor.
7
Instruction # 10 provided that:
You may not return a verdict for Jim Crabtree just because you might disagree with National Steel Corporation's decision or believe it to be harsh or unreasonable, as long as National Steel Corporation would have reached the same re-hiring decision regardless of Jim Crabtree's age.
|
The petition upon which the case was tried affirmatively discloses that the county court had no jurisdiction of the cause of action asserted. We are required to notice this want of jurisdiction apparent on the face of the record, and would not be authorized to consider the various questions presented. In his petition the defendant in error sought judgment against plaintiffs in error on three items, viz.: (1) $392.50 actual damages; (2) $150 exemplary damages; and (3) an injunction to restrain plaintiffs in error from thereafter damaging his lands and crops to the amount of $500. In that portion of his petition in which he sought injunctive relief he alleges, in substance, that he fears that, unless restrained, plaintiffs in error will again allow their stock to depredate upon his premises and thereby destroy the peace and comforts of his home and reduce the value of his property. The value to him of this right sought to be protected by injunction is stated in the petition in this language: "He shows that he would be damaged in the further sum of $500.00 if defendants are not so restrained." *Page 828
These allegations have the effect of making this item of $500 a part of the amount in controversy, the same as the other items of damages declared upon. The sum of these three items exceeds $1,000. The county court was, therefore, without jurisdiction to hear and determine the cause.
The injunction will be dissolved, the judgment of the trial court will be reversed, and the cause remanded, to be disposed of in accordance with this opinion. |
984 So. 2d 1280 (2008)
Ahmar Rashar PORTER, Appellant,
v.
STATE of Florida, Appellee.
No. 1D07-6474.
District Court of Appeal of Florida, First District.
June 27, 2008.
Ahmar Rashar Porter, pro se, Appellant.
Bill McCollum, Attorney General, Tallahassee, for Appellee.
PER CURIAM.
We dismiss this appeal as we lack jurisdiction. The trial court's order on Appellant's motion for postconviction relief filed pursuant to Florida Rule of Criminal Procedure 3.850 directed Appellant to refile his motion to correct a deficient claim. Therefore, the trial court's order is a nonappealable, nonfinal order. Kelly v. State, 969 So. 2d 1159 (Fla. 4th DCA 2007); Lee v. State, 939 So. 2d 154 (Fla. 1st DCA 2006).
DISMISSED.
ALLEN, DAVIS, and HAWKES, JJ., concur.
|
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF KANSAS
Leticia Macias,
Elizabeth Magana Zamora,
San Juanita Schneider, Ashley Negrete,
and Juan Carlos Vasquez,
on behalf of themselves and all others
similarly situated,
Plaintiffs,
v. Case No. 19-cv-2305-JWL
BNSF Railway Company; Miles Leasing, LLC;
Unified Government of Wyandotte County and
Kansas City, Kansas; Terminal Consolidation Co.;
Amino Bros. Co., Inc.; and Jane/John Doe
Construction Companies,
Defendants.
MEMORANDUM AND ORDER
On February 6, 2020, the court ordered plaintiffs to show cause why the court should not
dismiss plaintiffs’ amended complaint against all defendants for lack of subject matter jurisdiction
based on plaintiffs’ failure to plead that they have satisfied the notice requirements of the Kansas
Tort Claims Act and plaintiffs’ failure to plead sufficient facts from which CAFA jurisdiction
might be inferred. In that order, the court also advised plaintiffs to cure the facially overbroad
class definition set forth in their amended complaint. Finally, the court directed plaintiffs to attach
to their response any proposed amended complaint that plaintiffs would intend to file if the court
accepted their response to the show cause order.
In paragraph 30 of their response to the show cause order, plaintiffs have articulated a
theory of damages in excess of $5,000,000. See 28 U.S.C. § 1332(d) (district courts shall have
original jurisdiction of any civil action in which the matter in controversy exceeds the sum or
value of $5,000,000, exclusive of interest and costs, and is a class action in which . . . any member
of a class of plaintiffs is a citizen of a State different from any defendant”). In paragraph 31 of
their response to the show cause order, plaintiffs have attempted to explain why they believe that
the putative class has approximately 150 members. See id. § 1332(d)(5)(B) (CAFA does not apply
if “the number of members of all proposed plaintiff classes in the aggregate is less than 100”).1
Nonetheless, while plaintiffs have at least articulated a theory as to why CAFA jurisdiction
is appropriate in this case, they have totally failed to include any of those allegations in the
proposed third amended complaint attached to their response nor included any other facts from
which CAFA jurisdiction may be inferred. They have further failed to plead (and have failed to
mention in their response to the show cause order) that they have satisfied the notice requirements
of the Kansas Tort Claims Act and have failed to amend the class definition in any way.2 In fact,
the proposed amended complaint attached to their response is identical to the one attached to their
motion for leave to file an amended complaint that the court flatly rejected based on the
deficiencies outlined in the order to show cause. The decision by plaintiffs’ counsel to submit the
same deficient draft of plaintiffs’ complaint is frustrating to the court and an incredibly inefficient
way to process the claims of his clients. Nonetheless, to ensure that plaintiffs are not unduly
1
The remainder of plaintiffs’ response is devoted to arguing against CAFA exceptions that
defendants have not asserted in the first instance.
2
Other documents in the record reflect that the notice requirements of the KTCA may have been
satisfied. Nonetheless, plaintiffs must plead these facts.
2
prejudiced by their counsel’s failure to abide by the court’s order, the court will permit plaintiff
to file a third amended complaint on or before Wednesday, March 18, 2020. Plaintiff’s counsel
is strongly advised to include in that third amended complaint sufficient facts from which CAFA
jurisdiction may be inferred and facts indicating that the notice requirements of the KTCA have
been satisfied—information which should be readily available to plaintiffs and not at all onerous
to include in their third amended complaint. Defendants may challenge the third amended
complaint as they deem appropriate.
IT IS THEREFORE ORDERED BY THE COURT THAT plaintiffs shall file their
third amended complaint on or before Wednesday, March 18, 2020.
IT IS SO ORDERED.
Dated this 3rd day of March, 2020, at Kansas City, Kansas.
s/ John W. Lungstrum
John W. Lungstrum
United States District Judge
3
|
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.20549 FORM 10-Q xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2007 OR ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 1-11826 MIDSOUTH BANCORP, INC. (Exact name of registrant as specified in its charter) Louisiana 72 –1020809 (State of other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 102 Versailles Boulevard, Lafayette, Louisiana 70501 (Address of principal executive offices, including zip code) 779-291-0602 (Registrant’s telephone number, including area code) Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YESxNO¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. Large accelerated filer ¨Accelerated filer xNon-accelerated filer ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) YES¨NOx As of November 1, 2007, there were 6,582,004 shares of the registrant’s Common Stock, par value $0.10 per share, outstanding. Part I – Financial Information Item 1. Financial Statements. Consolidated Statements of Condition Consolidated Statements of Earnings (unaudited) Consolidated Statement of Stockholders’ Equity (unaudited) Consolidated Statement of Stockholders’ Equity (unaudited) Consolidated Statements of Cash Flows (unaudited) Notes to Interim Consolidated Financial Statements Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation. Forward Looking Statements Critical Accounting Policies Analysis of Statement of Condition Liquidity Asset Quality Impact of Inflation and Changing Prices Item 3. Quantitative and Qualitative Disclosures About Market Risk. Item 4. Controls and Procedures. Part II – Other Information Item 1. Legal Proceedings. Item 1A. Risk Factors. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. Item 3. Defaults Upon Senior Securities. Item 4. Submission of Matters to a Vote of Security Holders. Item 5. Other Information. Item 6. Exhibits. Signatures -2- Table of Contents Part I – Financial Information Item 1. Financial Statements. MidSouth Bancorp, Inc. and Subsidiaries Consolidated Statements of Condition September 30, 2007 (unaudited) December 31, 2006 (audited) Assets Cash and due from banks $ 27,885,071 $ 30,564,604 Interest bearing deposits in banks and federal funds sold 3,088,574 26,839,737 Total cash and cash equivalents 30,973,645 57,404,341 Securities available-for-sale, at fair value (cost of $182,146,375 at September 30, 2007 and $181,973,949 at December 31, 2006) 181,719,338 180,673,747 Securities held-to-maturity (estimated fair value of $11,709,372 at September 30, 2007 and $16,166,937 at December 31, 2006) 11,514,732 15,900,611 Loans, net of allowance for loan losses of $5,297,280 at September 30, 2007 and $4,976,857 at December 31, 2006 547,750,783 494,068,845 Other investments 5,157,740 2,501,150 Accrued interest receivable 5,815,119 5,491,730 Bank premises and equipment, net 36,450,478 30,609,332 Goodwill and intangibles 9,800,122 9,957,364 Cash surrender value of life insurance 4,181,378 4,068,116 Other assets 3,523,848 4,346,450 Total assets $ 836,887,183 $ 805,021,686 Liabilities and Stockholders’ Equity Liabilities: Deposits: Non-interest bearing $ 179,859,508 $ 182,595,931 Interest bearing 534,494,458 533,583,610 Total deposits 714,353,966 716,179,541 Securities sold under repurchase agreements 19,015,860 4,474,786 Federal funds purchased 5,000,000 - Federal Home Loan Bank advances 12,330,000 5,650,000 Accrued interest payable 1,090,551 1,196,822 Junior subordinated debentures 15,465,000 15,465,000 Other liabilities 3,344,968 2,312,061 Total liabilities 770,600,345 745,278,210 Stockholders’ Equity: Common stock, $0.10 par value- 10,000,000 shares authorized; 6,723,523 and 6,355,946 issued and 6,582,577 and 6,236,989 outstanding at September 30, 2007 and December 31, 2006, respectively 672,353 635,595 Capital surplus 51,292,909 42,907,597 Unearned ESOP shares (163,057 ) (251,259 ) Accumulated other comprehensive income (281,844 ) (858,133 ) Treasury stock- 140,946 shares at September 30, 2007 and 118,957 shares at December 31, 2006, at cost (2,899,662 ) (2,518,411 ) Retained earnings 17,666,139 19,828,087 Total stockholders’ equity 66,286,838 59,743,476 Total liabilities and stockholders’ equity $ 836,887,183 $ 805,021,686 See notes to unaudited consolidated financial statements. -3- Table of Contents MidSouth Bancorp, Inc. and Subsidiaries Consolidated Statements of Earnings (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2007 2006 2007 2006 Interest income: Loans, including fees $ 12,460,906 $ 10,860,528 $ 35,439,056 $ 30,143,044 Securities and other investments Taxable 1,105,589 1,274,496 3,186,209 3,451,061 Nontaxable 1,036,780 900,593 3,097,464 2,467,370 Federal funds sold 47,230 68,081 672,377 768,667 Total interest income 14,650,505 13,103,698 42,395,106 36,830,142 Interest expense: Deposits 4,430,762 4,268,473 13,713,330 11,603,901 Securities sold under repurchase agreements, federal funds purchased and advances 452,492 58,332 645,195 107,247 Junior subordinated debentures 350,281 350,782 1,044,174 1,020,499 Total interest expense 5,233,535 4,677,587 15,402,699 12,731,647 Net interest income 9,416,970 8,426,111 26,992,407 24,098,495 Provision for loan losses 300,000 50,000 650,000 670,000 Net interest income after provision for loan losses 9,116,970 8,376,111 26,342,407 23,428,495 Non-interest income: Service charges on deposits 2,449,769 2,459,671 7,245,344 6,560,086 Gains (losses) on securities, net - (7,553 ) - (7,553 ) Credit life insurance 42,402 40,887 138,274 129,761 Other charges and fees 1,081,725 936,880 3,143,410 2,681,960 Total non-interest income 3,573,896 3,429,885 10,527,028 9,364,254 Non-interest expenses: Salaries and employee benefits 5,215,368 4,249,564 14,716,502 11,972,079 Occupancy expense 1,760,542 1,597,830 4,947,729 4,458,038 Other 2,765,900 2,641,205 8,402,045 7,623,727 Total non-interest expenses 9,741,810 8,488,599 28,066,276 24,053,844 Income before income taxes 2,949,056 3,317,397 8,803,159 8,738,905 Provision for income taxes 508,445 900,260 1,921,406 2,267,494 Net earnings $ 2,440,611 $ 2,417,137 $ 6,881,753 $ 6,471,411 Earnings per share: Basic $ 0.37 $ 0.37 $ 1.05 $ 0.99 Diluted $ 0.37 $ 0.36 $ 1.04 $ 0.97 See notes to unaudited consolidated financial statements. -4- Table of Contents MidSouth Bancorp, Inc. and Subsidiaries Consolidated Statement of Stockholders’ Equity (unaudited) For the Nine Months Ended September 30, 2007 Common Stock Unrealized Losses on Shares Amount Capital Surplus ESOP Obligation Securities AFS, net Treasury Stock Retained Earnings Total Balance- January 1, 2007 6,355,946 $ 635,595 $ 42,907,597 $ (251,259 ) $ (858,133 ) $ (2,518,411 ) $ 19,828,087 $ 59,743,476 Net earnings - 6,881,753 6,881,753 Comprehensive income: Net change in unrealized losses on securities available-for-sale, net of taxes - 576,289 - - 576,289 Comprehensive income 7,458,042 Cash dividends on common stock, $0.18 per share - (1,189,986 ) (1,189,986 ) Common stock dividend, 5% per common share 320,168 32,017 7,821,698 - - - (7,853,715 ) - Exercise of stock options 47,409 4,741 266,001 - 270,742 Tax benefit resulting from exercise of stock options - - 137,716 - 137,716 Purchase of treasury stock - (381,251 ) - (381,251 ) ESOP obligation, net of repayments - - - 88,202 - - - 88,202 Excess of market value over book value of ESOP shares released, net adjustment - - 86,250 - 86,250 Stock option expense - - 73,647 - 73,647 Balance- September 30, 2007 6,723,523 $ 672,353 $ 51,292,909 $ (163,057 ) $ (281,844 ) $ (2,899,662 ) $ 17,666,139 $ 66,286,838 See notes to unaudited consolidated financial statements. -5- Table of Contents MidSouth Bancorp, Inc. and Subsidiaries Consolidated Statement of Stockholders’ Equity (unaudited) For the Nine Months Ended September 30, 2006 Common Stock UnrealizedLosses Shares Amount Capital Surplus ESOP Obligation on Securities AFS, net Treasury Stock Retained Earnings Total Balance- January 1, 2006 6,570,993 $ 657,099 $ 41,753,670 $ (47,194 ) $ (1,032,694 ) $ (1,229,213 ) $ 13,083,900 $ 53,185,568 Net earnings - 6,471,411 6,471,411 Comprehensive income: Net change in unrealized losses on securities available-for-sale, net of taxes - 128,922 - - 128,922 Comprehensive income 6,600,333 Cash dividends on common stock, $0.13 per share - (895,957 ) (895,957 ) Exercise of stock options 83,789 8,379 333,432 - 341,811 Tax benefit resulting from exercise of stock options - - 594,899 - 594,899 Purchase of treasury stock - (655,720 ) - (655,720 ) ESOP obligation, net of repayments - - - (232,604 ) - - - (232,604 ) Excess of market value over book value of ESOP shares released, net adjustment - - 52,500 - 52,500 Stock option expense - - 45,333 - 45,333 Balance- September 30, 2006 6,654,782 $ 665,478 $ 42,779,834 $ (279,798 ) $ (903,772 ) $ (1,884,933 ) $ 18,659,354 $ 59,036,163 See notes to unaudited consolidated financial statements. -6- Table of Contents MidSouth Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows (unaudited) For the Nine Months Ended September 30, 2007 2006 Cash flows from operating activities: Net earnings $ 6,881,753 $ 6,471,411 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,070,223 2,044,232 Provision for loan losses 650,000 670,000 Deferred income tax expense (benefit) 497,784 (255,005 ) Amortization of premiums on securities, net 449,973 538,504 Net loss on sale of securities - 7,553 Net loss on sale of premises and equipment 27,510 416 Net loss on sale of other real estate owned 27,533 13,210 Impairment on premises and equipment (20,706 ) - Stock option compensation expense 73,647 45,333 Change in accrued interest receivable (323,389 ) (539,517 ) Change in accrued interest payable (106,271 ) (103,052 ) Other, net 932,460 533,312 Net cash provided by operating activities 11,160,517 9,426,397 Cash flows from investing activities: Proceeds from maturities and calls of securities available-for-sale 21,966,866 26,308,619 Proceeds from maturities and calls of securities held-to-maturity 4,395,500 3,219,900 Proceeds from sales of securities available-for-sale - 2,988,590 Purchases of securities available-for-sale (22,600,250 ) (74,763,571 ) Purchases of other investments (2,655,225 ) (910,950 ) Loan originations, net of repayments (54,494,614 ) (53,029,037 ) Purchase of premises and equipment (7,818,016 ) (7,304,836 ) Proceeds from sale of premises and equipment 57,085 275 Proceeds from sales of other real estate owned 448,522 151,450 Net cash used in investing activities (60,700,132 ) (103,339,560 ) Cash flows from financing activities: Change in deposits (1,825,575 ) 66,408,333 Change in repurchase agreements 14,541,074 980,872 Change in federal funds purchased 5,000,000 1,200,000 Proceeds from FHLB advances 260,508,500 - Repayments of FHLB advances (253,828,500 ) - Purchase of treasury stock (381,251 ) (655,720 ) Payment of dividends on common stock (1,313,787 ) (1,190,449 ) Proceeds from exercise of stock options 270,742 341,811 Excess tax benefit from stock option exercises 137,716 594,899 Net cash provided by financing activities 23,108,919 67,679,746 Net decrease in cash and cash equivalents (26,430,696 ) (26,233,417 ) Cash and cash equivalents, beginning of period 57,404,341 52,437,002 Cash and cash equivalents, end of period $ 30,973,645 $ 26,203,585 See notes to unaudited consolidated financial statements. -7- Table of Contents MidSouth Bancorp, Inc. and Subsidiaries Notes to Interim Consolidated Financial Statements September 30, 2007 (Unaudited) 1.Basis of Presentation The accompanying unaudited consolidated financial statements and notes thereto contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company and its subsidiaries as of September 30, 2007 and the results of their operations and their cash flows for the periods presented. The interim financial information should be read in conjunction with the annual consolidated financial statements and the notes thereto included in the Company’s 2006 Annual Report and Form 10-K. The results of operations for the nine month period ended September 30, 2007 are not necessarily indicative of the results to be expected for the entire year. Use of Estimates– The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Summary of Significant Accounting Policies— The accounting and reporting policies of the Company conform with accounting principles generally accepted in the United States of America and general practices within the banking industry.With the exception of the adoption of FASB Interpretation No. 48 discussed herein, there have been no material changes or developments in the application of accounting principles or in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be Critical Accounting Policies and Estimates as disclosed in our Form 10-K for the year ended December 31, 2006. Recent Accounting Pronouncements—In June 2006, the FASB issued Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes.FIN 48 provides detailed guidance for the financial statement recognition, measurement, and disclosure of uncertain tax positions recognized in the financial statements.FIN 48 requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination.If the tax position meets the more-likely-than-not recognition threshold, the tax effect is recognized at the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement.Any difference between the tax position taken in the tax return and the tax position recognized in the financial statements using the criteria above results in the recognition of a liability in the financial statements for the unrecognized benefit.Similarly, if a tax position fails to meet the more-likely-than-not recognition threshold, the benefit taken in a tax return will also result in the recognition of a liability in the financial statements for the full amount of the unrecognized benefit.The new interpretation was effective for the Company for the nine months ended September 30, 2007.The adoption of this new accounting principle did not have a significant impact on the Company’s financial position, results of operations, or cash flows. In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”).SFAS No. 157 establishes a framework for measuring fair value and expands disclosures about fair value measurements.The changes to current practice resulting from the application of this statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements.SFAS No. 157 is effective for the fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.The Company does not anticipate the adoption of this new accounting principle to have a material effect on its financial position, results of operations, or cash flows. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS No. 159”).SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.SFAS No. 159 is effective for the fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.The Company has not yet made a determination if it will elect to apply the options available in SFAS No. 159. In September 2006, the FASB ratified the consensus the EITF reached regarding EITF No. 06-5, Accounting for Purchases of Life Insurance — Determining the Amount that Could Be Realized in Accordance with FASB Technical Bulletin 85-4 (“EITF 06-5”). The EITF concluded that a policy holder should consider any additional amounts included in the contractual terms of the life insurance policy in determining the “amount that could be realized under the insurance contract.” For group policies with multiple certificates or multiple policies with a group rider, the Task Force also tentatively concluded that the amount that could be realized should be determined at the individual policy or certificate level, i.e., amounts that would be realized only upon surrendering all of the policies or certificates would not be included when measuring the assets. This interpretation is effective for the Company beginning in fiscal year 2007.The adoption of ETIF 06-5 has not had, nor does the Company believe it will have, a material impact on its financial position, results of operations, or cash flows. Reclassifications—Certain reclassifications have been made to the prior years’ financial statements in order to conform to the classifications adopted for reporting in 2007. -8- Table of Contents 2.Employee Stock Compensation Plan In May of 2007, the stockholders of the Company approved the 2007 Omnibus Incentive Compensation Plan to provide incentives and awards for directors, officers, and employees of the Company and its subsidiaries. “Awards” as defined in the Plan includes, with limitations, stock options (including restricted stock options), stock appreciation rights, performance shares, stock awards and cash awards, all on a stand-alone, combination, or tandem basis. Options constitute both incentive stock options and non-qualified stock options. A total of 8% of the Company’s common shares outstanding can be granted under the Plan. The options have a term of ten years and vest 20% each year on the anniversary date of the grant.The 2007 Omnibus Incentive Plan replaces the 1997 Stock Incentive Plan, which expired in February of 2007. 3.Allowance for Loan Losses A summary of the activity in the allowance for loan losses is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2007 2006 2007 2006 Balance, beginning of period $ 5,182 $ 4,887 $ 4,977 $ 4,355 Provision for loan losses 300 50 650 670 Recoveries 36 44 78 266 Loans charged-off (221 ) (71 ) (408 ) (381 ) Balance, end of period $ 5,297 $ 4,910 $ 5,297 $ 4,910 4.Earnings Per Common Share Following is a summary of the information used in the computation of earnings per common share (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2007 2006 2007 2006 Net earnings $ 2,441 $ 2,417 $ 6,882 $ 6,471 Weighted average number of common shares outstanding used in computation of basic earnings per common share 6,573 6,548 6,568 6,512 Effect of dilutive securities: Stock options 65 116 71 112 Weighted average number of common shares outstanding plus effect of dilutive securities – used in computation of diluted earnings per share 6,638 6,664 6,639 6,624 5.Declaration of Dividends On February 14, 2007, the Company declared a $0.06 per share quarterly dividend for holders of record on March 14, 2007.The second quarter $0.06 per share dividend was declared on May 9, 2007 for shareholders of record on June 13, 2007.On July 18, 2007, the Company declared a 5% stock dividend for shareholders of record on September 21, 2007, paid on October 23, 2007.On the same date, the Company declared an increase in the quarterly dividend to $0.07 per share effective in the third quarter 2007 for shareholders of record on September 14, 2007. -9- Table of Contents Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation. MidSouth Bancorp, Inc. (“the Company") is a two-bank holding company that conducts substantially all of its business through its wholly-owned subsidiary banks (the “Banks”), MidSouth Bank, N.A. (“MidSouth LA”), headquartered in Lafayette, Louisiana and MidSouth Bank (“MidSouth TX”), headquartered in Beaumont, Texas.Following is management's discussion of factors that management believes are among those necessary for an understanding of the Company's financial statements.The discussion should be read in conjunction with the Company's consolidated financial statements and the notes thereto presented herein and with the financial statements, the notes thereto, and related Management’s Discussion and Analysis in the Company’s 10-K for the year ended December 31, 2006. Forward Looking Statements The Private Securities Litigation Act of 1995 provides a safe harbor for disclosure of information about a company’s anticipated future financial performance.This act protects a company from unwarranted litigation if actual results differ from management expectations.This management’s discussion and analysis reflects management’s current views and estimates of future economic circumstances, industry conditions, the Company’s performance, and financial results based on reasonable assumptions.A number of factors and uncertainties could cause actual results to differ materially from the anticipated results and expectations expressed in the discussion.These factors and uncertainties include, but are not limited to: · changes in interest rates and market prices that could affect the net interest margin, asset valuation, and expense levels; · changes in local economic and business conditions that could adversely affect customers and their ability to repay borrowings under agreed upon terms and/or adversely affect the value of the underlying collateral related to the borrowings; · increased competition for deposits and loans which could affect rates and terms; · changes in the levels of prepayments received on loans and investment securities that adversely affect the yield and value of the earning assets; · a deviation in actual experience from the underlying assumptions used to determine and establish the Allowance for Loan Losses (“ALL”); · changes in the availability of funds resulting from reduced liquidity or increased costs; · the timing and impact of future acquisitions, the success or failure of integrating operations, and the ability to capitalize on growth opportunities upon entering new markets; · the ability to acquire, operate, and maintain effective and efficient operating systems; · increased asset levels and changes in the composition of assets which would impact capital levels and regulatory capital ratios; · loss of critical personnel and the challenge of hiring qualified personnel at reasonable compensation levels; · changes in government regulations and accounting principles, policies, and guidelines applicable to financial holding companies and banking; and · acts of terrorism, weather, or other events beyond the Company’s control. Critical Accounting Policies Certain critical accounting policies affect the more significant judgments and estimates used in the preparation of the consolidated financial statements.The Company’s significant accounting policies are described in the notes to the consolidated financial statements included in Form 10-K for the year ended December 31, 2006.The accounting principles followed by the Company and the methods of applying these principles conform with accounting principles generally accepted in the United States of America (“GAAP”) and general banking practices.The Company’s most critical accounting policy relates to its allowance for loan losses, which reflects the estimated losses resulting from the inability of its borrowers to make loan payments.If the financial condition of its borrowers were to deteriorate, resulting in an impairment of their ability to make payments, the Company’s estimates would be updated and additional provisions for loan losses may be required (see Asset Quality). Another of the Company’s critical accounting policies relates to its goodwill and intangible assets.Goodwill represents the excess of the purchase price over the fair value of net assets acquired.In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill is not amortized but evaluated for impairment annually.If the fair value of an asset exceeds the carrying amount of the asset, no charge to goodwill is made.If the carrying amount exceeds the fair value of the asset, goodwill will be adjusted through a charge to earnings. A third critical accounting policy relates to stock-based compensation and the Company’s adoption of the provisions of SFAS No. 123R, Share-Based Payment (Revised 2004), on a modified basis, on January 1, 2006.The Company had previously adopted SFAS No. 123 on January 1, 2005.Among other things, SFAS No. 123R eliminates the ability to account for stock-based compensation using the intrinsic value based method of accounting and requires that such transactions be recognized as compensation expense in the income statement based on the fair market value on the date of the grant.SFAS No. 123R further requires that management make assumptions including stock price volatility and employee turnover that are utilized to measure compensation expense.The fair value of the stock options granted is estimated at the date of grant using the Black-Scholes option-pricing model.This model requires the input of highly subjective assumptions.The Company recognized stock option expense of $73,647, for the grant-date fair value of stock options vested in the nine months ended September 30, 2007.The Company did not grant any new stock options in 2007. -10- Table of Contents Results of Operations Third quarter 2007 earnings totaled $2,440,611, a 1.0% increase over earnings of $2,417,137 for the same period in 2006.Revenues for the Company, defined as net interest income and non-interest income, increased $1,134,870 for the third quarter of 2007 compared to the third quarter of 2006.A $1,253,211 increase in non-interest expenses attributed primarily to franchise expansion offset the improvement in revenues.Diluted earnings per share were $0.37 for the third quarter of 2007, compared to $0.36 per share for the third quarter of 2006.Earnings per share data have been adjusted to reflect a one-for-twenty (5%) stock dividend declared on July 18, 2007 for all shareholders of record as of September 21, 2007. Third quarter 2007 earnings were positively impacted by approximately $0.03 per share due to a lower effective tax rate.The effective tax rate during the third quarter was approximately 17.2%, as compared to 27.1% for the same period of 2006.The provision for income taxes reflects an effective tax rate of 21.8% for the first nine months of fiscal year 2007 as compared to 25.9% in the same period of 2006.The lower rate for the third quarter and nine-month period resulted from the Company’s recognition of the Work Opportunity Tax Credit under the Katrina Emergency Tax Relief Act of 2005.As a result, income tax expense for the quarter was reduced by approximately $193,000.For the fourth quarter of 2007, the effective tax rate is expected to be in the range of 20% to 22%. Offsetting the favorable impact of the third quarter 2007 tax reduction was a $250,000 increase in the provision for loan losses in quarterly comparison.Due to an increase in loan volume, provisions totaling $300,000 were recorded in the third quarter of 2007, compared to $50,000 recorded in provisions for the third quarter of 2006. Return on average equity was 15.19% for the third quarter of 2007 compared to 16.98% for the third quarter of 2006.The leverage capital ratio was 8.72% at September 30, 2007 compared to 8.50% at September 30, 2006. Net interest income before provision for loan losses for the third quarter of 2007 increased 11.8% to $9,416,970 compared to $8,426,111 for the third quarter of 2006.The improvement in net interest income was driven by loan growth in both the Louisiana and Texas markets.Net interest margin, on a fully taxable-equivalent basis, was 5.16% in the third quarter of 2007, an improvement of 20 basis points from 4.96% in the third quarter of 2006. Earnings for the first nine months of 2007 totaled $6,881,753, an increase of 6.3% from the $6,471,411 reported earnings for the first nine months of 2006.Basic earnings per share were $1.05 for the nine months ended September 30, 2007 as compared to the $0.99 per share for the nine months ended September 30, 2006.Diluted earnings per share were $1.04 and $0.97, respectively. Earnings increased in year-to-date comparison primarily due to a $2,893,912 increase in net interest income driven by an improvement in loan volume and loan yields.Non-interest income also increased by $1,162,774 largely due to a higher volume of insufficient funds transactions which added $685,258 to service charges on deposit accounts.Additionally, the provision for income taxes decreased $346,088 in nine-month comparison as a result of a lower effective tax rate applied in the third quarter of 2007.The year-to-date improvement in earnings was offset by a $4,012,432 increase in non-interest expenses that was attributable primarily to increased salaries and benefit costs. For the nine months ended September 30, 2007, total consolidated assets increased $31.9 million, or 4.0%, from $805.0 million at the year end 2006 to $836.9 million at the end of the third quarter of 2007.Total loans grew $54.0 million, or 10.8%, from $499.0 million at December 31, 2006 to $553.0 million at September 30, 2007, primarily in commercial and real estate loans.Total deposits remained relatively constant at $714.4 million at September 30, 2007 compared to $716.2 million at December 31, 2006. Nonperforming assets, including loans 90 days or more past due, decreased $400,000, from $2.3 million at December 31, 2006 to $1.9 million at September 30, 2007.As a percentage of total assets, nonperforming assets were 0.22% and 0.29% for September 30, 2007 and December 31, 2006, respectively.Net charge-offs to total loans were 0.06% for the third quarter of 2007. Continued credit quality ratios, supported by management’s most recent analysis of the ALL, indicated that the ALL-to-total loans ratio of 0.96% was appropriate at September 30, 2007.Due to an increase in loan growth, third quarter 2007 provision expense for loan losses totaled $300,000 compared to $50,000 in provision expense recorded for the third quarter of 2006. -11- Table of Contents Earnings Analysis Net Interest Income The primary source of earnings for the Company is the difference between interest earned on loans and investments (earning assets) and interest paid on deposits and other liabilities (interest-bearing liabilities).Changes in the volume and mix of earning assets and interest-bearing liabilities combined with changes in market rates of interest greatly affect net interest income. The Company’s net interest margin on a taxable-equivalent basis, which is net interest income as a percentage of average earning assets, was 5.16% for the three months ended September 30, 2007, up 20 basis points from 4.96% for the three months ended September 30, 2006.For the nine months ended September 30, 2007, the taxable-equivalent net interest margin increased 16 basis points, from 4.92% at September 30, 2006 to 5.08% at September 30, 2007.Tables 1 through 4 following this discussion analyze the changes in taxable-equivalent net interest income for the three and nine months ended September 30, 2007 and 2006. In quarterly comparison, average earning assets increased $52.9 million, or 7.5%, from $704.1 million in September 2006 to $757.0 million in September 2007.The average yield on earning assets improved 31 basis points, from 7.59% at September 30, 2006 to 7.90% at September 30, 2007.The average volume of loans increased $62.3 million, or 12.7%, and loan yields increased 16 basis points, from 8.81% for the quarter ended September 30, 2006 to 8.97% for the quarter ended September 30, 2007.The average taxable-equivalent yield on investment securities increased 24 basis points, from 4.74% to 4.98%, respectively.The average volume of investment securities decreased $7.9 million and the average volume of federal funds sold decreased $1.5 million in quarterly comparison.The mix of average earning assets improved, with average [email protected]% of average earning assets at September 30, 2007, compared to 69.5% at September 30, 2006.The improvement in the mix resulted in an increase to taxable-equivalent interest income of $1.6 million in quarterly comparison. The Company’s strong demand deposit mix, defined as all deposits except Certificates of Deposit (“CDs”), reflected improvement in average volume from $579.9 million, or 83.8%, of average total deposits at September 30, 2006, to $593.9 million, or 83.5%, of average total deposits at September 30, 2007.The average volume of CDs increased $5.9 million, from $111.7 million at September 30, 2006 to $117.6 million at September 30, 2007 and represented 16.2% of total deposits at September 30, 2006 compared to 16.5% at September 30, 2007.The higher volume of demand deposits reflects the Company’s retail strategy of developing long-term banking relationships with depositors. The average volume of NOW, money market and savings deposits increased $13.4 million in quarterly comparison, while the average rate paid on these deposits dropped 22 basis points, from 3.23% at September 30, 2006, to 3.01% at September 30, 2007.The decrease in the rate resulted primarily from rate reductions on the Platinum NOW and Money Market deposits that have historically repriced weekly with variances to the 90 day Treasury bill yield, which decreased 110 basis points over the past twelve months. The decrease in interest expense on NOW, money market and savings deposits was offset by average volume and rate increases on CDs.The average volume of CDs increased $5.9 million in quarterly comparison and the average rate paid on CDs increased 77 basis points, from 3.49% at September 30, 2006 to 4.26% at September 30, 2007.The volume and rate increases resulted primarily from higher cost CDs offered in the Texas markets and in the newer markets in Louisiana to compete with rate offerings in those markets.The rate and volume changes in interest-bearing deposits resulted in an increase in interest expense of $162,000 in quarterly comparison and the average rate paid on interest-bearing deposits remained [email protected]%. The average volume of federal funds purchased and securities sold under repurchase agreements increased $12.4 million in quarterly comparison primarily due to a $12.5 million reverse repurchase agreement entered into in July of 2007 with Citigroup Global Markets, Inc. (“CGMI”).The reverse repurchase agreement provided low cost funding to meet liquidity demands.Under the terms of the reverse repurchase agreement, interest is payable quarterly based on a floating rate equal to the 3-month LIBOR for the first 12 months of the agreement and a fixed rate of 4.57% for the remainder of the term.The repurchase date is scheduled for August 9, 2017; however, the agreement may be called by CGMI on August 9, 2008, or every quarterly period thereafter.Federal Home Loan Bank (“FHLB”) advances also increased as deposit growth slowed and additional borrowed funds were necessary to meet loan demand.The average volume of FHLB advances increased $19.6 million at an average rate of 5.17%.The increased borrowings resulted in increased interest expense of $395,000 in quarterly comparison. The average rate paid on the Company’s junior subordinated debentures decreased 2 basis points from third quarter of 2006 to third quarter of 2007 on the $8.2 million of such debentures issued in the third quarter of 2004 to partially fund the Lamar Bancshares (now MidSouth TX) acquisition.The debentures carry a floating rate equal to the 3-month LIBOR plus 2.50%, adjustable and payable quarterly.The rate at September 30, 2007 was 8.09%.The debentures mature on September 20, 2034 and, under certain circumstances, are subject to repayment on September 20, 2009 or thereafter.In February 2001, the Company issued $7.2 million of junior subordinated debentures.The debentures carry a fixed interest rate of 10.20% and mature on February 22, 2031. The impact of the quarterly changes in yield and volume of the earning assets and interest-bearing liabilities discussed above resulted in an increase of $1.1 million to taxable-equivalent net interest income from September 30, 2006 to September 30, 2007. In year-to-date comparison, taxable-equivalent net interest income increased $3.2 million, driven by a $60.0 million increase in average loan volume and a 36 basis point increase in the average yield on loans.The impact of the loan volume and yield increases was partially offset by a $56.7 million increase in the average volume of interest-bearing liabilities and a 30 basis point increase in the average rate paid on interest-bearing liabilities.Non interest-bearing deposits remained [email protected]% of average total deposits for the nine months ended September 30, 2007. Although the Company’s net interest margin and net interest spread improved in both quarterly and year-to-date comparisons, management believes that the recent rate reductions announced by the Federal Reserve Bank and the highly competitive deposit environment could place downward pressure on the margin and spread for the fourth quarter of 2007 and into 2008. -12- Table of Contents Table 1 Consolidated Average Balances, Interest and Rates (in thousands) Three Months Ended September 30, 2007 2006 Average Volume Interest Average Yield/Rate Average Volume Interest Average Yield/Rate Assets Investment securities and interest bearing deposits1 Taxable $ 87,063 $ 1,046 4.70 % $ 108,737 $ 1,251 4.50 % Tax exempt2 110,262 1,467 5.21 % 98,710 1,271 5.15 % Other investments 4,667 59 4.95 % 2,442 23 3.69 % Total investments 201,992 2,572 4.98 % 209,889 2,545 4.47 % Federal funds sold and securities purchased under agreements to resell 3,705 47 5.03 % 5,157 68 5.24 % Loans Commercial and real estate 439,089 10,079 9.11 % 390,297 8,742 8.89 % Installment 112,251 2,382 8.42 % 98,772 2,119 8.51 % Total loans3 551,340 12,461 8.97 % 489,069 10,861 8.81 % Total earning assets 757,037 15,080 7.90 % 704,115 13,474 7.59 % Allowance for loan losses (5,138 ) (4,882 ) Nonearning assets 79,479 72,658 Total assets $ 831,378 $ 771,891 Liabilities and stockholders’ equity NOW, money market, and savings $ 417,022 $ 3,169 3.01 % $ 403,623 $ 3,286 3.23 % Certificates of deposits 117,588 1,262 4.26 % 111,735 982 3.49 % Total interest bearing deposits 534,610 4,431 3.29 % 515,358 4,268 3.29 % Federal funds purchased and securities sold under repurchase agreements 17,041 198 4.61 % 4,686 58 4.94 % FHLB advances 19,583 255 5.17 % - - - Junior subordinated debentures 15,465 350 8.98 % 15,465 351 9.00 % Total interest bearing liabilities 586,699 5,234 3.54 % 535,509 4,677 3.47 % Demand deposits 176,893 176,282 Other liabilities 4,023 3,615 Stockholders’ equity 63,763 56,485 Total liabilities and stockholders’ equity $ 831,378 $ 771,891 Net interest income and net interest spread $ 9,846 4.36 % $ 8,797 4.12 % Net yield on interest earning assets 5.16 % 4.96 % 1Securities classified as available-for-sale are included in average balances.Interest income figures reflect interest earned on such securities. 2Interest income of $429,683 for 2007 and $370,467 for 2006 is added to interest earned on tax-exempt obligations to reflect tax equivalent yields using a 34% tax rate. 3Interest income includes loan fees of $793,873 for 2007 and $840,842 for 2006.Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis. -13- Table of Contents Table 2 Consolidated Average Balances, Interest and Rates (in thousands) Nine Months Ended September 30, 2007 2006 Average Volume Interest Average Yield/Rate Average Volume Interest Average Yield/Rate Assets Investment securities and interest bearing deposits4 Taxable $ 86,980 $ 3,083 4.73 % $ 100,869 $ 3,389 4.48 % Tax exempt5 110,577 4,379 5.28 % 91,047 3,479 5.10 % Other investments 3,249 103 4.23 % 2,271 62 3.62 % Total investments 200,806 7,565 5.02 % 194,187 6,930 4.76 % Federal funds sold and securities purchased under agreements to resell 17,338 672 5.18 % 22,045 769 4.66 % Loans Commercial and real estate 418,046 28,280 9.04 % 370,079 24,074 8.70 % Installment 108,283 7,159 8.84 % 96,299 6,069 8.43 % Total loans6 526,329 35,439 9.00 % 466,378 30,143 8.64 % Total earning assets 744,473 43,676 7.84 % 682,610 37,842 7.41 % Allowance for loan losses (4,999 ) (4,615 ) Nonearning assets 77,754 71,913 Total assets $ 817,228 $ 749,908 Liabilities and stockholders’ equity NOW, money market, and savings $ 420,962 $ 10,008 3.18 % $ 380,179 $ 8,626 3.03 % Certificates of deposits 119,512 3,705 4.14 % 117,858 2,978 3.38 % Total interest bearing deposits 540,474 13,713 3.39 % 498,037 11,604 3.12 % Securities sold under repurchase agreements and federal funds purchased 10,252 362 4.72 % 3,159 107 4.54 % FHLB advances 7,161 283 5.28 % - - - Junior subordinated debentures 15,465 1,044 9.03 % 15,465 1,020 8.82 % Total interest bearing liabilities 573,352 15,402 3.59 % 516,661 12,731 3.29 % Demand deposits 177,635 175,137 Other liabilities 4,038 3,233 Stockholders’ equity 62,203 54,877 Total liabilities and stockholders’ equity $ 817,228 $ 749,908 Net interest income and net interest spread $ 28,274 4.25 % $ 25,111 4.12 % Net yield on interest earning assets 5.08 % 4.92 % 4Securities classified as available-for-sale are included in average balances.Interest income figures reflect interest earned on such securities. 5Interest income of $1,281,525 for 2007 and $1,012,414 for 2006 is added to interest earned on tax-exempt obligations to reflect tax equivalent yields using a 34% tax rate. 6Interest income includes loan fees of $2,513,077 for 2007 and $2,611,267 for 2006.Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis. -14- Table of Contents Table 3 Changes in Taxable-Equivalent Net Interest Income (in thousands) Three Months Ended September 30, 2007 Compared to September 30, 2006 Total Increase Change Attributable To (Decrease) Volume Rates Taxable-equivalent earned on: Investment securities and interest bearing deposits Taxable $ (205 ) $ (258 ) $ 53 Tax exempt 196 153 43 Other investments 36 26 10 Federal funds sold and securities purchased under agreement to resell (21 ) (18 ) (3 ) Loans, including fees 1,600 1,404 196 Total $ 1,606 $ 1,307 $ 299 Interest paid on: Interest bearing deposits $ 163 $ 160 $ 3 Federal funds purchased and securities sold under repurchase agreements 140 144 (4 ) FHLB advances 255 255 - Junior subordinated debentures (1 ) - (1 ) Total $ 557 $ 559 $ (2 ) Taxable-equivalent net interest income $ 1,049 $ 748 $ 301 Table 4 Changes in Taxable-Equivalent Net Interest Income (in thousands) Nine Months Ended September 30, 2007 Compared to September 30, 2006 Total Increase Change Attributable To (Decrease) Volume Rates Taxable-equivalent earned on: Investment securities and interest bearing deposits Taxable $ (306 ) $ (513 ) $ 207 Tax exempt 900 737 163 Other investments 41 29 12 Federal funds sold and securities purchased under agreement to resell (97 ) (177 ) 80 Loans, including fees 5,296 4,011 1,285 Total $ 5,834 $ 4,087 $ 1,747 Interest paid on: Interest bearing deposits $ 2,109 $ 1,032 $ 1,077 Federal funds purchased and securities sold under repurchase agreements 255 250 5 FHLB advances 283 283 - Junior subordinated debentures 24 - 24 Total $ 2,671 $ 1,565 $ 1,106 Taxable-equivalent net interest income $ 3,163 $ 2,522 $ 641 -15- Table of Contents Non-Interest Income Excluding Securities Transactions Non-interest income for the third quarter of 2007 totaled $3,573,896, an increase of $144,011, or 4.2%, from $3,429,885 for the third quarter of 2006.In year-to-date comparison, non-interest income totaled $10,527,028 for the nine months ended September 30, 2007, a $1,162,774 increase, or 12.4%, over non-interest income of $9,364,254 reported for the first nine months of 2006.Prior year quarter and linked-quarter comparisons of non-interest income were impacted by a decrease in service charge income on deposit accounts due to the elimination of a $1.00 monthly charge on all accounts with an ATM or debit card.Elimination of the monthly charge reduced service charge income by approximately $14,000 per month, or $42,000 per quarter.The Company had charged ATM and debit card customers the $1.00 monthly fee in lieu of charging customers a fee for using competitors’ ATM machines. Income from other charges and fees increased $144,845 for the three months ended September 30, 2007 as compared to September 30, 2006, primarily due to increased ATM and debit card fees resulting from a higher volume of electronic transactions processed. A higher volume of insufficient funds (“NSF”) transactions increased NSF fee income $685,258 in nine month comparison.The total number of demand deposit accounts increased approximately 1,490, or 3.2%, from 46,089 accounts at September 30, 2006, to 47,579 at September 30, 2007, with the majority of the increase in consumer checking accounts. Increases in other charges and fees were recorded in ATM and debit card fees ($288,124), mortgage processing fees ($105,364), and lease income from third party investment advisory services ($84,040) in nine-month comparison. Non-interest Expenses Non-interest expenses increased $1,253,211 in quarterly comparison and $4,012,432 in year-to-date comparison, primarily due to increased salaries and employee benefits costs of $965,804 and $2,744,423, respectively.The number of full-time equivalent employees increased from 364 at September 30, 2006, to 418 at September 30, 2007, as a result of franchise expansion and recruitment of talented leaders to support corporate growth initiatives.Additional increases were recorded in occupancy expense, data processing expense, professional fees, education and travel costs, and other growth-related expenses. Included in professional fees recorded for the Company are premiums associated with FDIC insurance assessments.For several years, as a well-capitalized financial institution, the Company has not been required to pay FDIC insurance premiums, but has been required to pay FICO (the Financing Corporation) assessments that currently total approximately $21,000 a quarter, or $84,000 annually.FICO has assessment authority to collect funds from FDIC-insured institutions sufficient to pay interest on non-callable thrift bonds issued between 1987 and 1989, which expire with the bonds in 2019.Beginning this year, the FDIC resumed deposit insurance assessments and also issued one-time credits against the assessments to qualifying institutions.The Company qualified for a one-time credit totaling approximately $240,000, which offset the new FDIC assessment through the third quarter of 2007.Beginning in the fourth quarter of 2007, the Company expects to record approximately $86,000 in FDIC assessments, in addition to the $21,000 in FICO assessments.Based on current deposit growth projections, FDIC and FICO assessments for 2008 will average approximately $127,000 per quarter, or $508,000 for the year. -16- Table of Contents Analysis of Statement of Condition Consolidated assets totaled $836.9 million at September 30, 2007, up $31.9 million from $805.0 million at December 31, 2006.The increase resulted primarily from loan growth of $54.0 million.A $26.4 million reduction in cash and cash equivalents combined with an $11.7 million increase in overnight and short-term borrowings and a $14.5 million increase in securities sold under repurchase agreements were utilized to fund loan growth.Deposits totaled $714.4 million at the end of the third quarter of 2007, a decrease of $1.8 million from December 31, 2006.Deposits have remained flat in the second and third quarters of 2007 primarily due to fluctuations in large commercial deposit balances, in part due to tax payments remitted during these quarters, as well as increased competition for deposit dollars within the Company’s markets. Total loans grew 10.8%, from $499.0 million at year-end 2006 to $553.0 million at September 30, 2007, with most of the growth added in the second and third quarters.The loan growth occurred primarily in the Company’s commercial and real estate loan portfolios, complemented by solid increases in construction loans, lease financings, and installment loans as reflected in Table 5. Table 5 Composition of Loans (in thousands) September 30, 2007 December 31, 2006 Commercial, financial, and agricultural $ 175,150 $ 155,098 Lease financing receivable 10,017 7,902 Real estate – mortgage 205,200 192,583 Real estate – construction 73,787 64,126 Installment loans to individuals 88,166 78,613 Other 728 724 Total loans $ 553,048 $ 499,046 Within the $205.2 million real estate mortgage portfolio at September 30, 2007, $135.4 million represented loans secured by commercial real estate, 72% of which was owner-occupied.Of the $61.7 million in real estate mortgage loans secured by 1-4 family residential properties, 83% represented loans secured by first liens.Within the $73.8 million real estate construction portfolio, 83% represented commercial construction and land development and 17% represented residential construction and consumer property.Management believes the Company’s risk within the real estate and construction portfolios is well diversified throughout its markets and that current exposure within the two portfolios is sufficiently provided for within the ALL at September 30, 2007. Securities available-for-sale totaled $181.7 million at September 30, 2007, up $1.0 million from $180.7 million at December 31, 2006. The portfolio of securities held-to-maturity decreased $4.4 million, from $15.9 million at December 31, 2006 to $11.5 million at September 30, 2007, due to maturities and calls within that portfolio.Investment purchases slowed in the second and third quarters of 2007, as cash flows from calls and maturities were used to fund loans.Other investments increased $2.7 million from year-end 2006 due to purchases of FHLB stock required with the increase in borrowings under FHLB advances. Bank premises and equipment, net of accumulated depreciation, increased $5.8 million for the first nine months of 2007 and reflected the impact of the Company’s continued expansion. Liquidity Liquidity is the availability of funds to meet operational cash flow requirements and to meet contractual obligations as they become due.The Banks’ primary liquidity needs involve their ability to accommodate customers’ demands for deposit withdrawals as well as their requests for credit.Liquidity is deemed adequate when sufficient cash to meet these needs can be promptly raised at a reasonable cost to the Banks.Liquidity is provided primarily by three sources: a stable base of funding sources, an adequate level of assets that can be readily converted into cash, and borrowing lines with correspondent banks.The Banks’ core deposits are their most stable and important source of funding.Further, the low variability of the core deposit base lessens the need for liquidity.Cash deposits at other banks, federal funds sold, principal payments received on loans and mortgage-backed securities, and maturities of investment securities provide additional primary sources of asset liquidity for the Banks.The Banks also have significant borrowing capacity with the FHLB of Dallas, Texas and borrowing lines with other correspondent banks.At September 30, 2007, the Banks had $17.3 million in net borrowings with the FHLB and a correspondent bank. At the parent company level, cash is needed primarily to meet interest payments on the junior subordinated debentures and pay dividends on common stock.An $8.2 million issuance of junior subordinated debentures was completed on September 20, 2004, the proceeds of which were used to partially fund the MidSouth TX acquisition.The parent company previously issued $7.2 million in junior subordinated debentures in February 2001.Dividends from the Banks primarily provide liquidity for the parent company.As a publicly traded company, the parent company also has the ability to issue other securities instruments to provide funds as needed for operations and future growth. Capital The Company and the Banks are required to maintain certain minimum capital levels.Risk-based capital requirements are intended to make regulatory capital more sensitive to the risk profile of an institution's assets.At September 30, 2007, the Company and the Banks were in compliance with statutory minimum capital requirements and were classified as “well capitalized”.Minimum capital requirements include a total risk-based capital ratio of 8.0%, with Tier 1 capital not less than 4.0%, and a leverage ratio (Tier 1 to total average adjusted assets) of 4.0% based upon the regulators latest composite rating of the institution.As of September 30, 2007, the Company’s leverage ratio was 8.72%, Tier 1 capital to risk-weighted assets was 11.29% and total capital to risk-weighted assets was 12.13%.MidSouth LA and MidSouth TX had leverage capital ratios of 8.50% and 9.08%, respectively, at September 30, 2007. -17- Table of Contents Asset Quality Credit Risk Management The Company manages its credit risk by observing written, board approved policies that govern all underwriting activities.The credit risk management program requires that each individual loan officer review his or her portfolio on a scheduled basis and assign recommended credit ratings on each loan.These efforts are supplemented by external and internal independent reviews and other validations performed by the internal audit department.The results of the reviews are reported directly to the Audit Committee of the Board of Directors.Additionally, bank concentrations are monitored and reported to the Board of Directors quarterly whereby individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity are evaluated for each major standard industry classification segment. Nonperforming Assets and Allowance for Loan Losses Table 6 summarizes the Company's nonperforming assets for the quarters ending September 30, 2007 and 2006 and for the year-ended December 31, 2006. Table 6 Nonperforming Assets and Loans Past Due 90 Days or More (in thousands) September 30, 2007 September 30, 2006 December 31, 2006 Nonaccrual loans $ 1,084 $ 501 $ 1,793 Loans past due 90 days and over 510 1,789 98 Total nonperforming loans 1,594 2,290 1,891 Other real estate owned 143 24 368 Other foreclosed assets 134 58 55 Total nonperforming assets $ 1,871 $ 2,372 $ 2,314 Nonperforming assets to total assets 0.22 % 0.31 % 0.29 % Nonperforming assets to total loans + OREO + other foreclosed assets 0.34 % 0.48 % 0.46 % ALL to nonperforming assets 283.11 % 207.00 % 215.08 % ALL to nonperforming loans 332.31 % 214.41 % 263.19 % ALL to total loans 0.96 % 0.99 % 1.00 % Year-to-date charge-offs $ 408 $ 381 $ 542 Year-to-date recoveries 78 266 314 Year-to-date net charge-offs $ 330 $ 115 $ 228 Net YTD charge-offs to total loans 0.06 % 0.02 % 0.05 % At September 30, 2007, nonperforming assets, including loans past due 90 days and over, totaled $1,871,000 or 0.22% of total assets, as compared to the $2,372,000, or 0.31%of total assets recorded at September 30, 2006.The decrease in non-performing assets in prior year comparison resulted primarily from a $1,279,000 reduction in loans past due 90 days and over.The improvement in past due loans was partially offset by an increase of $583,000 in nonaccrual loans, from $501,000 at September 30, 2006 to $1,084,000 at September 30, 2007.Nonaccrual loans increased in prior year comparison due to the addition of two large fully secured credit relationships totaling $1,136,000 during the fourth quarter of 2006.Over the nine months ended September 30, 2007, payments received on the two credit relationships reduced nonaccrual loans by $915,000, leaving balances remaining of $221,000.Additionally, two fully secured real estate credits totaling $305,000 were added to nonaccrual loans during the third quarter of 2007. Allowance coverage for nonperforming assets was 283.11% at September 30, 2007, compared to 207.00% at September 30, 2006.Net year-to-date charge-offs were 0.06% of total loans for the third quarter 2007 compared to 0.02% for the same period ended September 30, 2006.The increase resulted primarily from two commercial loan charged-off during the third quarter 2007 totaling $100,000 and a decrease of $188,000 in recoveries of charged-off loans in 2007. Specific reserves have been established in the ALL to cover probable losses on nonperforming assets.The ALL is analyzed quarterly and additional reserves, if needed, are allocated at that time.Factors considered in determining provisions include estimated losses in significant credits; known deterioration in concentrations of credit; historical loss experience; trends in nonperforming assets; volume, maturity and composition of the loan portfolio; off balance sheet credit risk; lending policies and control systems; national and local economic conditions; the experience, ability and depth of lending management; and the results of examinations of the loan portfolio by regulatory agencies and others.The processes by which management determines the appropriate level of the allowance, and the corresponding provision for probable credit losses, involves considerable judgment; therefore, no assurance can be given that future losses will not vary from current estimates.Management believes the $5,297,280 in the allowance as of September 30, 2007 is sufficient to cover probable losses in nonperforming assets and in the loan portfolio. Impact of Inflation and Changing Prices The consolidated financial statements of and notes thereto, presented herein, have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of the Company’s operations.Unlike most industrial companies, nearly all the assets and liabilities of the Company are financial.As a result, interest rates have a greater impact on the Company’s performance than do the effects of general levels of inflation.Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. -18- Table of Contents Item 3. Quantitative and Qualitative Disclosures About Market Risk. In the normal course of conducting business, the Company is exposed to market risk, principally interest rate risk, through operation of its subsidiaries.Interest rate risk arises from market fluctuations in interest rates that affect cash flows, income, expense and values of financial instruments.The Asset/Liability Management Committee (“ALCO”) is responsible for managing the Company’s interest rate risk position in compliance with the policy approved by the Board of Directors. There have been no significant changes from the information regarding market risk disclosed under the heading “Interest Rate Sensitivity” in the Company’s Annual Report for the year ended December 31, 2006. Item 4. Controls and Procedures. The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).As of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), the principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms. During the third quarter of 2007, there were no significant changes in the Company’s internal controls over financial reporting that has materially affected, or is reasonably likely to affect, the Company’s internal controls over financial reporting. -19- Table of Contents Part II – Other Information Item 1. Legal Proceedings. The Banks have been named as a defendant in various legal actions arising from normal business activities in which damages of various amounts are claimed.While the amount, if any, of ultimate liability with respect to such matters cannot be currently determined, management believes, after consulting with legal counsel, that any such liability will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. Item 1A. Risk Factors. No change. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser,” as defined in Securities Exchange Act Rule 10b-8(a)(3), of equity securities during the quarter ended September 30, 2007. Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan7 Maximum Number of Shares That May Yet be Purchased Under the Plan7 July 2007 3,662 $ 22.90 3,662 192,996 August 2007 3,841 $ 22.03 3,841 189,155 September 2007 972 $ 779-291-0602,183 Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits. (a)Exhibits Exihibit NumberDocument Description 31.1 Certification pursuant to Exchange Act Rules 13(a) – 14(a) 31.2 Certification pursuant to Exchange Act Rules 13(a) – 14(a) 32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b)Reports Filed on Form 8-K A press release regarding the Company’s earnings for the quarter ended September 30, 2007 was attached as Exhibit 99.1 to the Form 8-K filed on October 26, 2007. 7Under a share repurchase program approved by the Company’s Board of Directors on November 13, 2002, the Company can repurchase up to 5% of its common stock outstanding through open market or privately negotiated transactions.The repurchase program does not have an expiration date. -20- Table of Contents Signatures In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MidSouth Bancorp, Inc. (Registrant) Date:November 7, 2007 /s/ C. R. Cloutier C. R. Cloutier, President /CEO /s/ J. E. Corrigan, Jr. J. E. Corrigan, Jr., Executive Vice President/CFO -21- Table of Contents
|
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF GEORGIA
AUGUSTA DIVISION
LARRY AUGURSON and JUDICE )
AUGURSON, )
)
Plaintiffs, )
)
v. ) CV 118-144
)
OLD DOMINION FREIGHT LINE, INC.; )
MARCUS ABNEY, Individually; and )
JOE DOE, )
)
Defendants. )
_________
ORDER
_________
The October 10, 2018 Scheduling Order directed the parties to file a Joint Status
Report by March 25, 2019 concerning the opportunity to engage in mediation prior to
summary judgment motions. (Doc. no. 8.) The deadline for the parties to file the Joint
Status Report as set forth in the Court’s Scheduling Order has passed, however, no Joint
Status Report has been filed. Accordingly, the Court ORDERS the parties to file a Joint
Status Report in accordance with the Court’s October 10th Order as soon as possible but no
later than Monday, April 1, 2019.
SO ORDERED this 28th day of March, 2019, at Augusta, Georgia.
|
Citation Nr: 1328481
Decision Date: 09/06/13 Archive Date: 09/16/13
DOCKET NO. 10-08 392A ) DATE
)
)
On appeal from the
Department of Veterans Affairs (VA) Regional Office (RO)
in St. Petersburg, Florida
THE ISSUE
Entitlement to service connection for an urological
condition.
REPRESENTATION
Appellant represented by: Florida Department of Veterans
Affairs
WITNESS AT HEARING ON APPEAL
The Veteran
ATTORNEY FOR THE BOARD
H.J. Baucom, Counsel
INTRODUCTION
The Veteran had active service from June 1983 to October
2007.
This matter initially arose before the Board of Veterans'
Appeals (Board) on appeal of an March 2009 rating decision
by the RO.
In February 2013, the Veteran testified at a hearing held at
the RO before the undersigned Veterans Law Judge; the
transcript is of record.
At the February 2013 hearing, the Veteran stated that he
wished to withdraw his appeal as to the issues involving an
overpayment and effective date referable to dependency, an
increased rating for the service-connected degenerative
joint disease of the shoulders and knees, and an increased
rating for the service-connected spinal disability.
A Substantive Appeal may be withdrawn by the Veteran at any
time before the Board promulgates a decision. 38 C.F.R. §
20.204(b). As the Veteran withdrew his appeal as to the
identified issues the Board has no jurisdiction to review
those matters at this time.
The Veteran's virtual VA file has been reviewed.
FINDING OF FACT
The currently demonstrated urological condition manifested
by interstitial cystitis, is shown as likely as not to have
had its clinical onset during service.
CONCLUSION OF LAW
By extending the benefit of the doubt to the Veteran, his
urological disability manifested by interstitial cystitis is
due to disease or injury that was incurred in active
service. 38 U.S.C.A. §§ 1110, 5107 (West 2002); 38 C.F.R.
§§ 3.102, 3.303 (2012).
REASONS AND BASES FOR FINDING AND CONCLUSION
Service connection will be granted if it is shown that the
veteran suffers from a disability resulting from personal
injury suffered or disease contracted in the line of duty,
or for aggravation of a preexisting injury suffered or
disease contracted in the line of duty, during active
military service. 38 U.S.C.A. §§ 1110, 1131; 38 C.F.R.
§ 3.303.
Disorders diagnosed after discharge will still be service
connected if all the evidence, including that pertinent to
service, establishes that the disease was incurred in
service. 38 C.F.R. § 3.303(d); see also Combee v. Brown, 34
F.3d 1039, 1043 (Fed. Cir. 1994).
To establish service connection, there must be a competent
diagnosis of a current disability; medical or, in certain
cases, lay evidence of in-service occurrence or aggravation
of a disease or injury; and competent evidence of a nexus
between an in-service injury or disease and the current
disability. Hickson v. West, 12 Vet. App. 247, 252 (1999);
see Jandreau v. Nicholson, 492 F.3d 1372 (Fed. Cir. 2007).
Competent medical evidence is evidence provided by a person
who is qualified through education, training, or experience
to offer medical diagnoses, statements, or opinions.
Competent medical evidence may also include statements
conveying sound medical principles found in medical
treatises. It also includes statements contained in
authoritative writings, such as medical and scientific
articles and research reports or analyses. 38 C.F.R.
§ 3.159(a)(1).
Competent lay evidence is any evidence not requiring that
the proponent have specialized education, training, or
experience. Lay evidence is competent if it is provided by
a person who has knowledge of facts or circumstances and
conveys matters that can be observed and described by a lay
person. 38 C.F.R. § 3.159(a)(2). This may include some
medical matters, such as describing symptoms or relating a
contemporaneous medical diagnosis. Jandreau v. Nicholson,
492 F.3d 1372 (Fed. Cir. 2007).
In determining whether service connection is warranted for a
disability, VA is responsible for determining whether the
evidence supports the claim or is in relative equipoise,
with the veteran prevailing in either event, or whether a
preponderance of the evidence is against the claim, in which
case the claim is denied. 38 U.S.C.A. § 5107; Gilbert
v. Derwinski, 1 Vet. App. 49 (1990). When there is an
approximate balance of positive and negative evidence
regarding any issue material to the determination, the
benefit of the doubt is afforded the claimant.
The Veteran testified at the recent hearing that the
symptoms of his current urological condition began in
service. The Veteran is competent to report his
symptomatology, and the Board finds his testimony to be
credible. Layno v. Brown, 6 Vet. App. 465, 469 (1994).
A VA examination in March 2009 noted that the Veteran
reported having the onset of urinary symptoms in August 2006
during service. The diagnoses at that time included that of
subject urinary dysfunction without objective findings to
support a diagnosis.
In a February 2010 note, the Veteran's treating urologist
opined that the Veteran' interstitial cystitis existed prior
to his separation from service in 2007. He explained that,
when the Veteran was diagnosed with benign prostatic
hypertrophy (BPH) at the time of his retirement examination,
it was a misdiagnosis and that he had interstitial cystitis
at that time.
A VA examination in October 2011 noted that the Veteran had
a diagnosis of interstitial cystitis after military service.
The examiner opined that it was less likely than not that
this was caused by or the result of service because the
medical records were silent for this condition and there was
no nexus between benign prostatic hypertrophy and
interstitial cystitis.
In light of the favorable determination, there is no need to
discuss all the evidence of record. Pieces of evidence, not
explicitly discussed herein, have not been overlooked. See
Timberlake v. Gober, 14 Vet. App. 122 (2000).
Based on a review of the entire record, the Board finds the
evidence to be in relative equipoise in showing that the
Veteran's current urological disability manifested by
interstitial cystitis as likely as not had its clinical
onset prior the Veteran's retirement from active service.
In resolving all reasonable doubt in the Veteran's favor,
service connection is warranted.
To the extent that this action is favorable to the Veteran,
a discussion of VCAA is not required at this time.
ORDER
Service connection for a urological disability manifested by
interstitial cystitis is granted.
____________________________________________
STEPHEN L. WILKINS
Veterans Law Judge,
Board of Veterans' Appeals
Department of Veterans Affairs
|
Citation Nr: 1633823
Decision Date: 08/26/16 Archive Date: 08/31/16
DOCKET NO. 14-24 472A ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in White River Junction, Vermont
THE ISSUES
1. Whether an overpayment of disability compensation benefits was properly created.
2. Entitlement to waiver of recovery of an overpayment of disability compensation benefits.
WITNESS AT HEARING ON APPEAL
Veteran
ATTORNEY FOR THE BOARD
Christopher McEntee, Counsel
INTRODUCTION
The Veteran served on several periods of active duty between July 2002 and February 2011.
This matter comes before the Board of Veterans' Appeals (Board) on appeal from a June 2013 decision by the Department of Veterans Affairs (VA). The case arose out of the White River Junction, Vermont VA Regional Office (RO), which is the Agency of Original Jurisdiction (AOJ) in this matter.
The Veteran provided testimony at a December 2015 videoconference hearing before the undersigned Veterans Law Judge. A transcript of the hearing has been included in the record. The record consists of electronic claims files and has been reviewed.
The appeal is REMANDED to the AOJ. VA will notify the Veteran if further action is required.
REMAND
A remand of this matter is warranted for additional development.
The validity and accuracy of a debt is a threshold determination that must be made prior to a decision on a request for waiver of the indebtedness. Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991). A debtor may dispute the amount or existence of a debt, which is a right that may be exercised separately from a request for waiver, or at the same time. 38 C.F.R. § 1.911(c) (1) (2015); see also VAOPGCPREC 6-98. The propriety and amount of the debt is integral to a waiver determination. See Schaper, 1 Vet. App. at 434.
In this matter, VA found that the Veteran was not entitled to VA compensation benefit payments he received while he served on active duty, and that he was indebted to the government for the amount he received. However, the record is not clear regarding which periods of duty formed the basis of the VA's decision. Nor is the record clear regarding the exact amount owed by the Veteran, and the calculations involved in arriving at that amount. Indeed, neither the June 2013 decision denying the Veteran's waiver request, nor the subsequent July 2014 Statement of Case (SOC) addressing the issue of waiver, addresses the validity of the debt created, or the accuracy of the amount of the debt. As such, the Board is not in a position to decide the threshold determination here regarding the validity of the debt, and the accuracy of the amount of the debt asserted by VA, and disputed by the Veteran. See Bernard v. Brown, 4 Vet. App. 384, 393-94 (1993) (holding that when the Board addresses in its decision a question that has not been addressed by the RO, it must consider whether the appellant has been given adequate notice to respond and, if not, whether he has been prejudiced thereby).
Accordingly, the case is REMANDED for the following action:
1. In a memorandum, the AOJ should specify the periods during which the Veteran served on active duty and received VA compensation benefits that should not have been paid to him. The AOJ should also detail the amount of monthly VA compensation benefit payments he received for which a debt has been determined.
2. After the above action has been completed, readjudicate the two issues here - first, whether an overpayment of disability compensation benefits was properly created and the amount owed by the Veteran; and second, whether a waiver of recovery of the overpayment is warranted. If any claim remains denied, issue the Veteran a Supplemental SOC.
The Veteran has the right to submit additional evidence and argument on the matters the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999).
These claims must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West 2014).
_________________________________________________
BETHANY L. BUCK
Veterans Law Judge, Board of Veterans' Appeals
Under 38 U.S.C.A. § 7252 (West 2014), only a decision of the Board of Veterans' Appeals is appealable to the United States Court of Appeals for Veterans Claims. This remand is in the nature of a preliminary order and does not constitute a decision of the Board on the merits of your appeal. 38 C.F.R. § 20.1100(b) (2015).
|
Citation Nr: 0700849
Decision Date: 01/11/07 Archive Date: 01/24/07
DOCKET NO. 04-30 365 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Columbia,
South Carolina
THE ISSUES
1. Entitlement to service connection for the cause of the
veteran's death.
2. Eligibility for Dependents' Educational Assistance (DEA)
under 38 U.S.C.A. Chapter 35.
REPRESENTATION
Appellant represented by: The American Legion
WITNESS AT HEARING ON APPEAL
Appellant
ATTORNEY FOR THE BOARD
M. Donovan, Associate Counsel
INTRODUCTION
The veteran served on active duty from July 1942 to December
1963. He died in December 2003. The appellant is his widow.
This case comes before the Board of Veterans' Appeals (Board)
on appeal from a May 2004 rating decision issued by the
Department of Veterans Affairs (VA) Regional Office (RO) in
Columbia, South Carolina, which denied service connection for
the cause of the veteran's death and found that eligibility
for DEA was not established.
In December 2004 the appellant testified before a Decision
Review Officer at the RO (RO hearing). A transcript of that
hearing is of record.
FINDING OF FACT
A service connected disability, ventral hernia, materially
contributed to the cause of the veteran's death.
CONCLUSIONS OF LAW
1. The criteria for service connection for the cause of the
veteran's death are met. 38 U.S.C.A. § 1310 (West 2002); 38
C.F.R. § 3.312 (2006).
2. Eligibility for DEA benefits under Chapter 35, Title 38,
United States Code is established. 38 U.S.C.A. §§ 3500,
3501(a)(1) (West 2002); 38 C.F.R. §§ 3.807, 21.3020, 21.3021
(2006).
REASONS AND BASES FOR FINDINGS AND CONCLUSIONS
The Veterans Claims Assistance Act of 2000 (VCAA) and
implementing regulations impose obligations on VA to provide
claimants with notice and assistance. 38 U.S.C.A. §§ 5102,
5103, 5103A, 5107, 5126 (West 2002 & Supp. 2006); 38 C.F.R
§§ 3.102, 3.156(a), 3.159, 3.326(a) (2006).
Proper VCAA notice must inform the claimant of any
information and evidence not of record (1) that is necessary
to substantiate the claim; (2) that VA will seek to provide;
(3) that the claimant is expected to provide; and (4) must
ask the claimant to provide any evidence in her or his
possession that pertains to the claim. 38 U.S.C.A. § 5103(a)
(West 2002); C.F.R. § 3.159(b)(1) (2006). VCAA notice should
be provided to a claimant before the initial unfavorable
agency of original jurisdiction (AOJ) decision on a claim.
Pelegrini v. Principi, 18 Vet. App. 112 (2004).
The VCAA is not applicable where further assistance would not
aid the appellant in substantiating his claim. Wensch v.
Principi, 15 Vet App 362 (2001); see 38 U.S.C.A. §
5103A(a)(2) (Secretary not required to provide assistance
"if no reasonable possibility exists that such assistance
would aid in substantiating the claim"); see also VAOPGCPREC
5-2004; 69 Fed. Reg. 59989 (2004) (holding that the notice
and duty to assist provisions of the VCAA do not apply to
claims that could not be substantiated through such notice
and assistance). In view of the Board's favorable decision
in this appeal, further assistance is unnecessary to aid the
veteran in substantiating his claim.
To establish service connection for the cause of a veteran's
death, the evidence must show that a disability incurred in
or aggravated by service either caused or contributed
substantially or materially to death. 38 U.S.C.A. § 1310; 38
C.F.R. § 3.312
For a service- connected disability to be the primary cause
of death, it must singly or with some other condition be the
immediate or underlying cause, or be etiologically related.
38 C.F.R. § 3.312(b).
Contributory cause of death is inherently one not related to
the principal cause. In determining whether the service-
connected disability contributed to death, it must be shown
that it contributed substantially or materially; that it
combined to cause death; that it aided or lent assistance to
the production of death. It is not sufficient to show that
it causally shared in producing death, but rather it must be
shown that there was a causal connection. 38 C.F.R.
§ 3.312(c).
During his lifetime the veteran was service connected for
recurrent ventral incisional hernia, evaluated as 20 percent
disabling from August 1994.
The December 2003 death certificate shows that the immediate
cause of the veteran's death was pneumonia. Severe chronic
obstructive pulmonary disease, ventral hernia, and small
bowel obstruction were listed as other significant conditions
contributing to death but not resulting in the underlying
cause.
Hospital records from December 2003 indicate that the veteran
was scheduled for ventral hernia repair, but unfortunately
decompensated preoperatively.
At the time of his death the veteran had perfected an appeal
of the denial of his claim for an increased rating for the
ventral hernia.
The death certificate contains competent evidence that a
service connected disability, namely a ventral hernia was a
significant contributory cause of the veteran's death. He
was hospitalized for treatment of this condition at the time
of his death. This evidence supports the conclusion that the
service connected ventral hernia was a contributory cause of
death. There is no competent evidence to the contrary.
The evidence thus favors the conclusion that a service
connected disability was a contributory cause of the
veteran's death. Service connection for the cause of the
veteran's death is granted.
DEA benefits
Educational assistance is available to a surviving spouse of
a veteran who, in the context of the issue on appeal, either
died of a service-connected disability or died while having a
disability evaluated as total and permanent in nature
resulting from a service-connected disability. 38 U.S.C.A.
§§ 3500, 3501(a)(1); 38 C.F.R. §§ 3.807, 21.3020, 21.3021.
The Board's decision granting service connection for the
cause of death is essentially a finding that the veteran died
of service connected disability. The appellant, thus, meets
the criteria for the grant of Chapter 35 education benefits.
(CONTINUED ON NEXT PAGE)
ORDER
Service connection for the cause of the veteran's death is
granted.
Eligibility for DEA under 38 U.S.C.A. Chapter 35 is granted.
_________________________________________________
Mark D. Hindin
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs
|
Case: 3:20-cr-00077-jdp Document #: 30-1 Filed: 02/12/21 Page 1 of 4
Wisconsin Department of Corrections
Name: KROHN, ANTHONY R DOC: 00430175
Birth year: 1983 Weight: 200 Aliases
Age: 37 Height: 5' 10" AK KROHN
Gender: MALE Eye Color: BROWN ANTHONY R KROHN
Race: AMERICAN INDIAN OR AMERICAN NATIVE Hair Color: BLACK ANTHONY KROHN
Dexterity: RIGHT HANDED
Front with
Front Left Right
Glasses
Photo(s) Taken: 08/19/2020
Status: INCARCERATED
Sub-Status:
Institution:
Jackson Correctional Institution
P.O. Box 232
Black River Falls, WI 54615-0232
309-392-8621
Region Unit:
Unit 811
8 11 17
1000 Log Lodge Court
Baraboo, WI 53913
309-392-8621
Maximum Discharge Date: 06/04/2023
Parole Eligibility Date: Mandatory Release/Extended Supervision Date: 06/01/2022
Addresses
Residence
Address Reported
LODI, WI, 53555, County of COLUMBIA 02/01/2020
Case: 3:20-cr-00077-jdp Document #: 30-1 Filed: 02/12/21 Page 2 of 4
Movement
Date Type Reporting Location Other Location
12/01/2020 Received from Jackson Correctional Institution Dodge Correctional Institution
another
Facility
12/01/2020 Transferred to Dodge Correctional Institution Jackson Correctional Institution
Another
Facility
08/19/2020 Returned Dodge Correctional Institution Rock County Jail
from
Extended
Supervision
(ES)
07/30/2019 Released on Fox Lake Correctional Institution Unknown
Extended
Supervision
03/01/2017 Returned Fox Lake Correctional Institution Rock County Jail/Sheriff Dept.
from Court
02/22/2017 Out to Court Fox Lake Correctional Institution Rock County Jail/Sheriff Dept.
09/28/2016 Received from Fox Lake Correctional Institution Dodge Correctional Institution
another
Facility
09/28/2016 Transferred to Dodge Correctional Institution Fox Lake Correctional Institution
Another
Facility
08/03/2016 Returned Dodge Correctional Institution Rock County Jail
from
Extended
Supervision
(ES)
11/03/2015 Released on Oshkosh Correctional Institution Unknown
Extended
Supervision
05/20/2014 Received from Oshkosh Correctional Institution Dodge Correctional Institution
another
Facility
05/20/2014 Transferred to Dodge Correctional Institution Oshkosh Correctional Institution
Another
Facility
03/19/2014 Returned Dodge Correctional Institution Rock County Jail
from
Extended
Supervision
(ES)
02/05/2013 Released on Waupun Correctional Institution Unit 117
Extended
Supervision
11/27/2012 Received from Waupun Correctional Institution New Lisbon Correctional Institution
another
Facility
11/27/2012 Transferred to New Lisbon Correctional Institution Waupun Correctional Institution
Another
Facility
06/08/2012 Switched New Lisbon Correctional Institution Stanley Correctional Institution
Case: 3:20-cr-00077-jdp Document #: 30-1 Filed: 02/12/21 Page 3 of 4
Supervision
Responsibility
06/07/2012 Switched New Lisbon Correctional Institution Stanley Correctional Institution
Supervision
Responsibility
05/17/2012 Received from New Lisbon Correctional Institution Stanley Correctional Institution
another
Facility
05/17/2012 Transferred to Stanley Correctional Institution New Lisbon Correctional Institution
Another
Facility
02/17/2012 Switched Stanley Correctional Institution Supervised Living Facility
Supervision
Responsibility
01/11/2012 Received from Stanley Correctional Institution Supervised Living Facility
another
Facility
01/11/2012 Transferred to Supervised Living Facility Stanley Correctional Institution
Another
Facility
12/21/2011 Received from Supervised Living Facility Jackson Correctional Institution
another
Facility
12/21/2011 Transferred to Jackson Correctional Institution Supervised Living Facility
Another
Facility
07/05/2011 Received from Jackson Correctional Institution Dodge Correctional Institution
another
Facility
07/05/2011 Transferred to Dodge Correctional Institution Jackson Correctional Institution
Another
Facility
05/11/2011 Admitted Dodge Correctional Institution Rock County Jail
Probation
Violator
04/08/2008 Released on Oregon Correctional Center Division of Community Corrections
MR to Central Office
Supervision
10/31/2007 Received from Oregon Correctional Center Dodge Correctional Institution
another
Facility
10/31/2007 Transferred to Dodge Correctional Institution Oregon Correctional Center
Another
Facility
10/30/2007 Received from Dodge Correctional Institution Columbia Correctional Institution
another
Facility
10/30/2007 Transferred to Columbia Correctional Institution Dodge Correctional Institution
Another
Facility
06/12/2007 Received from Columbia Correctional Institution Dodge Correctional Institution
another
Facility
06/12/2007 Transferred to Dodge Correctional Institution Columbia Correctional Institution
Case: 3:20-cr-00077-jdp Document #: 30-1 Filed: 02/12/21 Page 4 of 4
Another
Facility
06/11/2007 Received from Dodge Correctional Institution Oneida County Jail Contract
another
Facility
06/11/2007 Transferred to Oneida County Jail Contract Dodge Correctional Institution
Another
Facility
03/05/2007 Received from Oneida County Jail Contract Dodge Reception
another
Facility
03/05/2007 Transferred to Dodge Reception Oneida County Jail Contract
Another
Facility
02/28/2007 Returned Dodge Reception Rock County Jail
from Court
02/21/2007 Out to Court Dodge Reception Rock County Jail
12/20/2006 Admitted Dodge Reception Unknown
Probation
Violator
Court Cases
Case # Location Statute # Convicted
01CM01759 ROCK 940.19(1) , 946.41(1) 07/23/2002
02CF03952 ROCK 940.19(1) 06/09/2003
02CM01092 ROCK 940.19(1) 07/23/2002
05CM01998 ROCK 941.23 01/30/2006
06CM02553 ROCK 943.01(1) , 943.14 02/27/2007
09CF2123 ROCK 940.19(2) 12/18/2009
09CF2612 ROCK 946.49(1)(B) , 961.41(1M)(CM)2 12/18/2009
13CF2543 ROCK 346.63(1)(A) 03/13/2014
16CF939 ROCK 346.63(1)(A) 02/24/2017
|
Case 2:20-cv-01673-JAM-JDP Document 21 Filed 12/10/20 Page 1 of 2
1
2
3
4
5
6
7
8 UNITED STATES DISTRICT COURT
9 EASTERN DISTRICT OF CALIFORNIA
10
11 CHARLES BROWN, Case No. 2:20-cv-01673-JAM-JDP (PC)
12 Plaintiff, ORDER DENYING MOTIONS FOR AN
EXTENSION OF TIME AND TO APPOINT
13 v. COUNSEL
14 S.H. WONG, et al., ECF No. 19, 20
15 Defendant.
16
17 Plaintiff is a prisoner proceeding without counsel in this civil rights action brought under
18 42 U.S.C. § 1983. Plaintiff has filed a motion for an extension of time. ECF No. 20. No motions
19 are currently pending that require plaintiff to file a responsive pleading, and the court has not yet
20 issued a scheduling order. Thus, there is no basis for granting plaintiff an extension of time, and
21 the request will be denied as unnecessary.
22 Plaintiff has also filed a motion that requests the court provide him an application for
23 appointment of counsel. ECF No. 19. The court construes this filing as a motion for appointment
24 of counsel.
25 Plaintiff does not have a constitutional right to appointed counsel in this action, see Rand
26 v. Rowland, 113 F.3d 1520, 1525 (9th Cir. 1997), and the court lacks the authority to require an
27 attorney to represent plaintiff. See Mallard v. U.S. District Court for the Southern District of
28 Iowa, 490 U.S. 296, 298 (1989). The court may request the voluntary assistance of counsel. See
1
Case 2:20-cv-01673-JAM-JDP Document 21 Filed 12/10/20 Page 2 of 2
1 28 U.S.C. § 1915(e)(1) (“The court may request an attorney to represent any person unable to
2 afford counsel”); Rand, 113 [email protected]. However, without a means to compensate counsel, the
3 court will seek volunteer counsel only in exceptional circumstances. In determining whether such
4 circumstances exist, “the district court must evaluate both the likelihood of success on the merits
5 [and] the ability of the [plaintiff] to articulate his claims pro se in light of the complexity of the
6 legal issues involved.” Rand, 113 F.3d at 1525 (internal quotation marks and citations omitted).
7 The court cannot conclude that exceptional circumstances requiring the appointment of
8 counsel are present here. The allegations in the complaint are not exceptionally complicated.
9 Further, plaintiff has not demonstrated that he is likely to succeed on the merits. For these
10 reasons, plaintiff’s motion to appoint counsel, ECF No. 19, will be denied.
11 The court may revisit this issue at a later stage of the proceedings if the interests of justice
12 so require. If plaintiff later renews his request for counsel, he should provide a detailed
13 explanation of the circumstances that he believes justify appointment of counsel in this case.
14 Accordingly, it is hereby ORDERED that:
15 1. Plaintiff’s motion for an extension of time, ECF No. 20, is denied as unnecessary.
16 2. Plaintiff’s motion for appointment of counsel, ECF No. 19, is denied without
17 prejudice.
18
IT IS SO ORDERED.
19
20
Dated: December 9, 2020
21 JEREMY D. PETERSON
UNITED STATES MAGISTRATE JUDGE
22
23
24
25
26
27
28
2
|
Title: [MI] My boss issued a "not satisfactory" annual review to prevent me from transitioning into another position, despite the fact that I have a clear work record with no corrective or disciplinary action taken over the past year.
Question:Some details: I work in a chain pharmacy/convenience store as a shift manager, and have done so for three and a half years. Three months ago, I expressed interest in transferring into the pharmacy as a technician, a position with better pay and hours. I interviewed and was accepted by the district manager of the pharmacy. My boss initially said he would not allow me to make the move, due to a shortage of personnel to take my place and then, later on, "performance issues" which he did not elaborate on. The pharmacy manager agreed to delay my transition to allow my boss to hire and train new employees. He delayed the process until recently, when I began training and taking pharmacy shifts. Two weeks ago, I was given a "needs improvement" result on my annual review and a six cent raise. This review effectively bars me from the formal application process to the pharmacy.
I have no complaints, write-ups or corrective actions taken against me in the last year. I try quite hard to do a good job and I feel I succeed in this regard, taking criticism and remaining as pliable as possible when it comes to scheduling and other aspects of the job. Unfortunately, I believe this situation stems from an instance last summer, in which I witnessed my boss committing a substantial ethical violation. I attempted to inform his boss for a week solid to report the issue, but received no response. I eventually reported the problem to our ethical hotline and since then, our working relationship has been strained. My boss regularly accuses me of being a "smart-ass" and is overly harsh in criticizing my work.
Sorry, I didn't realize this post would take so much space to explain. I'm currently working with the pharmacy district manager to see if the issue can be resolved, as he agrees with me on my assessment of the situation. If he is unable to help, do I have any real recourse here? I'm incredibly upset by the whole thing and I would rather not seek other employment and start at the bottom rung again. Any advice, legal or otherwise, is greatly appreciated.
Answer #1: You might try your company's ethics hotline again.
It's hard to say for a private company without knowing which one it is, but in some organizations, retaliating against a whistleblower can itself be an ethical violation. If your company has a section on ethics in their employee handbook, it might provide guidance as to whether they would protect you in this situation. CVS, for example, has a [specific prohibition](https://cvshealth.com/sites/default/files/cvs-health-code-of-conduct.pdf) (page 39) on retaliating against people who report possible ethics violations.Answer #2: If I were you I'd apply at every CVS/Walgreens/anything with a pharmacy. Keep your head down, and play along. Secure that pharmacy job. Then tell current job you will no longer be working starting immediately. Two weeks of more pay, is two weeks of more pay. Answer #3: Not a legal issue, sorry.Answer #4: There is no legal issue here, and the only person affected other than you is the pharmacy manager who loses the experienced employee he WAS going to get.
Maybe you can speak with this person and they have some political influence they can use. I wouldn't go to them with "I'm not getting the transfer I wanted because of a bogus bad rating, can you help?", I would go to them with "I *was* going to come join your department, but because of the bogus bad rating now you won't get that (and my existing boss won't get much benefit either as I am not strongly motivated to deliver for him anymore). I wanted to let you know so you have a chance to use any influence you have if you want to."Answer #5: Your rating on a performance review isn't a legal issue, it's a company policy one. You have no legal entitlement to a transfer, or an accurate performance review. Answer #6: Unless you feel you're being discriminated against due to your membership in a protected class, the company is free to promote/demote/hire/fire anyone they want for any reason.Answer #7: Nothing illegal. Time to find a new job. Remember to return the favor. I wouldn't even give a days notice to them.Answer #8: This type of thing is all too common. Some managers are afraid of confrontation, so instead of being critical as you go they save it for one time a year. Other managers have no gripe with you but the manager's manager, insists you find something negative to put on the review. There can be lots of "idiotic" reasons why you got what you feel is less.
But the one thing for certain is you're in for more of the same down the road if you stay. So you can learn to live with it or start looking for another job. I hope you choose the latter and find a place that values your work. |
662 F. Supp. 1119 (1987)
Robert FINGAR, as custodian for Christopher Fingar, and Susan Fingar, as custodian for Karen Fingar, Plaintiffs,
v.
PRUDENTIAL-BACHE SECURITIES, INC. and Prudential Insurance Company of America, Defendants.
No. 86 C 1654.
United States District Court, E.D. New York.
March 31, 1987.
*1120 Eric H. Holtzman, Hauppauge, N.Y., for plaintiffs.
Obermaier, Morvillo & Abramowitz, P.C. (Elkan Abramowitz and Faye Kessin, of counsel), New York City, for defendants.
MEMORANDUM AND ORDER
NICKERSON, District Judge.
Plaintiffs Robert and Susan Fingar seek in an amended complaint to recover alleged losses resulting from their investment, as custodians for their minor children, in shares of common stock of the Western Union Corporation (Western Union). Plaintiffs allege that defendants, Prudential-Bache Securities, Inc. (Bache) and its corporate parent, Prudential Insurance Company of America (Prudential), illegally conspired to support the price of Western Union stock so that they could profitably sell off their own holdings in that stock in the event that an anticipated tender offer for Western Union did not materialize. The conspirators consisted of defendants and Steven Azadian, a Bache account executive, who allegedly fraudulently induced plaintiffs to purchase and retain shares of Western Union by touting it as a likely tender offer candidate. They did this both after they learned the tender offer fell through and during the period that the price of the shares was dropping and defendants were liquidating their own holdings.
The complaint alleges violations of sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 (the 1934 Act), 15 U.S.C. §§ 78j(b) & 78t(a), the Racketeer Influenced and Corrupt Organization Act (RICO), 18 U.S.C. §§ 1961-68, and state law. Jurisdiction is based on 28 U.S.C. § 1331, because federal questions are alleged, and on pendent jurisdiction.
Defendants move to dismiss the complaint's fraud-related claims, including the alleged securities law violations, under Rule 9(b) of the Federal Rules of Civil Procedure for failure to allege fraud with particularity. They also move to dismiss the RICO claim under Rule 12(b)(6) for failure to state a claim, the various state law claims for lack of jurisdiction and also, in one instance, for failure to state a claim, and the claim for punitive damages.
I.
The amended complaint alleges, in substance, the following. In the spring of 1983, plaintiffs became friends with Azadian, who held himself out as an expert in securities matters. Azadian eventually began to advise plaintiffs to sell their shares in M/A Com, Inc. (M/A Com) and to purchase Western Union shares. He described M/A Com stock as speculative, at one time warning that its price was likely to decline precipitously. In April 1983, plaintiffs finally acceded to his repeated blandishments by selling their M/A Com shares and purchasing 2400 shares of Western Union, but only after receiving assurances that such action was consistent with conservative investment strategies of "capital preservation."
Azadian did not inform plaintiffs that defendants themselves held approximately 53,800 shares in Western Union for their own account. Bayrock Investment Advisory Services (Bayrock), a division of Bache, apparently had purchased 4.9% of Western Union's outstanding common stock in March 1983. During the summer and fall *1121 of 1983, Western Union's price began to fall. Nonetheless Azadian repeatedly urged plaintiffs to retain their Western Union investment. To that end he showed plaintiffs in the summer of 1983 reports prepared by a Bache technical expert which stressed that Western Union was a likely tender offer candidate.
Defendants should then have known that such reports were inaccurate. In May 1983 defendants decided to sell the majority of their holdings in Western Union precisely because the anticipated tender offer had not materialized. They sold 29,000 Western Union shares during the spring and summer of 1983.
The same pattern of alleged deception persisted throughout the balance of 1983 and most of 1984, as the price of Western Union continued to fall. Azadian asserted his confidence in the soundness of Western Union and continued to show plaintiffs technical reports to confirm his advice. During this same period, and without notifying plaintiffs, defendants proceeded to dispose of a total of 51,000 Western Union shares. Plaintiffs' brief asserts that defendants eliminated their Western Union holdings by the end of the third quarter of 1984.
The final blow came on or about November 21, 1984, when the major banks cancelled Western Union's $108 million credit line. Western Union's stock price plummeted even more precipitously, and two days later plaintiffs sold their shares, sustaining losses amounting to $63,000.
The failure of defendants to inform plaintiffs of their plans to sell large quantities of Western Union stock, coupled with their continuing efforts to persuade plaintiffs first to purchase and then retain shares of Western Union, "constituted a conspiracy between Prudential and Bache to support the price of Western Union stock".
II.
Plaintiff's first two causes of action allege that the conspiracy constituted the use of a manipulative and deceptive device in connection with the purchase and sale of a security in contravention of § 10(b) of the 1934 Act and of Rule 10b-5 promulgated thereunder. The second cause of action differs from the first in that it incorporates the concealment of Bayrock's holdings in Western Union as part of the overall conspiracy by defendants to support the price of Western Union's stock. Defendants argue that neither cause of action has been pled with the requisite particularity required by Rule 9(b).
A.
Federal Rule of Civil Procedure 9(b) requires that "[i]n all averments of fraud ... the circumstances constituting fraud ... shall be stated with particularity." The Second Circuit has identified four purposes served by Rule 9(b): (1) to enable each defendant accused of fraudulent conduct to have sufficient information to frame a response, (2) to prevent the harm to a defendant's reputation and good will that results from unwarranted charges of fraud, (3) to diminish the potential for groundless strike suits filed for their settlement value, and (4) to prevent groundless claims from wasting the court's time. See Decker v. Massey-Ferguson, Ltd., 681 F.2d 111, 114-15 (2d Cir.1982); Ross v. A.H. Robins Co., 607 F.2d 545, 557 (2d Cir.1979), cert. denied, 446 U.S. 946, 100 S. Ct. 2175, 64 L. Ed. 2d 802 (1980). See also Crystal v. Foy, 562 F. Supp. 422, 424 (S.D.N.Y.1983) (Weinfeld, J.).
To state a claim under section 10(b), plaintiff must allege acts indicating an intent to deceive, manipulate or defraud. See Ernst & Ernst v. Hochfelder, 425 U.S. 185, 192 n. 7, 96 S. Ct. 1375, 1380 n. 7, 47 L. Ed. 2d 668 (1976). A complaint alleging fraud under the securities laws "states a cause of action ... only if the conduct alleged can be fairly viewed as `manipulative or deceptive.'" Santa Fe Industries, Inc. v. Green, 430 U.S. 462, 473-74, 97 S. Ct. 1292, 1301, 51 L. Ed. 2d 480 (1977). Rule 9(b), which is applicable to claims under section 10(b), see A.H. Robins Co., supra, 607 F.2d at 557, further requires the complaint to "`allege with some specificity the acts constituting fraud,'" Decker, supra, 681 F.2d at 114 (quoting Rodman v. *1122 Grant Foundation, 608 F.2d 64, 73 (2d Cir.1979)). Mere "conclusory allegations that defendant's conduct was fraudulent or deceptive are not enough." Id. (citing Segal v. Gordon, 467 F.2d 602, 607 (2d Cir. 1972)).
To meet these requirements the complaint must thus "`allege (1) specific facts, (2) sources that support the alleged specific facts, and (3) a basis from which an inference of fraud may be fairly drawn.'" Schwartz v. Novo Industri, A/S, 635 F. Supp. 1463, 1465 (S.D.N.Y.1986) (Weinfeld, J.) (quoting Crystal, supra, 562 F.Supp. at 425). See also Deutsch v. Flannery, 597 F. Supp. 917, 921 (S.D.N.Y.1984) (Keenan, J.).
Measured against these criteria, the first two causes of action are deficient. For the most part, the amended complaint alleges specific facts and provides sources in their support. But it does not allege sufficient specific facts to establish a basis from which an inference of fraud can be drawn. From the allegation that defendants were selling shares of Western Union from May 1983 on while Bache's account executive was simultaneously touting Western Union as a likely tender offer candidate, plaintiffs ask the court to infer that there was a conspiracy to cause plaintiffs to retain their shares in Western Union for the purpose of supporting its price. A claim alleging fraudulent inducement to retain stock, however, does not state a claim under Rule 10b-5. In Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 737-38, 95 S. Ct. 1917, 1926-27, 44 L. Ed. 2d 539 (1975), the Supreme Court held that pursuant to the language of the 1934 Act and Rule 10b-5, the fraud must be "in connection with the purchase or sale of any security," and that it is not enough to allege that a shareholder "decided not to sell their shares because of an unduly rosy representation or a failure to disclose unfavorable material."
Plaintiffs, in effect, ask the court to draw the inference that defendants in April 1983, when they held Western Union stock in expectation of a tender offer, conspired to induce plaintiffs through material misrepresentations and omissions to purchase shares so that if the tender offer failed to materialize, defendants would have a stronger market in which to dispose of their own holdings. However, the amended complaint does not spell this out with particularity. It alleges that defendants did not decide to sell their Western Union stock until May 1983, a month after plaintiffs had purchased shares. Thus the relevant misrepresentation or omission, if any, is not Azadian's touting of Western Union as a likely tender offer candidate, but the concealment of defendants' intention to sell their shares without notifying plaintiffs if and when they perceived that a tender offer was not forthcoming.
Generally Rule 9(b) pleadings cannot be based on information and belief, but this rule is relaxed as to matters peculiarly within the adverse parties' knowledge. See, e.g., Segal, supra, 467 [email protected]. In such instances, "the allegations must then be accompanied by a statement of the facts upon which the belief is founded." Id. Plaintiffs' complaint, if generously read, see Yoder v. Orthomolecular Nutrition Institute, Inc., 751 F.2d 555, 558 (2d Cir. 1985), predicates its allegation of a conspiracy between Prudential and Bache to support the price of Western Union on the following allegedly material misrepresentations and omissions that occurred prior to plaintiffs' purchase:
(1) Azadian's representations that M/A Com stock was speculative and at one point, likely to decline precipitously (¶¶ 18, 22).
(2) Azadian's representations before April 1983 that Western Union was a likely candidate for a tender offer (¶¶ 19-20).
(3) Azadian's representation that the purchase of Western Union stock was compatible with a strategy of conservative investment and "capital preservation" (¶ 24).
(4) The failure to inform plaintiffs that defendants held approximately 53,800 shares of Western Union during the spring of 1983 (¶¶ 29-31).
*1123 (5) The failure to inform plaintiffs that Bayrock had purchased in March 1983 approximately 4.9% of Western Union (¶¶ 40, 46-47).
The following allegedly material misrepresentations and omissions occurred after plaintiffs' April 1983 purchase of Western Union stock, and although not sufficient in and of themselves to state Rule 10b-5 causes of action, see Blue Chip Stamps, supra, are relevant to whatever extent they permit the inference that the conspiracy to support the stock price of Western Union existed at the time of plaintiffs' purchase:
(6) The failure to inform plaintiffs of defendants' decision in May 1983, after the tender offer had not materialized, to sell the majority of their Western Union holdings and of defendants' subsequent sale of 29,000 shares during the spring and summer of 1983 (¶¶ 32-33).
(7) Azadian's repeated advice to plaintiffs during the spring and summer of 1983 not to sell their shares, and his showing them reports in the summer of 1983, prepared by a Bache technical expert, stressing that Western Union was a likely tender offer candidate (¶¶ 34, 57, 59).
(8) Azadian's failure to provide plaintiffs with information regarding Bayrock's investment in Western Union, after Robert Fingar had learned of it and requested information thereon (¶¶ 44-46).
(9) Azadian's repeated expressions of confidence in the soundness of Western Union stock throughout the summer and fall of 1983 and the first eleven months of 1984, notwithstanding its declining price, and his use of further technical reports to confirm the validity of his advice (¶¶ 62-64).
(10) Azadian's wife, his successor at Bache, stating to plaintiffs on November 20, 1984, one day before Western Union's credit line with the major banks was cancelled, that "Prudential-Bache is very high on Western Union" and referring to technical reports indicating that a tender offer would become more likely if its price continued to drop (¶¶ 65-67).
The volume of these allegations does not compensate for the complaint's failure to tie them together with more specific details as to the dates and content of relevant statements, the manner in which certain ones were misleading, and how they are connected to the particular defendants named in the complaint. See, e.g., Zerman v. Ball, 735 F.2d 15, 22-23 (2d Cir.1984). Each misrepresentation (except for the tenth one) was allegedly made by Azadian, but the amended complaint does not spell out the specifics of the conspiracy between defendants to support the price of the stock. Indeed, there is no allegation of defendants' knowledge of what Azadian was doing or of his knowledge of the number of shares held by the defendants and their plans to sell.
Nor does the amended complaint allege sufficient facts from which an inference of scienter as to each particular defendant can be drawn. See Luce v. Edelstein, 802 F.2d 49, 54, 57 (2d Cir.1986); Savino v. E.F. Hutton & Co., 507 F. Supp. 1225, 1232 (S.D.N.Y.1981). Plaintiffs emphasize Azadian's circulation of defendants' technical reports predicting Western Union to be a likely tender offer candidate. This type of speculative information, however, without more generally does not form a basis for Rule 10b-5 liability. See, e.g., Goldman v. Belden, 754 F.2d 1059, 1068 (2d Cir.1985).
Plaintiffs thus seek to have the court infer fraudulent intent through allegations that the reports were still being drawn up and circulated (1) after the time when defendants realized that "said tender offer [had] failed to materialize (¶ 32), (2) simultaneous to or after the "spring and summer of 1983" in which defendants sold 29,000 of their Western Union shares (¶ 33), and (3) after defendants knew or should have known, "[d]uring 1984," that the credit status of Western Union was in peril (¶ 60). The times alleged are stated only in general terms. Because of the overlap in times an inference of fraud is impermissible.
Information that should be within plaintiff's knowledge, such as each date they *1124 were shown a report touting Western Union's tender offer possibilities, is not pled other than by general references to the "summer of 1983" (¶ 57). The circulation of later reports is referenced to "the summer and fall of 1983" and the "first eleven months of 1984" (¶ 62-64). The content of these reports is then only summarized as "supporting Azadian's advice with regard to Western Union" (¶ 64).
Plaintiffs also fail to indicate the dates of the reports, the time frames they were intended to cover, and how they correlated at the relevant times to the price of Western Union stock, and the amount of defendants' holdings. The significance of this sort of information is readily apparent by considering the alleged misrepresentation by Azadian's wife on November 20, 1984. If, as plaintiffs' brief indicates, defendants had already divested themselves of all Western Union stock, an inference of fraud, or at least of the particular fraud alleged, does not arise.
Moreover, the amended complaint fails to indicate when defendants found out or should have known about Western Union's tenuous credit status. Cf. Denny v. Barber, 576 F.2d 465, 470 (2d Cir.1978) (Rule 9(b) requirements not met where complaint failed to allege date at which defendants knew "investments had become so unacceptably `risky' that disclosure was required"). There is thus no way to ascertain whether the failure to disclose that status was a fraud permeating the technical reports. The amended complaint alleges that Western Union's credit status deteriorated "[d]uring 1984" (¶ 60), but then inexplicably faults the earlier "summer of 1983" reports for failing to reveal this "precarious credit position" (¶ 61).
Accepting the amended complaint's theory of conspiracy liability, without a more specific allegation of facts fairly supporting a reasonable inference of "manipulative and fraudulent conduct attributable to each defendant," Crystal, supra, 562 F.Supp. at 426, would potentially transmogrify into securities law violations innumerable instances of ordinary brokerage transactions. The complaint plainly sets forth two activities: selling of Western Union stock by defendants, and touting by Azadian to plaintiffs of Western Union's investment potential. Pleadings that purport to connect two such activities as one fraudulent scheme must be sufficiently particular. A less stringent requirement would expose a brokerage firm to a federal securities law suit whenever its employee recommends an investment that diverges from the firm's own holdings, and that investment goes sour. Taken to an extreme, the only safe recommendation would be the one that exactly mimics both the firm's own trades and its recommendations to other clients.
One of the purposes of Rule 9(b)'s particularity requirement is to avoid instances of where "a plaintiff is not seeking to `redress ... a wrong,' but rather `to find one.'" Crystal, supra, 562 F.Supp. at 433 (quoting Segal, supra, 467 F.2d at 608). "Without facts from which an inference of fraud can be drawn, plaintiff is not entitled to use the provisions of the discovery rules to find those facts." Deutsch, supra, 597 F.Supp. at 922.
In the absence of more particular pleading, this case is distinguishable from Goldman v. Belden, supra, where the complaint alleged that defendant's officers issued optimistic statements about the defendant corporation's future prospects while simultaneously disposing of large blocks of their holdings in defendant's stock. There, the touter and the seller were identical, and the inference of fraudulent conduct naturally followed. Nor is the present complaint comparable to Chasins v. Smith, Barney & Co., 438 F.2d 1167 (2d Cir.1970), where the defendant brokerage firm failed to reveal to the plaintiff whose account it was handling that it was a market-maker in the securities which it was selling to plaintiff as a principal. Again, the direct nature of the relationship allowed a reasonable inference of fraud.
The complaint's failure to plead a sufficient connection between the selling by defendants and the touting by Azadian requires dismissal of both securities law counts. Although Azadian's circulation of corporate technical reports reciting allegedly *1125 inaccurate information is an allegation of fact that might have sustained an inference of fraud, it is incapable of doing so where the relevant correlating dates and other supporting information is not particularly alleged.
B.
The question remains whether any of the five alleged material misrepresentations or omissions occurring prior to plaintiffs' purchase of the stock independently suffices to state a cause of action under Rule 10b-5.
Even if the court were to assume that Azadian's representations as to M/A Com's speculativeness and Western Union's attractiveness were representations of fact, the amended complaint lacks any allegation that such statements were untrue, or, in the case of M/A Com, caused plaintiffs to suffer losses. Similarly, the failure to inform plaintiffs before their purchase of the shares about defendants' and Bayrock's Western Union holdings is nowhere alleged to be material (at least in absence of a secret intention to dispose of such shares at plaintiffs' expense). Indeed, there is neither an allegation nor a reason to believe that defendants would have a duty to reveal such information. Cf. Chasins, supra.
Azadian's representation that the purchase of Western Union stock was compatible with a strategy of conservative investment and "capital preservation," although a closer question, also fails to state a cause of action under Rule 10b-5. The amended complaint does not allege that Western Union stock was, in fact, incompatible with such investment goals. There is an allegation that Bache had given M/A Com its highest rating during the spring of 1983, while assigning a lower rating to Western Union (¶ 55), but that does not sufficiently give rise to an inference that Western Union stock was inappropriate for plaintiffs' investment objectives.
Moreover, even if the court assumes that the recommendation of Western Union stock was an unsuitable one for plaintiffs' purposes, in the absence of an allegation of scienter, Azadian's conduct at most rises to a claim of breach of fiduciary duty, not a violation of Rule 10b-5. See Pross v. Katz, 784 F.2d 455, 458 (2d Cir.1986); Clark v. John Lamula Investors, Inc., 583 F.2d 594, 600 (2d Cir.1978). The amended complaint does allege that Azadian admitted he was "relieved" when a Bache technical report "supported the advice [he] had given to plaintiffs" (¶ 58). But this apparently refers to the report's confirmation that Western Union was indeed a likely candidate for a tender offer, and not to whether Western Union's stock was an investment consistent with "capital preservation" goals.
III.
Plaintiffs' fourth cause of action alleges that defendants violated section 1962 of RICO, 18 U.S.C. § 1962. Although the complaint fails to refer to any particular subsection of section 1962, the context of the pleadings indicates that the claim is made under section 1962(c), and plaintiffs' brief refers solely to section 1962(c). That section makes it unlawful "for any person employed by or associated with any enterprise ... to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity."
Defendants urge that this count of the complaint is deficient in its allegation that "[d]efendants' use of legitimate business entities in furtherance of securities fraud constitutes the conduct of an `enterprise' within the meaning of RICO" (¶ 82), because it casts Prudential and Bache as both the "enterprise" and the "person" conducting the affairs of the enterprise.
In Bennett v. United States Trust Co., 770 F.2d 308, 315 (2d Cir.1985), cert. denied, 474 U.S. 1058, 106 S. Ct. 800, 88 L. Ed. 2d 776 (1986), the Second Circuit held that "under section 1962(c) a corporate entity may not be simultaneously the `enterprise' and the `person' who conducts the affairs of the enterprise through a pattern of racketeering activity." This holding necessarily controls the result here. Plaintiffs' RICO claim is dismissed.
*1126 Because plaintiffs' federal securities law and RICO claims are dismissed, plaintiffs' pendent state law claims (counts three, five, six and seven) are dismissed also. United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 1139, 16 L. Ed. 2d 218 (1966). In light of this disposition, the court does not reach defendants' other contentions.
Defendants' motion to dismiss the complaint is granted, with leave to replead in accordance with this memorandum and order. Plaintiffs may serve an amended complaint within thirty days of the date hereof. So ordered.
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 99-4403
RAYMOND BLACKWELL,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Catherine C. Blake, District Judge.
(CR-97-232-CCB)
Submitted: February 29, 2000
Decided: March 20, 2000
Before WILKINS and MICHAEL, Circuit Judges,
and HAMILTON, Senior Circuit Judge.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
James E. McCollum, Jr., Carla M. Mathers, JAMES E. MCCOL-
LUM, JR. & ASSOCIATES, P.C., College Park, Maryland, for
Appellant. Lynne A. Battaglia, United States Attorney, Andrea L.
Smith, Assistant United States Attorney, James M. Webster, Assistant
United States Attorney, Baltimore, Maryland, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Raymond Blackwell appeals from a 235-month sentence imposed
following his conviction for possession with the intent to distribute
crack cocaine, 21 U.S.C. § 841(a) (1994). A review of the record dis-
closes no reversible error. Thus, we affirm his conviction and sen-
tence.
On appeal, Blackwell claims that the district court erred in denying
his motion to suppress. We find that the district court did not clearly
err in finding that Blackwell consented to the search. See United
States v. Lattimore, 87 F.3d 647, 650 (4th Cir. 1996) (en banc). Fur-
ther, we find that the trooper did not impermissibly exceed the scope
of the original traffic stop because the car's registration had been sus-
pended, and the trooper needed to ask additional questions to decide
whether to have the vehicle towed immediately or whether to permit
Blackwell to drive to a nearby rest stop and leave the car there. Cf.
United States v. Rusher, 966 F.2d 868, 876-77 (4th Cir. 1992) (once
a driver has produced a valid license and registration, the police must
allow him to go on his way, and any further questioning exceeds the
scope of the traffic stop "unless the officer has a reasonable suspicion
of a serious crime"). Blackwell's responses and behavior in reaction
to these questions were adequate to arouse the trooper's suspicion and
led him to ask for consent to the search of the vehicle.
We also conclude that the district court did not abuse its discretion
in admitting evidence of Blackwell's 1994 traffic stop and that, even
if the court erred, such error was harmless. See United States v. Van
Metre, 150 F.3d 339, 349 (4th Cir. 1998); United States v. Queen, 132
F.2d 991, 996 (4th Cir. 1997). Similarly, we find that district court's
Allen* instruction was evenly balanced and did not suggest that jurors
_________________________________________________________________
*Allen v. United States, 164 U.S. 492 (1896).
2
abandon their conscientious objections. Thus, the district court did not
abuse its discretion in giving the challenged Allen charge. See United
States v. Cropp, 127 F.3d 354, 359-60 (4th Cir. 1997). We also reject
Blackwell's claim that the district court's second inquiry into the sta-
tus of deliberation at the close of the day was coercive. Moreover, if
the district court's second inquiry was improperly coercive, Blackwell
cannot complain because the court's second inquiry was made at
Blackwell's request. See United States v. Jackson, 124 F.3d 607, 617
(4th Cir. 1997) (an appeal may not lie from an error that the defendant
himself has caused).
Accordingly, we affirm his conviction and sentence. We dispense
with oral argument because the facts and legal contentions are ade-
quately presented in the materials before the court and argument
would not aid the decisional process.
AFFIRMED
3
|
Exhibit 10.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, (the “Agreement”) dated this 26th day of March, 2010
is made by and between Global Defense Technology & Systems, Inc., a Delaware
corporation (“GTEC”) and Global Strategies Group (North America) Inc., a
Maryland corporation (“GNA”, with GTEC and the Company referred to as the
“Company”), and Ronald Jones (the “Executive”).
WHEREAS, the GNA and the Executive previously entered into an Employment
Agreement effective of November 25, 2009, as subsequently amended (the “Prior
Agreement”); and
WHEREAS the Company and the Executive desire to amend and restate the terms of
the Prior Agreement.
In consideration of the foregoing and the covenants below, the Company and
Executive agree as follows:
1. Employment.
(a) During the Term (as defined in Section 2 hereof), GNA shall employ Executive
and Executive shall render services to GNA and GTEC as the Executive Vice
President. Executive shall perform during his employment with GNA such duties
and exercise such powers in relation to the business of the Company commensurate
with his positions with the Company.
(b) During the Term, Executive shall report to John Hillen, III, President and
Chief Executive Office (referred to as the “CEO”).
(c) Executive shall perform such actions consistent with his position and such
other duties as may from time to time be assigned to him by the President and
CEO. In the performance of his duties, Executive shall comply with such limits
on Executive’s authority in his positions with the Company as the CEO and Board
may from time to time impose. Executive shall devote his full and exclusive
business time and best efforts to the performance of his duties under this
Agreement and shall perform them faithfully and diligently; provided that
Executive may (i) serve on civic, charitable or, with the Board’s consent,
corporate boards or committees and (ii) deliver lectures, fulfill speaking
engagements or teach at educational institutions and retain any remuneration
received therefore as long as such activities do not, in the Board’s judgment,
interfere with the performance of his duties hereunder.
2. Term of Employment.
The Executive’s employment with GNA commenced on November 25, 2009 under the
terms of the Prior Agreement (the “Original Effective Date”). Pursuant to the
terms of the Prior Agreement, the term of Executive’s employment is currently
extended until November 25, 2010
--------------------------------------------------------------------------------
(the “Initial Expiration Date”). Subject to the provisions of this Section 2 and
earlier termination pursuant to Section 4 below, the term of this Agreement
shall end on the Initial Expiration Date, provided that, subject to earlier
termination pursuant to Section 4 below, commencing on the Initial Expiration
Date, and on each anniversary of the Initial Expiration Date thereafter, the
term of this Agreement shall automatically be extended for an additional year
unless, not later than six (6) months prior to the expiration of the
then-existing term, the Company or the Executive shall have given notice not to
extend the term of this Agreement; and provided, further, that if a Change of
Control (as defined herein) of GTEC shall have occurred during the original or
any extended term of the Executive’s employment pursuant to this Agreement, the
term of the Executive’s employment pursuant to this Agreement shall continue in
effect for a period of twelve (12) months from the date on which such Change of
Control occurred. All periods during which the Executive is employed hereunder
shall hereinafter be referred to as the “Term.”
3. Compensation.
(a) Salary. As full compensation for Executive’s services under this Agreement,
Executive shall be entitled to an annual gross salary at the rate of $300,000 US
Dollars (“Base Salary”). The Base Salary shall be payable in accordance with the
Company’s normal payroll practices. If Executive’s employment begins or
terminates part way through a payment period, his Base Salary will be prorated
based on the actual number of days included in the period. All forms of
compensation referred to in this Agreement are subject to applicable withholding
and payroll taxes. The Base Salary may be increased from time to time at the
discretion of the CEO and Board.
(b) Bonus. In addition to his Base Salary, Executive will also be considered for
an annual bonus with a performance-based target of 50% of the Base Salary (the
“Target Bonus Amount”). Performance objectives for Company’s financial year
(“Financial Year”) will be determined by the CEO and Board or a committee
thereof generally during the first ninety (90) days of the Financial Year. The
actual amount of any bonus shall be determined in the sole discretion of the
Board. Receipt by Executive of a bonus in relation to any Financial Year is not
to be regarded as establishing an entitlement on the part of Executive to
receive a bonus in relation to subsequent Financial Years or as to the amount of
any such bonus. Bonuses are subject to Executive still being employed by the
Company at the date payment is due and to his not being under notice of
termination on that date either given by Executive or the Company. The Target
Bonus Amount may be increased from time to time at the discretion of the CEO and
Board.
(c) Equity Compensation.
(i) Grants. The Executive will be eligible for stock option grants “Options” in
the sole discretion of the CEO and Board taking into account the Executive’s
performance, the performance of the Company and other factors the Board
determines to be relevant. The exercise price of any grants of Options shall be
the fair market value of the underlying shares on the date of grant, as
determined by the Board in accordance with the terms of the Plan and each Option
shall vest as provided by the Board at the time of grant.
--------------------------------------------------------------------------------
(ii) Accelerated Vesting. Notwithstanding anything herein to the contrary, in
the event of a Change in Control (as defined below), if the Executive’s Options
are assumed or continued by the GTEC or its successor entity, including the
parent of the GTEC or its successor, in the sole discretion of the parties to
the Change in Control transaction and thereafter remain in effect following such
Change in Control, then all Options held by the Executive shall be deemed vested
and exercisable in full as of immediately prior to the date on which the
Executive’s employment with the Company and its subsidiaries or successor entity
terminates if (i) such termination occurs within six (6) months following such
Change in Control and (ii) such termination is either by the Company (or
successor entity) without Cause or by the Executive for Good Reason. If,
following a Change in Control, to the extent that Options are not assumed or
continued by the GTEC or its successor entity, including the parent of the GTEC
or its successor, then, subject to the Executive’s continued employment with the
GTEC through the date of the Change of Control, vesting of such outstanding
Options will accelerate to 100% as of immediately prior to the effective date of
the Change in Control. All Options will cease to vest upon death, disability or
termination of employment.
4. Termination of Employment.
(a) General. Notwithstanding Section 2 above, the Company may terminate
Executive’s employment prior to expiration of the Term for any of the following
reasons: (i) as a result of his death or Disability as provided in Section 4(b)
below, (ii) for Cause as provided in Section 4(c) below or (iii) without Cause
as provided in Section 4(d) below.
(b) Termination due to Death; Disability. The Term shall terminate on
Executive’s death or Disability, at which time the Company’s obligations under
this Agreement to pay further compensation shall cease forthwith, except that
the Company shall pay Executive (or his estate or legal representative, as the
case may be), in full and complete satisfaction of all of the Company’s
obligations under this Agreement, the following: (i) any accrued but unpaid Base
Salary prorated on a daily basis up to the date of such termination;
(ii) subject to submission of all required documentation, reimbursable expenses
accrued (but unpaid) as of the date of such termination of the Executive’s
employment; (iii) any accrued but unused vacation days paid at a rate determined
consistently with Company policy; and (iv) any vested and accrued employee
benefits payable under the Company’s employee benefit plans (collectively, the
“Accrued Rights”). As used in this Agreement, the term “Disability” shall mean a
physical or mental disability or incapacity of Executive, whether total or
partial, that, in the good faith determination of the Board, has prevented him
from performing substantially all of his duties under this Agreement during a
period of two consecutive months or for one hundred eighty (180) days during any
twelve (12) month period (or such longer period as may be required to comply
with applicable law).
--------------------------------------------------------------------------------
(c) Termination for Cause. If Executive (i) willfully fails to perform his
duties hereunder in a material manner and such failure shall not be discontinued
promptly after written notice to Executive thereof (which notice shall be signed
by the CEO and Board or a designated officer of the Company and refer to a
breach of the Employment Agreement); (ii) is charged with or indicted for a
felony or other crime casting doubt on Executive’s trustworthiness or integrity;
(iii) (A) materially breaches any of his covenants under Sections 5(a) through
5(d) hereof or (B) knowingly and materially breaches any of his covenants under
Section 5(e) hereof; (iv) commits any act of dishonesty that is intended to
result in personal enrichment of the Executive at the expense of the Company or
(v) in bad faith, commits any act or omits to take any action, to the material
detriment of the Company (each of the foregoing (i)—(v) constituting “Cause”);
then the Company may at any time by written notice terminate Executive’s
employment and the Term, and Executive shall have no right to receive any
compensation or benefit from the Company hereunder on and after the effective
date of such notice, except for any Accrued Rights.
(d) Termination Without Cause. Notwithstanding anything to the contrary
contained elsewhere in this Agreement, the Company, in the sole discretion of
the CEO and Board, shall have the right to terminate Executive’s employment
during the Term at any time and for any reason, without Cause by written notice
to Executive. In the event that Executive’s employment is terminated without
Cause, then, provided the Executive has incurred a “separation from service”
within the meaning of Section 409A of the Code and applicable Treasury
Regulations (a “Separation from Service”), and subject to the Executive’s
execution and non-revocation of an effective general release of claims in favor
of the Company in a form delivered by the Company to the Executive within the
applicable consideration period specified in the release (not to exceed thirty
(30) days following such delivery) (which delivery will be made within seven
days following Executive’s Separation from Service with the Company), the
Company shall pay Executive as severance an aggregate amount equal to:
(i) Six (6) months of his Base Salary (or twelve (12) months of his Base Salary
if such termination of employment occurs within six (6) months following a
Change in Control);
(ii) notwithstanding the requirement of Section 3(b) that the Executive be
employed on the bonus payment date, the amount of any unpaid bonus which has
been earned by the Executive for any Financial Year preceding the termination of
the Executive’s employment in respect of which such compensation is paid or
payable;
(iii) 50% of the Target Bonus Amount for the Financial Year during which the
termination occurs (or 100% of the Target Bonus Amount if such termination of
employment occurs within six (6) months following a Change in Control).
All payments due under this Section 4(d) are subject to Section 7(k). Subject to
the other terms of this paragraph, his severance shall be payable as and when
Executive’s Base salary or bonus would otherwise have been paid (and in the case
of Base Salary, in accordance with the Company’s regular payroll payment
practices) but in the case of the bonus amount, no later than March 15 of the
year following the year during which the Executive is notified of his
termination
--------------------------------------------------------------------------------
from the Company with the date of such payment determined by the Company.
Notwithstanding the foregoing sentence, if the Executive incurs a Separation
from Service within two (2) years following the occurrence of a Change in
Control that also constitutes a change in the ownership or effective control of
GTEC or a change in the ownership of a substantial portion of the assets of
GTEC, in all cases within the meaning of Treasury Regulation
Section 1.409A-3(i)(5), severance payments to which the Executive is entitled
under this Section 4(d) shall, except as limited below, be paid in a single lump
sum on the First Payment Date (as defined below). In the event of a Separation
from Service prior to August 18, 2011 (the expiration date of the term of the
Prior Agreement in effect on the date of this amended and restated Employment
Agreement), the Change in Control lump-sum payment rule shall not apply to any
amount which would be treated as nonqualified deferred compensation (within the
meaning of Section 409A of the Code) under the Prior Agreement as in effect
immediately prior to this amended and restated employment agreement and any such
amount of nonqualified deferred compensation shall be paid in accordance with
the rules of the second sentence of this paragraph. Notwithstanding any
provision of this Agreement to the contrary, no severance payments otherwise
payable under this Section 4 shall be paid prior to the 60th day following the
date of the Executive’s Separation from Service with the Company (the “First
Payment Date”) and any such amounts that otherwise would have been paid prior to
the First Payment Date shall be paid on the First Payment Date. The Company
shall have no other liability to Executive other than for the Accrued Rights or
as otherwise required by law. Notwithstanding the foregoing provisions of this
Section 4(d), the payments described in this Section 4(d) shall immediately
cease and be irrevocably forfeited if the Executive violates any of the
restrictive covenants contained in Section 5 of this Agreement.
(e) Termination By Executive For Good Reason. If Executive terminates his
employment for Good Reason then such termination shall be treated as a
termination of Executive’s employment by the Company without Cause under
Section 4(d) of this Agreement. For purposes of this Agreement, “Good Reason”
shall mean (A) the assignment to Executive of any duties materially and
adversely inconsistent with his position as set forth in Section l(a) of this
Agreement including, but not limited to status, office or responsibilities as
contemplated under Section 1 herein, (B) a change in the Executive’s reporting
relationship such that he no longer reports directly to the CEO and Board, (C) a
material breach by the Company of any material provision of this Agreement, or
(D) the relocation of the Executive’s office as assigned to him by the Company
to a location more than fifty (50) miles from the Executive’s office prior to
the date of such relocation, except for travel reasonably required in the
performance of Executive’s Responsibilities. The Executive must notify the
Company in writing of the existence of a condition constituting Good Reason
within ninety (90) days of the first occurrence of the condition and the Company
shall have thirty (30) days thereafter during which to cure such event.
Executive shall not be entitled to resign for Good Reason during such thirty
(30) day period or in the event such condition is cured. Executive’s resignation
for Good Reason must be effective no later than one hundred eighty (180) days
following the first occurrence of a condition constituting Good Reason.
(f) Other Terminations By Executive. During the Term, Executive may in his
discretion without Good Reason terminate his employment with the Company by
giving the Company at least ninety (90) days written notice of his decision to
terminate his employment (or thirty (30) days if the Executive is terminating
his employment in order to accept a position with the U.S. Government).
--------------------------------------------------------------------------------
(g) Cooperation. Executive agrees that following any termination of his
employment, he shall co-operate with the Company in winding up or transferring
to other Executives or members of the Board of the Company or such other
individuals as may be directed by the Board of any pending work and shall also
co-operate with the Company (to the extent allowed by law and at the Company’s
expense) in connection with any action (i) brought by any third party against
the Company or (ii) brought by the Company against any third party, in either
case that relates to Executive’s duties; provided that such cooperation does not
unreasonably interfere with Executive’s subsequent employment. The Company and
Executive agree that their obligations under this Section 4(g) shall survive the
termination of the Term.
(h) For purposes of this Agreement, “Change in Control” means the occurrence of
either of the following:
(i) the acquisition of more than 50% of the combined voting power of GTEC’s then
total outstanding voting securities by any “person” or related “group” of
“persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended) other than (x) GTEC or any
affiliate of GTEC, (y) any employee benefit plan of GTEC or any trustee or other
fiduciary holding securities under an employee benefit plan of GTEC (or its
subsidiaries), or (z) Contego Systems LLC, Kende Holding kft, Global Strategies
Group Holding S.A., or any of their affiliates or successor entities (any such
person or group an “Acquiring Person”); or
(ii) the consummation of a merger or consolidation of GTEC with any other
corporation or other entity, following which the voting securities of GTEC
outstanding immediately prior to such merger or consolidation no longer
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at least 50% of the
combined voting power of the securities of GTEC or such surviving entity or any
direct or indirect parent thereof outstanding immediately after such merger or
consolidation; or
(iii) the stockholders of GTEC approve a plan of complete liquidation or
dissolution.
5. Restrictive Covenants.
(a) Non-Competition. For so long as Executive is employed by the Company, and
for a period of twelve (12) months after the termination of Executive’s
employment with Company for which he receives severance payments under
Section 4(d) (without regard to whether such severance is paid in a lump sum)
(the “Non-Competition Period”), Executive shall not, directly or indirectly,
compete with, be engaged in the same business as, be employed by, act as a
consultant to, or be a director, officer, Executive, owner or partner of, any
business or
--------------------------------------------------------------------------------
organization which competes with or is engaged in the same business as the
Company and its subsidiaries are now engaged in or hereafter engages in during
the Non-Competition Period; provided that Executive’s ownership of the stock of
any publicly traded entity or mutual fund will not be treated as a violation of
this Section 5(a) if such ownership does not result in Executive’s indirect
ownership of more than l% of the outstanding class of any equity securities of
an entity that is competitive with the Company and its subsidiaries.
(b) Non-Solicitation. For so long as Executive is employed by the Company, and
for a period of twelve (12) months after the termination of Executive’s
employment for any reason (the “Restrictive Period”), the Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any of its subsidiaries to leave the employ of
the Company or any of its subsidiaries, or in any way interfere with the
relationship between the Company or any of its subsidiaries and any employee
thereof, or (iii) induce or attempt to induce any customer, developer, client,
member, supplier, licensee, licensor, franchisee or other business relation of
the Company or any of its subsidiaries to cease doing business with the Company
or any of its subsidiaries, or in any way interfere with the relationship
between any such customer, developer, client, member, supplier, licensee or
business relation and the Company or any of its subsidiaries. The foregoing
shall not limit serving as a reference upon request with regard to an entity
with which Executive is not affiliated.
(c) Non-Disparagement. During the Restrictive Period, Executive shall not,
through aid, assistance or counsel, on Executive’s own behalf or on behalf of
any other person or entity, by any means, issue or communicate any public
statement that may be critical or disparaging of the Company or any of its
subsidiaries, its products, services, officers, directors or employees (other
than in the good faith performance of his duties while employed by Company);
provided the foregoing shall not apply to truthful statements made in compliance
with legal process or government inquiry. During the Restrictive Period, the
Company shall not, through aid, assistance or counsel, on Company own behalf or
on behalf of any other person or entity, by any means, issue or communicate any
public statement that may be critical or disparaging of Executive; provided the
foregoing shall not apply to truthful statements made in compliance with legal
process or government inquiry.
(d) Confidential Information.
(i) Executive agrees that during his employment with the Company he will have
access to Confidential Information of the Company and its subsidiaries to enable
him to optimize the performance of his duties to the Company. Executive agrees
to use such Confidential Information solely for the Company and its
subsidiaries’ benefit during his employment hereunder. Executive agrees that
upon the termination of his employment in accordance with Section 4, the Company
shall have no obligation to provide or otherwise make available to him any of
its Confidentia1 Information. Executive understands that “Confidential
Information” means any of the Company or its subsidiaries’ proprietary
information, technical data, trade secrets or know-how, including, but not
limited to, research, product plans, products, services, customer/client lists
and customers/clients (including, but not limited to,
--------------------------------------------------------------------------------
customers/clients of the Company or its subsidiaries on whom Executive called or
with whom Executive became acquainted during the Term), markets, software,
developments, inventions, processes, formulas, technology, designs, drawings,
engineering, hardware configuration information, marketing, finances or other
business information disclosed to him by the Company or its subsidiaries either
directly or indirectly in writing, orally or by drawings or observation of parts
or equipment. Executive further understands that Confidential Information does
not include any of the foregoing items which has become publicly known and made
generally available through no wrong act or omission of his or of others who
were under confidentiality obligations as to the item or items involved or
improvements or new versions thereof.
(ii) Executive agrees, at all times during the Term and thereafter, to hold in
strictest confidence, and not to use, except for the exclusive benefit of the
Company, or to disclose to any person, firm or corporation without written
authorization of the Board of Directors of the Company, any Confidential
Information of the Company or its subsidiaries.
(iii) Executive agrees that he shall not, during the Term and thereafter,
improperly use or disclose any proprietary information or trade secrets of any
former employer or other person or entity and that he will not bring onto the
premises of the Company or its subsidiaries any unpublished document or
proprietary information belonging to any such employer, person or entity unless
consented to in writing by such employer, person or entity.
(iv) Executive recognizes that the Company and its subsidiaries have received
and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company and its subsidiaries’
part to maintain the confidentiality of such information and to use it only for
certain limited purposes. Executive agrees to hold all such confidential or
proprietary information in the strictest confidence and not to disclose it to
any person, firm or corporation or to use it except as necessary in carrying out
his work for the Company consistent with the Company’s agreement with such third
party.
(v) Executive will at all times during this Agreement be in a position to make
use of information in the performance of his duties. However, if he has any
concerns as to whether or not it is appropriate for him to use such information
he must draw it to the attention of the Board, who will give appropriate advice.
(vi) Executive agrees that, at the time of leaving the employ of the Company, he
will deliver to the Company (and will not keep in his possession, recreate or
deliver to anyone else) any and all Confidential Information, including, but not
limited to, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items developed by Executive pursuant to his employment with the Company or
otherwise belonging to the Company, its subsidiaries, their successors or
assigns.
(vii) In the event that Executive leaves the employ of the Company, Executive
hereby grants consent to notification by the Company to his new employer about
his rights and duties under this Agreement.
--------------------------------------------------------------------------------
(viii) If Executive breaches his obligation of confidentiality hereunder,
Executive shall be liable to the Company for all damages (direct or
consequential) incurred as a result of Executive’s breach.
(e) No other agreement, grant or plan shall require Executive to limit his post
employment activities beyond that set forth herein or condition any payment or
benefit on any greater limitation.
(f) Severability; Relief. The covenants of this Agreement shall be severable,
and if any of them is held invalid because of its duration, scope of area or
activity, or any other reason, the Parties agree that such covenant shall be
adjusted or modified by the court to the extent necessary to cure that
invalidity, and the modified covenant shall thereafter be enforceable as if
originally made in this Agreement. Executive acknowledges that his services are
unique and the restrictions contained in this Section 5 will not impair
Executive’s ability to earn a living in any businesses other than those
businesses from which Executive is prohibited during the time of such
restriction. The Parties agree that the violation of any covenant contained in
this Section 5 may cause immediate and irreparable harm to Company or the
Executive, as the case may be, the amount of which may be difficult or
impossible to estimate or determine. If a Party violates any covenant contained
in this Section 5, the other Party shall have the right to equitable relief by
injunction or otherwise (and no bond or other security shall be required in
connection therewith), in addition to all other rights and remedies afforded by
law. In addition, in the event of an alleged breach or violation by either Party
of any of Sections 5(a) through (c), the Restrictive Period shall be tolled
until such breach or violation has been duly cured. The Parties agree that the
restrictions contained in Section 5 are reasonable.
6. Representations, Warranties and Agreements.
Executive hereby represents, warrants and agrees as follows:
(c) Ability to Perform. Executive is free to enter into this Agreement, and to
keep fully and perform all of Executive’s agreements, covenants and conditions
hereunder. Executive has not done and will not do any act or thing nor make any
agreement, commitment, grant or assignment which might interfere with or impair
the complete enjoyment of the rights granted and the services to be rendered to
the Company. Executive is under no contractual or other restriction or
obligation which is inconsistent with the execution of this Agreement, the
performance of Executive’s duties hereunder or the other rights of the Company
hereunder. Executive is aware of no impediments or restraints that would hinder
the performance of Executive’s duties under this Agreement. This Agreement
constitutes the valid and legally binding obligation of Executive, duly
enforceable against Executive in accordance with the terms hereof.
(d) Indemnification. Executive shall indemnify and hold the Company harmless
from and against, any and all liability, claims, actions, penalties and
expenses, including attorney’s fees and expenses, which the Company may suffer
by reason of any breach or alleged breach of any representation, warranty or
agreement made by Executive under this Section 6. To
--------------------------------------------------------------------------------
the fullest extent permitted by law, the Company shall indemnify and hold
harmless the Executive from and against any and all liability, claims, actions,
penalties and expenses, including attorneys’ fees and expenses, which the
Executive may suffer by reason of the performance of his duties on behalf of the
Company. The provisions of this Section 6(b) are in addition to, and not in
derogation of, the indemnification provisions of the Company’s Certificate of
Incorporation, as amended, the Company’s Bylaws, as amended, and any
Indemnification Agreement between the Company and the Executive.
7. Miscellaneous.
(a) Survival. The covenants, agreements, representations and warranties
contained in or made pursuant to this Agreement shall survive the Term.
(b) Third Party Beneficiaries. This Agreement does not create, and shall not be
construed as creating, any rights enforceable by any person not a party to this
Agreement.
(c) Assignment. This Agreement is not assignable by either party; provided,
however, that the Company shall have the right to assign this Agreement to any
person or entity controlling, controlled by or under common control with the
Company, or to any person or entity to whom or which the business of the Company
may be transferred. All covenants and agreements hereunder shall inure to the
benefit of and be binding, upon the Company’s successors and assigns. This
Agreement and all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would still be payable
to him hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the Executive’s devisee, legatee, or other designee or, if there be no such
designee, to the Executive’s estate.
(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland applicable to agreements made
and to be performed in that state, without reference to its principles of
conflicts of law. Executive hereby expressly consents to the personal
jurisdiction of the state and federal courts located in the State of Maryland
for any lawsuit filed there against Executive by the Company concerning his
employment or the termination of his employment or arising from or relating to
this Agreement. Each of the parties hereto irrevocably waives any and all right
to a trial by jury in any legal proceeding arising out of or related to this
Agreement. If any party institutes legal action to enforce or interpret the
terms and conditions of this Agreement, each party shall pay its own fees and
costs in connection therewith.
(e) Notices. Any notice or other communication under this Agreement shall be in
writing and shall be considered given when delivered personally or when mailed
by registered mail, return receipt requested, to the parties at the following
addresses (or at such other address as a party may specify by notice given
hereunder to the other):
If to the Company at:
Global Defense Technology & Systems, Inc.
1501 Farm Credit Drive, Suite 2300
McLean, VA 22102-5011
--------------------------------------------------------------------------------
if to Executive at the last address on file with the Company’s Human Resource
department.
(f) Enforceability. If any term or provision or part of this Agreement is
invalid, illegal or unenforceable, in whole or in part, such term or provision
or part shall to that extent be deemed not to form part of this Agreement, but
the validity and enforceability of the remainder of this Agreement shall not be
affected, and if any provision is inapplicable to any person or circumstance, it
shall nevertheless remain applicable to all other persons and circumstances. If
any covenant should be deemed invalid, illegal or unenforceable because its
scope or area is considered excessive, such covenant shall be modified so that
the scope or area of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.
(g) Waiver. The failure of a party to this Agreement to insist on any occasion
upon strict adherence to any term of this Agreement shall not be considered to
be a waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must be
in writing.
(h) Complete Agreement. This Agreement supersedes all prior or contemporaneous
agreements between the parties with respect to its subject matter, and is
intended as a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter, and cannot be changed or
terminated except by a writing signed by the parties.
(i) Headings. The section headings of this Agreement are for reference purposes
only and are to be given no effect in the construction or interpretation of this
Agreement.
(j) Counterparts. This Agreement may be signed in multiple counterparts, each of
which shall be deemed an original. Any executed counterpart returned by
facsimile shall be deemed an original executed counterpart.
(k) Section 409A Compliance and Specified Employee.
(i) Notwithstanding anything to the contrary in this Agreement, in-kind benefits
and reimbursements provided under this Agreement shall be provided in accordance
with the requirements of Treasury Regulation Section 1.409-3(i)(1)(iv), such
that any in-kind benefits and reimbursements provided under this Agreement
during any calendar year shall not affect in-kind benefits or reimbursements to
be provided in any other calendar year, other than an arrangement providing for
the reimbursement of medical expenses referred to in Section 105(b) of the Code,
and any in-kind benefits and reimbursements shall not be subject to liquidation
or exchange for another benefit. Notwithstanding anything to the contrary in
this Agreement,
--------------------------------------------------------------------------------
reimbursement requests must be timely submitted by Executive and, if timely
submitted, reimbursement payments shall be promptly made to Executive following
such submission, but in no event later than December 31st of the calendar year
following the calendar year in which the expense was incurred. In no event shall
Executive be entitled to any reimbursement payments after December 31st of the
calendar year following the calendar year in which the expense was incurred.
This paragraph shall only apply to in-kind benefits and reimbursements that
would result in taxable compensation income to Executive.
(ii) If the Executive is treated as a “specified employee” (as determined by the
Company in its discretion in accordance with applicable regulations under
Section 409A of the Code) at the time of his or her separation from service
(within the meaning of Section 409A of the Code) from the Company and each
employer treated as a single employer with the Company under Section 414(b) or
(c) of the Code, and if any amount(s) of nonqualified deferred compensation
(within the meaning of Section 409A of the Code) are payable by the Company or a
member of the Group by reason of the Executive’s separation from service, then
payment of the amounts so treated as nonqualified deferred compensation which
would otherwise be payable during the six (6) month period following the
Executive’s separation from service will be withheld by the payer and paid in a
single lump sum on the earliest of (i) the first business day which is at least
six (6) months and one (1) day following the date of such separation from
service, (ii) the death of the Executive, or (iii) such earlier date on which
payment is permitted under Section 409A(a)(2)(B) of the Code. The rules of this
section are intended to comply with Section 409A(a)(2)(B) of the Code and shall
be interpreted consistent with such section. Any series of payments due under
this Agreement shall for all purposes of Section 409A of the Code be treated as
a series of separate payments and not as a single payment.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Global Defense Technology & Systems, Inc. By:
/s/ John Hillen, III
Its: President and CEO Global Strategies Group (North America) Inc. By:
/s/ John Hillen, III
Its: President and CEO RONALD JONES (“Executive”)
/s/ Ronald Jones |
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
NICHOLE WALKINSHAW, et al.,
Plaintiffs, 4:19-CV-03012
vs.
MEMORANDUM & ORDER
SAINT ELIZABETH REGIONAL MEDICAL
CENTER, COMMONSPIRIT HEALTH f/k/a
CATHOLIC HEALTH INITIATIVES, and CHI
NEBRASKA f/k/a CHI HEALTH,
Defendants.
This matter is before the Court on Defendants’ Motion to Dismiss pursuant to Fed. R. Civ.
P. 12(b)(6), Filing 46, defendant CommonSpirit Health’s Motion to Dismiss for Lack of Personal
Jurisdiction, Filing 44, and Plaintiffs’ Motion for Leave to Take Jurisdictional Discovery, Filing
50. For the reasons stated herein, the Court finds it has personal jurisdiction over defendant
CommonSpirit and jurisdictional discovery is therefore unnecessary. The Court further finds
Plaintiffs have adequately stated causes of action under the Fair Labor Standards Act, the Nebraska
Wage and Hour Act, and the Nebraska Wage Payment and Collection Act and have stated a cause
of action for breach of contract. Accordingly, all three motions are denied.
I. BACKGROUND
The following facts are those alleged in the Amended Complaint1 and are assumed to be
true for the purposes of Defendants’ two pending motions. Plaintiffs consist of seven nurses
1
Plaintiffs submitted a number of attachments to their brief opposing dismissal for lack of personal jurisdiction. Filing
49-1 to 49-9. “When considering a Rule 12(b)(6) motion, the court generally must ignore materials outside the
pleadings, but it may consider some materials that are part of the public record or do not contradict the complaint, as
well as materials that are necessarily embraced by the pleadings.” Ashford v. Douglas Cty., 880 F.3d 990, 992 (8th
Cir. 2018) (quoting Smithrud v. City of St. Paul, 746 F.3d 391, 395 (8th Cir. 2014)). Accordingly, to the extent the
1
employed at Saint Elizabeth Regional Medical Center (“SERMC”). Filing [email protected]. SERMC is a
Nebraska corporation and is directly owned by CHI-Nebraska d/b/a CHI-Health (“CHI-Health”).
Filing [email protected]. CHI-Health is a Nebraska corporation and, until recently, was a subsidiary of
Catholic Health Initiatives (“CHI”). Filing [email protected]. After a merger between CHI and another
health system, Dignity Health, CHI-Health and SERMC became part of CommonSpirit Health
(“CommonSpirit”). Filing 25 at 9. CommonSpirit is a corporation registered in Colorado and
headquartered in Illinois. Filing 25 at 9.
The seven named plaintiffs, Nicole Walkinshaw, Tysha Bryant, April Endicott, Heather
Nabity, Meghan Martin, Alandrea Ellwanger, and Troy Stauffer, have all worked for SERMC
since at least February 2015. Filing [email protected]. Since then, Defendants have followed an “On-Call
Policy” which governs nurses’ compensation for time spent on call. Filing [email protected]. Pursuant to
the on-call policy, nurses are required “to be available for work at times other than during their
regular-scheduled shifts.” Filing [email protected]. This “On-Call Work” consists of responding to
telephone calls, text messages, and emails from doctors and performing preparatory and follow-
up work related to those communications. Filing [email protected]. From February 6, 2015, until September
30, 2018, Defendants paid Plaintiffs $2.00 an hour for on-call work performed during weekdays
and $2.50 per hour for on-call work on weekends. Filing [email protected]. On June 1, 2017, Defendants
adopted a written on-call policy (“2017 Policy”). Filing [email protected]. According to the 2017 Policy,
nurses were to be paid time and a half their regular rate for “[w]ork relating to the principal
activities of [the] position that can be taken care of with a phone call or access to work from home.”
attachments embrace matters beyond the scope of permissible considerations for this Motion to Dismiss, the Court
has disregarded them. See Sorace v. United States, 788 F.3d 758, 767 (8th Cir. 2015) (quoting Gorog v. Best Buy Co.,
760 F.3d 787, 791 (8th Cir. 2014)) (“A district court does not convert a motion to dismiss into a motion for summary
judgment when, for example, it does not rely upon matters outside the pleadings in granting the motion.”).
2
Filing [email protected]. Despite the 2017 Policy, Plaintiffs allege they continued to be compensated for
on-call work at a rate between $2.00 and $2.50 per hour. Filing [email protected].
In October of 2018, the on-call policy was amended (“2018 Policy”). Filing [email protected]. The
2018 Policy had many of the same requirements as the 2017 Policy but changed on-call work
compensation to “$3.00 per hour for 0 to 50 on-call hours and $4.00 per hour for 51-plus-on-call
hours.” Filing [email protected]. The 2018 Policy was still in effect on June 24, 2019, the date of the
filing of the Amended Complaint. Filing [email protected].
Plaintiffs bring claims against SERMC, CHI-Health, and CommonSpirit for alleged
violations of the Fair Labor Standards Act (FLSA), the Nebraska Wage and Hour Act (NWHA),
the Nebraska Wage Payment and Collection Act (NWPCA), and for breach of contract. Filing 25
at 47-56.
Defendants SERMC, CHI-Nebraska, and CommonSpirit filed a motion to dismiss all
Plaintiffs’ claims for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Filing 46. Defendant
CommonSpirit filed a separate motion to dismiss all the claims against it for lack of personal
jurisdiction. Filing 44. Plaintiffs filed a Motion for Leave to Take Jurisdictional Discovery, Filing
50, for purposes of refuting Defendants’ arguments regarding lack of personal jurisdiction.
II. ANALYSIS
A. Standards of Review
1. Failure to State a Claim Under Fed. R. Civ. P. 12(b)(6)
A complaint must contain “a short and plain statement of the claim showing that the pleader
is entitled to relief.” Fed. R. Civ. P. 8(a)(2). To satisfy this requirement, a plaintiff must plead
“enough facts to state a claim to relief that is plausible on its face.” Corrado v. Life Inv’rs Ins. Co.
of Am., 804 F.3d 915, 917 (8th Cir. 2015) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
3
570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Barton v. Taber, 820 F.3d 958, 964 (8th Cir. 2016) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678, 192 S. Ct. 1937, 173 L. Ed. 2d 868 (2009)).
In analyzing a motion to dismiss, the Court must “accept as true all factual allegations in
the complaint and draw all reasonable inferences in favor of the nonmoving party, but [is] not
bound to accept as true ‘[t]hreadbare recitals of the elements of a cause of action, supported by
mere conclusory statements’ or legal conclusions couched as factual allegations.” McDonough v.
Anoka Cty., 799 F.3d 931, 945 (8th Cir. 2015) (citations omitted) (quoting Iqbal, 556 U.S. at 678).
“When considering a Rule 12(b)(6) motion, the court generally must ignore materials outside the
pleadings, but it may consider some materials that are part of the public record or do not contradict
the complaint, as well as materials that are necessarily embraced by the pleadings.” Ashford v.
Douglas Cty., 880 F.3d 990, 992 (8th Cir. 2018) (quoting Smithrud v. City of St. Paul, 746 F.3d
391, 395 (8th Cir. 2014)).
2. Lack of Personal Jurisdiction Under Fed. R. Civ. P. 12(b)(2)
In order to defeat a motion for lack of personal jurisdiction, a plaintiff must plead
“sufficient facts ‘to support a reasonable inference that the defendant[] can be subjected to
jurisdiction within the state.’” K-V Pharm. Co. v. Uriach & CIA, S.A., 648 F.3d 588, 591-92 (8th
Cir. 2011) (alteration in original) (quoting Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072
(8th Cir. 2004)). When jurisdiction is at issue, “the nonmoving party need only make a prima facie
showing of jurisdiction.” Pangaea, Inc. v. Flying Burrito LLC, 647 F.3d 741, 745 (8th Cir. 2011)
(quoting Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991)).
The nonmoving party’s prima facie showing is analyzed “not by the pleadings alone, but by the
4
affidavits and exhibits presented with the motions and in opposition thereto.” Dever, 380 F.3d at
1072 (quoting Block Indus. v. DHJ Indus., Inc., 495 F.2d 256, 260 (8th Cir. 1974)). “[T]he court
must look at the facts in the light most favorable to the nonmoving party, and resolve all factual
conflicts in favor of that party.” Pangaea, Inc., 647 F.3d at 745 (quoting Dakota Indus., Inc., 946
F.2d at 1387).
B. Discussion
1. Personal Jurisdiction over CommonSpirit
As a preliminary matter, the Court must address whether it has jurisdiction over
CommonSpirit. As a rule, Plaintiffs do not need to pass a high burden at this stage in the
proceedings to establish jurisdiction over a defendant; only a prima facie case is required. See
Johnson v. Arden, 614 F.3d 785, 794 (8th Cir. 2010) (stating that for purposes of a motion to
dismiss for lack of personal jurisdiction, “the plaintiff must make a prima facie showing” (citation
omitted)). To assess whether a Court has personal jurisdiction over a nonresident defendant, “the
Court must determine whether: (1) the requirements of the Nebraska long-arm statute are satisfied;
and (2) the exercise of jurisdiction is permitted by the Due Process Clause of the Fourteenth
Amendment.” Fastrich v. Cont’l Gen. Ins. Co., 2017 WL 3610535, at *3 (D. Neb. Aug. 21, 2017)
(citing Coen v. Coen, 509 F.3d 900, 905 (8th Cir. 2007)). Nebraska courts have interpreted the
state’s long-arm statute, Neb. Rev. Stat. § 25-536 (Reissue 2016), to extend jurisdiction over
nonresident defendants to the fullest degree allowed by the Due Process Clause of the United States
Constitution. Pecoraro v. Sky Ranch for Boys, Inc., 340 F.3d 558, 561 (8th Cir. 2003). Thus, the
Court need only determine whether the assertion of jurisdiction over CommonSpirit comports with
constitutional limits.
5
“The Supreme Court has recognized two theories for evaluating personal jurisdiction:
general and specific jurisdiction.” Steinbuch v. Cutler, 518 F.3d 580, 586 (8th Cir. 2008) (citing
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15, 104 S. Ct. 1868, 80 L.
Ed. 2d 404 (1984)). “When a cause of action arises out of or is related to a defendant’s contacts
with the forum state, the exercise of personal jurisdiction is one of specific jurisdiction.” Epps v.
Stewart Info. Servs. Corp., 327 F.3d 642, 648 (8th Cir. 2003) (citing Helicopteros, 466 U.S. at 414
n.8, 104 S. Ct. 1868, 80 L. Ed. 2d 404). On the other hand, “if the exercise of jurisdiction does not
depend on the relationship between the cause of action and the defendant’s contacts with the forum
state, the exercise of personal jurisdiction is one of general jurisdiction.” Id. (citing Helicopteros,
466 U.S. at 415, 104 S. Ct. 1868, 80 L. Ed. 2d 404.) The Court reads Plaintiffs’ Complaint and
briefing as presenting only an argument for specific personal jurisdiction over CommonSpirit.2
Under either theory, “[t]he touchstone of the due-process analysis remains whether the
defendant has sufficient ‘minimum contacts with [the forum state] such that the maintenance of
the suit does not offend ‘traditional notions of fair play and substantial justice.’” Viasystems, Inc.
v. EBM-Papst St. Georgen GmbH & Co., KG, 646 F.3d 589, 594 (8th Cir. 2011) (quoting Int’l
Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945)). “Minimum
contacts must exist either at the time the cause of action arose, the time the suit is filed, or within
a reasonable period of time immediately prior to the filing of the lawsuit. Pecoraro, 340 F.3d at
562 (citing Clune v. Alimak AB, 233 F.3d 538, 544 n.8 (8th Cir. 2000)).
2
Plaintiff’s Amended Complaint asserts the Court has personal jurisdiction over CommonSpirit “because Defendants
transact business in and have significant contacts with this District, and because Plaintiffs’ claims arise directly out of
Defendants’ substantial and systematic business operations in this District.” Filing 25 at 4. While this could arguably
be read as setting forth an argument for both general and specific personal jurisdiction, Plaintiff’s brief only presents
an argument in support of specific personal jurisdiction. See Filing 49 at 4.
6
The Eighth Circuit uses a five-factor test when evaluating a defendant’s contacts with the
forum state for purposes of determining whether personal jurisdiction exists. Epps, 327 F.3d at
648.
Those five factors are: (1) the nature and quality of contacts with the forum state;
(2) the quantity of such contacts; (3) the relation of the cause of action to the
contacts; (4) the interest of the forum state in providing a forum for its residents;
and (5) convenience of the parties.
Id. (citing Burlington Indus., Inc. v. Maple Indus., Inc., 97 F.3d 1100, 1102 (8th Cir. 1996)). “The
first three factors are primary factors, and the remaining two factors are secondary factors.”
Johnson v. Arden, 614 F.3d 785, 794 (8th Cir. 2010). In making a determination, Courts should
“look at all of the factors and the totality of the circumstances in deciding whether personal
jurisdiction exists.” K-V Pharm., 648 [email protected].
In Epps, the Eighth Circuit also explored another “wrinkle” in the situations where the
defendant is a nonresident parent corporation. 327 [email protected]. The court in Epps explained that
personal jurisdiction can be based exclusively on the activities of the nonresident corporation’s in-
state subsidiary, but only in situations where “the parent so controlled and dominated the affairs
of the subsidiary that the latter’s corporate existence was disregarded so as to cause the residential
corporation to act as the nonresidential corporate defendant’s alter ego.” Id. at 649 (citing
Contractors, Laborers, Teamsters & Eng’rs Health Plan v. Hroch, 757 F.2d 184, 190 (8th Cir.
1985); Lakota Girl Scout Council, Inc. v. Havey Fund–Raising Mgmt., Inc., 519 F.2d 634, 637
(8th Cir. 1975)).
The principle stated in Epps, however, does not limit the exercise of personal jurisdiction
over a nonresident parent corporation only to cases where the in-state subsidiary is an alter ego of
the parent. In Anderson v. Dassault Aviation, 361 F.3d 449, 453 (8th Cir. 2004), the Eighth Circuit
made clear that piercing the corporate veil under an alter-ego theory was not necessary if the
7
nonresident parent corporation had its own contacts with the forum state sufficient to establish
personal jurisdiction. The Eighth Circuit held, “We conclude that [the parent company] has
sufficient contacts with Arkansas to support an Arkansas court’s assertion of personal jurisdiction
over it whether or not [the subsidiary] is its alter ego.” Id.
Here, all seven Plaintiffs have worked for SERMC in Nebraska during some point relevant
to this litigation. Filing [email protected]. SERMC is directly owned by CHI-Health. Filing [email protected]. CHI-
Health is a Nebraska corporation. Filing [email protected]. According to the Amended Complaint, CHI-
Health “created, implemented, and enforced the On-Call Policy governing the conditions and
compensation of on-call time” and “directly employed the supervisors of all named Plaintiffs.”
Filing [email protected]. Finally, CHI-Health was a subsidiary of CHI and is now part of CommonSpirit.
Filing [email protected]. “Within 36 months of the January 31, 2019 closing date, ‘substantially all of CHI’s
regional and hospital corporations . . . will merge into’ CommonSpirit.’” Filing 25 at 9. It is
undisputed that CHI-Health is one of CommonSpirit’s subsidiaries. Filing 45 at 1. According to
Plaintiffs, CommonSpirit and CHI were responsible for issuing bi-monthly pay stubs to Plaintiffs
and maintaining employment and compensation records for Plaintiffs. Filing [email protected].
In addressing the first factor, the nature and quality of CommonSpirit’s contacts with
Nebraska, Plaintiffs have pled enough facts to establish a prima facie case that CommonSpirit is
subject to specific personal jurisdiction in Nebraska. For most of the timeframe alleged in the
Amended Complaint, CHI was the parent company of CHI-Health. Filing [email protected]. CHI was
renamed CommonSpirit in January of 2019. Filing 25 at 5. CHI transferred its ownership of
hospitals, medical facilities, clinics, and other health-related businesses throughout the country to
CommonSpirit. Filing 25 at 5. CommonSpirit is the sole corporate member or controlling
shareholder of CHI-Health and SERMC and employs Plaintiffs in Nebraska. Filing [email protected]. While
8
mere ownership of a subsidiary is not enough to confer personal jurisdiction over a foreign
corporation, Plaintiffs allege CommonSpirit has more involvement in Nebraska than a mere
ownership interest. After the merger, CommonSpirit’s operations in Nebraska continued to use the
CHI name. Filing 25 at 9. CommonSpirit issued bi-monthly pay stubs to Plaintiffs. Filing 25 at 29-
30. CHI and CommonSpirit have been and continue to be responsible for Plaintiffs’ working hours
including maintaining wage rates and hours of work performed by Plaintiffs. Filing [email protected].
In Fastrich, the parent corporation was an Ohio corporation with its principal place of
business in Texas. 2017 WL 3610535, at *4. The parent corporation in Fastrich had “done nothing
to avail itself of the Nebraska forum” other than “mere ownership” of the Nebraska-based
subsidiary. Id. In contrast, Plaintiffs in the present case allege facts claiming that CommonSpirit
was far more involved than being a mere owner of CHI-Health and SERMC. CommonSpirit
appears to have some involvement in the payment and recordation of Plaintiffs’ work.
CommonSpirit does significant business in Nebraska which is not “fortuitous” and could have
reasonably expected the nature of its contacts to give rise to liability in Nebraska.
The second and third factors, the quantity and relationship of the contacts to Plaintiffs’
claims, also favors the conclusion that the District of Nebraska has personal jurisdiction over
CommonSpirit. The underlying theme of Plaintiffs’ claims is undercompensated overtime work.
Filing 25. Plaintiffs allege that prior to the merger, CHI paid their salaries and that CommonSpirit
has now taken over that duty. Filing 25 at 7, 10-11. The pleading standard under Fed. R. Civ. P.
12(b)(6) contemplates that plaintiffs will often be unable to prove definitively the elements of the
claim before discovery, particularly in cases where the necessary information is within the control
of the defendants. An obvious disadvantage for Plaintiffs is CommonSpirit was created less than
a year ago and the amount of evidence tying it to this suit would likely be difficult to procure at
9
this time. However, the allegations and evidence support the reasonable inference that (1) prior to
the merger, CHI paid the wages of nurses employed at its Nebraska hospitals and related health
facilities, and (2) since the merger, CommonSpirit—which was formed by renaming CHI and
through the “reorganization and renaming of CHI’s current corporation”—has performed these
functions. CommonSpirit, assuming it does pay the Plaintiffs, would reasonably have many
contacts with Nebraska and those contacts relate to the core of this suit, thus establishing specific
personal jurisdiction.
Finally, the last two factors, the interest of the forum state in providing a forum for its
residents and convenience of the parties, also favor Plaintiffs. Nebraska courts have an interest in
enforcing federal and state statutes designed to protect Nebraska workers as well as enforcing
contracts whose breach has allegedly infringed on Nebraska citizens’ rights. The convenience of
the parties favors Plaintiffs as well. All the named Plaintiffs work in Nebraska. As a multi-state
corporation which performs millions of dollars of business in Nebraska it cannot be said that
CommonSpirit is unduly inconvenienced by litigating a suit in this forum.
Therefore, the Court determines it has specific personal jurisdiction over defendant
CommonSpirit based on CommonSpirit’s alleged contacts with Nebraska in relation to the subject
matter of the present lawsuit. Accordingly, it is not necessary to proceed on the theory of piercing
the corporate veil. See Anderson, 361 [email protected] The Court denies CommonSpirit’s Motion to
Dismiss under 12(b)(2).
2. Failure to State a Claim under the FLSA
3
The Court acknowledges that discovery may reveal additional facts informing whether CommonSpirit is a proper
Defendant in this case. If so, nothing in this Order precludes the parties from raising these issues in a subsequent
motion.
10
“The FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees
that cannot be modified by contract.” Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 69, 133
S. Ct. 1523, 1527, 185 L. Ed. 2d 636 (2013). It provides that “no employer shall employ any of
his employees . . . for a workweek longer than forty hours unless such employee receives
compensation for his employment in excess of the hours above specified at a rate not less than one
and one-half times the regular rate at which he is employed.” 29 U.S.C. §207(a)(1). Employees
have a private right of action against an employer who violates the minimum-wage or overtime
provisions of the Act. 29 U.S.C. § 216(b). Plaintiffs here assert Defendants violated the FLSA’s
overtime provision.
The level of detail necessary to adequately plead a FLSA overtime claim is a “difficult
question—one that has ‘divided courts around the country.’” Davis v. Abington Mem’l Hosp., 765
F.3d 236, 241 (3d Cir. 2014) (quoting Nakahata v. N.Y.–Presbyterian Healthcare Sys., Inc., 723
F.3d 192, 200 (2d Cir. 2013)). Several courts have held that it is “sufficient to plead coverage, that
the employee worked more than 40 hours in one workweek, and that the employee was not paid
overtime compensation.” Hugler v. Cilantros Mexican Bar & Grill, LLC, 2017 WL 3995543, at
*3 (D. Neb. Sept. 8, 2017); see also Sec’y of Labor v. Labbe, 319 Fed. Appx. 761, 763-64 (11th
Cir. 2008) (holding that a complaint alleging the employer was covered by the FLSA and that the
employer repeatedly “fail[ed] to pay covered employees minimum hourly wages and to
compensate employees who worked in excess of forty hours a week at the appropriate rates” was
sufficient, even if “not overly detailed”). Under this standard, “plaintiffs are not required to allege
a particular week in which they worked over forty hours and were not compensated for overtime.”
Hugler, 2017 WL 3995543, at *3 (citing Hall v. DIRECTV, LLC, 846 F.3d 757, 777 (4th Cir.
2017)). In contrast, other circuits have required more detail from plaintiffs asserting an FLSA
11
claim, holding that plaintiffs must allege facts demonstrating a specific week in which they worked
more than forty hours and were not compensated. See Landers v. Quality Commc’ns, Inc., 771
F.3d 638, 644-45 (9th Cir. 2014) (“We agree with our sister circuits that in order to survive a
motion to dismiss, a plaintiff asserting a claim to overtime payments must allege that she worked
more than forty hours in a given workweek without being compensated for the overtime hours
worked during that workweek.”).
The Eighth Circuit has not addressed the pleading standard under the overtime provision
of the FLSA. See Ash v. Anderson Merchandisers, LLC, 799 F.3d 957, 962 (8th Cir. 2015) (noting
“[t]he proper pleading standard for FLSA claims is a matter of first impression in this circuit,” but
declining to reach the question because the plaintiff’s complaint was insufficient on other
grounds). The District of Nebraska has previously taken the position that the less-detailed pleading
standard applies to overtime FLSA claims. See Hugler, 2017 WL 3995543, at *3. Thus, Plaintiffs
are required “to plead coverage, that the employee worked more than 40 hours in one workweek,
and that the employee was not paid overtime compensation;” they need not plead a specific
workweek in which they worked more than forty hours. See id.
Applying this standard, Plaintiffs’ Amended Complaint sufficiently alleges facts that fulfill
the required elements for a FLSA overtime claim at this stage in the proceedings. Plaintiffs allege
Defendants are a covered employer and that no exemptions apply. Filing [email protected]. Each of the
seven Plaintiffs also allege that they were employed by Defendants during the timeframe of the
current suit. Filing [email protected]. Plaintiffs Walkinshaw, Bryant, Nabity4, and Stauffer each allege they
4
In their Amended Complaint, Plaintiffs appear to have “Copy/Pasted” paragraph 85 from paragraph 73. This is
problematic because it alleges the same eight-day period for plaintiff Nabity as that alleged for plaintiff Bryant.
Defendants attack this eight-day range as disqualifying to state a claim under the FLSA. However, both plaintiffs
Bryant and Nabity allege elsewhere in the Amended Complaint that they worked on average in excess of 40 hours a
week. Filing 25 at 32, 35. As we are at the pleading stage, the Court need not rely on paragraph 85 alone and will
construe the Amended Complaint as a whole as adequately stating a claim for both plaintiff Bryant and plaintiff
Nabity.
12
“typically” or “on average” worked more than forty hours for which they were not compensated
in compliance with the FLSA. Filing [email protected]. Plaintiffs Walkinshaw, Endicott, Martin, and
Stauffer allege specific weeks in which they worked more than forty hours without pay for time
and a half, a level of detail which exceeds the minimum pleading requirements. See Hugler, 2017
WL 3995543 at *3; Filing [email protected]. Plaintiff Ellwanger neither alleges that she ever worked
more than forty hours in a week, nor does she allege a specific week in which she was denied
overtime pay. Filing [email protected]. However, Ellwanger is not seeking to be a named Plaintiff for the
purposes of Count I. Filing 48 at 15 n.2. Combined, plaintiffs Walkinshaw, Bryant, Nabity,
Endicott, Martin, and Stauffer allege that, as Defendants’ employees, they worked over forty hours
in one or more weeks and were not properly compensated for their overtime. The Court finds these
allegations are sufficient to “give the defendant[s] fair notice of what the . . . claim is and the
grounds upon which it rests.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512, 122 S. Ct. 992, 152
L. Ed. 2d 1 (2002) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957));
see also Davis, 765 F.3d at 243 (holding “a plaintiff’s claim that she ‘typically’ worked forty hours
per week, worked extra hours during such a forty-hour week, and was not compensated for extra
hours beyond forty hours he or she worked during one or more of those forty-hour weeks, would
suffice” to state an FLSA claim).
Defendants point to various perceived flaws in the pleadings including use of averages,
determination and calculation of workweeks, and a purported lack of detail regarding how time
and a half is to be calculated. First, the prohibition against the use of averages under 29 C.F.R
§778.104 is not the pleading standard for the FLSA; it states that employers cannot escape liability
for overtime wages by averaging hours across workweeks instead of paying employees overtime
on a weekly basis. As set forth above, Plaintiffs need only to allege coverage under the FLSA, that
13
the employee worked more than forty hours in a workweek, and the employee was not paid
overtime. See Hugler, 2017 WL 3995543, at *3; see also Landers, 771 F.3d at 646 (stating that
even under the more rigorous pleading standard, “plaintiffs in these types of cases cannot be
expected to allege with mathematical precision[] the amount of overtime compensation owed by
the employer” (international quotation marks omitted)). Second, the FLSA expressly allows for
workweeks to begin on different days for different employees. 29 C.F.R. §778.105 (“For purposes
of computing pay due under the [FLSA] . . . different workweeks may be established for different
employees or groups of employees.”). Defendants point to the fact that “the referenced weeks do
not all start on the same day of the week” and claim it is improbable that “the Medical Center
varied its workweek during the relevant period.” Filing 47 at 9. How Defendants may have defined
a given plaintiff’s workweek is a question of fact which is not before the Court at this stage of the
proceedings and which has no bearing on whether Plaintiffs have plausibly stated a claim under
the FLSA under the relevant standard set forth above.
Third, Defendants complain that Plaintiffs do not provide information about the rates of
pay for all hours worked. Filing [email protected]. This again misses the mark. Even assuming this was
true, Plaintiffs need not provide specifics at this time. It is enough to allege that Plaintiffs were
employees that worked more than forty hours in a week and were not paid overtime compensation.
See Hugler, 2017 WL 3995543, at *3. Plaintiffs allege each of their normal hourly rates, the length
of each Plaintiffs’ normal work week, the additional on-call hours, the rate of pay for that on-call
work, and some Plaintiffs even list specific weeks in which they were not paid overtime.5 Filing
[email protected]. For the above stated reasons, Defendants’ motion to dismiss Count I is denied.
5
In their reply, Defendants claim that with respect to plaintiffs Nabity and Stauffer, “the numerical values cited in
[Plaintiff’s] Opposition are nowhere to be found in Plaintiff’s Amended Complaint.” Filing 57 at 5, n.9. Defendants
provide no citation for this allegation in contravention of NECivR 7.1(b)(2)(A) which states, “A factual assertion in
14
3. Failure to State a Claim under the NWHA
Plaintiffs’ second cause of action alleges Defendants violated certain sections of the
Nebraska Wage and Hours Act (“NWHA”). Filing [email protected]. The NWHA requires an employer
to pay their employees a minimum wage of eight dollars an hour between January 1, 2015, through
December 31, 2015, and nine dollars an hour thereafter. Neb. Rev. Stat. § 48-1203 (Reissue 2010).
Defendants do not deny that Plaintiffs are entitled to a minimum wage under the NWHA. Instead,
the parties dispute whether an hour-by-hour (where a worker must be paid a minimum wage for
each hour worked) or a weekly approach (where a worker’s total weekly pay divided by the number
of hours worked that week must equal at least the minimum wage) to calculating minimum wage
is appropriate.
Defendants urge this Court to take a weekly approach to calculating wages under the
NWHA while Plaintiffs argue this Court has previously required that employees be paid a
minimum wage for each hour they work. Defendants claim there is a split of authority within the
District of Nebraska. The crux of Defendants’ argument that Nebraska courts have, in some cases,
employed the weekly approach is a single text order in Lopez v. Tyson Foods, Inc., 8:06-CV-00459
(D. Neb. May 23, 2011). Filing 47 at 11 n.5. Defendants claim that ECF text minute entry #359 in
that case demonstrates that the court used a weekly approach.
In Lopez, the plaintiffs asserted a minimum-wage claim under the NWHA. During trial,
the defendant–employer moved to dismiss the NWHA claim as a matter of law. In its brief, the
defendant urged the court to adopt the weekly approach, but the crux of its argument for dismissal
the opposing brief must cite to the pertinent page of the pleading, affidavit, deposition, discovery material, or other
evidence on which the opposing party relies.” The Court finds Defendants’ unsupported claim in this regard to be
untrue. The only difference between the hours Nabity and Stauffer assert in their Amended Complaint and those
asserted in their brief in opposition are that Plaintiff’s Amended Complaint separates out weekend overtime from
weekday overtime while the brief adds these hours into the single category of overtime. Compare Filing 25 at 35, 38,
with Filing [email protected]. Defendants’ attempt to create an inconsistency where there is none is unconvincing and detracts
from the persuasiveness of its other, more ethically sound arguments.
15
was that the plaintiffs’ expert witness had presented no evidence—hourly or weekly—to prove the
plaintiffs were paid below minimum wage. Lopez, 8:06-CV-00459, at ECF 356, pg. 18. The text
minute entry granting dismissal of plaintiffs’ NWHA claim as a matter of law contains neither
explanation nor analysis. Defendants argue it is clear that the Court based its decision on a legal
analysis adopting the weekly approach. Defendants’ argument is disingenuous in the context of
the accompanying briefing. It is far more plausible that the Court dismissed the NWHA claim
because the plaintiffs failed to present adequate evidence than it is to believe the Court adopted a
new legal standard in a text minute entry.
Furthermore, the same Judge who heard the arguments in Lopez later also expressly
addressed the NWHA pleading standard issue in Petrone v. Werner Enters., Inc., 121 F. Supp. 3d
860, 872 (D. Neb. 2015). In analyzing whether the NWHA should apply an hourly or a weekly
approach, Senior Judge Lyle Strom stated that while the Eighth Circuit applied the weekly
approach to FLSA claims from United States v. Klinghoffer Bros. Realty Corp., 285 F. 2d. 487,
490 (2nd Cir. 1960), in Hensley v. MacMillan Bloedel Containers, Inc., 786 F.2d 353, 357 (8th
Cir. 1986), “no court in Nebraska has applied the federal Klinghoffer [weekly] rule to the state
Wage and Hour Act.” Petrone, 121 F. Supp. [email protected]. To be sure, Judge Strom would not have
made such a statement had he intended the text minute entry in Lopez to stand for the adoption of
the weekly approach. Petrone answered in no uncertain terms that “calculations under the
Nebraska Wage and Hour Act will be based on an hour-by-hour basis, whereas the Klinghoffer
rule shall be applied to the FLSA violations.” 121 F. Supp. [email protected]. To contend there is a split
in this District flouts Defendants’ duty of candor to the Court.
Therefore, Defendants’ motion to dismiss claim II is denied.
4. Failure to State a Claim under the NWPCA
16
The Nebraska Wage and Payment and Collection Act specifies that an “employer shall pay
all wages due its employees on regular days designated by the employer or agreed upon by the
employer and employee” Neb. Rev. Stat. § 48-1230(1) (Supp. 2015). Under the NWPCA, an
employee can institute a suit for unpaid wages which are not paid within thirty days of the regular
payday designated or agreed upon by the parties. Neb. Rev. Stat. § 48-1231 (Reissue 2010). As
part of Count II, Plaintiffs claim that Defendants’ failure to pay Plaintiffs appropriate wages within
thirty days of their regular paydays violated the NWPCA. Filing [email protected]. Count III in the Amended
Complaint asserts that the 2017 Policy obligated Defendants to pay Plaintiffs for On-Call work at
the rate of “one and one-half the regular base rate in 15-minute increments.” Filing [email protected]. The
2017 policy applied to nurses at SERMC, among other places. Filing [email protected]. As alleged in
the Amended Complaint, Defendants did not make these payments to Plaintiffs at any time, let
alone within 30 days of their regular paydays. Filing [email protected].
Defendants claim they are not subject to Neb. Rev. Stat. § 48-1231(1) because the wages
Plaintiffs seek were not previously agreed to by Defendants. Filing [email protected]. Under the
NWPCA, “Nebraska courts require a plaintiff to show the disputed wages were previously agreed
to by a defendant.” Morales v. Greater Omaha Packing Co., Inc., No. 08 Civ. 161, 2008 WL
5255807, at *2 (D. Neb. Dec. 15, 2008) (citing Freeman v. Cent. States Health & Life Co. of
Omaha, 2 Neb. App. 803, 515 N.W.2d 131, 134–35 (1994)). “However, the agreement need only
be that the defendant agreed ‘to pay plaintiffs at the appropriate rate of pay for the duties they were
performing.’” Id. (quoting Hawkins v. City of Omaha, 261 Neb. 943, 958, 627 N.W.2d 118, 130
(2001)).
In this case, the parties’ employment relationship shows that there was at least some
agreement with regard to terms, conditions, and rate of payment. Filing [email protected]. “Under liberal
17
notice pleading standards in federal courts, the plaintiffs need not allege anything more specific at
this stage of the proceedings.” Morales, 2008 WL 5255807, at *2. Taking the Amended Complaint
as true, Plaintiffs have alleged that Defendants paid Plaintiffs at a rate both below the “appropriate
rate of pay for the duties” performed by Plaintiffs and below the minimum wage.
Defendants attack Plaintiffs’ third cause of action because Plaintiffs failed to identify the
“regular base rate” on which their claim hinges. Filing [email protected]. In fact, Plaintiffs each plead their
regular rates of pay specifically. Filing [email protected]. Plaintiffs have sufficiently plead enough facts
to make Defendants’ alleged violation of the NWPCA plausible and therefore Defendants’ motion
to dismiss the NWPCA claim contained in Count II and Count III is denied.
5. Failure to State a Claim for Breach of Contract
Plaintiffs’ breach-of-contract claim is similarly based on the 2017 on-call policy. Filing 25
at 56-60. As alleged in the Amended Complaint, Defendants and Plaintiffs both adhered to every
aspect of the 2017 on-call policy from June 1, 2017, to September 30, 2018 with the exception of
Defendants’ alleged failure to pay overtime. Filing [email protected]. The provision in the 2017 on-call
policy which stated, “work relating to the principle [sic] activities of [nurses’] position[s] that can
be taken care of with a phone call or access to work from [home]” would be paid at the rate of
“one and one-half times the regular base rate in 15-minute increments.” Filing [email protected].
In order to prove a breach of contract under Nebraska law, at a minimum one must
prove the following: (1) the parties entered into a contract; (2) the terms of the
contract; (3) the defendant breached the contract in one or more of the ways alleged
by the plaintiff; (4) the breach of contract was the proximate cause of some damage
to the plaintiff; and (5) the nature and extent of the damage.
Entergy Ark., Inc. v. Nebraska, 226 F. Supp. 2d 1174, 1179-80 (2002) (citing Nebraska Jury
Instructions, Instruction 15.01 ¶ B, at 838–39 (West 2d ed. 2001)).
18
The thrust of Defendants’ argument is that the creation of an employment policy did not
de facto create a mutually assented-to contract. In Nebraska, “[t]o create a contract, there must be
both an offer and an acceptance; there must also be a meeting of the minds or a binding mutual
understanding between the parties to the contract.” Linscott v. Shasteen, 288 Neb. 276, 281, 847
N.W.2d 283, 289 (2014) (citing City of Scottsbluff v. Waste Connections of Neb., 282 Neb. 848,
809 N.W.2d 725 (2011)). “A binding mutual understanding or meeting of the minds sufficient to
establish a contract requires no precise formality or express utterance from the parties about the
details of the proposed agreement; it may be implied from the parties’ conduct and the surrounding
circumstances.” Id. (citing City of Scottsbluff, 282 Neb. 848, 809 N.W.2d 725).
Construing the facts in the light most favorable to Plaintiffs, there is enough information
in the Amended Complaint to survive a motion to dismiss. Plaintiffs allege the 2017 Policy was
agreed to by the parties and it mutually bound the parties to specific obligations including overtime
work and pay. Filing [email protected]. Plaintiffs allege Defendants breached the contract and caused
damages to them by failing to pay them at the rate of one-and-a-half-time pay for the overtime
work they performed pursuant to the contract. Filing [email protected]. This adequately states a claim
for breach of contract under Nebraska law. See Entergy Arkansas, 226 F. Supp. [email protected].
6. Class Certification
Finally, Defendants move to dismiss the Amended Complaint because Plaintiffs fail to
demonstrate facts to establish a class action. The class certification issue is premature at this stage
in the proceedings. Although Plaintiffs’ Amended Complaint purports to be a class action,
Plaintiffs have yet to move for class certification. The Court will defer any judgment on the merits
of class certification until the appropriate motion is filed by Plaintiffs.
Accordingly,
19
IT IS ORDERED:
1. Defendant CommonSpirit Health’s Motion to Dismiss under Fed. R. Civ. P. 12(b)(2),
Filing 44, is denied;
2. Plaintiffs’ Motion for Leave to Take Jurisdictional Discovery, Filing 50, is denied as moot;
3. Defendants’ Motion to Dismiss under Fed. R. Civ. Pro 12(b)(6), Filing 46, is denied.
Dated this 20th day of December, 2019.
BY THE COURT:
_______________________
Brian C. Buescher
United States District Judge
20
|
FILED
NOT FOR PUBLICATION OCT 23 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 12-30288
Plaintiff - Appellee, D.C. No. 1:11-cr-00113-RFC-1
v.
MEMORANDUM*
PERRY NATION,
Defendant - Appellant.
Appeal from the United States District Court
for the District of Montana
Richard F. Cebull, Senior District Judge, Presiding
Argued and Submitted October 10, 2013
Portland, Oregon
Before: SILVERMAN, W. FLETCHER, and CALLAHAN, Circuit Judges.
Defendant-Appellant Perry Nation appeals his conviction of two counts of
aggravated sexual abuse in violation of 18 U.S.C. §§ 1153(a) and 2241(c), and his
sentence to 235 months in prison. We have jurisdiction pursuant to 28 U.S.C. §
1291, and now affirm.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
First, the district did not abuse its discretion in admitting the rebuttal
testimony of the government’s expert witness Stephanie Knapp, an FBI Child and
Adolescent Forensic Interviewer. On cross-examination of government witnesses
and in its case-in-chief, the defense sought to raise the inference that the alleged
victims were incredible because they had each delayed disclosing the abuse for
several years. Defense counsel asked each of the victims about their failure or
unwillingness to disclose immediately, and asked the victims’ mother and other
witnesses whether they had ever been told of the abuse previously or noticed any
signs of abuse. Since the defense had implicitly, but repeatedly, attacked the
victims’ credibility based on their failure to reveal the abuse at or near the time it
occurred, the district court did not abuse its discretion in permitting the
government to rebut that attack by introducing Knapp’s testimony about the
general characteristics of child victims of sexual abuse and the time it takes for
such victims to disclose the incidents. See United States v. Bighead, 128 F.3d
1329, 1330-31 (9th Cir. 1997).
Second, Defendant challenges the qualification of Knapp as an expert under
Federal Rule of Civil Procedure 702 and Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579, 589 (1993). “Daubert’s tests for the
admissibility of expert scientific testimony do not require exclusion of expert
2
testimony that involves specialized knowledge rather than scientific theory.”
Bighead, 128 F.3d at 1330 (citing United States v. Cordoba, 104 F.3d 225 (9th Cir.
1997)). Defendant failed to object to Knapp’s testimony on the ground that she did
not possess professional qualifications that would have satisfied Daubert. We
therefore review for plain error. Even assuming that Knapp’s testimony as to
scientific studies of child abuse victims went beyond “specialized knowledge,”
where Knapp’s testimony that was based on her specialized knowledge was
substantially similar to the results of the scientific studies, admission of this
evidence was not plain error.
Third, Defendant argues the government failed to disclose Knapp as an
expert witness. However, Federal Rule of Criminal Procedure 16(a)(1)(G) only
requires the government to disclose any expert witnesses that it will call “during its
[email protected].” That express language indicates that “the government
ordinarily need not disclose the names of rebuttal witnesses.” Fed. R. Civ. P.
16(a)(1)(G); see also Matylinsky v. Budge, 577 F.3d 1083, 1094 (9th Cir. 2009).
Fourth, Defendant argues that Knapp’s testimony improperly bolstered the
credibility of the victims. Knapp testified as to the “general behavioral
characteristics” of victims of sexual violence she had encountered during her
career. Bighead, 128 F.3d at 1330 (quoting United States v. Hadley, 918 F.2d 848,
3
853 (9th Cir. 1990). No “improper buttressing” occurs when the expert witness
“testifie[s] only about ‘a class of victims generally,’ and not the particular
testimony of the child victim in this case.” Id. at 1331 (quoting Hadley, 918 F.2d
at 852). Knapp’s testimony was no different; there was no improper vouching
here. Cf. United States v. Binder, 769 F.2d 595, 602 (9th Cir. 1985) (reversing
where expert witness testimony sought to establish that “the complaining witnesses
were able to distinguish reality from fantasy and truth from falsehood” and was
“not limited to . . . a discussion of a class of victims generally”), overruled on other
grounds by United States v. Morales, 108 F.3d 1031, 1035 n.1 (9th Cir. 1997) (en
banc).
Fifth, Defendant argues that Knapp’s references to studies on the reporting
of child abuse violated Defendant’s rights under the Confrontation Claude of the
Sixth Amendment, which only reaches testimonial evidence. No objection was
made, so we review for plain error. “To rank as ‘testimonial,’ a statement must
have a ‘primary purpose’ of ‘establish[ing] or prov[ing] past events potentially
relevant to later criminal prosecution.” Bullcoming v. New Mexico, 131 S. Ct.
2705, 2714 n.6 (2011) (alteration marks in original) (quoting Davis v. Washington,
547 U.S. 813, 822 (2006)). The statistical studies Knapp referenced are not
testimonial because their “primary purpose” was not to “establish or prove past
4
events potentially relevant to later criminal prosecution.” Davis, 547 U.S. at 822.
The studies contained no evidence or proof as to the “past events” of this case.
There was no plain error in admitting this testimony.
Finally, “in light of the factors set forth in 18 U.S.C. § 3553(a)” the district
court did not impose a substantively unreasonable sentence. See generally United
States v. Crowe, 563 F.3d 969, 977 (9th Cir. 2009); United States v. Carty, 520
F.3d 984 (9th Cir. 2008) (en banc). The court carefully weighed the 18 U.S.C. §
3553(a) factors, noting the gravity of the crimes, the defendant’s lengthy criminal
history, and the need to protect the public and deter sexual abuse. The sentence is
not disproportionate to the crimes of raping one’s own daughter and sexually
molesting children within one’s care, and was within the Guidelines.
AFFIRMED.
5
|
Reversing in part and affirming in part.
Appellant filed its petition in the Perry circuit court on the 7th day of September, 1932, against Samantha Engle Combs and Wesley Combs, her husband, *Page 366
alleging that it was the owner and in the possession of all the coal, oil, mineral, and mining rights and privileges in and upon a large tract of land set out and described in its petition containing 760.97 acres, together with all of the surface in said tract, except in nine small tracts set out, described, and referred to in said petition, which was excluded; that Samantha Engle Combs and Wesley Combs were claiming to be the owner of a small tract within said boundary under an alleged deed made to Samantha Engle Combs by her father, Albert Combs, and mother, Rachell Combs, bounded and described as follows:
"Beginning on a beech tree near the Abram rock on the bank of Troublesome Creek, thence with the meanders of Troublesome to public school property, thence with said school property to the County Road, thence with said road to the beginning."
Appellant alleges that it was entitled to a judgment declaring its title quieted to all of the land set out in its petition, including the land claimed by appellees; that the deed made to Samantha Engle Combs by her father and mother, as aforesaid, should be canceled and held for naught; that appellees be perpetually enjoined from entering upon its land, or interfering in any way with its possession and ownership. To this petition appellees filed answer and counterclaim traversing all of the allegations therein. By a second paragraph pleaded that Samantha Engle Combs was, herself, the owner of said tract of land and entitled to its use and possession; that her title was deducible from the record of the Commonwealth of Kentucky; that she became the owner by deed of conveyance from Albert Engle and Rachel Engle, of date January 3, 1913; that she has been in the possession of same continuously for more than seven, and fifteen years before the institution of the action, claiming it to a well-defined boundary as her own; that appellant had stood by and permitted her to sell a right of way for a public highway across said land; that by so doing he recognized her possession and title to said land; that appellant acquiesced in her right of possession and title and permitted her to erect upon the land valuable and lasting improvements worth the sum of $2,000, consisting of two dwelling houses and some other buildings, at no time objecting to her making said improvements; that the improvements had enhanced *Page 367
or increased the value of said property in the sum of $2,000, and should appellant be adjudged the owner of the land, that she recover the value of the improvements with a lien on the land to secure its payment. In reply appellant denied in toto her right of ownership or legal title from the records of the Commonwealth of Kentucky or at all, or her actual possession of same, or that she had been in the adverse possession of it for seven or fifteen years or any other time; or that it permitted appellees to claim, use, or occupy land, or to sell the right of way for a public highway to the Commonwealth of Kentucky for a public road, or that it had acquiesced in the defendants' possession, or in any way recognized her title or possession to same; or that it stood by or permitted her to erect valuable or lasting improvements thereon of the value of $2,000 or any other sum; or that she had placed improvements thereon with its knowledge or acquiescence; or that lasting or valuable improvements built by her upon said land had enhanced the value of said [email protected]. Appellant further pleaded that the deed claimed by appellee bore date of January 3, 1913; that when made to her there was then pending in the Perry circuit court a suit brought by the Tennis Coal Company, its vendor, against Albert and Rachel Engle, her father and mother, concerning the ownership and possession of the land in controversy, and at that time she was residing with them; that when said deed was made, if made at that time, was done so without a valuable consideration therefor, and was fraudulent and void and without notice or publication of same until after said action had been tried and judgment rendered; that said deed, if made at all, was kept a secret and "pigeon holed" and not recorded until the _____ day of July, 1926. By that action the Tennis Coal Company was adjudged to be the owner of all the lands owned by Albert and Rachel Engle, her vendors, which included the tract of land now claimed by her. By that action Albert and Rachel Engle were restrained from molesting or interfering with said tract of land in any manner; that the alleged conveyance by Albert and Rachel Engle to Samantha Engle Combs was a fraud upon the rights of appellant, and should be canceled and held for naught. By an amended reply it pleaded that at the time the alleged deed was said to have been made to Samantha Engle Combs, this appellant was the owner *Page 368
and in the actual possession, of the whole of the tract of land described in its petition, which included the land claimed by her, and was claiming it adversely to Albert and Rachel Engle and to the whole; that the deed made to her was champertous and void; that it or its vendor leased said land to Albert Engle, father of Samantha Engle Combs, and her brothers, William and Andy, with her knowledge, continued as tenants of appellant until December 31, 1928; that all of said tenants, brothers, father, and mother of Samantha Engle Combs, were fraudulently acting in concert with each other and with appellees, Samantha Engle Combs and Wesley Combs, to cheat, defraud, and take and convert the title of that part of plaintiff's boundary set out in their counterclaim for the use and benefit of appellees. They pleaded those facts as a complete bar and estoppel to appellees' claim either for the land or the value of the improvements.
On these issues the evidence was heard by the court. Judgment was rendered declaring appellant to be the owner of all the mineral in, upon, and under the tract of land described in its petition and all the surface, except the nine pieces or tracts excluded, as set forth in the petition. It was further adjudged that the deed from Albert and Rachel Engle to Samantha Engle Combs be canceled, set aside, and held for naught, and that appellant was the rightful owner and in the possession of the whole of said boundary except the surface rights of the nine tracts excluded in its petition; that appellees were estopped to set up or claim any part thereof; that Samantha Engle Combs, and her husband, Wesley Combs, were enjoined perpetually from entering upon said tract of land or from interfering therewith or attempting in any way to reduce any part thereof to their possession or to appropriate in any way its title to their use. To all of this judgment appellees objected and excepted. The court further adjudged that appellees recover of appellant for improvements $1,200, with a lien upon the land to secure its payment, and that said land be sold and a sufficiency thereof applied to its payment. To that part of the judgment appellant appeals. Appellees entered a motion for a cross-appeal against the judgment rendered against them, which was sustained, and now ask that the judgment be set aside and held for naught on their cross-appeal. *Page 369
The question arises: To whom did the small boundary belong at the time of the institution of this action? The answer to that question will solve appellees' complaint on the cross-appeal. To do that, it is necessary that we give a short statement of the facts adduced by the record.
Appellant obtained its title by virtue of a conveyance made to it on the 14th day of September, 1916, by the Tennis Coal Company. That deed included the land now claimed by appellees. The Tennis Coal Company obtained title from W.B. Engle and his wife, Vina Engle, on November 20, 1903. At the time the Tennis Coal Company sold the land to appellant, there was pending in the Perry circuit court an action in equity brought by the Tennis Coal Company against Rachel and Albert Engle, mother, father, and grantors to the land claimed by appellees. The purpose of that action was to remove the cloud from its title by reason of a claim made by Albert and Rachel Engle, which included the land in controversy. A judgment was rendered by the court and agreed to by Albert and Rachel Engle adjudging the Tennis Coal Company to be in possession and the owner of the entire tract of land consisting of 760.97 acres which included the land in controversy, and restraining them from interfering in any way with the title or possession of the Tennis Coal Company. Before that action, however, was fully settled, Albert Engle instituted a suit in the Perry circuit court against the Tennis Coal Company, wherein he claimed to be entitled to the possession of a portion of said tract included in the boundary, that the Tennis Coal Company had purchased from W.B. Engle, amounting to about 50 acres, and in that suit Albert Engle claimed to be the owner and in possession thereof, and asked that his title be quieted. This 50 acres, Albert Engle claimed to have purchased from his brother, Thomas Engle. This action was decided in the Perry circuit court in his favor, but on appeal to this court the judgment was reversed. Tennis Coal Co. v. Engle, 123 S.W. 1193, 1194.
In that opinion, we said:
"It will thus be seen that, when Thomas Engle attempted to convey the land to Albert Engle in April 1901, be had no title to it, as he had been divested of his title by the sheriff's deed made in *Page 370
1899. We do not attach any importance to the paper called a title bond made by Thomas Engle to Albert Engle in April, 1899. It was not in any particular sufficient to pass title to any land, and may be treated as if it had never been made. That Thomas Engle, the alleged grantor in the title bond, did not consider it as divesting him of title is made plain by the fact that in 1900 he brought a suit against W.B. Engle for the purpose of having set aside the sale of the land made under the execution against him.
"It is also very clearly established that when the survey of the land purchased from W.B. Engle was made by the company, a short time previous to the execution of the deed to it by W.B. Engle, the surveyors included the land in controversy in the W.B. Engle survey, and that Albert Engle was present a good part of the time, and knew where the lines of the survey were being run and that they embraced the land in controversy, and that he did not then set up any title to it.
"There is a large amount of evidence in the record, much of it contradictory as well as irrelevant, but the conclusion that Albert Engle is not the owner of the land claimed by him may safely be rested upon the deed made by the sheriff to W.B. Engle in 1899, the deed by W.B. Engle to the appellant company in 1903, and the fact that Albert Engle by his lease in 1904 recognized that the company was the owner of the land now claimed by him. And the further fact that he was present when the boundary lines of the W.B. Engle tract were being surveyed and must have known, as he lived in the immediate neighborhood, that it embraced the land leased by him and that he is now asserting title to it. It is true that Albert Engle testifies he did not understand that the survey included this land, or that the lease convered it, but the weight of the evidence is against him on both propositions, as well as upon the point that mistake or fraud entered into the execution of the lease.
"The judgment of the lower court is reversed, with directions to dismiss the petition."
That judgment is now in full force and effect and *Page 371
has never in any way been modified. It occurs to us that the adjudication, as set out in the case, supra, settles the question as to the title at that time at least to the land in controversy being in the Tennis Coal Company and not in Albert Engle.
Appellee Samantha Engle Combs claims that she obtained title to the land in controversy from her father and mother, Albert and Rachel Engle. She admits that the deed was made to her when she was an infant, nine years old, when residing with her father and mother; that the consideration stated in the deed was $50; that no part of it was paid; that it was merely a gift; that her deed was not recorded until the year 1926. The proof shows that Albert Engle, her father, after this appellant had become the owner of the 760.97 acres of land, including the land claimed by appellee, occupied it as its tenant; that at the time the deed made to his daughter was recorded, he was occupying the land as tenant; that he bad no title and, therefore, was unable to convey to his daughter a title to same or to convey any greater interest in said land than he had himself.
The evidence is conclusive that the deed to Samantha Engle Combs, made on January 8, 1913, did not and could not pass the title to her because at that time Albert and Rachel Engle had no title to convey. His conveyance was fraudulent and void. When said deed was made known and recorded on the 16th day of July, 1926, this tract, the boundary of which included the disputed land, was leased to Albert Engle. The proof is conclusive to our mind that appellant by virtue of its deed from the Tennis Coal Company was the owner of all land included in the boundary set out in its deed for the full 760.97 acres, and that said boundary included the land in controversy. However, the evidence on that question is contradictory and in conflict in many instances, but the judgment of the trial court as to the evidence on a disputed question, as in the instant case, is accepted by this court, unless upon the whole record the mind of the court is left in doubt to such an extent that that doubt impresses the court that the judgment is wrong. We have no such doubt. We are of the opinion that no error was committed by the trial court in adjudging the land to belong to appellant.
The next question is: Did the court commit an error *Page 372
in adjudging that appellees recover $1,200, by reason of the improvements placed upon the land by her after she took possession of it. The proof is to the effect that she did not take possession of the land until in the year 1928. Up to that time it had been leased to others, and as she states, controlled by her father, Albert Engle; that he had leased it to different parties at different times; that she married in 1920 and left the home of her father and lived at other places, and not on this land; that she and her husband moved on the land for the first time in that year, doing so with, full knowledge that her father and brothers were occupying the land as tenants of appellant. When she moved upon it she obtained notice through her husband that her title to the land was in question. Her husband at that time, with her knowledge, was in the act of doing some building on the place. He was notified that he was beginning the erection of a building on land belonging to appellant and he announced: "I don't reckon I will stop." She admits in her testimony that she obtained that information from him. However, with that knowledge, she continued to build a residence and other buildings upon the land. It is in evidence that the buildings that she did erect were composed of very cheap material; in fact, were of very little value to the property. However, we do not think that the value of the improvements affects the question involved.
At the time the deed was made to appellee by her father, he was a tenant of appellant or its grantor. It is a well-established rule of law that when a tenant or lessee conveys land to a third party, the third party becomes a subtenant and is bound by the terms of the lease of the original tenant. Her possession of the land can rise no higher than that of her father.
In Fordson Coal Co. v. Wells, 245 Ky. 291, 53 S.W.2d 564,567, the court said:
"When this deed was made by Davis to James Wells, Davis was in possession of the premises described and claimed by the Fordson Coal Company, under a lease from the Kentucky Coal Lands Company, one of the vendors of the Fordson Coal Company; hence all Davis could convey was his tenancy. See section 2291, Ky. Stats. When a man enters under a tenant, he becomes tenant, that is all. A stream can rise no higher than its source."
Applying that principle of law to this case, the *Page 373
claim of appellees for improvements should not be allowed, because when the improvements were made, she had knowledge that her title to the land was not good and that her rights could be no greater than that of her father, who had no rights in the land greater than that of a tenant. Thus when making the improvements they did so without any accountability on the part of appellant.
In the case of Tuck et al. v. Sharer et al., 234 Ky. 296,28 S.W.2d 22, 24, the court said:
"The rule which permits one who has made improvements on land in his possession to recover the amount by which such improvements have inhanced its vendible value applies only to a bona fide claimant of the land, and not to one like appellant who was not, as we have seen, a purchaser of the land, nor did he enter thereon under a claim of right, but only as a tenant for a fixed, term."
In the case of Loeb v. Conley, 160 Ky. 91, 169 S.W. 5759
581, Ann. Cas. 1916B, 49, the court said:
"If, however, the improvements are not made by a person while acting in the good-faith belief that he is the owner of the land, or if they are made with actual notice of an adverse superior claim, and especially after this adverse claim has been asserted in a suit, the person making the improvements will not be entitled to compensation."
In the same case, supra, the court said:
"It is further said that, to entitle one claiming for improvements to recover: 'It is not enough, that the possessor shows himself to have meliorated the land, but his money and labor must be bestowed under an honest conviction of his being the rightful owner of the land. For if he takes possession without title, and knowing the land belongs to another, he is himself guilty of a wrong, and although he may have expended his money and bestowed his labor, his claim for compensation ought not to be sanctioned by a court of equity.'
"In Harrison v. Fleming, 7 T. B. Mon. 537, and again in Harrison v. Baker, 5 Litt. 250, it was held that where persons make improvements with actual knowledge of the assertion of an adverse claim to the land, they cannot recover for the improvement. *Page 374
To the same effect are Singleton v. Jackson, 2 Litt. 208, and Wade v. Keown, 78 S.W. 900, 25 Ky. Law Rep. 1787."
Applying these principles to the instant case, we are unable to reach any other conclusion than that the court was in error in allowing appellees the sum of $1,200, their claim for the improvements erected on the place secured by a lien on the land. Whatever rights that they had to the land came to them by reason of the deed made to Samantha Engle Combs by her father, who had at the time no title to the land, but was occupying same as a tenant to appellant, which fact was known to appellees, as shown by the evidence. Thus, we have concluded, after a careful consideration of the entire record, that the case should be reversed on the appeal and affirmed on the cross-appeal. |
IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
FEBRUARY 18, 2003 Session
JOE R. HALES v. SHELBY COUNTY, TENNESSEE
Direct Appeal from the Circuit Court for Shelby County
No. CT-002477-01 D’Army Bailey, Judge
No. W2002-01539-COA-R3-CV - Filed August 12, 2003
This appeal arises from a claim involving an injury sustained by a county employee. The trial court
awarded the plaintiff $216,400.00 for injuries sustained while working for Shelby County. The trial
court then denied Shelby County’s post-trial motion seeking a credit or offset for wage continuation
benefits already paid to the plaintiff. The parties raise multiple issues on appeal. For the following
reasons, we affirm.
Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Circuit Court Affirmed
ALAN E. HIGHERS, J., delivered the opinion of the court, in which W. FRANK CRAWFORD , P.J., W.S.,
and DAVID R. FARMER , J., joined.
Carroll C. Johnson, Memphis, TN, for Appellant
Joseph Michael Cook, Memphis, TN, for Appellee
MEMORANDUM OPINION1
Facts and Procedural History
On April 19, 2000, Joe R. Hales (“Mr. Hales”) was involved in an automobile accident
arising out of and in the course of his employment with Shelby County (“the County”). As a
consequence of this accident, Mr. Hales sustained a closed head injury which resulted in a substantial
and permanent loss of his mental faculties.
1
Rule 10 (Court of Appeals). Memorandum Opinion. - This Court, with the concurrence of all judges
participating in the case, may affirm, reverse or modify the actions of the trial court by memorand um opinion when a
formal opinion would have no precedential value. When a case is decided by memo randum opinion it shall be designated
“MEMORANDUM OPINION”, shall not be published, and shall not be cited or relied on for any reason in any unrelated
case.
The County is not bound by the Tennessee Worker’s Compensation Act (“the Act”). Instead,
the County has an Injury (OJI) Leave Policy which is supplemented by the Act where the County’s
policy is silent. Pursuant to the County’s policy, Mr. Hales was paid disability payments in the
amount of his full salary for ninety (90) days. At the end of this ninety (90) day period, Mr. Hales
was paid sixty-six and two-third percent (66 2/3%) of his salary. These payments began on April 19,
2000 and ended on June 15, 2001.
On April 19, 2001, Mr. Hales brought suit against the County seeking “such temporary-total,
permanent-partial and other job injury benefits to which he is entitled.” The County filed its answer,
alleging that it had paid Mr. Hales temporary disability to which he was entitled. Thereafter, Mr.
Hales filed a motion to amend his complaint, seeking to add a prayer for an award of prejudgment
interest. This motion was granted by order entered March 22, 2002. Mr. Hales also filed a motion
requesting that any amount awarded be commuted to a lump sum.
Pursuant to Tennessee Code Annotated section 50-6-207(a)(ii)(ff) and the County policy, the
trial court awarded Mr. Hales permanent disability payments for 400 weeks at the maximum
compensation rate of $541.00 per week for a total award of $216,400.00. In its Final Judgment, the
trial court ordered that the $216,400.00 be paid in a lump sum, awarded prejudgment interest on the
amount of the award that had accrued up until the date of the trial, and provided that Mr. Hales’ right
to future medical benefits be left open.
Thereafter, Shelby County filed a post-trial motion seeking a credit or offset for wage
continuation payments previously made to Mr. Hales. The County claimed that since the maximum
total of all benefits to which Mr. Hales was entitled was 400 weeks, the County should be able to
offset the amounts paid from April 19, 2000 until September 15, 2001. The trial court, finding that
the County was not entitled to a credit or offset, denied the motion. The County timely filed its
notice of appeal on June 13, 2002.
Issues
I. Whether the County should be liable for on the job injury benefits in excess of the
maximum total amount required to be paid under the County’s OJI policy as
supplemented by the Tennessee Worker’s Compensation Act.
II. Whether the County’s stipulation of issues at trial prevents it from raising issues on
appeal that were not [email protected].
Standard of Review
The findings of fact made by a trial court are given a presumption of correctness that will not
be overturned unless the evidence preponderates against those findings. See TENN. R. APP . P. 13(d);
see also Bank/First Citizens v. Citizens and Assoc., 82 S.W.3d 259, 262 (Tenn. 2002). A trial
-2-
court’s ruling on a matter of law, however, will be reviewed “‘under a pure de novo standard . . .
according no deference to the conclusions of law made by the lower court[].’” Bank/First Citizens,
82 S.W.3d at 727 (quoting Southern Constructors, Inc. v. Loudon County Bd. of Educ., 58 S.W.3d
706, 710 (Tenn. 2001)).
Law and Analysis
We will first address Mr. Hales’ assertion that the County is bound by its trial stipulations,
as this is the dispositive issue. Mr. Hales asserts that the parties stipulated that there were two (2)
contested issues presented for the trial court to resolve - whether Mr. Hales was entitled to receive
the award in a lump sum and whether Mr. Hales was entitled to prejudgment interest. Mr. Hales
further asserts that these stipulations prevent the County from raising issues on appeal which were
not [email protected]. We agree.
At trial, counsel for Mr. Hales stated that “it’s my belief that there’s only really two real
issues, the lump sum issue and the issue of prejudgment interest.” In response, counsel for the
county stated “[i]t’s true, the issues are essentially as counsel has stated.” Counsel for the County
further stated, “[a]nd the issue, as I see it, boils down to whether or not we’re going to commute the
settlement or whether there is any prejudgment interest.” The parties also entered into the following
stipulations:
(1) the injury “arose out of and in the course and scope of his employment,”
(2) Mr. Hales was entitled to the maximum compensation rate of $541.00 per week,
(3) Mr. Hales was one-hundred percent (100%) totally disabled,
(4) a mental injury is a scheduled injury pursuant to Tennessee Code Annotated section
50-6-207(ff),
(5) Mr. Hales was entitled to “an award of 400 weeks at the rate of $541.00 a week for
the total award of $216,400.00 for the permanent impairment,”
(6) the nature of the injury requires that Mr. Hales future medicals be left open, and
(7) the last disability or wage continuation payments made by the County was on June
15, 2001.
At no time during the trial did the County assert that it was entitled to a setoff for amounts
previously paid to Mr. Hales. The County had the opportunity to assert that it was entitled to an
offset and chose not to. Instead, the County stipulated that there were only two contested issues,
those being whether Mr. Hales was entitled to prejudgment interest and whether the award should
be paid in a lump sum. Only after the trial court decided both issues in Mr. Hales’ favor did the
County raise the issue of an offset.
As our Supreme Court stated in Bearman v. Camatsos, 385 S.W.2d 91(Tenn. 1964):
We have recognized a number of times the validity of an oral stipulation made during
the course of a trial. Shay v. Harper, 202 Tenn. 141, 303 S.W.2d 335. Further, an
-3-
open court concession by the attorneys in the case constitutes a binding stipulation
in this State. Phelan v. Phelan, 43 Tenn. App. 376, 309 S.W.2d 387.
When a party makes a concession or adopts a theory by stipulation and his cause of
action is determined on this concession or theory, then that party must abide by his
decision even on appeal by certiorari. Lewis & Sons v. Ill. Cent. R. Co., 150 Tenn.
94, 259 S.W. 903; Stearns v. Williams, 12 Tenn. App. 427.
These stipulations will be rigidly enforced by the courts of this State. State ex rel
Weldon v. Thomason, 142 Tenn. 527, 221 S.W. 491; Tucker v. International Salt
Co., 209 Tenn. 95, 349 S.W.2d 541.
Id. at 93. The rule that stipulations will be enforced applies “to stipulations regarding issues as well
as stipulations of fact.” Envtl. Abatement, Inc. v. Astrum R. E. Corp., 27 S.W.3d 530, 539 (Tenn.
Ct. App. 2000) (citing In the Matter of Property Seized On Or About November 14-15, 1989, 501
N.W.2d 482, 485 (Iowa 1993)). Our Supreme Court has also noted that the parties’ stipulations that
there were only two (2) controverted issues at the trial prevented the defendant “from questioning
the limited nature of the decree” on appeal. Aetna Cas. and Surety Co. v. Miller, 491 S.W.2d 85,
86 (Tenn. 1973). The County raises no question on appeal regarding either of the issues that were
stipulated to by the parties and adjudicated by the trial court. We find that the parties are bound by
the stipulations they made at trial and that these stipulations prevent the County from litigating issues
not [email protected]. We will not address the remaining issue as it was rendered moot by our
disposition of the stipulation issue.
Conclusion
Accordingly, we affirm. Costs on appeal taxed to the Appellant, Shelby County, for which
execution may issue if necessary.
___________________________________
ALAN E. HIGHERS, JUDGE
-4-
|
29 So. 3d 1228 (2010)
Tyrone HUTCHINSON, Appellant,
v.
The STATE of Florida, Appellee.
No. 3D08-1639.
District Court of Appeal of Florida, Third District.
March 31, 2010.
*1229 Tyrone Hutchinson, in proper person.
Bill McCollum, Attorney General, and Michael C. Greenberg, Assistant Attorney General, for appellee.
Before ROTHENBERG, LAGOA, and SALTER, JJ.
ROTHENBERG, J.
On Rehearing
Upon this Court's own motion, we grant rehearing, withdraw this Court's opinions issued on August 12, 2009, and February 3, 2010, and issue the following opinion in its stead.
Tyrone Hutchinson ("the defendant") appeals from an order denying his motion to correct an illegal sentence pursuant to Florida Rule of Criminal Procedure 3.800. Although we affirm, we do so without prejudice to the defendant's right to pursue the remedy he seeks through an alternate means.
In October 2001, pursuant to a negotiated plea, the defendant pled guilty to the charge of robbery while armed with a weapon and was sentenced as a youthful offender to one year of community control followed by thirty months of probation. In conjunction with this plea, the trial court's supervision order unambiguously provided that a violation of its terms would result in a five-year prison sentence.
In December 2001, an affidavit of violation of community control was filed against the defendant when he absconded from his supervision and his whereabouts became unknown. Although a warrant was issued for the defendant's arrest, he was not immediately apprehended. In July 2002, the defendant was convicted of three counts of burglary in Illinois.
In September 2005, the defendant was returned to the Florida trial court, where he entered into a negotiated plea wherein he pled guilty to the community control violations alleged in the affidavit and he was sentenced to ten years incarceration despite the unambiguous language in the 2001 supervision order stating that upon a violation of the defendant's supervision, he would be sentenced to a term of five years incarceration.
Nearly two years after accepting the ten-year plea offer, in July 2007, and within two years from the date his sentence became final, the defendant filed a motion to correct illegal sentence pursuant to rule 3.800, alleging that he should have been sentenced to five years in prison in accordance with his October 2001 plea and the supervision order. The trial court denied the motion as legally insufficient. The defendant did not appeal that order.
In October 2007, the defendant filed a second motion to correct his sentence pursuant to rule 3.800. Approximately two months later, the trial court denied the motion upon the same grounds as the first (July 2007) motion. Again, the defendant did not appeal the trial court's order.
In March 2008, the defendant filed the instant motion to correct illegal sentence pursuant to rule 3.800. Once again, the trial court denied the motion. The defendant appeals from that decision.
*1230 The defendant claims that the trial court failed to impose the sentence the original sentencing judge agreed would be imposed upon a violation of the defendant's supervision. Thus, what the defendant is seeking is the enforcement of his October 2001 plea. Under the facts of this case, we conclude that rule 3.800 is, however, not the appropriate avenue to address the defendant's claim.
First, we note that there is nothing "illegal" about the sentence imposed in 2005. The trial court imposed a ten year sentence. The maximum penalty for the offense of armed robbery is life imprisonment. The sentence imposed was based on a negotiated plea wherein the defendant waived his right to a hearing in exchange for the ten year sentence.
Second, and perhaps more importantly, the trial court could not logistically "enforce the terms of the 2001 plea" without allowing the defendant to withdraw his subsequent 2005 plea on the basis of ineffective assistance of counsel or because it was not a knowing, free and voluntary plea. A motion to vacate a plea under any of these grounds must be filed pursuant to rule 3.850, not rule 3.800. Rule 3.800 is not the proper remedy where issues of waiver, effectiveness of defense counsel, or voluntariness of a plea are involved. See Elbert v. State, 20 So. 3d 961, 962 (Fla. 2d DCA 2009) (noting that postconviction court properly treated portions of "motion to correct illegal sentence" as motion filed under rule 3.850 as claims alleged ineffective assistance of trial counsel and involuntariness of plea); Collins v. State, 859 So. 2d 1244, 1245 (Fla. 5th DCA 2003) (noting that claims of ineffective assistance of trial counsel and involuntariness of plea are properly raised in a timely 3.850 motion for postconviction relief); Patterson v. State, 664 So. 2d 31, 32 (Fla. 4th DCA 1998) (holding that issues relating to ineffective assistance of trial counsel and involuntariness of plea should be raised in a rule 3.850 motion, not a petition for habeas corpus relief).
Lastly, for a sentence to be subject to correction under rule 3.800, the illegality must be revealed by the face of the record and determinable without an evidentiary hearing. State v. Mancino, 714 So. 2d 429 (Fla.1998); Hopping v. State, 708 So. 2d 263 (Fla.1998). Here, we are unable to determine the validity of the defendant's claim by the record provided.
Thus, we conclude that although the original sentencing judge allegedly agreed in 2001 to sentence the defendant to five years upon a violation of the defendant's supervision, because: (1) the defendant subsequently agreed in 2005 to the ten year sentence imposed when he violated his supervision; (2) he was represented by counsel when he accepted the ten year sentence; and (3) the sentence does not exceed the statutory maximum and is not otherwise an "illegal sentence," the defendant may not seek relief from the 2005 negotiated plea by way of rule 3.800. The defendant must, instead, seek a remedy pursuant to rule 3.850 on the basis of ineffective assistance of counsel or the voluntariness of the plea. Accordingly, we affirm the trial court's order denying the defendant relief under rule 3.800.
Although the two-year time limitation for filing a motion pursuant to rule 3.850 has long passed, the defendant may not be without a remedy as our decision is without prejudice to the defendant's right to seek habeas corpus relief if he can establish a manifest injustice. See Adams v. State, 957 So. 2d 1183 (Fla. 3d DCA 2006).
Although the record on appeal is not complete, it appears that in 2001, when the defendant pled guilty to armed robbery, the State and the trial court promised the *1231 defendant, in exchange for his guilty plea, that upon a violation of his supervision order he would receive a five-year term of imprisonment. As it happened, the defendant did violate the conditions of the supervision order. However, he was sentenced to ten years in prison. While the record reflects that the ten-year sentence imposed by the trial court was agreed to by the defendant, who was represented by counsel, it would appear that the defendant's plea was the result of ineffective assistance of counsel unless there was a knowing and voluntary waiver by the defendant of the five-year sentence he was told he would be sentenced to upon a violation of his supervision.
In conclusion, we affirm the order on appeal denying relief pursuant to rule 3.800. However, if after reviewing the transcripts of the original 2001 plea to community control followed by probation, and the 2005 plea accepting a sentence of ten years, the defendant believes he is entitled to relief, the defendant may file a habeas corpus petition.[1] The trial court is instructed to consider any such petition in a manner consistent with this opinion.
Due to the novelty and complexity of the issues involved in this appeal, we hereby appoint the Public Defender's Office to represent the defendant and pursue the appropriate relief at the trial level and at the appellate level, if an appeal is taken.
Affirmed with instructions.
NOTES
[1] Neither the 2001 transcript nor the 2005 transcript was provided by the defendant for review on appeal.
|
114 HR 3245 IH: GRACE Act
U.S. House of Representatives
2015-07-28
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
I
114th CONGRESS
1st Session
H. R. 3245
IN THE HOUSE OF REPRESENTATIVES
July 28, 2015
Mr. Bridenstine introduced the following bill; which was referred to the Committee on Oversight and Government Reform
A BILL
To prohibit the Federal Government from contracting with entities that donate or match employee
donations to Planned Parenthood Federation of America, Inc.
1.Short titleThis Act may be cited as the Government Refusal of Abortion in Contracting and Enterprise or the GRACE Act. 2.Prohibition on contracting with entities that donate to Planned Parenthood Federation of America, Inc (a)ProhibitionA Federal entity may not enter into a contract with a person or entity that donates or matches employee donations to Planned Parenthood Federation of America, Inc., or any affiliate or clinic of Planned Parenthood Federation of America, Inc.
(b)ApplicabilitySubsection (a) applies— (1)to contracts entered into after the date of the enactment of this Act; and
(2)to subcontracts (at any tier) awarded under such contracts. |
Order entered July 11, 2016
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-16-00259-CV
IN THE INTEREST OF A.R.R., A CHILD
On Appeal from the 303rd Judicial District Court
Dallas County, Texas
Trial Court Cause No. DF-14-11946
ORDER
The Court has before it appellant’s July 1, 2016 motion, asking us to hold the court
reporter in contempt for not filing the reporter’s record and noting that he cannot file his brief
without reviewing the court reporter’s record. The reporter’s record was filed May 23, 2016.
Therefore, we DENY appellant’s motion.
To the extent appellant complains that he cannot file his brief because he cannot access
the reporter’s record, we DIRECT the Clerk to send a copy of the reporter’s record to appellant.
Appellant’s brief is DUE on or before August 19, 2016.
/s/ CRAIG STODDART
JUSTICE
|
Title: I'm going to sound like a busybody but am concerned with my coworker and her boyfriend sleeping naked with her breast-fed seven-year-old; now she's getting ready to pull her out of public school because her teacher is questioning why the girl is smart but acts like a much younger child.
Question:This coworker of mine is beautiful and very popular, but in my opinion is taking this hippie thing entirely too far. Her daughter is smart enough but constantly reverting to acting like a toddler; she's doing it more than she acts her age. I support extended breast feeding but this is getting weird. We work at a health food store; we are talking major crunchy granola. So, once she let it slip that they all sleep naked in bed together. I honestly do not think they are pedophiles at all, but as liberal as I am, that's still getting weird at her age. I've always minded my own business, but now she's saying she's going to pull the girl out of the public school because the classroom teacher is starting to question the emotional development of the child. Do I mind my own business or make a discreet phone call to CPS? No way in Hell would I discuss the matter with her; she's on one hell of an ego trip. Could I do this anonymously? I can't risk CPS telling her it was me. One last detail: another coworker's daughter spent the night at their house and they had both girls running around naked, which would not have been cool with the girl's conservative mom, but the adults were not naked in front of the girls. # Free Spirit!
Answer #1: There are heaps of red flags here
- Child is lagging in social and emotional development
- The child's sleeping arrangement
- The mother being critical of a mandated reports questions (the teacher) and wanting to remove her from public school, thus further isolating the child.
Together these paint a pretty dim situation. Report this to CPS. Report the facts only and don't put in excuses or backstory. CPS will investigate and act if there is something wrong. Your report will remain anonymous, and you coworker is unlikely to that think you reported her. If she is investigated, she will probably assume the school reported her. Answer #2: IANAL
WHEN you call CPS, they will ask for your information. You do not need to give it to them, instead state that you would like to remain anonymous.
*however* at least in Ohio it is illegal for CPS to tell anyone who exactly called on them. Instead, they state that there was a concern voiced and they are there to look into it. (And, imo, if she believes the school is asking too many questions, she'll probably assume they called. All teachers are mandated reporters)
I will say, two adults and an older child sleeping in the same bed and nude will....raise eyebrows. It may not necessarily lead to removal, but it may lead to parenting/child development classes and a safety plan (meaning parents do xyandz or child will be removed).
CPS isn't as cut and dry as people think. They dont WANT to remove children. They want to ensure the best environment for development, including safety, education, and emotional stability. It sounds like at least 2 of these are in question for this child.Answer #3: There are two red flags here. First, regression to outgrown behaviors is a sign that a child has been sexually abused. Second, the mother’s desire to isolate the child after the teacher became concerned can be an indicator of abuse. There is no reason not to call CPS at this point. Answer #4: IANAL, but I myself am a free spirit. However, I do NOT see any reason for a 7 year old CHILD to be sharing a bed with two naked ADULTS. Now if they were all dressed, and that was the only place for them to sleep, I could understand. At 7 she is well aware of what is going on and there is a good chance that she understands that what is happening is inappropriate. The fact that her mom is pulling her out of school is a cause of concern for me. You definitely need to call CPS. It may be that all the mom needs is some parenting classes and a better understanding of personal boundaries. Part of CPS’s job is to keep families together (IF it’s a situation that’s safe for the children). I truly hope things work out!! Answer #5: Relevant advice has been given and I think you know what to do, I just want to add that people who have experienced trauma will sometimes become emotionally "stuck" at the age the trauma occurred, developmentally. Even adults who have developed normally may revert to speaking and acting the age they were when they were abused when discussing/re-experiencing their trauma. It is not out of the question that the "acting like a toddler" is correlated with abuse as a toddler. Hope CPS sorts it out.Answer #6: I may be be A LOT biased on this subject because I am a former sexually abused child. But sleeping nude with a grown adult that is not your parent raises red flags to me IDGAF about them being nudist. Also letting another child that is not your own or close relative whose parent you know for sure shares your values, another red flag. Sounds like they're trying to normalize things without teaching the child to have proper boundaries which is very important for development. I don't want to assume or think the worst, but I am weary because the way society seems to be going trying to normalize pedophilia (many teachers, abusing students but evading jail, too many stories on Mary Kay L trying to rewrite her abuse as some great love story. Abused children found in houses after being missing for years ect)
Please make the anonymous call if CPS investigates and finds nothing no harm no foul. Regression in a 7 year old is not good at all especially if the teacher is noticing it enough to speak to her mother.Answer #7: If you suspect abuse, call CPS.
If it's just a matter of unconventional parenting, and you don't suspect abuse, stay out of it.
I was raised by hippie parents who embraced body positivity (including nudity), extended breastfeeding, and alternative education; while not conventional, it wasn't sexual or abusive.
If you do suspect abuse or educational neglect, however, call CPS. Better safe than sorry.Answer #8: Hi OP. Sorry you’ve had such controversy on this post. The main thing that worried me was that the man sleeping in the bed is the moms boyfriend of three years, not the father. And he’s naked with the little girl? It’s a bit strange.. certainly unconventional and maybe even harmless, but I don’t think calling CPS is a bad idea.. they can determine themselves whether or not abuse is actually taking place.. I think you’re making the right call. Better save than sorryAnswer #9: I don't see how her great beauty figures into this but whatever. Call CPS and tell them what you know. The teachers may have already contacted them so your report will add to the file.Answer #10: You should call CPS on your coworker. Pick up the phone right now and call them. You might also be able to contact them online. |
Citation Nr: 0030823
Decision Date: 11/28/00 Archive Date: 12/01/00
DOCKET NO. 99-07 578 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Los
Angeles, California
THE ISSUES
1. Entitlement to an increased evaluation for partial
paralysis of the right upper extremity as a residual of
poliomyelitis, currently evaluated as 50 percent disabling.
2. Entitlement to special monthly compensation benefits for
loss of use of the right hand and upper extremity, under 38
U.S.C.A § 1114(k)(West 1991).
REPRESENTATION
Appellant represented by: Disabled American Veterans
WITNESS AT HEARING ON APPEAL
Appellant
ATTORNEY FOR THE BOARD
William J. Jefferson, Counsel
INTRODUCTION
The veteran had active service from November 1942 to December
1944.
This case comes before the Board of Veterans' Appeals (Board)
on appeal from a rating decision of the Department of Veterans
Affairs (VA) Los Angeles, California, Regional Office (RO).
In a June 2000 decision from a hearing officer at the RO, the
veteran's 30 percent disability evaluation for partial
paralysis of the right upper extremity as a residual of
poliomyelitis was increased to a 50 percent rating.
FINDINGS OF FACT
1. The partial paralysis of the right upper extremity as a
residual of poliomyelitis is productive of no more than
severe incomplete paralysis of the (major) middle radicular
nerve group.
2. The partial paralysis of the right upper extremity as a
residual of poliomyelitis results in right arm and hand
atrophy, muscle weakness and significant loss of right hand
grip strength, but does not equate to loss of use of the
right hand than that which would be equally well served by an
amputation stump at the site of election below the elbow with
use of a suitable prosthetic appliance.
CONCLUSIONS OF LAW
1. The criteria for a rating in excess of 50 percent rating
for partial paralysis of the right upper extremity as a
residual of poliomyelitis have not been met. 38 U.S.C.A.
§ 1155 (West 1991); 38 C.F.R. §§ 4.7, 4.73, 4.124a,
Diagnostic Codes 8011, 8511 (2000).
2. The criteria for special monthly compensation for loss of
use of the right hand and upper extremity have not been met.
38 U.S.C.A. § 1114 (k) (West 1991); 38 C.F.R. §§ 3.350(a)(2),
4.7, 4.63 (2000).
REASONS AND BASES FOR FINDINGS AND CONCLUSIONS
I. Increased Evaluation for Partial Paralysis of the Right
Upper Extremity as a Residual of Poliomyelitis
Service medical records show that in 1943 the veteran
contracted poliomyelitis, resulting in weakness and atrophy
of the muscles of the right hand and forearm.
In a January 1945 rating decision service connection for
severe incomplete paralysis of the lower radicular group of
the right hand secondary to poliomyelitis was granted,
evaluated as 50 percent disabling.
Postservice VA medical records reveal the veteran's
complaints of right arm cramping and weakness. Physical
findings showed atrophy of the right hand muscles and right
grip strength weakness. In 1977 it was reported that the
right hand grip was 20 pounds compared to 90 on the left.
There was marked atrophy of the right first dorsal
interosseous and right abductor digiti quinti.
EMG and nerve conduction studies performed in July 1998
revealed diffuse denervation of the upper right extremity
worse distal, old or chronic could be due to old polio;
neuropathy of median and ulnar nerves; possible right radial
nerve neuropathy.
A private medical examination was performed in August 1998.
The veteran complained of a slow deterioration of his right
hand that was consistent and chronic. The neurologic
evaluation revealed 3/5-grip strength on the right that was
described as abnormal. Upper extremity reflexes were from 1-
2 plus. There was motor function weakness of the right upper
extremity along with generalized weakness and wasting of the
right hand musculature, predominantly in the thenar and
hypothenar areas involving the whole (hand). Sensation was
normal. The diagnosis was poliomyelitis with acute anterior
residual atrophy of the right arm muscle and weakness in the
grip.
A VA neurological examination was performed in April 1999.
The veteran complained of progressive right arm weakness. He
reported that he occasionally dropped items from his right
hand and that he had problems turning keys in locks and
lifting pictures. He had some difficulty performing distal
fine movements on the right, such as buttoning and
unbuttoning his clothing, and picking up coins. The physical
examination revealed a mild depression of the right shoulder
and mild but definite atrophy affecting the infraspinatus,
supraspinatus, and deltoid muscles. There was prominent
atrophy of the flexor compartment of the right upper
extremity distal to the elbow. There was moderate atrophy of
the intrinsic hand muscles with a partial claw hand
deformity. There was moderate to severe atrophy of the
abductor pollicis muscle. Right upper extremity strength was
described as decreased. Wrist extensor strength was 4 plus/5
to 5 minus/5. Wrist flexors were 4/5. The interosseous
muscles were 4/5 in strength, and the right abductor pollicis
muscle was 2 plus/5 to 3/5. Sensation was described as
intact. Right upper extremity reflexes were 2/4 and
symmetrical.
In the diagnostic assessment the physician opined that the
veteran exhibited evidence of prior nerve damage of the right
upper extremity muscles. It was stated that his problems
were more prominent distally. Because of weakness, the
veteran could only occasionally push and pull without normal
strength. He had at least slight difficulty operating hand
controls and moderate difficulty using tools. He could only
occasionally perform simple gripping movements without normal
strength. He also had some difficulty performing fine
movements with his right fingers and his ability to carry and
lift objects was affected. It was stated that in the disease
poliomyelitis it would not be unusual for previously injured
cells to die, accounting for proximal weakness.
In a May 2000 statement a private physician reported that the
veteran had mild atrophy of the right shoulder due to past
polio.
A personal hearing was held at the RO in June 2000. The
veteran testified that he had trouble buttoning his shirt.
He was unable to pick a quarter up from a table. He had
right arm weakness everyday. He stated that he also had
atrophy in the neck area. The veteran testified that
previously he was right handed. He was able to drive a car
without problem. He was able to write with his right hand
and there was no problem writing unless he had to exert
pressure. He could make a soft fist with his right hand. He
was not using medication for the right arm condition.
Analysis
Disability evaluations are determined by the application of a
schedule of ratings which is based on average impairment of
earning capacity. 38 U.S.C.A. § 1155; 38 C.F.R. § Part 4.
The most recent rating decision reflects that the veteran's
partial paralysis of the right upper extremity as a residual
of poliomyelitis has been evaluated as 50 percent disabling
under the provisions of Diagnostic Codes 8011 and 8511 of the
Rating Schedule, 38 C.F.R. § 4.124a, which respectively
pertains to anterior poliomyelitis and diseases of the
peripheral nerves. Under Diagnostic Code 8011, anterior
poliomyelitis as an active febrile disease equates to a 100
percent evaluation, and residuals are rated as a minimum of
10 percent disability.
Diagnostic Codes 8511, assigns a 50 percent disability rating
for incomplete, severe, paralysis of the middle radicular
group of nerves in the (major) upper extremity. Complete
paralysis of the middle radicular group of the major upper
extremity warrants a 70 percent rating, which is the maximum
rating available under that code. The term "incomplete
paralysis" indicates a degree of lost or impaired function
substantially less than the type picture for complete
paralysis given with each nerve, whether due to varied level
of the nerve lesion or to partial regeneration.
The veteran's poliomyelitis of the right upper extremity
affects more than one radicular group, from the right
shoulder to the right hand. In this regard, the provisions
of Diagnostic Code 8513, paralysis of all radicular groups,
should also be considered. Diagnostic Code 8513 provides
that a 20 percent rating is warranted for mild incomplete
paralysis of all radicular groups; moderate incomplete
paralysis warrants a 40 percent rating; and severe incomplete
paralysis warrants a 70 percent rating. Complete paralysis
warrants a 90 percent rating.
Preliminarily, it is important to note that there is no
evidence of active poliomyelitis. The record shows that the
veteran has substantial functional impairment of the right
upper extremity attributable to poliomyelitis. There is
overall decreased strength of the right upper extremity,
along with weakened right hand grip strength. The veteran
has much difficulty performing fine movements with his right
hand, he drops objects, and he can only occasionally push and
pull objects with normal strength. The medical evidence also
confirms that he has atrophy in most areas of his right upper
extremity, from the intrinsic muscles of his right hand to
the right shoulder, infraspinatus, supraspinatus, and deltoid
muscles that are described as mild to severe.
While substantial functional impairment of the veteran's
right upper extremity due to poliomyelitis is evident, the
clinical data also shows that he continues to have
significant use of his right hand and arm. In his own
testimony he stated that he is able to drive a car,
apparently using his right arm. He is also still able to
write with his right hand. In essence it appears that
significant functional use of the right upper extremity
remains. In this regard it must be concluded, there is no
evidence that shows that the poliomyelitis of the right upper
extremity results in complete paralysis of the middle
radicular group. The veteran has significant function in all
parts of the right upper extremity, and the record does not
reveal evidence of severe incomplete paralysis of all
radicular groups of the right upper extremity.
The Board is required to render a determination based on the
entire evidentiary data of record. In the present case, the
Board finds that the veteran's disability picture does not
approximate the criteria necessary for a higher disability
evaluation. 38 C.F.R. § 4.7. An increased evaluation for
partial paralysis of the right upper extremity as a residual
of poliomyelitis is not warranted.
II. Special Monthly Compensation Benefits for Loss of Use of
the Right Hand and Upper Extremity
If as a result of a service- connected disability, a veteran
has suffered the anatomical loss or loss of use of one hand,
special monthly compensation under 38 U.S.C.A. § 1114 (k) is
payable. Loss of use of a hand for the purpose of special
monthly compensation will be held to exist when no effective
function remains, other than that which would be equally well
served by an amputation stump at the site of election below
the elbow, with use of a suitable prosthetic appliance. The
determination will be made on the basis of the actual
remaining function of the hand, whether the acts of grasping,
manipulation of the hand could be accomplished equally as
well by an amputation stump with prosthesis.
The veteran is currently in receipt of service connection for
partial paralysis of the right upper extremity as a residual
of poliomyelitis evaluated as 50 percent disabling.
The clinical data of record shows that veteran has severe
disablement of his right upper extremity as a result of
poliomyelitis. He has mild to severe atrophy of the
musculature of his right arm and hand, weakness of grip
strength, and problems with fine manipulations of his right
hand. However, it is important to note that the veteran
continues in his ability to grasp and manipulate objects, and
he has somewhat more than significant use of his right hand
and arm.
Based on the foregoing, while there is severe disablement of
the right upper extremity, the record indicates that function
of the veteran's right arm and hand exists. It does not
appear that there is loss of use of the right hand or arm for
that matter, which would be equally well served by an
amputation stump below the elbow with a prosthetic appliance.
The Board concludes that entitlement to special monthly
compensation for loss of use of a hand under 38 U.S.C.A. §
1114 (k) (West 1991) is not warranted.
ORDER
An increased evaluation for partial paralysis of the right
upper extremity as a residual of poliomyelitis is denied.
Entitlement to special monthly compensation for loss of use
of the right hand and upper extremity under 38 U.S.C.A. §
1114 (k) (West 1991) is denied.
John E. Ormond, Jr.
Veterans Law Judge
Board of Veterans' Appeals
|
36 Cal. 2d 234 (1950)
THE PEOPLE, Respondent,
v.
JOHN P. STECCONE et al., Appellants.
Crim. No. 5144.
Supreme Court of California. In Bank.
Oct. 24, 1950.
J. Emmet Chapman, Frederick C. Dewar, Golden & Fratis, J. Bruce Fratis and Julius M. Keller for Appellants.
Fred N. Howser, Attorney General, and Clarence A. Linn, Deputy Attorney General, for Respondent.
SPENCE, J.
Defendants John P. Steccone and Peter Makris were charged with conspiracy (Pen. Code, 182, subd. 1) to "keep and maintain rooms and places ... [at] 1313 Park Street and 136 Santa Clara Avenue in the city of Alameda, with books, papers, devices and paraphernalia for the purpose of recording and registering bets and wagers on horse races." (Pen. Code, 337a, subd. 2.) Six overt acts were listed in the information. The jury returned a verdict finding each defendant guilty as charged. Motions for new trial were separately made and denied. Defendants were placed upon probation, conditioned, among other things, upon defendant Steccone serving a term of six months and defendant Makris a term of three months in the county jail. Each defendant has appealed from the "judgment" and from the "order denying a new trial."
[1] Since the court did not pronounce judgment but suspended proceedings and granted probation, the purported appeals from the judgments must be dismissed (People v. *236 Murphy, 60 Cal. App. 2d 762, 765 [141 P.2d 755]; People v. Warnick, 86 Cal. App. 2d 900, 901 [195 P.2d 552]; People v. Labarbera, 89 Cal. App. 2d 639, 644 [201 P.2d 584]), and consideration will be given only to the points raised by appellants as ground for reversal of the orders denying a new trial. Each appellant questions the sufficiency of the evidence to sustain the verdicts and the admissibility of certain evidence against him; and, in addition, appellant Steccone attacks the propriety of the trial court's refusal of specific instructions requested by him. A review of the record compels the conclusion that neither appellant has shown any ground for reversal.
From the record it appears that appellant Makris, the owner and operator of the Step-Inn Club, a restaurant and tavern located at 1313 Park Street, Alameda, was accepting in July, 1947, bets placed on horse races. Police Officer White testified that "pursuant to his plain-clothes duty, investigating bookmaking," he went to Makris' club on July 15, 16, and 18, 1947, on each of which days he "placed a $2.00 bet"; that during the course of his visits there, Makris made two similar telephone calls from behind the counter--one on the 15th and the other on the 16th--the first to an unnamed person and the second to a person identified as "John," each time "call[ing] off a lengthy list of numbers ... [and] various amounts of money," using, among other phrases, the words "to win, to place, to show"; that while he was on the premises he saw certain persons at the bar place bets with Makris, with the latter putting the money so received "in his pocket"; and that he, White, collected on his first bet with Makris, who "checked the list" and then paid him his winnings. Makris was not arrested at this time.
The next date pertinent to the charge against appellants is February 3, 1949, some 18 months following Officer White's investigation. Police Inspector Johnson testified that on that day about 11 o'clock in the morning, he with three other police officers "in civilian clothes" went to the Step- Inn Club, asked the "customers in the place ... to leave," and then searched the premises "for evidence." In a drawer in the back of the bar they found approximately 45 sheets of paper, ruled horizontally and vertically into lines and columns by a mimeographing process, but with no writing thereon. Makris was then arrested. While the officers were still there, appellant Steccone entered the club, and was immediately "placed in custody" and searched. On his person was found *237 a "Daily Bulletin and Sports Review" of February 3, 1949, some sheets of ruled paper and a "single sheet" with writing on it, having columns of figures and the name "Pete" at the top. These articles were "laid on [a] shuffleboard table," and as the officers "turned away," Steccone "grabbed" the paper marked with the name "Pete" and "tore [it] up." One of the officers "picked up the pieces," "grabbed ahold of ... Steccone and told him that was a very foolish thing to do," and Steccone replied "yes, he guessed it was." These "pieces" were later "put ... together with Scotch tape" and constitute one of the exhibits in the record.
After the arrest of appellants at the Step-Inn Club, the officers went to Steccone's home at 136 Santa Clara Avenue, Alameda, and were admitted by Mrs. Steccone. Upon searching the rumpus room in the basement, they found an adding machine containing a tape with a long series of figures on it, the figures corresponding to those found on the sheet of paper torn up by Steccone at the time of his arrest in the club. The officers also found in a closet in the same room of the Steccone home a small "open cardboard box" with "one single sheet" in it ruled in a manner similar, but not identical with the sheaf of papers found in the Step-Inn Club, and likewise without any writing thereon. A police officer, following his qualification as an expert witness on methods used by bookmakers in the vicinity for keeping their records, stated that the various mentioned items found in the two places were paraphernalia commonly used in the conduct of bookmaking.
In addition to the foregoing evidence, there was admitted as to appellant Makris only a statement which he made to Officer Johnson in the office of the Inspector of Police in Alameda on February 3, 1949, after his arrest--and so identified by Officer Johnson and the police department secretary at the trial. It appears that Makris there stated that the "run down" sheets--"ruled off in squares"--found at his club had been given to him by "Johnnie Steccone" for registering bets on the horse races, that he made "sometimes 10 ... 15 ... 20 bets" with "Johnnie per day," involving "as a rule" sums of money from $20.00 ... [to] $50.00," that they settled their accounts every day "about 10:30 or 11:00 o'clock" when Johnnie would come to the club, and that it was Johnnie's practice to "mark ... down" these bets on one of these ruled sheets."
[2, 3] As a general rule, a conspiracy can only be established *238 by circumstantial evidence "for, as the courts have said, it is not often that the direct fact of an unlawful design which is the essence of a conspiracy can be proved otherwise than by the establishment of independent facts, bearing more or less closely or remotely upon the common design (5 Cal.Jur. 521); and it is not necessary to show that the parties met and actually agreed to undertake the performance of the unlawful acts (citing authority), nor that they had previously arranged a detailed plan ... for the execution of the conspiracy (citing authority)." (People v. Sampsell, 104 Cal. App. 431, 438-439 [286 P. 434].) [4] However, before evidence of the acts and declarations of an alleged coconspirator is admissible against the other, the fact of the conspiracy must be proved. (Code Civ. Proc., 1870, subd. 6.) In recognizing the application of this rule of evidence in a criminal case, it was said in People v. Talbott, 65 Cal. App. 2d 654, at page 663 [151 P.2d 317]: "... the fact of the conspiracy must be proved before the evidence of said acts or declarations may be considered. The issue, however, need be proved only to the extent of establishing prima facie evidence of the fact. It need not be established by a preponderance of the evidence in a civil action nor beyond a reasonable doubt in a criminal action; the latter doctrine applies only to the issue of guilt. Any evidence received by virtue of this rule necessarily is received conditionally, for in the final analysis, the jury must first pass judgment on the question as to whether the asserted conspiracy has been proved." (See, also, People v. Marvin, 48 Cal. App. 2d 180, 197 [119 P.2d 413]; People v. Correa, 44 Cal. App. 634, 641-642 [186 P. 1055]; and any language in People v. Doble, 203 Cal. 510, 517 [265 P. 184], which might be said to indicate the requirement of a greater amount of proof must be disapproved.)
In determining here whether there was sufficient circumstantial evidence to make the required prima facie showing, these items should be considered: Evidence showing that appellants Steccone and Makris each maintained bookmaking establishments "with books, papers, devices and paraphernalia for the purpose of recording and registering bets upon horse races"; that "Pete" Makris "laid off" his bets by telephone with a man named "John"; that John Steccone was a "lay off" man--a bookmaker's bookmaker; that Steccone was arrested in the Step-Inn Club which Makris used for his bookmaking activities; that when arrested and searched, Steccone had in his possession a register of bets which bore the heading *239 "Pete"--a contraction of Makris' given name Peter--and which Steccone attempted to destroy; that the figures on the adding machine tape found in Steccone's home corresponded to those on the register of bets taken from Steccone at the time of his arrest in Makris' club; and the presence in Makris' club of blank forms for the registering of bets similar to those found in Steccone's home. So significant in this recital of the record are these incriminating factors: the similar documentary evidence found in the two places as indicating that the "two establishments had been in communication" (People v. Labarbera, supra, 89 Cal. App. 2d 639, 641), the telephone call made by appellant Peter Makris to "John" for the purpose of placing his day's bets, indicating the conduct of operations between them upon the "lay-off" plan (People v. Oreck, 74 Cal. App. 2d 215, 218-221 [168 P.2d 186]), and appellant John Steccone's consciousness of guilt in attempting to destroy the register of bets found in his possession at the time of his arrest in Makris' club and bearing the identification of "Pete" in its heading. Such facts taken in combination as a chain of connecting circumstances pointing to a collaboration between appellants in their bookmaking operations appear sufficient to make out a prima facie case of conspiracy against them. (People v. Correa, supra, 44 Cal. App. 634, 641-642.)
Appellants argue that the names "Pete" and "John" are common names, and that the fact of the telephone call made by Makris to the "lay off" man "John" coupled with the fact of Steccone's possession of the register of bets with the word "Pete" on the top some eighteen months later when he was arrested in Makris' club, would not warrant an inference that appellants Peter Makris and John Steccone were the persons involved as collaborators in the maintenance of a bookmaking business. But if "Pete" did not mean Makris and "John" did not mean Steccone, then appellants could and should have denied it. These were facts within their knowledge and power to dispute, but they failed to testify. So it was said in like circumstances in People v. Adamson, 27 Cal. 2d 478, at pages 490-491 [165 P.2d 3]: "... if it appears from the evidence that defendant could reasonably be expected to explain or deny evidence presented against him, the jury may consider his failure to do so as tending to indicate the truth of such evidence and as indicating that among the inferences that may reasonably be drawn therefrom, those unfavorable to the defendant are the more probable." (See, also, People v. Liss, 35 Cal. 2d 570, 576 [219 P.2d 789].) *240
Although standing alone as bits of isolated evidence, the names "Pete" and "John" as used in reference to the alleged activities of appellants, might be entitled to but little weight, their evidentiary value as a connecting link along with other incriminating factors must be recognized. Application of this principle was made in People v. Trujillo, 32 Cal. 2d 105 [194 P.2d 681], where a hammer marked on its handle with the initials "E.W." was found at the scene of the crime and was held to have been properly admitted in evidence as an incriminating, connecting circumstance--"another link in the chain of evidence"--against the defendant "Ernest Woodmansee," though the latter denied ownership of it. (P. 111.) Of course, as appellants strongly assert, "conspiracies cannot be established by suspicion" (People v. Long, 7 Cal. App. 27, 33 [93 P. 387]), nor can a defendant's failure to testify as to facts within his knowledge be "used to supply a failure of proof by the prosecution" (People v. Zoffel, 35 Cal. App. 2d 215, 221 [95 P.2d 160]), but such is not the case here, as the record discloses numerous corroborative facts evidencing appellants' collaboration in bookmaking activities at their respective establishments. The significance of such names in the chain of proof against appellants was for the jury's determination. (People v. Trujillo, supra, 32 Cal. 2d 105, 111.)
[5, 6] Since the evidence above set forth was sufficient to make out a prima facie case of conspiracy against appellants, the trial court did not err in admitting against both appellants evidence of the acts and declarations of the alleged coconspirators in furtherance of the conspiracy (People v. Talbott, supra, 65 Cal. App. 2d 654, 663); and when the last-mentioned testimony is considered in connection with the prima facie case, and without regard to the admissions made by appellant Makris after his arrest, there appears to have been ample evidence to sustain the finding of the jury that both appellants were guilty of the crime charged. Of course, with respect to appellant Makris there was the added factor of his above-mentioned admissions made to the arresting officers.
[7] Nor is there merit in appellant Steccone's contention that the court erred in refusing certain instructions offered by him. The requested instructions were either covered in substance by the instructions given or failed to state correctly the proposition of law involved, and as so classified, no purpose would be served in discussing them separately as listed by appellant. Rather, in summary, it need only be said that *241 an examination of the entire charge reveals that the trial court fully, fairly, and clearly instructed the jury upon all legal principles pertaining to the alleged conspiracy.
The purported appeals from the alleged judgments are dismissed. [8] The orders denying appellants' motion for a new trial are affirmed.
Gibson, C.J., Shenk, J., Edmonds, J., Traynor, J., and Schauer, J., concurred.
Carter, J., concurred in the judgment.
|
964 F.2d 853
22 Fed. R. Serv. 3d 779
Ronald HANKINS, Appellee,v.William C. FINNEL, State of Missouri, Appellants.
No. 91-1299.
United States Court of Appeals,Eighth Circuit.
Submitted Sept. 9, 1991.Decided May 22, 1992.Rehearing and Rehearing En BancDenied June 25, 1992.
Robert L. Presson, Jefferson City, Mo., for appellants.
Therese M. Schuele, Kansas City, Mo., for appellee.
Before ARNOLD,* JOHN R. GIBSON, and BEAM, Circuit Judges.
JOHN R. GIBSON, Circuit Judge.
1
The State of Missouri and William Finnel appeal from a district court1 judgment enjoining the State of Missouri from attaching funds it had just paid Ronald Hankins to satisfy a judgment against its former employee, William Finnel. A jury had awarded Hankins $1 in nominal damages and $3,000 in punitive damages after finding that Finnel had sexually molested Hankins during the time that Finnel taught school at the Missouri State Penitentiary and Hankins was an inmate there. Shortly after this court affirmed the judgment, the State brought an ex parte action in the circuit court of Cole County, Missouri, seeking reimbursement for the cost of Hankins' incarceration pursuant to the Missouri Incarceration Reimbursement Act, Mo.Rev.Stat. §§ 217.825-217.841 (Supp.1991). The State sought reimbursement equal to ninety percent of Hankins' judgment. The Cole County Circuit Court appointed a receiver to take control of the money paid to Hankins and later stayed proceedings pending the outcome of this action. The district court held that it had ancillary jurisdiction under Fed.R.Civ.P. 69(a), that the State waived its Eleventh Amendment immunity to the extent that it voluntarily accepted the obligation of the judgment against Finnel, and that the Supremacy Clause barred application of the Missouri reimbursement statute. Hankins v. Finnel, 759 F. Supp. 569 (W.D.Mo.1991). On appeal, the State argues that it has not waived its Eleventh Amendment immunity, that the district court lacked jurisdiction under Rule 69(a), that federal law does not preempt the Missouri Incarceration Reimbursement Act, and that the district court should have abstained. We affirm the judgment of the district court.
2
In 1988, Hankins sued Finnel in the district court for the Western District of Missouri, alleging that while he was an inmate in the penitentiary, Finnel sexually harassed or molested him on four occasions. Hankins attended the penitentiary school where Finnel was an instructor. The case was tried to a jury, which found for Hankins on his 42 U.S.C. § 1983 (1988) claims and awarded $1 nominal damages and $3,000 punitive damages. This court affirmed the judgment. Hankins v. Finnel, 909 F.2d 510 (8th Cir.1990). The Attorney General of the State of Missouri represented Finnel at trial and on appeal. The State also agreed to indemnify Finnel for any judgment against him pursuant to the statute entitled "State Legal Expense Fund," Mo.Rev.Stat. § 105.711 (Supp.1991).
3
On July 31, 1990, the State initiated ex parte proceedings in the Cole County Circuit Court attempting to obtain ninety percent of the amount it was to pay to Hankins as a result of the judgment against Finnel. Under the Missouri Incarceration Reimbursement Act, the State may seek reimbursement of up to ninety percent of a prisoner's assets, which are defined to include a money judgment received from the State as a result of a civil action against one of its employees. Mo.Rev.Stat. § 217.827(1)(a).
4
The circuit court appointed a receiver to hold the funds in Hankins' inmate account and ordered Hankins to show cause why an order should not be entered appropriating his assets to reimburse the State for the cost of his confinement. Three days after the circuit court's August 17, 1990, order, Hankins' account was debited by $3,234.22 for "cell reimbursement." On that same day, the State deposited the identical amount (representing the $3,000 judgment plus interest) into Hankins' overdrawn account.2
5
In November, Hankins returned to the district court, filing motions for a writ of mandamus to stay the state court proceedings and to proceed in aid of execution on the judgment. Before the district court could rule on the mandamus motion, the state court stayed its proceedings, making Hankins' first motion moot. Hankins, 759 F. Supp. at 570.
6
Addressing Hankins' other motion, the district court cited its authority under Fed.R.Civ.P. 69(a) to enforce its judgment and conduct proceedings in aid of execution. Id. at 571. Because the federal statute under which Hankins sued, 42 U.S.C. § 1983 (1988), provides no mechanism for enforcement of a judgment, the district court determined it must rely on Missouri law on that issue. The court concluded that Missouri law empowered it to conduct "proceedings in prohibition" under Mo.Rev.Stat. § 530.010 (1986). Id. It also cited federal case law permitting federal courts to exercise jurisdiction over nonparties that have an obligation to indemnify the judgment debtor. Id. The district court concluded that because the State of Missouri had consented to satisfy the judgment, the court retained ancillary jurisdiction to enforce that judgment. Id.
7
The district court next concluded that the Eleventh Amendment did not bar enforcement of the judgment against the State, as the State had waived its immunity to the extent that it had voluntarily agreed to indemnify its employee, Finnel, and had acted in his stead. Id. at 572. The district court stated: "Where the State has stepped in to satisfy the judgment against Mr. Finnel, the State cannot then assert its Eleventh Amendment immunity to circumvent the Court's authority to enforce that judgment." Id.
8
The district court next addressed the conflict between 42 U.S.C. § 1983 and the Missouri Incarceration Reimbursement Act. The court concluded that although no provision in section 1983 "expressly conflicts with the state's right to attach a prisoner's assets," id. at 573, the Missouri Reimbursement Act nonetheless thwarts the objectives of section 1983. Id. at 574. The court explained: "If the State were permitted to seize the Section 1983 damage awards prisoners receive for prison employees' conduct, the prisoners would have no motive to bring such suits and the State and its employees would have no inducement to comply with federal law." Id. The court concluded that the Supremacy Clause invalidated the Missouri statute as applied in this case because it conflicted with section 1983. Id.
9
The district court thus enjoined the State from attaching the funds the State had just paid Hankins. This appeal followed.
I.
10
Finnel and the State of Missouri3 argue that the district court erred in concluding that the State had waived its immunity under the Eleventh Amendment. The district court did not find a "general waiver," but concluded that the State had waived its immunity with regard to the judgment in this case by "agree[ing] to indemnify" Finnel and then "stepp[ing] in to satisfy the judgment." Hankins, 759 F. Supp. at 572.
11
The State asserts that its statute authorizing representation and indemnification of employees who are sued does not constitute an express or implied waiver of the State's Eleventh Amendment immunity. It further contends that its issuance of the check to Hankins4 does not establish an implied waiver because no official, including the State's Attorney General, can waive the Eleventh Amendment by his actions. Only the Missouri Assembly, it asserts, can waive the State's immunity, and only by enacting general legislation.
12
As the State acknowledges, the Eleventh Amendment bar is not absolute. Port Authority Trans-Hudson Corp. v. Feeney, 495 U.S. 299, 304, 110 S. Ct. 1868, 1872, 109 L. Ed. 2d 264 (1990). In certain instances, Congress may abrogate the states' sovereign immunity, or a state may consent to suit in federal court. Id. Because the "Eleventh Amendment implicates the fundamental constitutional balance between the Federal Government and the States," Atascadero State Hospital v. Scanlon, 473 U.S. 234, 238, 105 S. Ct. 3142, 3145, 87 L. Ed. 2d 171 (1985), the Supreme Court has prescribed a stringent test for determining the existence of a waiver. A waiver must be " 'stated by the most express language,' " or, if implied, it must appear " 'by such overwhelming implication from the text as [will] leave no room for any other reasonable construction.' " Feeney, 495 U.S. at 305, 110 S.Ct. at 1873 (quoting Atascadero State Hosp., 473 U.S. at 239-40, 105 S.Ct. at 3146, and Edelman v. Jordan, 415 U.S. 651, 673, 94 S. Ct. 1347, 1361, 39 L. Ed. 2d 662 (1974) (internal quotation omitted)).
13
A state may also waive its Eleventh Amendment immunity through conduct. Garrity v. Sununu, 752 F.2d 727, 738 (1st Cir.1984). Courts have inferred a waiver when the State has made a general appearance in federal court and defended a lawsuit on the merits. See Sosna v. Iowa, 419 U.S. 393, 396 n. 2, 95 S. Ct. 553, 555 n. 2, 42 L. Ed. 2d 532 (1975); Clark v. Barnard, 108 U.S. 436, 447-48, 2 S. Ct. 878, 882-84, 27 L. Ed. 780 (1883). In Paul N. Howard Co. v. Puerto Rico Aqueduct Sewer Authority, 744 F.2d 880 (1st Cir.1984), cert. denied, 469 U.S. 1191, 105 S. Ct. 965, 83 L. Ed. 2d 970 (1985), a governmental corporation "not only appeared but filed a counterclaim and a third-party complaint." Id. at 886. The First Circuit thus had "little trouble concluding that [the corporation] voluntarily submitted to the jurisdiction of the federal court, thereby waiving any Eleventh Amendment immunity...." Id.
14
An Eleventh Amendment waiver need not be a general waiver, but may be a partial or limited one. See WJM, Inc. v. Massachusetts Dep't of Pub. Welfare, 840 F.2d 996, 1002-03 & n. 8 (1st Cir.1988) (by filing proofs of claim in debtors' Chapter 11 bankruptcy proceedings, State of Massachusetts made a "partial" waiver of its Eleventh Amendment immunity, exposing itself only to the debtors' claims that arose out of the same transaction or occurrence as its own claims against the debtor), overruled in part on other grounds, Reopell v. Massachusetts, 936 F.2d 12, 15 (1st Cir.), cert. denied, --- U.S. ----, 112 S. Ct. 637, 116 L. Ed. 2d 655 (1991); Moreno v. University of Maryland, 645 F.2d 217, 220 (4th Cir.1981) (state waived its immunity to the extent that it obtained a stay of a district court order pending appeal by agreeing to pay refunds to university students if the order was upheld on appeal), aff'd, Toll v. Moreno, 458 U.S. 1, 102 S. Ct. 2977, 73 L. Ed. 2d 563 (1982). The district court here stressed the limited nature of the waiver, specifically stating that the State had not made a "general waiver." Hankins, 759 F. Supp. at 572. The State waived its immunity only "as it pertains to the judgment in this case." Id.
15
The State attacks the district court's determination, pointing to language in a Missouri state statute which declares that "[n]othing in sections 105.711 to 105.726 [the sections covering the State Legal Expense Fund] shall be construed to broaden the liability of the state of Missouri ... nor to abolish or waive any defense at law which might otherwise be available to any agency, officer, or employee of the state of Missouri." Mo.Rev.Stat. § 105.726 (1986). This statute, the State asserts, clearly declares the State's intention not to waive its Eleventh Amendment immunity by representing or indemnifying state employees.
16
The State also relies on a trio of federal decisions in which the courts determined that statutes authorizing the state to represent or indemnify employees sued in connection with their official duties do not waive Eleventh Amendment immunity. For example, in Williams v. Bennett, 689 F.2d 1370 (11th Cir.1982), cert. denied, 464 U.S. 932, 104 S. Ct. 335, 78 L. Ed. 2d 305 (1983), the court concluded that an Alabama statute authorizing the State to pay up to $100,000 for judgments awarded against officials and employees of the Board of Corrections did not waive the State's Eleventh Amendment immunity. Id. at 1377-78. The court relied in part on express language in the statute stating that "[n]othing in this section shall be deemed to waive the sovereign immunity of the [S]tate...." Id. at 1378 (citing Ala.Code § 41-9-74(c)). Two district court decisions construing similar statutes also found no waiver of sovereign immunity. See United States v. DCS Dev. Corp., 590 F. Supp. 1117, 1120-22 (W.D.N.Y.1984) (statute authorizing state to represent and indemnify employees sued in connection with their official duties and attorney general's subsequent appearance in case do not add up to a waiver of Eleventh Amendment immunity); Elliott v. Hinds, 573 F. Supp. 571, 575 (N.D.Ind.1983) (attorney general's representation of state employee under terms of state statute does not waive Eleventh Amendment immunity).
17
We recognize that the State of Missouri, in section 105.726, clearly expressed its intent not to waive sovereign immunity by its enactment of certain statutes. That section disavows waiver, however, only with regard to the statutes that pertain to the State Legal Expense Fund; it says nothing about the Missouri Incarceration Reimbursement Act.
18
The cases that the State cites also are not dispositive of the issue before us. Williams, DCS Development Corp., and Elliott all address the argument that a state indemnification statute waived the state's immunity so that the state or its agencies could be sued for money damages, or its employees could be sued for damages in their official5 rather than individual capacities. See Williams, 689 F.2d at 1376; DCS Dev. Corp., 590 F. Supp. at 1121; Elliott, 573 F. Supp. at 574-75. In both of these situations, the plaintiff seeks an award of damages from the state treasury. In this case, however, the state employee was sued in his individual capacity and damages were awarded against him as an individual. The State voluntarily entered the picture by agreeing to pay the judgment. The issue is not whether the State has waived its immunity so that it can be sued as a defendant in the main action, or its officials can be sued in their official capacity, but rather whether the State's actions in satisfying Hankins' judgment and then immediately attempting to recoup it can be deemed a limited waiver of immunity solely with regard to the judgment.
19
Although the State agreed to pay Hankins' judgment, it voluntarily and deliberately took actions designed to ensure that the money never reached Hankins' hands. The State initiated the ex parte action in state court three weeks before it credited Hankins' account. Although aware that Hankins was represented by appointed counsel, the State appeared ex parte before the state court and obtained orders to show cause and appointing a receiver. The State acted pursuant to the Missouri Incarceration Reimbursement Act, which specifically includes in its definition of assets "[a] money judgment received by the offender from the state as a result of a civil action" against the State or one of its agencies or employees and in which the claim arose from the performance of official duties on behalf of the State. Mo.Rev.Stat. § 217.827(1)(a)b.
20
The State cites no case that addresses whether a statute similar to Missouri's Incarceration Reimbursement Act waives sovereign immunity when state officials rely on that statute to recoup the judgment of an inmate who has successfully sued a state employee in federal court on a federal claim. In fact, one of the cases on which the State relies, DCS Development Corp., qualifies its holding by stating that the attorney general's mere appearance in a suit does not constitute waiver "unless the Attorney General seeks to take advantage of the suit for the benefit of the state, or unless state law otherwise provides." 590 F. Supp. at 1121 (emphasis added). The DCS court then cites Sosna, in which the State of Iowa was deemed to have waived its Eleventh Amendment defense by entering a voluntary appearance and defending the case on the merits. 419 U.S. at 396 n. 2, 95 S. Ct. at 555 n. 2. Under Iowa law, such an action constituted a waiver of sovereign immunity.
21
Although the State of Missouri never entered a general appearance in this case, it did seek to take advantage of the suit for its own benefit. By representing and indemnifying Finnel, it provided what, in essence, amounted to an employment benefit for Finnel. Section 105.711.2(2) authorizes the expenditure of state funds when the plaintiff's claim concerns conduct "arising out of and performed in connection with [the employee's] official duties." The Missouri Incarceration Reimbursement Act then targets such judgment proceeds for recoupment by defining an inmate's "assets" to include money received from the State to satisfy a judgment against one of its employees where the inmate's claim arose from "the [employee's] conduct of official duties." Mo.Rev.Stat. § 217.827(1)(a)b. In essence, the State achieves the advantage of protecting both its employees and its own coffers by paying a judgment with one hand that it intends to take back with the other.
22
The State's actions left Hankins with little more than a "stealth" payment--the judgment proceeds vanished before Hankins even knew he had been paid. For Eleventh Amendment purposes, we see little difference between this situation and a case in which a state simply reneges on its promise to pay. In Moreno, the Fourth Circuit found that the University of Maryland "explicitly" waived its immunity when it obtained a stay of a district court order by agreeing to pay certain tuition refunds should the order be affirmed on appeal. 645 [email protected]. The university failed to vindicate its position on appeal, and "so it must pay the refunds to which it agreed." Id. at 221.
23
We conclude, based on the combination of factors present here, that the State of Missouri made a limited waiver of its Eleventh Amendment immunity with regard to the judgment in this case.6 It is evident that the district court found a waiver only with respect to the narrow facts of this case, and we are convinced that it did not err. The State, acting under statutory authority, represented Finnel at all stages of the litigation and agreed to indemnify him. It then "paid" the judgment, but not before instituting a state court proceeding attempting to recoup it. The State took these actions ex parte despite its knowledge that Hankins was represented by counsel. The ledger sheet from Hankins' inmate account lists a $3,234.22 debit for "Cell Reimbursement" just before it lists the credit from the State of Missouri in the identical amount. The debit and credit were both entered on August 20, 1990, about three weeks before the State notified Hankins of its actions. In sum, the State acted to the advantage of and for the benefit of itself.
24
The State of Missouri also argues that the Attorney General does not possess the authority to waive the Eleventh Amendment by his mere actions and that only the General Assembly can waive immunity and only by enacting general legislation. This argument overlooks the fact that the Attorney General acted under the authority of state statutes. Although the Missouri legislature expressly declared that the statutes governing the State Legal Expense Fund do not waive any immunity defense, see Mo.Rev.Stat. § 105.726, it included no such language in the Missouri Incarceration Reimbursement Act.
25
We further observe that even without the existence of the waiver, Hankins still would be entitled to proceed in district court. Although the district court could not, in the absence of a waiver, enjoin the State from attaching Hankins' funds, it could enjoin state officials. See Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 100-03, 104 S. Ct. 900, 907-09, 79 L. Ed. 2d 67 (1984). The Eleventh Amendment bars a federal court from awarding retroactive monetary relief against a state or its officials (when sued in their official capacity), but it does not bar a federal court from issuing an injunction ordering a state official to comply in the future with federal law.7 Id. See also Edelman v. Jordan, 415 U.S. 651, 666-67, 94 S. Ct. 1347, 1356-58, 39 L. Ed. 2d 662 (1974). The State of Missouri, through its responsible officials, parted with the $3,234.22 at issue in this case when Hankins' account was credited with this amount. That the same or other state officers then seized this fund under the Missouri Incarceration Reimbursement Act does not relieve the officials taking possession of this fund from liability to pay the money in response to a court order directed to those individuals, and limited to the funds seized. The type of relief sought here8 is prospective and injunctive, and thus is not barred by the Eleventh Amendment provided that the court directs any order toward state officials, not the State. Determining the identity of the necessary officials is a matter the district court may address if need be.
II.
26
The State next argues that the district court lacked jurisdiction under Fed.R.Civ.P. 69(a), which governs execution, to decide whether 42 U.S.C. § 1983 preempts the Missouri Incarceration Reimbursement Act.
27
The district court primarily relied on Argento v. Village of Melrose Park, 838 F.2d 1483 (7th Cir.1988), in which the Seventh Circuit held that a district court could properly retain jurisdiction under Rule 69(a) to enforce a judgment against nonparties that were responsible for indemnifying the judgment debtors. Id. at 1487-90. The Seventh Circuit saw "no reason" to draw a distinction, for purposes of supplemental jurisdiction, between parties and nonparties, id. at 1488, as the nonparties' liability to the defendants was "related to the same events that underlie the original ... action." Id. at 1490.9
28
The State challenges the district court's reliance on Argento, arguing that: (1) a municipality, not a state, was obligated to indemnify the public employee in Argento; (2) the State of Missouri is not under a judicially enforceable obligation to indemnify its employees; (3) once a judgment is paid, Rule 69 does not apply; and (4) the supplemental proceedings in this case constituted a separate action over which the district court lacked jurisdiction.
29
Most of these arguments do not demand extensive discussion. The fact that Argento dealt with a municipality rather than a state is irrelevant for purposes of Rule 69. The State's Eleventh Amendment concerns simply do not bear on this issue.
30
We need not answer the State's argument that it is not under a judicially enforceable obligation to pay, as the State claims throughout its brief that the judgment has been satisfied and the record of Hankins' account shows a $3,234.22 credit from the State of Missouri on August 20, 1990.
31
The State next asserts that once a judgment is paid, Rule 69 is no longer applicable. We are not persuaded by this argument. The State has, in essence, devised what the district court called a "shell game" that allows it to "pay" a judgment while simultaneously recouping the proceeds. The actions of the State, in commencing the ex parte proceedings in state court and making its deposit in Hankins' overdrawn account, must be seen as an effort to prevent Hankins from collecting his judgment in the first place.
32
The State characterizes its claim for reimbursement as a completely independent claim brought under state law and properly adjudicated in state court. We reject this characterization. The issue is whether the State's claim for reimbursement is "adequately related," see Argento, 838 F.2d at 1490, to Hankins' original civil rights action to fall within the parameters of ancillary jurisdiction pursuant to Rule 69.
33
The State's statutory scheme--authorizing indemnification of state employees who are sued in connection with their official duties and then targeting such judgment proceeds for a reimbursement claim by the State--has the effect of defeating the efforts of any inmate to actually collect his judgment and completely vitiates any deterrent value these judgments possess. Because the State's scheme has the potential to severely frustrate the enforcement of federal rights in prisons, we conclude that the State's claim under the Missouri Incarceration Reimbursement Act is sufficiently related to Hankins' original civil rights action that it may properly be addressed in ancillary proceedings.10 We observe that our discussion here necessarily touches on some of the issues that we address regarding preemption in Part III, infra.
34
Finally, the State attacks the district court's reliance on Mo.Rev.Stat. § 530.010, the Missouri statute governing writs of prohibition. The district court recognized that 42 U.S.C. § 1983 provides no mechanism for enforcing a judgment, Hankins, 759 F. Supp. at 571, so it relied on Rule 69, which provides that proceedings under its authority "shall be in accordance with the practice and procedure of the state in which the district court is held ... except that any statute of the United States governs to the extent that it is applicable." The State argues that the Missouri statute is intended to "prevent a usurpation of judicial power" and provides no procedural basis for the district court's actions.
35
We need not address the applicability of section 530.010 to this case. Even accepting the State's argument that it is irrelevant, we conclude that the district court retains "plenary power to enforce its commands." Spain v. Mountanos, 690 F.2d 742, 747 (9th Cir.1982). Where state law fails to supply the necessary procedure, or actually stands in the way of enforcement, the district court may take the necessary steps to ensure compliance with its judgment. See Gary W. v. Louisiana, 622 F.2d 804, 806-07 (5th Cir.1980), cert. denied, 450 U.S. 994, 101 S. Ct. 1695, 68 L. Ed. 2d 193 (1981); Gates v. Collier, 616 F.2d 1268, 1271-72 (5th Cir.1980). See generally 7 James W. Moore et al., Moore's Federal Practice p 69.04 (1991). We also observe that the district court may rely on Fed.R.Civ.P. 70, which permits it to invoke its equitable powers in enforcing a judgment. See Spain, 690 F.2d at 744-47; Gates, 616 [email protected].
III.
36
Under the Supremacy Clause, state law is preempted whenever it "contradicts or interferes with an Act of Congress." Hayfield Northern R.R. Co. v. Chicago & N.W. Transp. Co., 467 U.S. 622, 627, 104 S. Ct. 2610, 2614, 81 L. Ed. 2d 527 (1984). See also Rose v. Arkansas State Police, 479 U.S. 1, 3, 107 S. Ct. 334, 335, 93 L. Ed. 2d 183 (1986). Federal law preempts state law not only where the two are plainly contradictory but also where "the incompatibility between [them] is discernible only through inference." Hayfield Northern R.R. Co, 467 U.S. at 627, 104 S.Ct. at 2614. When federal law does not expressly preempt state law, the court "must inquire more deeply into the intention of Congress and the scope of the pertinent state legislation." Id. at 628, 104 S.Ct. at 2614. Preemption in this instance will arise when "state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 300, 108 S. Ct. 1145, 1150-51, 99 L. Ed. 2d 316 (1988) (citing Hines v. Davidowitz, 312 U.S. 52, 67, 61 S. Ct. 399, 404, 85 L. Ed. 581 (1941)).
37
The purpose of section 1983 is two-fold: to compensate victims and to deter future deprivations of federal constitutional rights. Owen v. City of Independence, 445 U.S. 622, 651, 100 S. Ct. 1398, 1415, 63 L. Ed. 2d 673 (1980); Bell v. City of Milwaukee, 746 F.2d 1205, 1239 (7th Cir.1984). In Bell, the Seventh Circuit refused to apply a Wisconsin statute that precluded damages to an estate for loss of life and also precluded recovery of punitive damages. The court concluded that both provisions undermined the purpose of section 1983. Id. at 1236-41. With regard to the punitive damages provision, the court stated: "To disallow punitive damages in Section 1983 actions solely on the basis of restrictive state tort law would seriously hamper the deterrence effect of Section 1983." Id. at 1241.
38
The jury in this case awarded Hankins $1 in nominal damages and $3,000 in punitive damages. To allow the State to largely recoup this award would be inimical to the goals of the federal statute. As the district court observed, "neither the State nor its employees would have the incentive to comply with federal and constitutional rights of prisoners." Hankins, 759 F. Supp. at 574.
39
We thus conclude that section 1983 preempts the Missouri Incarceration Reimbursement Act as it is applied in this case. To the extent that the Act permits the State to recoup the very monies it has paid to satisfy a section 1983 judgment against one of its employees, the Act is invalidated under the Supremacy Clause.
40
The State also argues that its claim under the Reimbursement Act is analogous to a counterclaim or setoff and should be permitted on that basis. This argument is beside the point when the issue is one of preemption.
IV.
41
The State finally asserts that the district court erred in failing to abstain in deference to pending state judicial proceedings. We see no reason to apply the abstention doctrine where important federal interests are at stake and where the proceedings were ancillary to a judgment awarded in federal court.
42
For the foregoing reasons, we affirm the judgment of the district court.
43
BEAM, Circuit Judge, dissenting.
44
Because the majority opinion disregards accepted legal principles applicable to cases such as this, I respectfully dissent. Without reason or precedent, the district court, advancing dubious policy justifications, has elevated the 42 U.S.C. § 1983 judgment against Finnel to a status that it does not merit. Further, the district court used an inapplicable procedural rule, Fed.R.Civ.P. 69(a), to cut a pathway for this prisoner-plaintiff through immunity barriers erected by the Constitution.
45
Finnel was an employee of the State of Missouri and, while serving in this capacity, violated the constitutional rights of Hankins. The cause of action was against Finnel in his personal capacity and sought to (and did) impose personal liability. The suit was not and could not have been an official capacity case. "[O]fficial capacity suits ... represent only another way of pleading an action against an entity of which an officer is an agent." Monell v. Department of Social Servs., 436 U.S. 658, 690 n. 55, 98 S. Ct. 2018, 2035 n. 55, 56 L. Ed. 2d 611 (1978). Of course, the Eleventh Amendment precluded a suit by Hankins directly against the State of Missouri. Edelman v. Jordan, 415 U.S. 651, 663, 94 S. Ct. 1347, 1355, 39 L. Ed. 2d 662 (1974). To repeat, the State of Missouri was not and could not have been the object of Hankins' claim.
46
The state enters the picture in only a limited way--through its statute-making powers. Missouri, furnishing an additional benefit to its workers, provides and pays for a lawyer when a state employee is sued for task-related activities and, through the State Legal Expense Fund, Mo.Rev.Stat. § 105.711 (Supp.1991), indemnifies the employee for any judgment rendered. Some states use tax money to buy commercial insurance coverage while others, like Missouri, appropriate an indemnity fund, a form of self-insurance. So Finnel was, in essence, provided indemnity coverage by the State to satisfy his liability to Hankins.
47
The judgment was entered and the State paid off. It satisfied the judgment, as Finnel's indemnitor, by paying the money into Hankins' account at the institution. Since Hankins could not carry cash around in prison, it was necessary for the money to be handled this way. Perhaps if he had had another bank account or a legal guardian, his lawyer could have had the tender transferred to him in some other way. Presumably Missouri could also have paid the money into the registry of the federal court. In any event, Missouri had (and should have had) access to the funds now owned by Hankins. That the satisfaction of judgment was handled through Hankins' prison account or in any other way is irrelevant to the legitimate issues in this case.
48
In a separate state court proceeding, under the Missouri Incarceration Reimbursement Act, Mo.Rev.Stat. §§ 217.825-217.841 (Supp.1991), the State impounded the money and sought a judgment against Hankins for ninety percent of the judgment payment made into the prison account. As noted by the majority, the Reimbursement Act seeks money to repay the State for costs of Hankins' incarceration. No attack is made on the validity of the Reimbursement Act, constitutional or otherwise.1 Had Hankins inherited money or obtained a federal court judgment for breach of contract or through a tort claim, the Act would presumably have functioned without this interference from the federal district court. However, since this was a section 1983 judgment, the district court, for reasons difficult to follow from the clear language of the rule and the facts at work here, applied Fed.R.Civ.P. 69(a)2 in an effort to help the prisoner defeat the claim of the State, a nonparty to the underlying action in federal court. Since Missouri, as indemnitor of Finnel, had, in essence, paid over to creditor Hankins the full amount of the federal court judgment, this rule was simply not applicable. The rule outlines a process to enforce an unpaid judgment through a writ of execution. When a third party holds funds of a judgment debtor, Rule 69(a) may be used to reach the funds. Here, there were no such funds remaining in the hands of the indemnitor, they were in Hankins' prison account.
49
The majority relies upon Argento v. Village of Melrose Park, 838 F.2d 1483 (7th Cir.1988), for support of the use of a Rule 69(a) procedure. Beyond the fact that the dissent in Argento presents the better reasoned argument, the case, and all the cases cited by the Argento majority, are inapposite here. None of the actions involved a sovereign state with Eleventh Amendment protections, they involved governmental subdivisions subject to being made parties to the action in the first instance. Further, Argento presented a situation where the section 1983 judgment against the employees remained unsatisfied, a scenario, as earlier indicated, we do not face in this matter.
50
The second error more directly involves the Eleventh Amendment. In support of some supposed public policy consideration involving section 1983 actions,3 the district court and the majority seek to blur the line drawn by the Supreme Court which separates a state from its employees in this kind of litigation. The reasoning employed by the district court and the majority runs upstream from the unambiguous holdings of the Supreme Court. For instance, in Kentucky v. Graham, 473 U.S. 159, 105 S. Ct. 3099, 87 L. Ed. 2d 114 (1985), a successful section 1983 plaintiff sought to collect attorney fees allowed by 42 U.S.C. § 1988 from the Commonwealth. "[I]t is clear that a suit against a government official in his or her personal capacity cannot lead to imposition of fee liability upon the governmental entity. A victory in a personal-capacity action is a victory against the individual defendant, rather than against the entity that employs him." Id. at 167-68, 105 S.Ct. at 3106. The Supreme Court further stated that when a party prevails against one party it has no entitlements against even another party, let alone a nonparty. Id. at 168, 105 S.Ct. at 3106. In Brandon v. Holt, 469 U.S. 464, 105 S. Ct. 873, 83 L. Ed. 2d 878 (1985), the Supreme Court chastised the Sixth Circuit for failing to carefully adhere to the personal-official distinction in section 1983 litigation. Id. at 473, 105 S.Ct. at 878.
51
The majority contends, in the face of this concept, that the Missouri indemnity fund legislation and/or the Missouri Reimbursement Act, jointly or severally, work an implied waiver of Eleventh Amendment immunity sufficient to bring the State into this federal court garnishment proceeding. The law is to the contrary. If waiver occurred as a result of the indemnity scheme or the Reimbursement Act, Missouri should have been made a party defendant in the underlying suit, not brought in through the back door as a quasi party. More importantly, however, applying solidly established precedent, waiver did not occur.
52
The Supreme Court has repeatedly rejected constructive waiver arguments such as those made here and has established that waiver can be found "only where stated 'by the most express language or by such overwhelming implications from the text as [will] leave no room for any other reasonable construction.' " Edelman, 415 U.S. at 673, 94 S.Ct. at 1361 (quoting Murray v. Wilson Distilling Co., 213 U.S. 151, 171, 29 S. Ct. 458, 464, 53 L. Ed. 742 (1909)). The Court has continuously applied this standard, construing even express state waivers of sovereign immunity very narrowly. See Florida Dep't of Health & Rehab. Servs. v. Florida Nursing Home Ass'n, 450 U.S. 147, 149-50, 101 S. Ct. 1032, 1033-34, 67 L. Ed. 2d 132 (1981) (per curiam) (general statutory waiver of state agency's immunity applies only to suits in state courts and not federal courts); Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 241, 105 S. Ct. 3142, 3146, 87 L. Ed. 2d 171 (1985) (state constitution's general waiver of state's sovereign immunity applies only to suits in state courts and not federal courts as well).
53
Here, the Missouri indemnity statute goes even a step further, it specifically disavows any waiver of Eleventh Amendment immunity. Even ignoring the express disavowal of waiver, the holdings of the district court and the majority are wrong given the nearly insurmountable presumption against constructive waivers of Eleventh Amendment immunity. See Edelman, 415 U.S. at 671-74, 94 S.Ct. at 1359-61.
54
In Williams v. Bennett, 689 F.2d 1370, 1377-79 (11th Cir.1982), cert. denied, 464 U.S. 932, 104 S. Ct. 335, 78 L. Ed. 2d 305 (1983), and Gamble v. Florida Dep't of Health & Rehab. Servs., 779 F.2d 1509, 1516-18 (11th Cir.1986), the Eleventh Circuit has twice considered whether indemnity statutes waive immunity. Williams examined an Alabama statute, and, Gamble, as indicated, analyzed Florida law. The Alabama statute discussed in Williams is comparable to the Missouri legislation; it contains an express disavowal of waiver. The Eleventh Circuit found the indemnity language to be an employee benefit "analogous to liability insurance for any ... correctional employee ... sued individually for acts arising in the course of employment." Williams, 689 [email protected]. A situation squarely on point with this case. Our holding should be the same as that of the Williams court in terms of employee benefits and waiver of immunity.
55
The majority's use of the Reimbursement Act as a source of limited waiver is puzzling, especially since Rule 69(a) is used as the vehicle to force payment of this judgment. Although the Act's definition of "assets" includes "[a] money judgment received by the offender from the state as a result of a civil action," Mo.Rev.Stat. § 217.827(1)(a)b, it is difficult to even speculate how these words used by the Missouri legislature remotely approach a waiver of sovereign immunity "by the most express language or by such overwhelming implications from the text," Edelman, 415 U.S. at 673, 94 S.Ct. at 1361. This section merely defines the assets subject to state claims under the Reimbursement Act, it does not implicate, much less waive, Missouri's immunity in the separate and distinct federal court litigation that provides the source of the assets.
56
The majority nonetheless finds an implied waiver of immunity by concluding that Missouri seeks to take advantage of the judgment in Hankins' section 1983 suit through the Reimbursement Act. The majority cites United States v. DCS Dev. Corp., 590 F. Supp. 1117 (W.D.N.Y.1984), and Sosna v. Iowa, 419 U.S. 393, 95 S. Ct. 553, 42 L. Ed. 2d 532 (1975), to support its finding. The majority ignores, however, that the fundamental question addressed in these cases was the extent to which a state waives its immunity once it has voluntarily made an appearance in a suit. An appearance in the litigation is a prerequisite to applying the waiver standard, i.e., whether the state seeks to take advantage of the suit. As discussed above, Missouri did not waive its immunity in the section 1983 suit by satisfying Hankins' judgment. Missouri, therefore, has not appeared in the suit and does not seek to take advantage of it in the sense that DCS Dev. Corp. and Sosna contemplate. Instead, Missouri's position is comparable to that of a tort victim who decides to sue a previously insolvent tortfeasor in another court upon learning that the tortfeasor has received a judgment from a third party. By overlooking the lack of an appearance by Missouri in Hankins' section 1983 suit, the majority stretches the holdings of DCS Dev. Corp. and Sosna beyond their intended and reasonable scope.
57
In sum, the majority now establishes precedent for this circuit based upon erroneous policy arguments and a misapplication of established law.4 Accordingly, I would reverse the district court, set aside the Fed.R.Civ.P. 69(a) proceeding and let Hankins and the state settle their differences in the proper forum, the Missouri courts.
*
The Honorable Richard S. Arnold became Chief Judge of the United States Court of Appeals for the Eighth Circuit on January 7, 1992
1
The Honorable Scott O. Wright, Senior United States District Judge for the Western District of Missouri
2
Although the State claimed in the state court filings that it sought only $2,910.80, it debited Hankins' account by $3,234.22. Before the debit, Hankins' account balance was $33.78
3
The two appellants will be referred to throughout the rest of our discussion as "the State." Although the State was not a party in the proceedings below, Hankins, 759 F. Supp. at 571-72, it filed a joint notice of appeal with Finnel
4
Hankins never actually received the check. The money was deposited in his account the same day that his account was debited for "cell reimbursement." His account record lists the debit before the credit
5
In an official-capacity lawsuit, the State is considered the real party in interest, Carr v. City of Florence, 916 F.2d 1521, 1524 (11th Cir.1990), because relief is sought directly from the state treasury. Lawson v. Bouck, 747 F. Supp. 376, 380 (W.D.Mich.1990). In an individual capacity lawsuit, relief is sought from the individual, even though liability is predicated upon actions taken by that individual in his official capacity. Id
6
The overly general arguments of the dissent do not merit a detailed response as they fail to focus on the narrow and unique factual situation presented in this case, which in itself is without precedent. A reading of this opinion makes it evident that it is not based upon public policy, as the dissent charges. It goes without saying that we decide only the limited issues before us and do not reach other issues that may arise in the future
7
We are aware of Florida Dep't of State v. Treasure Salvors, Inc., 458 U.S. 670, 102 S. Ct. 3304, 73 L. Ed. 2d 1057 (1982), in which eight justices held that the Eleventh Amendment barred a federal court from adjudicating a State's interest in specific property without the State's consent. Id. at 682, 102 S.Ct. at 3313 (plurality), id. at 703, 102 S.Ct. at 3324 (White, J., concurring in judgment in part, dissenting in part.) We conclude that Treasure Salvors does not control this case. Here, the district court would not be deciding the State's interest in a res, but would simply be enjoining state officials from attaching certain funds to which Hankins now holds title. The district court's order would not diminish or extinguish the State's claim against Hankins, and thus does not run counter to Treasure Salvors. Nothing in the district court's order prevents the State from seeking reimbursement out of Hankins' other assets
8
The State repeatedly asserts the judgment has been paid. Thus, the district court's order would only be aimed at releasing Hankins' account from the receiver's control
9
See also Skevofilax v. Quigley, 810 F.2d 378, 385 (3d Cir.) (district court has ancillary jurisdiction to adjudicate a garnishment action by a judgment creditor against a nonparty to the action that may owe an obligation to indemnify the judgment debtor), cert. denied, 481 U.S. 1029, 107 S. Ct. 1956, 95 L. Ed. 2d 528 (1987)
10
Because we conclude that the State's claim is not a separate and independent claim, we need not address its contentions that Hankins could not have removed the State's claim to federal court and that Hankins could not have asserted an independent claim for declaratory and injunctive relief in federal court because of the lack of subject matter jurisdiction
1
I suspect there are several avenues of assault available, not limited to arguments that a reimbursement amounts to an additional criminal fine or that court ordered restitution arising outside the criminal process violates due process considerations. Nothing of this nature is referred to in the record and it is doubtful that such attacks, if made, would prevail in the final analysis
2
Federal Rule of Civil Procedure 69(a) states:
Process to enforce a judgment for the payment of money shall be a writ of execution, unless the court directs otherwise. The procedure on execution, in proceedings supplementary to and in aid of a judgment, and in proceedings on and in aid of execution shall be in accordance with the practice and procedure of the state in which the district court is held, existing at the time the remedy is sought, except that any statute of the United States governs to the extent that it is applicable. In aid of the judgment or execution, the judgment creditor or a successor in interest when that interest appears of record, may obtain discovery from any person, including the judgment debtor, in the manner provided in these rules or in the manner provided by the practice of the state in which the district court is held.
3
The district court concluded that permitting the State to seize this section 1983 damage award would disincline prisoners from bringing such damage claims and would destroy the inducement for a state and its employees to comply with the federal Constitution. Any witness to the flood of prisoner petitions from the correctional facilities of this country will recognize this argument as fanciful. Further, section 1983 carries with it equitable as well as legal remedies. The Missouri Act confiscates only a portion of each judgment and, as in this case, the award of attorney fees to the plaintiff often, if not usually, far exceeds the amount of the section 1983 judgment. With these remedies and this knowledge in mind, it is almost certain that the actions of Missouri in this case, even if successful, will have absolutely no effect upon the number of prisoner claims asserted
4
Besides failing to justify the unprecedented status it accords a section 1983 judgment, the majority's holding fails to provide a workable framework for future adjudication. For example, it is far from clear whether the majority's holding would preclude a state from seeking reimbursement for prison expenses from the proceeds of a prisoner's section 1983 suit unrelated to the conditions of his imprisonment. Presumably such reimbursement would undermine the purposes of section 1983 as directly as the claim for reimbursement in the present case supposedly does. As this example demonstrates, any attempt to restrict the scope of the majority's holding would simply reveal the holding's inherently arbitrary nature
|
612 A.2d 150 (1992)
Melvin E. BOARDLEY, Defendant Below, Appellant,
v.
STATE of Delaware, Plaintiff Below, Appellee.
Supreme Court of Delaware.
Submitted: March 26, 1992.
Decided: July 24, 1992.
Rehearing Denied August 17, 1992.
Bernard J. O'Donnell and Brian J. Bartley (argued), Asst. Public Defenders, Office of Public Defender, Wilmington, for appellant.
Gary A. Myers (argued), Deputy Atty. Gen., Dept. of Justice, Georgetown, for appellee.
Before HORSEY, WALSH and HOLLAND, JJ.
*151 WALSH, Justice:
This is an appeal from a conviction of murder first degree and a related weapons offense following a jury trial in the Superior Court. The appellant, Melvin Boardley, was sentenced to life imprisonment without the possibility of parole for the murder conviction and an additional sentence of five years for the weapons offense. On appeal, he asserts two claims of error: the failure of the trial court to suppress the seizure of his hat during a warrantless search and the refusal of the trial court to order the non-consensual securing of a blood sample from a third party for use as potentially exculpatory evidence. We find no error in the rulings of the Superior Court and accordingly affirm the convictions.
I
The evidence presented by the State fairly depicted the following events. On January 28, 1990, at approximately 3 a.m., James F. Thomas was attempting to make a call from a public phone outside a club in Wilmington. Thomas had a brief confrontation with a passerby with whom he exchanged words. The passerby went to the middle of the street to speak to a man, later identified as Therome Clark, who was alighting from a car. After securing a cigarette from Clark, the individual returned to Thomas to continue the argument. After a brief exchange, the individual drew an automatic pistol and, despite Thomas' retreat, shot Thomas in the chest, killing him. The assailant then fled the scene.
During the confrontation Thomas' brother-in-law, Nathan Williams, was standing nearby. He overheard the words exchanged and saw the shot fired. Williams gave the police a description of the assailant a black man, wearing dark clothing including a brown or black brim hat who had fled the scene. Later Williams identified the assailant, the defendant Boardley, from a photo lineup and claimed to have known [email protected]. Williams also identified Clark, who had also left the scene, as the person Boardley spoke to in the middle of the street.
Shortly after the shooting, Boardley appeared at the apartment of his girlfriend, Patricia Walston. Walston was not there but her sister, Brenda Irby, was present. Irby testified that Boardley asked for her help because he had just shot a man in the arm after an argument. Boardley stayed that night at the apartment where he was arrested by police the next morning. At the time of his arrest, Boardley was not wearing the clothing described by Williams but as they were leaving the apartment, someone, apparently a police officer, placed a brim hat on Boardley's head. Later while Boardley was in custody the hat was noted to fit the description of the hat worn by Thomas' assailant. The hat was seized and, over defense objection, admitted in evidence, along with a black leather jacket after identification by Williams[1] as matching the clothing worn by Thomas' assailant.
*152 Clark, who was identified by Williams as having talked to Boardley shortly before the shooting, later became the subject of investigation by police. Clark, who lived a short distance from the crime scene, returned to that location about an hour after the shooting and dropped a note in view of police officers. The note offered "a favor for a favor." At the time of the killing, Clark was facing prosecution on robbery charges. Upon being confronted about the note, Clark told police that he heard the shot and saw a black male running from the scene. He denied being with the assailant prior to the shooting and gave several inconsistent versions of his role in the incident. Clark later became uncooperative to the point where he refused to testify at Boardley's trial unless granted immunity. Clark also refused to provide a blood sample, at Boardley's request, in order to determine whether blood found on Clark's hand matched that of the victim. At trial, Clark ultimately testified for the State and identified Boardley as the individual who argued with Williams and then shot him.
Although he did not testify, Boardley's girlfriend claimed that he was with her at her apartment until 2 a.m. and when she left he was asleep. She testified that when she last saw Boardley he was wearing a black and red sweater and lime green pants. Boardley argued to the jury that Clark's suspicious conduct and evasiveness suggested that he was actually the gunman. The jury apparently rejected this contention and convicted Boardley of first degree murder and the accompanying weapons offense.
II
Boardley's first contention of error is the refusal of the Trial Judge to suppress the seizure of his hat by police shortly after his arrest. He argues that the seizure of the brim hat was in violation of the constitutional standards as well as contrary to the search warrant statute. 11 Del.C. § 2301.
Within hours of Thomas' death the police secured an arrest warrant for Boardley charging him with first degree murder. They also secured a search warrant from a Municipal Court judge authorizing the search of the home of Boardley's mother at 911 Pine Street, where Boardley was thought to be living. The search warrant authorized seizure, as evidence of a crime, of a semi-automatic handgun and "a black hat, a black jacket, black pants, black shoes and a green sweater or sweatshirt." Boardley was not present at the Pine Street address and no items of his clothing were seized. When the police then went to the home of Boardley's girlfriend, they located Boardley but found no gun. Since it was a wintry day, the arresting officers requested a woman in the house to secure a jacket for Boardley, who was handcuffed. As they left the apartment, the police placed a brim hat on Boardley's head. Upon arrival at the police station these items, along with Boardley's other personal belongings, were inventoried and secured in police custody. Later when the police learned from Brenda Irby that Boardley was wearing a brim hat shortly after the shooting, the hat, already in police custody, was formally seized for use as evidence.
Boardley's argument that the police had no authority to seize the hat at the time of his arrest lacks a factual premise. There was no seizure of the hat at the time Boardley was arrested because the police were not interfering in any meaningful way with Boardley's possessory interests in the hat. See United States v. Jacobsen, 466 U.S. 109, 113, 104 S. Ct. 1652, 1656, 80 L. Ed. 2d 85 (1984). The trial court found that, at the time of the arrest, the police were not aware of the significance of the hat as evidence. Thus, in placing the hat on Boardley's head incident to transporting him, the police could hardly be said to have engaged in a seizure. Indeed, by placing the hat on his head and permitting him to retain it until it was inventoried incident to the booking process, the police were recognizing *153 Boardley's continued right to possession of the hat. As the Trial Judge noted in denying the motion to suppress, the initial police contact with the hat was "innocuous" and the evidentiary value of the evidence was not recognized until later when the item was in police custody for an entirely different reason.
The Trial Judge determined that the police did not resort to subterfuge or trickery in securing Boardley's hat so that he could wear it to the police station. As a factual finding that conclusion is binding on this Court if supported by sufficient evidence and the product of a logical and orderly deductive process. Downs v. State, Del. Supr., 570 A.2d 1142, 1144 (1990). On the present record, we perceive no basis to disturb it.
Boardley's argument that the "discovery" of the hat resulted from a generalized search of the bedroom where he was arrested is equally without merit. Since the police were in possession of a warrant for Boardley's arrest they were authorized to seize his person and transport him, suitably attired, to the police station. Whether or not a general unauthorized search of the premises occurred is irrelevant unless there is a nexus between that search and the placing of the hat on Boardley's head incident to his transportation. Since the trial court specifically determined that the hat was not related to any prior search, it is unnecessary to examine the scope and authority of such a search.
Once the brim hat came into police custody for safekeeping purposes, it was subject to seizure under the plain view doctrine when its evidentiary value became known. Wicks v. State, Del.Supr., 552 A.2d 462, 465 (1988) (citing Coolidge v. New Hampshire, 403 U.S. 443, 466, 91 S. Ct. 2022, 2038, 29 L. Ed. 2d 564 (1971)). Seizure of evidence under the plain view doctrine is permitted where (1) the view of the evidence results from a lawful police activity such as execution of a search or arrest warrant, (2) police contact with the evidence is inadvertent, and (3) the item, when seized, is of "immediately apparent evidentiary value." Id. Since the trial court has determined, as a factual matter, that the initial contact with the hat was not contrived, resulted from the execution of a valid arrest warrant and that the evidentiary value of the item did not become apparent until other information was conveyed to the police, the Wicks standard is clearly satisfied. Accordingly, we affirm the ruling of the Superior Court declining to suppress the seizure of the brim hat.
III
We next address an issue which arose from a pretrial ruling of the Superior Court. Boardley claims that he was denied access to important exculpatory evidence when the Superior Court refused to require Clark to provide a blood sample.
At the time the police first spoke to Clark, following his dropping of the note, they noticed blood on the fingernail of his right hand. Because of Clark's unusual actions following the shooting and his contact with the assailant prior to the shooting, the police secured scrapings and clippings of the fingernail. These items were submitted to the Federal Bureau of Investigation ("FBI") for serological analysis and comparison with the victim's blood. In response the FBI reported on May 31, 1990 that the scrapings were insufficient for comparison and that a sample of Clark's blood as well as additional samples of the victim's blood would be required for a definitive analysis. Boardley promptly filed a motion to compel Clark to provide a blood sample and the State did not oppose the request.
Clark, represented by counsel, refused to provide the sample and moved to dismiss Boardley's application. The Superior Court ruled that Boardley lacked standing to compel Clark to provide a blood sample and the court did not have "the prosecutorial authority" to require a witness to submit to a blood test. The State thereupon filed a motion to compel which essentially adopted Boardley's factual basis as "probable cause to withdraw Therome Clark's blood." Clark again objected through counsel that the State had not demonstrated probable cause to invade the privacy of a witness. *154 The Superior Court ruled that it would not consider the State's application unless it was in the form of a request for a search warrant. In compliance with the court's suggestion, the State sought the issuance of a search warrant accompanied by an "Additional Probable Cause Sheet," attested to under oath by a Deputy Attorney General, which contained, inter alia, the following information:
The Defendant's Opening Memorandum on his Motion to Compel sets forth a factual predicate for probable cause. Specifically, pages seven and eight of the Defendant's Memorandum indicate that another State witness, Nathaniel Williams, observed Therome Clark hand the defendant what appeared to be a pack of cigarettes, immediately prior to the shooting. Therome Clark may also have fled in the defendant's direction, when Nathaniel Williams used the phone to call police. The defendant then notes in this Memorandum that Therome Clark denies having handed the defendant anything. This denial, the defense argues, coupled with the blood on Therome's finger and the fact that no murder weapon was located, provides a basis for probable cause to withdraw Therome Clark's blood. Your affiants pray that a Search Warrant be granted for the withdrawal of blood samples from Therome Clark to compare with the victims blood and the blood found on Therome Clark's right index finger.
The Superior Court conducted a further hearing on the State's application for a search warrant. When the prosecutor was unable to state that there was probable cause to believe that Clark had committed any crime, the court refused to authorize the issuance of a search warrant for the taking of a sample of his blood.
When Clark was called by the State as a witness at trial, he invoked his right against self-incrimination. Upon the grant of immunity Clark testified against Boardley and identified him as the individual who confronted the victim. In cross-examination, Clark admitted that the police took fingernail scrapings from him indicating the presence of blood but claimed that the blood came from an accidental needle stick while injecting drugs. Clark also conceded that he refused to cooperate with the police until granted immunity. Finally, the jury was advised that the State and defense stipulated that both the State and the defense had sought unsuccessfully to secure a sample of Clark's blood.
Boardley contends that the Superior Court erred in requiring a showing of probable cause of criminal activity by Clark in order to secure his blood. As a result of that ruling, Boardley argues that he was deprived of evidence material to his defense. The State agrees that the Superior Court erred in applying the Fourth Amendment's probable cause standard to a request to search and seize evidence of a crime from a third party. The State maintains, however, that the trial court's error cannot be laid at the State's door and that, in any event, the ruling did not subvert the fairness of the trial. We agree.
Although a search warrant may not issue except upon a determination of probable cause there is no requirement the owner or possessor of the property to be seized be viewed as a suspect. Zurcher v. Stanford Daily, 436 U.S. 547, 98 S. Ct. 1970, 56 L. Ed. 2d 525 (1978). The Fourth Amendment does not foreclose the issuance of a search warrant directed to a third party not "implicated in misconduct." Id. at 559, 98 S. Ct. at 1978. The requirement of probable cause in that context is directed to the relationship between the crime under investigation and the evidence sought to be seized. As long as the search is "reasonable" under the Fourth Amendment, the "State interest in enforcing the criminal law and recovering the evidence remains the same," whether the third party is a suspect or not. Id. at 560, 98 S. Ct. at 1979.[2]
*155 In requiring the State to establish probable cause that Clark had engaged in criminal activity, the Superior Court was clearly in error. The court should have granted the State's application to seize a small amount of Clark's blood for comparison with that of the victim. While Clark's conduct at the scene was suspicious, and he later proved uncooperative with police, no witness directly implicated him in the shooting. Moreover, it would have seriously undermined the State's case against Boardley if the prosecutor were to state under oath, as a condition of securing a search warrant, that the State had probable cause to suspect Clark of the offenses for which Boardley had been indicted.
Although we conclude that the Superior Court erred in its refusal to grant a search warrant for Clark's blood, such error is not attributable to the prosecution. Indeed, short of attesting to Clark's criminal involvement, the State did all that was required in an effort to secure evidence which the defendant claimed was exculpatory. Nor was the defendant entitled to an inference that such evidence if secured would have been exculpatory of his guilt since the absence of such evidence was not the result of the State's failure to gather or preserve it. Cf. Deberry v. State, Del. Supr., 457 A.2d 744 (1983); Hammond v. State, Del.Supr., 569 A.2d 81 (1989).[3]
Boardley contends that the trial court's error was compounded by the State's use of Clark as an immunized [email protected]. Although we agree that the trial court erred in not requiring production of a sample of Clark's blood, we conclude that such error was harmless beyond a reasonable doubt. We also find no prosecutorial overreaching in its grant of immunity enabling Clark to testify for the State.
Clark's conduct at the scene, although unusual, did not give rise to any reasonable inference that he was directly implicated in Thomas' death. There is no evidence that Clark had any contact with the victim, nor with Boardley except to hand him a pack of cigarettes prior to the shooting. It is undisputed that there was only one shot and one assailant. Boardley's sole defense was that he was not at the scene. The evidence to the contrary including the direct eye witness testimony of Williams, who was standing a few feet away from the confrontation, was overwhelming. That testimony together with Boardley's statements shortly after the killing that he had shot a man in an argument rendered the State's case extremely strong. In light of the strength of the State's case, we are convinced beyond a reasonable doubt that any error which precluded a comparison of the blood on Clark's fingernail with that of the victim was harmless and did not affect the verdict.[4]Michael v. State, Del.Supr., 529 A.2d 752, 761 (1987).
Additionally, we note that the evidence of Clark's refusal to provide a blood sample as well as his initial refusal to testify were presented to the jury to impeach his testimony and to suggest to the jury that Clark was implicated in the killing. The jury was instructed that because Clark had been granted immunity his testimony should be received with great caution. Boardley's basic defense at trial was that the State had not properly investigated the crime and that the real culprit was Clark whose conduct in refusing to provide a blood sample and securing of immunity suggest that he, *156 not Boardley, killed Williams. Boardley was afforded a full opportunity to present that defense, notwithstanding the absence of a blood test that might have implicated Clark. Id. The jury simply chose to reject that argument in the face of the overwhelming evidence presented by the State. We perceive of no basis to disturb that verdict.
The judgment of the Superior Court is AFFIRMED.
NOTES
[1] Before Boardley's arrest, the police secured a search warrant for the home of Boardley's mother for a gun and his clothing, including the hat and a black jacket. Although these items were not located at the home of Boardley's mother, a black leather jacket was later produced by Boardley's girlfriend. On appeal, Boardley does not allege error in admission of the leather jacket.
[2] The compulsory extraction of blood from any individual, whether a suspect or a witness, is subject to the further requirement that any compulsion required to extract blood not implicate due process concerns. Schmerber v. California, 384 U.S. 757, 86 S. Ct. 1826, 16 L. Ed. 2d 908 (1966); Brank v. State, Del.Supr., 528 A.2d 1185, 1190 (1987).
[3] Following oral argument, this Court inquired of the State whether, at that time, a blood test could be conducted if this case were remanded to the Superior Court for the purpose of requiring Clark to supply a sample of his blood for testing. The State has advised the Court that the victim's blood sample was "routinely destroyed" by the Medical Examiner's Office and thus is no longer available for comparison with any new sample of Clark's blood.
[4] We note that even if Clark had provided a sample of his blood, it would have been of limited relevance. At trial, the State presented the testimony of an FBI serologist who stated that the analysis envisioned by the FBI could only have determined whether two particular samples were of the same genetic "group," not whether they came from the same person. Thus, the best evidence Boardley could have hoped to obtain from the sample was that the blood under Clark's fingernails was of the same genetic group as the victim's, but not necessarily that it was the victim's.
|
116 HR 6051 IH: Reading Early and Addressing Dyslexia Act
U.S. House of Representatives
2020-03-02
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
I116th CONGRESS2d SessionH. R. 6051IN THE HOUSE OF REPRESENTATIVESMarch 2, 2020Ms. Houlahan (for herself and Mr. Westerman) introduced the following bill; which was referred to the Committee on Education and LaborA BILLTo authorize a pilot program for dyslexia screening and early literacy intervention using evidence-based services for students suspected of having an early reading deficiency or dyslexia, and for other purposes.1.Short titleThis Act may be cited as the Reading Early and Addressing Dyslexia Act or the READ Act. 2.Findings; sense of Congress(a)FindingsCongress finds the following: (1)More than 30,000,000 adults in the United States are not able to read or write above a third-grade level.(2)Of adults in the United States who live in poverty, nearly half have low levels of literacy.(3)Children whose parents have low levels of literacy are more than 70 percent more likely to also have low levels of literacy and are more likely to get poor grades, display behavioral problems, have high absentee rates, repeat school years, or drop out.(4)The 2019 National Assessment of Educational Progress 4th Grade Reading Level Assessment showed the national average reading score for 2019 was lower than 2017.(5)More than 70 percent of State prison inmates have low levels of literacy.(6)Low levels of literacy are connected to over $230,000,000,000 a year in health care costs in the United States.(7)Dyslexia is thought to be the most common neurocognitive disorder, affecting about 10 percent of children in school.(8)In 1997, Congress asked the Director of the National Institute of Child Health and Human Development at the National Institutes of Health, in consultation with the Secretary of Education, to convene a national panel, the National Reading Panel, to assess the status of research-based knowledge, including the effectiveness of various approaches to teaching children to read. The report, released in 2000, documented overwhelming evidence that instruction in phonics enhances all students’ success in learning to read. (9)In 2014, in response to the Pennsylvania General Assembly’s passage of Act 69 of 2014, the Pennsylvania Department of Education developed the Dyslexia Screening and Early Literacy Intervention Pilot Program, which established a three-year early literacy intervention and dyslexia pilot program using evidence-based screening and then evidence-based instruction and intervention for students found to be at risk for future reading difficulties. Such Program identified students in kindergarten who were deemed at risk for reading difficulties, including dyslexia, using screening tests. (10)Alabama, Arkansas, Colorado, Connecticut, Kansas, Louisiana, Montana, New Jersey, Oklahoma, Rhode Island, and South Carolina have all commissioned task forces on early literacy or dyslexia. (11)Arkansas, Arizona, Oregon, Ohio, Indiana, Illinois, Massachusetts, Montana, Nevada, North Dakota, South Carolina, and Wyoming have put into place protocols and procedures to screen for early reading deficiencies and dyslexia.(b)Sense of CongressIt is the sense of the Congress that—(1)it is in the interest of the Nation to ensure all children in the United States, regardless of ability, disability, or circumstance, be afforded a high-quality education that includes the promotion of literacy skills; and(2)the Individual with Disabilities Education Act (20 U.S.C. 1400 et seq.) should be robustly funded.3.DefinitionsFor the purposes of the pilot program authorized by this Act:(1)DyslexiaThe term dyslexia means a condition that—(A)is characterized by difficulty with accurate or fluent word recognition and by poor spelling and decoding abilities that typically results from a deficit in one or more processes related to the phonological component of language;(B)is often unrelated to other cognitive abilities and the provision of effective classroom instruction; and(C)may result in problems in reading comprehension and reduced reading experience that may impede the growth of vocabulary and background knowledge. (2)Comprehensive literacy instructionThe term comprehensive literacy instruction has the meaning given such term in section 2221(b) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6641(b)).(3)Intensive intervention(A)In generalThe term intensive intervention means a structured literacy program that includes explicit, multisensory, and systematic phonics instruction and is delivered in the manner proscribed by the developer of the structured literacy program by a teacher trained in such program.(B)Phonics instruction termsWith respect to phonics instruction that is part of intensive intervention—(i)the term explicit means instruction in which a teacher clearly explains and models key skills, with well-chosen examples, and students are not expected to develop the skills based mainly on exposure and incidental learning opportunities;(ii)the term multisensory means instruction that combines listening, speaking, reading, and a tactile or kinesthetic activity; and(iii)the term systematic means instruction that is planned and provided in specific sequence, with important prerequisite skills taught before more advanced skills, and with care taken not to introduce skills in a way that is confusing to students.(4)Local educational agencyThe term local educational agency has the meaning given such term in section 8101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801).(5)SecretaryThe term Secretary means the Secretary of Education. (6)State educational agencyThe term State educational agency has the meaning given such term in section 8101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801).4.Early Literacy and Dyslexia Intervention Pilot Program(a)AuthorizationNot later than 1 year after the date of enactment of this Act, the Secretary shall establish an Early Literacy and Dyslexia Intervention Pilot Program (hereinafter referred to as the Pilot Program), in accordance with this Act, to award grants to State educational agencies to provide evidence-based early screening, multi-tier support systems, and comprehensive literacy education, using evidence-based methods of screening and intensive intervention identified in accordance with subsection (d), for students served by the participating local educational agencies in such States. The early screening and support systems identified in accordance with subsection (d) and carried out under the Pilot Program shall screen and support students for potential risk factors for early reading deficiencies and dyslexia, such as low phonemic awareness, low letter and symbol naming, and inability to remember sequences. (b)Grant selection and distribution(1)Grant selectionThe Secretary shall award grants under this Act to 5 State educational agencies to participate in the Pilot Program. The Secretary shall ensure that the State educational agencies awarded grants under this Act serve geographically, racially, and economically diverse student populations.(2)Grant periodA grant awarded to a State educational agency under this Act shall be for a period of 3 consecutive school years, and shall be for not more than $500,000 for each school year of the grant period.(c)Participating local educational agenciesEach State educational agency awarded a grant under this Act shall select no fewer than 2 local educational agencies in the State to participate in the Pilot Program under this Act. To be eligible to be selected as a participating local educational agency, a local educational agency shall—(1)have a total enrollment of at least 3,000 students; (2)provide full-day kindergarten; and(3)submit an application to the State educational agency at such time and containing such information as may be required by the Secretary and the State educational agency. (d)Identification of evidence-Based methods of screening and intensive interventionNot later than 6 months after the date of enactment of this Act, the Secretary shall, in consultation with recognized, expert organizations described in section 5(a)(1), State educational agencies the Secretary is consulting with in accordance with section 5(b), and the State educational agencies selected to participate in the Pilot Program, identify—(1)one or more intensive interventions for students in kindergarten through grade 3, which shall include—(A)phonological awareness and phonemic awareness;(B)sound symbol recognition;(C)alphabet knowledge;(D)decoding skills;(E)encoding skills; and(F)rapid naming; and(2)best practices to instruct educators on—(A)the science of reading;(B)how to execute the intensive interventions identified in accordance with paragraph (1); (C)understanding and identifying early reading deficiencies and dyslexia, including how to execute methods of screening identified in accordance with paragraph (3); and(D)how to execute the intensive intervention identified in accordance with paragraph (4);(3)one or more evidence-based methods of screening appropriate for students in kindergarten through grade 3 for potential risk factors for early reading deficiencies and dyslexia, which may include the Dynamic Indicators of Basic Early Literacy Skills tests and phonological and phonemic processing and rapid automatized naming tests;(4)evidence-based intensive intervention for students identified as being at risk for, suspected of having, or having early reading deficiencies or dyslexia, or both; and(5)a methodology for evaluating the effects of the Pilot Program on the students identified as having early reading deficiencies or dyslexia, or both.(e)ActivitiesEach State educational agency participating in the Pilot Program shall ensure that the following activities are carried out using the methods of screening and intensive intervention identified in accordance with subsection (d): (1)Provide intensive interventions identified in accordance with subsection (d)(1) that develop basic reading skills and incorporate systematic phonics instruction to every student in kindergarten through grade 3 who is served by a participating local educational agency in the State. (2)Three times during each school year during the grant period, including at the beginning of the school year, during the middle of the school year, and during the final academic period of the school year, use evidence-based methods of screening identified in accordance with subsection (d)(3) to screen each student in kindergarten through grade 3 enrolled in each participating local educational agency in the State for low phonemic awareness and other evidence-based risk factors for early reading deficiencies and dyslexia. (3)For each student who is suspected of having an early reading deficiency or dyslexia, or both, based on the results of a screening conducted in accordance with paragraph (2)—(A)notify the parent or guardian of such student that the student was screened, the results of the student’s screening, and that the student is eligible to receive reading intervention services as part of the Pilot Program;(B)provide to the parent or guardian of such student information about additional screening and services available through the Pilot Program, and information on other resources available through the local educational agency and State to parents and students about early reading deficiencies and dyslexia, and recommended evidence-based resources and interventions; and(C)in order to provide additional screening, diagnostic assessments, or services to the student under the Pilot Program, require consent from the parent or guardian of such student indicating that the parent or guardian voluntarily and knowingly consents to the continued participation of the student in the Pilot Program.(4)For each student suspected of having an early reading deficiency or dyslexia based on the results of a screening whose parent or guardian has consented to continued participation in the Pilot Program—(A)conduct diagnostic assessments that—(i)are nationally standardized, norm-referenced screening assessments of phonological awareness, alphabetic knowledge, concept of word and grapheme phoneme correspondence; and(ii)are proven to have predictive validity and classification accuracy; and(B)provide intensive intervention identified in accordance with subsection (d)(4) in areas identified by the screening, diagnostic assessments, or progress monitoring data collected by intervention teachers, that includes timely targeted instruction and strategic reteaching of specific unlearned material or concepts until mastery is achieved. (f)Student participationParticipation of a student in the Pilot Program, including participation in screening and receipt of intensive intervention, shall not at any time preclude a parent or guardian from requesting or receiving an evaluation of such student for special education services, including during the course of intensive intervention carried out under the Pilot Program.(g)Reports to SecretaryAt the end of each school year of the Pilot Program, each participating State educational agency shall report to the Secretary on the activities of the State educational agency, and each participating local educational agency in the State, carried out under the Pilot Program, including any data and information the Secretary may require.5.Consultation(a)Consultation and grantee assistanceIn establishing, operating, and evaluating the Pilot Program, the Secretary shall—(1)consult with nationally recognized organizations that recognize, support, and advocate for science-based literacy instruction, and specialize in, and have expertise with, the scientific basis of dyslexia and intensive intervention; and(2)provide State educational agencies participating in the Pilot Program with assistance related to implementation and execution of the Pilot Program, including access to—(A)technical support mechanisms (such as training and printed reference materials); and(B)the State educational agencies consulting with the Secretary in accordance with subsection (b).(b)Consultation with State educational agencies(1)In generalNot later than 90 days after the date of enactment of this Act, the Secretary shall select at least one State educational agency with experience implementing and carrying out a program similar to the Pilot Program to be carried out by State educational agencies under this Act. The Secretary shall consult with the selected State educational agencies with respect to providing assistance to State educational agencies participating in the Pilot Program. Such assistance may include designated staff assistance, conferences, shadowing, resource building and sharing, and any other assistance the Secretary determines to be appropriate. (2)SelectionTo be qualified to be selected as a State educational agency to consult with the Secretary in accordance with paragraph (1), a State educational agency shall—(A)submit to the Secretary an application, at such time and containing such information as the Secretary may require; and(B)have implemented, before the date of enactment of this Act, and carried out for not less than one calendar year before such date, a statewide program that—(i)incorporated evidenced-based reading instruction for all students served by the State;(ii)identified students at-risk for early reading deficiencies or dyslexia in kindergarten;(iii)provided evidenced-based intensive intervention beginning in kindergarten for students identified as at-risk;(iv)collected data to study the impact of such program; and(v)used an outside research institution to analyze the data and determine the impact on student outcomes.(3)Ineligibility for Pilot ProgramAny State educational agency selected to consult with the Secretary for the purposes of this subsection shall not be eligible for a grant to participate in the Pilot Program.6.Evaluation(a)EvaluationNot later than one year after the date of enactment of this Act, the Secretary shall enter into a contract with a nationally recognized educational evaluation institution or organization to provide an evaluation of the Pilot Program, which shall be completed not later than one year after the completion of the third school year of the Pilot Program. Such evaluation shall review the effectiveness of evidence-based early reading assistance programs for students with risk factors for early reading deficiencies and dyslexia.(b)Publication of resultsThe Secretary shall make available to the public on the website of the Department of Education the results of the evaluation carried out under subsection (a).7.Report; Study; Resource sharing(a)Pilot Program reportNot later than the 30 days after the completion of the evaluation required under section 6, the Secretary shall submit a report to Congress on the outcome of the Pilot Program and other related matters. Such report shall include—(1)qualitative and quantitative data on the outcomes of State and local educational agencies and students who participated in the Program;(2)qualitative and quantitative data on the experience of educators who participated in the Program; (3)a list of the methods of screening used to evaluate students for low phonemic awareness and other evidence-based risk factors for early reading deficiencies and dyslexia, and how many participating State educational agencies, participating local educational agencies, and participating schools used each such method; (4)for each school year of the Pilot Program, the number of students in kindergarten through grade 3 in each participating State educational agency, participating local educational agency, and participating school who were—(A)screened for low phonemic awareness and other evidence-based risk factors for early reading deficiencies and dyslexia;(B)suspected of having an early reading deficiency or dyslexia based on the results of such screening; and(C)identified as having early reading deficiencies or dyslexia based on a diagnostic assessment; and(5)any regulatory, legal, or resource barriers to continuing and expanding the Program.(b)StudyNot later than 180 days after the completion of the evaluation required under section 6, the Secretary shall provide to Congress, based on the data collected as part of the Pilot Program and evaluation carried out under this Act and any other data available to the Secretary—(1)an assessment of—(A)the impact of practices put in place under the Pilot Program, including the practice of instructing teachers on the science of reading;(B)the value of the inclusion of the science of reading courses for teacher licensing and certification; and(C)how students perform when taught by teachers who have received instruction on the science of reading; and(2)based on the data collected as part of the Program, whether the Secretary recommends reconvening the National Reading Panel.(c)Resource sharingNot later than January 1, 2024, the Secretary shall use the report required under subsection (a) and the results of the study under subsection (b) to create and make available an online platform to provide State and local educational agencies with resources to identify and best serve students in kindergarten through grade 3 who are identified as being at risk for, suspected of having, or having early reading deficiencies or dyslexia, which shall include—(1)evidence-based methods of screening designed specifically for students identified as being at risk for, suspected of having, or having early reading deficiencies or dyslexia; (2)methods of targeted instruction for early reading deficiencies and dyslexia;(3)guidance on developing instructional plans for students identified as having early reading deficiencies or dyslexia;(4)developmentally appropriate curricula and engaging instructional materials and practices for students identified as having early reading deficiencies or dyslexia; (5)structured multisensory approaches to teach language and reading skills to all students, including students identified as being at risk for, suspected of having, or having early reading deficiencies or dyslexia; and(6)a list of suggested training programs for teachers on effective reading instruction methods.8.Authorization of appropriationsThere are authorized to be appropriated to award grants to State educational agencies in accordance with this Act, not more than $2,500,000 for each year of the Pilot Program. |
680 S.W.2d 183 (1984)
J.A. TOBIN CONSTRUCTION COMPANY, Appellant,
v.
STATE HIGHWAY COMMISSION OF MISSOURI, Respondent.
No. WD 35102.
Missouri Court of Appeals, Western District.
September 4, 1984.
Motion for Rehearing and/or Transfer to Overruled and Denied October 30, 1984.
Application to Transfer Denied December 18, 1984.
*185 Michael P. Riley of Carson, Monaco, Coil, Riley & McMillin, P.C., Jefferson City, for appellant.
Bruce A. Ring, Chief Counsel, and Dan Pritchard, Asst. Counsel, Mo. Highway and Transp. Com'n, Jefferson City, for respondent.
Before TURNAGE, C.J., and SOMERVILLE and MANFORD, JJ.
Motion for Rehearing and/or Transfer to Supreme Court Overruled and Denied October 30, 1984.
*186 MANFORD, Judge.
This is a direct appeal from a jury award of damages for breach of contract. The judgment is affirmed, but the case is remanded to the circuit court with directions to enter judgment in the sum of $301,653.62, plus pre-judgment interest in the sum of $198,890.43, for a total judgment of $500,544.05.
Before addressing the specific points presented on this appeal and for purposes of clarity, the parties are identified, and disposition of the cross-appeal is entered. Appellant is the Missouri Highway and Transportation Commission (hereinafter the Commission) and was the original [email protected]. Tobin Construction Company (hereinafter Tobin) is respondent and was the original [email protected].
Subsequent to the original trial, Tobin caused to be issued an execution upon the judgment previously entered in its favor. The Commission filed a motion to quash that execution, contending that the Commission was not required to file a supersedeas bond to stay execution pending appeal. The trial court quashed the execution, and Tobin appealed from that quashal. That appeal came to this court and was assigned a separate case designation. By order of this court, the two cases were consolidated under the present case number. Because of the particular disposition of the original proceedings, the question posed by Tobin's cross-appeal becomes moot and is therefore neither reached nor decided.
Turning to the original appeal, the Commission presents twelve points, which in summary charge that the trial court erred (1) in denying the Commission's motion for directed verdict at the close of all the evidence, because the evidence did not establish for Tobin a cause of action ex contractu in the nature of a breach of warranty in that no positive representation by the Commission was made upon which Tobin could rely, (2) in denying the Commission's motion for directed verdict at the close of all the evidence, because the evidence did not establish for Tobin a cause of action for additional compensation, because a special provision of the contract does not allow for added expenses, (3) in denying the Commission's motion for directed verdict, because the contract specifically absolves the Commission for any delay and from any expenses incurred, (4) in denying the Commission's motion for directed verdict at the close of the evidence, because the evidence establishes any delay was caused by Tobin, (5) in denying the Commission's motion to strike the testimony of a subcontractor, because said subcontractor had no privity of contract with the Commission, (6) in giving the verdict-directing instruction for Tobin, because said instruction did not include all the necessary elements for a cause of action ex contractu in the nature of a breach of warranty, (7) in the giving of the burden of proof instruction, because said instruction did not contain the term "or defense" and the Commission submitted an affirmative defense, (8) in refusing the testimony of a certain defense witness and two tendered exhibits, (9) in allowing the testimony of a certain witness over the Commission's objection, because said testimony was irrelevant, (10) in overruling the Commission's motion for new trial and motion to correct the judgment entry, because the judgment is excessive in that the amount of prejudgment interest is incorrectly computed, (11) in admitting a certain exhibit and thus committing plain error, because said document is not a true copy and said fact was not disclosed to the Commission or the trial court, and (12) the Commission was, by the trial court, denied a fair trial because of the cumulative effect of all of the foregoing charged errors.
The pertinent facts as disclosed by the record are as follows. Tobin, along with other contractors, submitted its bid for a road project (designated 1-435-1(61)16 UA), which was to further the development of I-435 highway in Jackson County, Missouri. Tobin was the low bidder, and the contract was executed between the Commission and Tobin on July 12, 1968. The contract contained the following, which is referred to as Special Provision R:
*187 "R. WORK RESTRICTION (KANSAS CITY POWER & LIGHT EASEMENT)
The Contractor is advised that the Commission and the Kansas City Power & Light Company have an agreement executed November 7, 1966, for the relocation of the utility facilities which are on the right of way for a distance of approximately 5500 feet in the vicinity of Truman Road extending from approximately Station 199 + 00 to approximately Station 254 + 00. The Kansas City Power & Light Company has taken bids for the necessary relocation work and has advised the Commission that such work would begin about May 1, 1968, and would be completed by October 1, 1968, and the company has been advised that this representation will appear in this contract. The Commission presently holds the necessary property rights under the overhead lines mentioned except for right of way tract No. 230, which is traversed by Skiles Avenue, where the fee ownership was in the Kansas City Power & Light Company subject to the agreement mentioned above. Skiles Avenue, being open, will permit the Contractor to traverse the right of way in this area until it is completely freed of the Kansas City Power & Light Company's facilities. The bidder will be furnished, upon request, with the most recent information with respect to the progress of this relocation and is advised that the Commission has directed that said relocation be completed by October 1, 1968.
Until such time as the right of way is completely freed of the existing facilities, the Contractor will be required to conduct the work withing (sic) the above defined limits in the manner necessary to insure that any facilities remaining in place at any time are properly protected from damage.
No additional compensation will be allowed for any delay, inconvenience, or added expense to the Contractor resulting from any restriction of operations which may be necessary to protect utility facilities prior to their removal from the right of way."
The foregoing provision became an issue at trial and remains an issue on this appeal.
The record shows that Tobin relied upon Special Provision R in preparing its bid and in planning and scheduling work on the project. The time for completion was 260 working days[1]. Also, as part of the contract, was the Missouri Standard Specifications 1961 Edition.
The particular work area called for in the contract was an area running generally north-south between 23rd Street and U.S. 24 Highway in Jackson County, Missouri. Within this overall distance, there existed for some 5500 feet utility power lines. These power lines were the high voltage transmission type and were located within the area designated as the road right-of-way. There is no dispute between the Commission and Tobin that these utility lines had to be relocated before Tobin could do work relative to the proposed road location at least within the 5,500 feet.
It is noted from the above provision that the Commission advised Tobin that the Commission had an agreement with the Kansas City Power and Light Company under the date of November 7, 1966 for the relocation of the utility lines, and that the work on relocation would commence about May 1, 1968 and be completed by October 1, 1968. The above provision also notes that the provision relative to relocation was to appear in the contract between the Commission and Tobin.
The utility lines were not relocated as of October 1, 1968, and relocation was not accomplished until May of 1969. The parties agree that as a result of the failure to relocate the utility lines, Tobin lost the equivalent of one-year's work on the *188 project and that Tobin suffered increased costs due to the delay. In support of its claim for additional compensation in the sum of $301,653.62, Tobin submitted detailed work sheets representing claimed labor costs caused by the delay. In addition, Tobin submitted a claim for increased costs to the Universal Bridge Company for increased bridge costs. Universal had a contract with Tobin but not the Commission. There is no dispute between the parties that increased bridge costs occurred due to the delay of relocating the utility lines. Tobin has not paid Universal for the increased costs, and the Commission has not paid Tobin for its claimed increased costs. Tobin complied with the requirement of submitting its claim to the Commission. Upon rejection of its claim, the present action was filed.
Tobin filed its petition and tried this action upon the theory that the Commission, pursuant to Special Provision R above, represented and warranted that the work on the utilities would commence about May 1, 1968 and would be completed by October 1, 1968. Tobin further claimed its reliance upon said representation and warranty in the preparation and submission of its bid.
Pursuant to a Notice to Proceed issued by the Commission, Tobin commenced work on the project about August 12, 1968.
The record reveals that the relocation of the utilities could not be and was not completed by October 1, 1968, because the Kansas City Power and Light Company did not possess title to the land to achieve relocation. Kansas City Power and Light was joined as an original defendant herein by Tobin. The Commission filed a cross-claim against Kansas City Power and Light. The circuit court entered summary judgment for Kansas City Power and Light against Tobin's claim and upon the Commission's cross-claim. An appeal from that judgment resulted in affirmance by this court. J.A. Tobin Construction Company v. State Highway Commission of Missouri, Etc., 630 S.W.2d 258 (Mo.App.1982). Other motions for summary judgment filed by the Commission as to Tobin's claim were overruled by the trial court. The Commission defended upon the theory that Special Provision R above was not a representation or a warranty that the utilities would be removed as of October 1, 1968. The Commission further denied Tobin's right to rely upon Special Provision R above as a representation or warranty that said utilities would be removed by October 1, 1968. The Commission further answered that Tobin's own delays occasioned its losses and that Tobin's recovery was limited to the commission's non-assessment of working days during the period from October 1, 1968 to May, 1969.
After a trial to a jury, the jury returned its verdict in the sum of $301,653.62, plus interest at 6%. The trial court entered judgment upon the verdict. This appeal followed the overruling of timely filed after-trial motions. Any additional facts are to be found where applicable within the discussion of the Commission's points on appeal infra.
Under its point (I), the Commission charges that the trial court erred by its denial of the Commission's motion for directed verdict. The argument of the Commission is based upon the denial that Special Provision R was either a representation or warranty which in turn would establish a breach of contract. The representation or warranty claimed by Tobin and denied by the Commission directly concerns the relocation of the utility lines by October 1, 1968. The Commission misconstrues the cause of action herein. The Commission attempts to argue this case as if it involved a breach of contract in the nature of a breach of warranty as found in the case of Ideker, Inc. v. Missouri State Highway Commission, 654 S.W.2d 617 (Mo.App. 1983). In Ideker, this court found from all the evidence that there existed a representation of a material fact which gave rise to an action ex contractu in the nature of a breach of warranty. This court in Ideker enumerated six necessary elements which must be found in order to make a claim under the unique and unusual circumstances therein involved. In the instant case, *189 the contract contains an express written warranty to relocate the utility lines (Special Provision R). The instant case thus is a strict breach of contract case and does not come within Ideker. Thus, the Commission's reliance upon Ideker is misplaced and the Commission's contention that Tobin failed to prove the six necessary elements is without merit.
It is obvious that the remainder of the Commission's argument within its point (I) is premised upon the Commission's assumption that Ideker applies and controls. It is equally obvious that the Commission's arguments within the Commission's additional points (II) and (III) are premised upon the Commission's assumption that Ideker applies and controls.
As noted above, since this court has ruled that the instant case does not come within Ideker and hence that case neither applies nor controls, it suffices to conclude at this juncture that the Commission's points (I), (II), and (III) are meritless and thus ruled against the Commission.
Under its point IV, the Commission charges that the trial court erred in denying the Commission's motion for a directed verdict at the close of all the evidence, because the evidence established that any delay occasioned to Tobin, and hence any additional expenses resulting therefrom, was caused by Tobin in not starting to work on another part of the project not restricted by the existing utility facilities.
The Commission argues that Tobin was notified to proceed on August 12, 1968 under the contract. The Commission refers to Special Provision B, which required Tobin to complete work on Potter Street prior to the closing of Independence Avenue. The Commission notes that there were no utility restrictions on Potter Street and that site was thus available from the August 12, 1968 date. The Commission further notes that work on Potter Street was not started until April, 1969. The Commission further notes that Tobin was not active on the Potter Street site for a six-and-one-half-week period, the summer of 1969, and that completion on Potter Street was not reached until September, 1971. Thus, the Commission notes that Tobin failed to take advantage of the Potter Street site between August 12, 1968 and April, 1969, and for the summer six-and-one-half-week period in 1969. Seventeen working days were charged to the six-and-one-half summer work period. The Commission further notes that there was also a site available for work and free from utility restriction at 12th Street, from August 12, 1968, but Tobin did not start work on the 12th Street location until May, 1969. The Commission thus concludes that the evidence establishes that Tobin was delayed by its own failure to coordinate available stages of work rather than from the failure to relocate the utility facilities. The Commission contends that the evidence was so clear and convincing on this point that no fact issue was left for determination by the jury and it was error to have denied the Commission's motion for directed verdict.
Tobin's response to this charged error is that it is presented for the first time on appeal. Tobin notes that the Commission did not present this point, either in its motion for directed verdict or in its motion for new trial. A review of both motions reveals that Tobin's assertion is only partially correct. The Commission's Motion for Directed Verdict, and the close of the evidence, contained the following language:
"6. The evidence affirmatively establishes that any actual delay to Plaintiff in its work on Project 1-435-1(61)16 UA resulted from the plaintiff not properly and satisfactorily coordinating the various stages of work under the contract which could have and should have been performed. Therefore, defendant, Commission is entitled to judgment as a matter of law."
In its motion for judgment N.O.V. or alternatively for a new trial, the Commission charges that the trial court erred in refusing to enter a directed verdict in the Commission's favor at the close of all the evidence, and pursuant to that general charge sets forth numerous specific reasons. While none of the specific reasons *190 includes any reference or claim of actual delay being occasioned by Tobin's failure to coordinate the various stages of the work, Tobin's contention must fail in light of the rulings found in Welch v. Hesston Corp., 540 S.W.2d 127 (Mo.App.1976) and Frisella v. Reserve Life Insurance Co. of Dallas, 583 S.W.2d 728 (Mo.App.1979). The issue was properly preserved for review by this court.
The question thus arises, does the evidence so clearly and unequivocally establish that the delay to Tobin was occasioned by Tobin's failure to coordinate the various stages of work so that the Commission was entitled to a directed verdict?
The answer to the foregoing question is no. The evidence upon the record discloses that the Commission, by its own witnesses, established both delay and additional costs to Tobin as a direct result of the utilities not being removed. In addition, the evidence of the Commission discloses that there were other utilities (not the utilities involved in relocation as per Special Provision R) located within other areas of the job site. In addition, while a Commission witness did testify that Tobin could have done work in the 12th Street area, he also verified that grading in that area would have been impractical due to the existing utility facilities. Witnesses for the Commission testified that the delay of a year to Tobin on the project was occasioned by the failure of relocation of the utility facilities. In addition, there was introduced into evidence a letter written by the Chief Engineer of the Commission which did not agree entirely with Tobin's claim, but nonetheless acknowledged the delay occasioned by the failure to relocate the utilities. The evidence also discloses that other work on the project did commence after the August, 1968 notice to proceed. The conclusion which must be reached is that the evidence upon the record was not such as to support the Commission's motion for directed verdict. The trial court did not err in denying the Commission's motion for directed verdict at the close of the evidence, in overruling the Commission's motion for judgment N.O.V., or for a new trial in the alternative.
The Commission's point (4) is found to be meritless and is ruled against the Commission.
Under its point (5), the Commission charges that the trial court erred in denying the Commission's motion to strike the testimony of a subcontractor to Tobin. The Commission contends that such testimony was irrelevant in that the subcontractor had no privity of contract with the Commission, and Tobin was not damaged due to the subcontractor's claim being speculative and unliquidated.
The record discloses that Tobin had contracted with the Universal Bridge Company for bridge work on the project. The record also reveals that Tobin had paid Universal the sum due under the original contract between Tobin and Universal, but Tobin had not paid Universal for the losses incurred by Universal. In the claim submitted by Tobin to the Commission, the sum representing the claimed increase to Universal was included.
At trial, the President of Universal, Jaccard Matchette, testified to the additional costs encountered by Universal due to the failure of the relocation of the utility lines. The testimony of Mr. Matchette on direct examination was introduced without objection by the Commission. The direct examination was interrupted by a voir dire examination by the Commission. That voir dire consisted only of asking the witness if Universal had been paid by Tobin under the contract. The witness answered affirmatively. On cross-examination, the witness was asked if Universal had been paid by Tobin for the additional monies claimed due. This question brought a negative response. The Commission then moved to strike the entire testimony of this witness.
The Commission urges that the court erred under the ruling set forth in Bernard McMenamy Contractors, Inc. v. Missouri State Highway Commission, 582 S.W.2d 305 (Mo.App.1979). This court in McMenamy prohibited the inclusion of a subcontractor's costs within the claim of the contractor *191 as against the Commission. What the Commission herein urges is the interpretation of McMenamy that presentment or inclusion of a subcontractor's claim within the claim of the contractor is not permissible. This is not what was ruled in McMenamy. Rather, the subcontractor's claim as a part of the contractor's claim was denied because of the particular facts in that case. The court was careful to point out that no claim by the subcontractor as against the contractor had ever been made. In addition, the claimed costs by the subcontractor were based upon estimates. There was no offer into evidence of any contract between the contractor and the subcontractor. What this court said in McMenamy was that there existed no basis for recovery when a claim was based upon a difference between the estimated original cost and the final cost. At 316, this court went on to say:
"At best recovery would be based upon the difference between the amount received and the final cost. However, a more fundamental question is presented as to respondent's [contractor's] right to recover on their claim. Whether or not American [subcontractor] has a valid claim against respondent would depend upon the contract between those two parties. The contract was not offered in evidence. The claim of American against McMenamy is speculative and unliquidated. There has been no showing that McMenamy is liable to American and therefore there can be no basis for recovery by McMenamy against the commission on this element of the claim."
It is readily apparent, contrary to the Commission's contention herein and from a reading of McMenamy, that a contractor may include as part of its claim against the Commission the amount due a subcontractor, provided that portion of the contractor's claim is not based on speculation and is liquidated.
In the instant case, documentary evidence establishing the monies due Universal from Tobin was admitted without the objection of the Commission. In addition, the evidence, both oral and documentary, was explicit and reflected actual out-of-pocket expenses by Universal. There was no speculation on the amount of Universal claim against Tobin. The claim figures were defined and fixed, thus the sum claimed due was liquidated. Further, the testimony of witness Matchette clearly established that the claim by Universal as against Tobin was based upon the delay occasioned by the failure to relocate the utility lines.
Aside from the fact that the Commission's motion to strike the Machette testimony was untimely, the basis for that motion was insufficient to support the motion. The Commission's motion was premised upon a lack of privity between the Commission and Universal and that Tobin had not been damaged by Universal's claim. The trial court did not err in overruling the Commission's objection and denying the Commission's motion to strike the testimony. The Machette testimony was relevant to Tobin's claim against the Commission.
The Commission's point (5) is meritless and is ruled against the Commission.
Under its point (6), the Commission charges that the trial court erred in submitting Tobin's verdict-directing instruction because said instruction did not include all the necessary elements of its claim ex contractu in the nature of a breach of warranty.
The challenged instruction reads:
"INSTRUCTION NO. 6
Your verdict must be for plaintiff is you believe:
First, defendant did not clear the right of way of utility lines by October 1, 1968, as represented in the specifications in order to give the plaintiff a place to work, and
Second, because of such failure, defendant's contract obligations were not performed, and
Third, plaintiff was thereby damaged, unless you believe that plaintiff is not *192 entitled to recover by reason of Instruction No. 7."
In its argument, the Commission alleges that the foregoing instruction does not contain or follow the substantive law announced in Ideker relative to a cause of action ex contractu upon representation or warranty. As noted above, the instant case does not come within Ideker, supra. The Commission further argues that the challenged instruction is defective as it contains the "tail" on affirmative defenses. The Commission then concludes that the instruction, having been MAI 26.02, is not applicable because the terms of the contract are in dispute between the parties. The Commission refers to Notes on Use, MAI 26.02, which discloses, "This instruction is applicable only when there is no dispute concerning the terms of the agreement and the defendant's obligation to perform his agreement." The Commission posits that since it challenged the existence of any positive representation within Special Provision R and hence the contract, there existed a viable issue or dispute concerning the terms of the contract and hence MAI 26.02 is inapplicable.
Before considering Tobin's response, this court notes Tobin's assertion that the Commission did not object to the above instruction. The record reveals Tobin to be incorrect. The record also reveals an objection to the instruction as well as a specific challenge to same in the Commission's motion for judgment N.O.V. or in the alternative, a new trial. In response, Tobin argues that the Commission offered the following instruction in the nature of a third method converse instruction. That instruction reads as follows:
"INSTRUCTION NO. 7
Your verdict must be for defendant if you believe:
First, either:
The agreement did not contain a representation as to a date of removal for utilities restrictions or the agreement did not allow additional compensation to plaintiff for delay or added expense due to utility restriction or
The agreement allowed the consideration of the count of working days for any actual delay to plaintiff due to utility restrictions or completion of work under the agreement was delayed by the operations of plaintiff and
Second, plaintiff in any one or more of the respects submitted in Paragraph First, is not entitled to recover from defendant any damage sustained by plaintiff for utility restrictions."
Tobin goes on to assert the following: first, that both of the above instructions must be read together. Such is the rule, Collier v. Roth, 515 S.W.2d 829, 837 (Mo.App.1974). Tobin then argues the fact that the representation was a material fact was never in issue. The record bears this out as the Commission's own witnesses established this as a material fact. Additionally, Tobin points out that there was no dispute relative to the existence of the contract, inclusive of Special Provision R. Tobin concludes that the sole or remaining question was whether the Commission breached the contract.
This case is a case for breach of contract. M.A.I. 26.02 is precisely the instruction which was applicable herein. Further it is clear that when the two above instructions are read together all the issues were framed for the jury. The instructions set forth ultimate facts for the jury. It is the responsibility of this court to determine if the instructions as framed and submitted constituted prejudicial error materially affecting the merits of the action. If no prejudicial error arose, this court cannot set aside the jury verdict. Collier, supra.
The Commission suffered no prejudice by the submission of the verdict-directing instruction above. The Commission's point (6) is without merit and is ruled against the Commission.
Under its point (7), the Commission charges that the trial court erred in the submission of the burden of proof instruction because said instruction did not contain *193 the "tail" wording "or defense" as required since the Commission offered an affirmative defense.
The Commission is correct in its assertion that a burden of proof instruction is required. MAI 3.01, Sears, Roebuck & Co. v. Peerless Products, Inc., 539 S.W.2d 768 (Mo.App.1976).
While contended in its brief by the mere conclusion that the Commission submitted an affirmative defense, and the same conclusion having been offered at the time of oral argument, this court is unable to ascertain that affirmative defense either from the briefs or upon the record. As near as this court can determine, it is the Commission's position that by submission of the above instruction (No. 7) and reference thereto in the previous instruction (No. 6), an affirmative defense was submitted, thus requiring the "or defense" term within the burden of proof instruction.
A reading of the above instruction reveals that it was not an affirmative defense instruction, but rather was a third method converse instruction. Restaurant Industries, Inc. v. Lums, Inc., 495 S.W.2d 668, 670 (Mo.App.1973). It is obvious that the instruction is a converse to Tobin's verdict-directing instruction. As submitted under the particular facts and circumstances of the instant case, the burden of proof instruction complied with MAI 3.01 and the trial court did not err in not modifying that instruction to include the term "or defense." If the modification was thought necessary, the Commission could have moved for its modification. Nicholls v. Kammerich, 626 S.W.2d 653 (Mo.App. 1981).
The Commission's point (7) is meritless and is ruled against it.
Under its point (8), the Commission charges that the trial court erred in refusing the testimony of a Commission witness (and the offer of proof in support of his testimony), and conjunctively the refusal of two offered exhibits.
The argument of the Commission is an additional argument, contending that this court must interpret Special Provision R and the intent included within that part of the contract. During trial, the Commission, by the testimony of a district engineer, attempted to show another that another contractor had made inquiry about recent information regarding the relocation of the utility facilities. When the trial court sustained Tobin's objection to this testimony, the Commission made an offer of proof which was rejected. In addition, the Commission offered two documents (i.e., the contractor's letter of inquiry and the Commission's reply), both of which were rejected.
In its argument, the Commission assumes that Special Provision R requires, or it is mandatory upon, a contractor to make inquiry relative to the recent progress on relocation of the utility facilities. Special Provision R, as observed above, is not mandatory, but merely assures bidders that such information will be furnished if requested. The evidence revealed that at the time Tobin submitted its bid, Tobin did not even know of the above-referred to letters.
What the Commission sought to do, both by testimony and the two letters, was to modify Special Provision R by asserting it was required of a bidder (contractor) to make inquiry. If that conclusion be reached, the Commission further contends that the October 1, 1968 date is a mere estimated date and not a final or declared date of removal.
The wording and thus the intent of Special Provision R is clear. That provision does not include any requirement or mandate that a contractor make inquiry. Neither the offered testimony nor the offered letters were admissible, since neither provided extrinsic or collateral evidence in support of or in aid of ascertaining the intent of Special Provision R. Where the language and hence the intent of an agreement is unclear, the court can consider extrinsic facts in ascertaining the intent. Harris v. Union Electric Co., 622 S.W.2d 239, 247 (Mo.App.1981). Because the language *194 and hence the intent of Special Provision R are plain and clear, the rule in Harris does not apply.
The trial court did not err in sustaining Tobin's objection, the rejection of the Commission's offer of proof, or the offered letters.
There is no merit to the Commission's point (8), and it is ruled against the Commission.
Under its point (9), the Commission charges that the trial court erred in overruling the Commission's objection to certain testimony, because said testimony was irrelevant.
The Commission charges error regarding testimony centered upon utilities [email protected]. 24 Highway on the project site. During Tobin's case in chief, a Tobin witness offered testimony relative to delay due to a [email protected]. 24 Highway. The Commission objected upon the grounds said testimony was beyond the scope of Tobin's pleadings. The objection was sustained and the jury was instructed to disregard the testimony.
During the cross-examination of a Commission witness, Tobin questioned the witness about the [email protected]. 24 Highway. The Commission objected on the basis that the [email protected]. 24 Highway had no relation to, nor was it within, Tobin's claim. The trial court overruled the objection "in light of the direct examination of this witness."
The record discloses that during direct examination, the witness was asked and responded to a series of questions designed to suggest to the jury that Tobin could have done other work on the project pending the removal of the utilities, and thus Tobin suffered no loss by the delay in removing the utilities. The trial court did not err in allowing Tobin to inquire of this same witness on cross-examination of the same subject matter. While Tobin was correctly prohibited from establishing this evidence by and through its case in chief, the trial court did not err in allowing Tobin to make inquiry after the Commission raised the issue in its case in chief. The trial court correctly ruled the Commission's objection and did not abuse its discretion. Board of Public Buildings v. GMT Corp., 580 S.W.2d 519 (Mo.App.1979).
There is no merit to the Commission's point (9) and it is ruled against the Commission.
Under its point (10), the Commission charges that the trial court erred in denying the Commission's motion for new trial and motion to correct the judgment entry, because the judgment amount is excessive in that the total amount of prejudgment interest accrued on the actual damages is incorrectly computed.
The Commission points out that the trial court assessed the sum of $267,866.81 as prejudgment interest. The jury returned a verdict in the sum of $301,653.62 plus 6% interest. The trial court entered judgment for $301,653.62 plus interest from July 12, 1972 at 6% per annum, for a total sum of $267,866.81 in interest and for a total judgment sum of $569,520.43. The Commission first charges that the applicable interest total should have been only $198,890.43 rather than $267,866.81. The Commission then points out that neither Tobin requested the compounding of interest, nor did the jury's verdict allow for the compounding of interest.
Tobin responds to the Commission's contention by simply charging that the Commission did not timely raise the issue and hence the matter is not properly preserved or before this court. This court cannot agree with Tobin's assertion. The Commission's motion for judgment N.O.V. or in the alternative, while not a work of art, does nonetheless charge that the verdict was excessive. This court concludes that such charge was sufficient to have preserved the issue, and the Commission was within its rights to have subsequently moved to correct the judgment and to have that issue considered by this court.
In calculating a rate of interest at 6% per annum for a prescribed period of ten years, eleven months, and twenty-six *195 days, the sum of interest applicable to the verdict of $301,653.62 would be the sum of $198,890.43, thus providing a judgment total of $500,545.05.
The Commission is correct in its assertion that the prejudgment interest total was incorrectly calculated by the trial court, and the Commission's point (10) is sustained to reflect a corrected judgment total of $500,545.05.
Under its point (11), the Commission charges that the trial court committed plain error by admitting documentary evidence, because said document was not a true copy of a letter from the Commission to Tobin, and such fact was concealed from the Commission and the trial court.
This charged error centers upon trial exhibit number 17, which the record reveals was a portion of a letter written by the Chief Engineer of the Commission to Tobin.
Both parties point out and agree that no objection to the exhibit was [email protected]. Tobin contends that the issue, not having been preserved, deprives this court of review. The Commission, while admitting the issue was not preserved, nonetheless argues the issue should be viewed under the plain error rule, Rule 84.13(c).
At trial, Tobin offered a portion of a letter. The omitted portion addressed settlement negotiation or an offer by the Commission to Tobin. The record shows that the letter was admitted under the Business Records Act, § 490.660 et seq., RSMo 1978 without objection.
In its post-trial motion N.O.V. or in the alternative, the Commission did not challenge the admission of the letter. The Commission subsequently filed a supplemental motion for new trial accompanied by an affidavit, asserting the questioned exhibit was not a true copy as contended by Tobin because of the omission of the paragraph relative to the settlement offer by the Commission. The Commission further asserts concealment by Tobin of this fact from the Commission and the trial court.
The record reflects that the Commission had ample opportunity to examine the original letter, which included the paragraph on settlement, and furthermore, since the letter in its original form originated with the Chief Engineer of the Commission, it would be ludicrous to conclude that the Commission did not know of the full content of the original letter.
It is further obvious from the entire record that the paragraph regarding settlement was not submitted to the jury to avoid error. Settlement negotiations are generally not admissible. Owen v. Owen, 642 S.W.2d 410 (Mo.App.1982). It cannot be concluded that the Commission suffered any prejudice by the admission of this exhibit in the form admitted. There was no manifest injustice or miscarriage of justice in the admission of the exhibit. In short, there was no error, plain or otherwise.
The Commission's point (11) is found to be meritless and is ruled against the Commission.
Under its final point (12), the Commission charges that it was, by the trial court, denied a fair trial as a result of the cumulative effect of all of the above charged errors.
Simply put, this court, with the exception of the incorrect computation of prejudgment interest under point (10) which does not serve as a basis for reversal of this cause, finds no error and thus concludes that there is no merit to the Commission's point (12) and the same is ruled against the Commission.
The judgment herein is affirmed, but this cause is remanded to the circuit court with directions to enter judgment to the favor of respondent in the total sum of $500,545.05. The costs herein are assessed against appellant.
All concur.
NOTES
[1] The time for such contracts is prescribed by a predeclared number of working days as opposed to a specified date for completion. A working day is defined within Paragraph 8.8.6 of the Missouri Standards Specifications (1961 Edition) as "any day when in the opinion of the engineer, soil and weather conditions are such as to permit any major operation of the project for six hours or over, unless other major conditions prevent the contractor's operations."
|
Exhibit 10.2
WINDSTREAM BENEFIT RESTORATION PLAN
(Amended and Restated as of January 1, 2008)
--------------------------------------------------------------------------------
WINDSTREAM BENEFIT RESTORATION PLAN
(Amended and Restated as of January 1, 2008)
TABLE OF CONTENTS
INTRODUCTION & HISTORY
1
ARTICLE I EFFECTIVE DATE; PURPOSE
1
Section 1.01 Name, Effective Date
1
Section 1.02 Purpose, Funding
1
Section 1.03 Section 409A Compliance
1
ARTICLE II DEFINITIONS AND INTERPRETATION
2
Section 2.01 Definitions
2
Section 2.02 Pension Plan
3
ARTICLE III PARTICIPATION
3
Section 3.01 Covered Participant
3
Section 3.02 Continued Participation
3
ARTICLE IV RETIREMENT AND SPOUSAL DEATH BENEFITS
3
Section 4.01 Eligibility
3
Section 4.02 Amount of Retirement Benefit
4
Section 4.03 Amount of Spouse Death Benefit
4
Section 4.04 Vesting
5
Section 4.05 Form of Payment
5
Section 4.06 Time of Commencement
5
Section 4.07 Pre-2008 Payments
5
Section 4.08 Actuarial Assumptions
6
ARTICLE V SPECIAL SECTION 409A PROVISIONS
6
Section 5.01 Discretionary Acceleration of Payments
6
Section 5.02 Delay of Payments
8
Section 5.03 Actual Date of Payment
8
Section 5.04 Discharge of Obligations
8
Section 5.05 Compliance With Code Section 409A
8
ARTICLE VI ADMINISTRATION
9
Section 6.01 Plan Administrator
9
Section 6.02 Expenses
9
Section 6.03 Records
9
Section 6.04 Legal Incompetency
9
Section 6.05 Claim for Benefits
9
Section 6.06 Review
10
Section 6.07 Exhaustion of Remedies
10
ARTICLE VII AMENDMENT AND TERMINATION
11
Section 7.01 Amendment
11
Section 7.02 Payments Upon Termination of Plan
11
ARTICLE VIII MISCELLANEOUS
12
Section 8.01 Construction and Governing Law
12
Section 8.02 No Employment Rights
12
Section 8.03 Nonalienation
12
i
--------------------------------------------------------------------------------
Section 8.04 Limitation of Liability
13
Section 8.05 Reemployment of a Participant
13
Section 8.06 Successors
13
EXHIBIT A GRANDFATHERED PARTICIPANTS
14
EXHIBIT B COVERED PARTICIPANTS
15
ii
--------------------------------------------------------------------------------
WINDSTREAM BENEFIT RESTORATION PLAN
(Amended and Restated as of January 1, 2008)
INTRODUCTION & HISTORY
Effective July 16, 2006, Alltel Holding Corp. originally adopted the Windstream
Benefit Restoration Plan (the “Plan”). Effective July 17, 2006, Alltel Holding
Corp. became known as Windstream Corporation (the “Company”).
Effective January 1, 2007, the excess benefits under the Plan attributable to
the Windstream Profit-Sharing Plan and Windstream 401(k) Plan were transferred
to the Windstream 2007 Deferred Compensation Plan.
Effective January 1, 2008, the Company hereby amends and restates the Plan to
incorporate changes required by Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and the final regulations thereunder.
ARTICLE I
EFFECTIVE DATE; PURPOSE
Section 1.01 Name, Effective Date. The Plan hereunder shall be known as the
Windstream Benefit Restoration Plan, as amended and restated effective
January 1, 2008.
Section 1.02 Purpose, Funding. The purpose of the Plan is solely to provide
benefits in excess of the limitations of Section 401(a)(17) of the Code, or
corresponding provisions of any subsequent federal tax laws, to a select group
of management or highly compensated employees, within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of the Employment Retirement Income Security Act
of 1974, as amended (“ERISA”). The Plan is unfunded, and the rights, if any, of
any person to any benefits hereunder shall be the same as any unsecured general
creditor of the Company. The benefits payable under the Plan shall be paid by
the Company from its general assets.
Section 1.03 Section 409A Compliance. Alltel Holding Corp. adopted the Plan as
of July 16, 2006 pursuant to the Employee Benefits Agreement by and between
Alltel Corporation and Alltel Holding Corp. dated as of December 8, 2005. On
July 17, 2006, Alltel Corporation distributed the shares of Alltel Holding Corp.
to its shareholders, and immediately thereafter Alltel Holding Corp. merged with
and into Valor Communications Group, Inc. to form the Company. The Company, as
the successor to Alltel Holding Corp., assumed the Plan in connection with the
merger. The Plan was not “materially modified” within the meaning of
Section 409A of the Code in connection with these transactions. In order to
comply with Section 409A of the Code, effective immediately before January 1,
2008, the Plan will be divided into two separate parts, one of which shall be
named “Part One” and the other of which shall be named “Part Two”. Part One of
the Plan shall be governed by the terms and conditions of the Plan as in effect
on January 1, 2007. Part Two of the Plan shall be governed by the terms and
conditions set forth herein.
(a) Grandfathered Participants. The individuals listed on Exhibit A (the
“Grandfathered Participants”), who were vested, and terminated employment, as of
December 31, 2004 and, therefore, whose entire benefit under Article V of Part
One of the Plan qualifies as an “amount deferred” prior to January 1, 2005
within the meaning of Section 409A of the Code, shall participate in, and be
governed by the terms and conditions of, Part One of the Plan. It is intended
that such amounts shall be exempt from
--------------------------------------------------------------------------------
the application of Section 409A of the Code. Nothing contained herein is
intended to materially enhance a benefit or right existing under Part One of the
Plan or add a new material benefit or right to Part One of the Plan with respect
to Grandfathered Participants.
(b) Covered Participants. The individuals, other than Grandfathered
Participants, who participated in the Plan as of December 31, 2007 as listed on
Exhibit B (the “Covered Participants”), shall participate in, and be governed by
the terms and conditions of, Part Two of the Plan, as set forth herein, and as
it may be amended from time to time hereafter. Part Two of the Plan is intended
to comply with Section 409A of the Code.
ARTICLE II
DEFINITIONS AND INTERPRETATION
Section 2.01 Definitions. When the initial letter of a word or phrase is
capitalized herein, such word or phrase shall have the meaning hereinafter set
forth:
(a) “Affiliate” means each entity with whom the Company would be considered a
single employer under Sections 414(b) and 414(c) of the Code, provided that in
applying Section 1563(a)(1), (2), and (3) for purposes of determining a
controlled group of corporations under Section 414(b) of the Code, the language
“at least 50 percent” is used instead of “at least 80 percent” each place it
appears in Section 1563(a)(1), (2), and (3), and in applying Treasury Regulation
Section 1.414(c)-2 for purposes of determining trades or businesses (whether or
not incorporated) that are under common control for purposes of Section 414(c),
“at least 50 percent” is used instead of “at least 80 percent” each place it
appears in that regulation. Such term shall be interpreted in a manner
consistent with the definition of “service recipient” contained in Section 409A
of the Code.
(b) “Affiliated Group” means (i) the Company and (ii) all Affiliates.
(c) “Board” means the Board of Directors of the Company.
(d) “Change in Control” has the meaning given to such term in the Windstream
2006 Equity Incentive Plan, as in effect on January 1, 2008. Notwithstanding the
foregoing, to the extent that any event or occurrence described in the preceding
definition does not constitute a “change in the ownership or effective control”
or a “change in the ownership of a substantial portion of the assets” of the
Company within the meaning of Section 409A of the Code, such event or occurrence
shall not constitute a Change in Control for purposes of the Plan.
(e) “Code” shall mean the Internal Revenue Code of 1986, as amended.
(f) “Committee” shall mean the Benefits Committee.
(g) “Company” means Windstream Corporation, a Delaware corporation, or its
successor.
(h) “Covered Participant” shall have the meaning given such term in
Section 1.03(b).
(i) “Grandfathered Participant” shall have the meaning given such term in
Section 1.03(a).
(j) “Participant” means each individual who becomes a Participant in the Plan
under Section 3.01 and continues to be a Participant under Section 3.02.
(k) “Plan Administrator” means the Committee.
-2-
--------------------------------------------------------------------------------
(l) “Pension Plan” means the Windstream Pension Plan, as amended from time to
time.
(m) “Plan” means the Windstream Benefit Restoration Plan, as set forth herein
effective January 1, 2008, and as it may be amended from time to time hereafter.
(n) “Separation from Service” means a termination of employment or service with
the Affiliated Group in such a manner as to constitute a “separation from
service” as defined under Section 409A of the Code. Upon a sale or other
disposition of the assets of the Company or any member of the Affiliated Group
to an unrelated purchaser, the Committee reserves the right, to the extent
permitted by Section 409A of the Code, to determine whether Participants
providing services to the purchaser after and in connection with the purchase
transaction have experienced a Separation from Service.
Section 2.02 Pension Plan. Any capitalized word or phrase herein which is not
defined in Section 2.01 shall have the meaning provided in the Pension Plan,
based on the definition under the Pension Plan as in effect on December 31, 2007
(and therefore without regard to any subsequent amendments to the Pension Plan
after December 31, 2007).
ARTICLE III
PARTICIPATION
Section 3.01 Covered Participant. Effective as of January 1, 2008, each Covered
Participant shall become a Participant in the Plan. Thereafter, participation in
the Plan is limited to those employees of the Affiliated Group who are
(i) expressly selected by the Compensation Committee of the Board, in its sole
discretion, to participate in the Plan, and (ii) a member of a “select group of
management or highly compensated employees,” within the meaning of Sections 201,
301 and 401 of ERISA (the “Eligible Employees”). In lieu of expressly selecting
Eligible Employees for Plan participation, the Compensation Committee of the
Board may establish eligibility criteria (consistent with the requirements of
clause (ii) of this Section) providing for participation of all Eligible
Employees who satisfy such criteria. The Compensation Committee of the Board may
at any time, in its sole discretion, change the eligibility criteria for
Eligible Employees.
Section 3.02 Continued Participation. A Participant’s active participation in
the Plan shall be suspended upon his employment status change as determined by
the Committee or Separation from Service. Further, a Participant shall cease to
be a Participant upon his non-vested Separation from Service under the Plan.
Thereafter, in either foregoing case, upon his reemployment with the Affiliated
Group, he shall reparticipate in the Plan if and as determined by the
Compensation Committee of the Board as provided in Section 3.01.
ARTICLE IV
RETIREMENT AND SPOUSAL DEATH BENEFITS
Section 4.01 Eligibility. A Participant who is entitled to a vested Pension
under the Pension Plan shall be eligible for a retirement benefit under this
Article as hereinafter provided. A Spouse who is entitled to a vested Qualified
Preretirement Survivor Annuity under the Pension Plan shall be eligible for a
Spouse death benefit under this Article as hereinafter provided.
-3-
--------------------------------------------------------------------------------
Section 4.02 Amount of Retirement Benefit. The retirement benefit payable under
the Plan to a Participant who is eligible therefor shall be determined as
follows:
(a) the regular Pension (on a single-life-only basis payable commencing at the
later of age 65 or the Participant’s Retirement) that the Participant would
receive under the Pension Plan if the Pension Plan were not subject to (and
contained no provisions with respect to) Section 401(a)(17) of the Code;
reduced (but not below zero) by –
(b) the regular Pension payable to the Participant (on a single-life-only basis
payable commencing at the later of age 65 or the Participant’s Retirement,
regardless of the actual form of payment or timing of commencement of payment)
under the Pension Plan;
and, if applicable, further reduced (but not below zero) by -
(c) if the Participant has not attained age 65 on the date the retirement
benefit under the Plan is to commence, the amount of the retirement benefit
shall be reduced for commencement prior to age 65 to the same extent (if any)
that the Participant’s Pension under the Pension Plan would have been reduced
for commencement prior to age 65 if it had commenced as of the date the
retirement benefit under the Plan commenced, based on the reduction factors as
in effect on December 31, 2007, including any such reduction factors for which
the Participant may subsequently qualify (but without regard to any subsequent
amendments to the Pension Plan after December 31, 2007), provided that, if the
Participant is ineligible to commence his Pension under the Pension Plan on the
date the retirement benefit under the Plan is to commence, the amount of the
retirement benefit shall be reduced for commencement prior to the Participant’s
age 65 by five-tenths of one percent (0.5%) for each complete calendar month by
which such earlier commencement date precedes the month following the month in
which such Participant attains age 65.
Section 4.03 Amount of Spouse Death Benefit. The Spouse death benefit payable
under the Plan to a Spouse who is eligible therefor shall be determined as
follows:
(a) the Qualified Preretirement Survivor Annuity that such Spouse would receive
under the Pension Plan based on the regular Pension (on a single-life-only basis
payable commencing at the later of age 65 or the Participant’s death) the
Participant with respect to whom the Spouse death benefit is payable would have
received if the Pension Plan were not subject to (and contained no provisions
with respect to) Section 401(a)(17) of the Code;
reduced (but not below zero) by –
(b) the Qualified Preretirement Survivor Annuity payable to such Spouse under
the Pension Plan (regardless of the actual form of payment or timing of
commencement of payment), based on the regular Pension (on a single-life-only
basis payable commencing at the later of age 65 or the Participant’s death);
and, if applicable, further reduced (but not below zero) by -
(c) if the Participant with respect to whom the Spouse death benefit is payable
had not attained or would not if he had survived have attained age 65 on the
date the Spouse death benefit under the Plan is to commence, the Spouse death
benefit shall be reduced for commencement prior to age 65 to the same extent (if
any) that the Qualified Preretirement Survivor Annuity under the Pension Plan
would have been reduced for commencement prior to the Participant’s age 65 if it
had commenced as of the date
-4-
--------------------------------------------------------------------------------
the death benefit under the Plan commenced, based on the reduction factors as in
effect on December 31, 2007, including any such reduction factors for which the
Participant may subsequently qualify (but without regard to any subsequent
amendments to the Pension Plan after December 31, 2007), provided that, if the
Spouse is ineligible to commence his Qualified Preretirement Survivor Annuity
under the Pension Plan on the date the Spouse death benefit under the Plan is to
commence, the amount of the Spouse death benefit shall be reduced for
commencement prior to the Participant’s age 65 by five-tenths of one percent
(0.5%) for each complete calendar month by which such earlier commencement date
precedes the month following the month in which such Participant would have
attained age 65.
Section 4.04 Vesting. The benefits under this Article shall vest at the same
time(s), in the same manner, and to the same extent as the Participant’s Accrued
Pension under the Pension Plan.
Section 4.05 Form of Payment.
(a) Normal Annuity Form. Subject to Section 4.05(b), the form of payment of the
retirement benefit or Spouse death benefit as determined under this
Article shall be a monthly amount payable as of the first day of each month for
the life only of the retired Participant or Spouse, as applicable, beginning at
the effective time of commencement prescribed in Section 4.06 (the “Normal
Annuity Form”). However, a Participant or Spouse may elect, before the actual
time of commencement prescribed in Section 4.06 and pursuant to procedures
established by the Committee, any alternative life annuity described in
applicable Treasury Regulations under Section 409A of the Code and available
under the Pension Plan which is actuarially equivalent to the Participant or
Spouse’s Normal Annuity Form, using the actuarial assumptions prescribed in
Section 4.08.
(b) Lump Sum Payment. Notwithstanding the foregoing, in the event that the
actuarial present value of the annuity payments payable under Section 4.05(a) is
below $30,000, as determined on the commencement date provided in Section 4.06
and based on the actuarial assumptions prescribed in Section 4.08, then the
actuarial present value of the annuity payments shall be paid in the form of a
single lump sum on the commencement date provided in Section 4.06.
Section 4.06 Time of Commencement.
(a) Retirement Benefit. The payment of a Participant’s retirement benefit under
the Plan shall commence as of the first day of the first month following the
later of (i) his 60th birthday or (ii) the six-month anniversary of the
Participant’s Separation from Service. If payments commence as a result of
Section 4.06(a)(ii), the first payment shall include any monthly payments
(without interest) that would have been made had the Participant’s benefit
commenced on the first day of the month following his Separation from Service.
(b) Spouse Death Benefit. Any Spouse death benefit under the Plan shall commence
as of the first day of the calendar month next following the later of (i) the
date the Participant would have attained his 60th birthday or (ii) the calendar
month in which the Participant’s death occurs.
Section 4.07 Pre-2008 Payments. If a Participant commences payment of benefits
in conjunction with his benefit under the Pension Plan prior to January 1, 2008,
then such benefit shall be payable for the remainder of 2007 and subsequent
calendar years at the same time and in the same form elected by the Participant
under the Pension Plan. Such time and form of payment shall not be subject to
change after January 1, 2008 and shall not be affected by any changes in the
time or form of payment of the benefit under the Pension Plan that occur on or
after January 1, 2008.
-5-
--------------------------------------------------------------------------------
Section 4.08 Actuarial Assumptions. For purposes of Section 4.05, the actuarial
assumptions are (i) mortality using the RP-2000 Mortality Table for Combined
Healthy lives, equally weighted for male and female mortality, projected to
2007, assuming 25% blue collar and 75% white collar employee participation and
(ii) interest at 5% per annum. The determination of actuarial equivalent life
annuities under Section 4.05(a) and actuarial present value under
Section 4.05(b) shall be made as an “immediate annuity” (i.e., as the actuarial
equivalent or actuarial present value of the benefit payable at the effective or
actual time of commencement, as applicable).
ARTICLE V
SPECIAL SECTION 409A PROVISIONS
Section 5.01 Discretionary Acceleration of Payments. To the extent permitted by
Section 409A of the Code, the Committee may, in its sole discretion, accelerate
the time or schedule of a payment under the Plan as provided in this Section.
The provisions of this Section are intended to comply with the exception to
accelerated payments under Treasury Regulation Section 1.409A-3(j) and shall be
interpreted and administered accordingly.
(a) Domestic Relations Orders. The Committee may, in its sole discretion,
accelerate the time or schedule of a payment under the Plan to an individual
other than the Participant as may be necessary to fulfill a domestic relations
order (as defined in Section 414(p)(1)(B) of the Code).
(b) Conflicts of Interest. The Committee may, in its sole discretion, provide
for the acceleration of the time or schedule of a payment under the Plan to the
extent necessary for any Federal officer or employee in the executive branch to
comply with an ethics agreement with the Federal government. Additionally, the
Committee may, in its sole discretion, provide for the acceleration of the time
or schedule of a payment under the Plan to the extent reasonably necessary to
avoid the violation of an applicable Federal, state, local, or foreign ethics
law or conflicts of interest law (including where such payment is reasonably
necessary to permit the Participant to participate in activities in the normal
course of his position in which the Participant would otherwise not be able to
participate under an applicable rule).
(c) Employment Taxes. The Committee may, in its sole discretion, provide for the
acceleration of the time or schedule of a payment under the Plan to pay the
Federal Insurance Contributions Act (FICA) tax imposed under Sections 3101,
3121(a), and 3121(v)(2) of the Code, or the Railroad Retirement Act (RRTA) tax
imposed under Sections 3201, 3211, 3231(e)(1), and 3231(e)(8) of the Code, where
applicable, on compensation deferred under the plan (the FICA or RRTA amount).
Additionally, the Committee may, in its sole discretion, provide for the
acceleration of the time or schedule of a payment, to pay the income tax at
source on wages imposed under Section 3401 of the Code or the corresponding
withholding provisions of applicable state, local, or foreign tax laws as a
result of the payment of the FICA or RRTA amount, and to pay the additional
income tax at source on wages attributable to the pyramiding Section 3401 of the
Code wages and taxes. However, the total payment under this acceleration
provision must not exceed the aggregate of the FICA or RRTA amount, and the
income tax withholding related to such FICA or RRTA amount.
(d) Limited Cash-Outs. Subject to the mandatory six month delay provisions of
the Plan following a Participant’s Separation from Service, the Committee may,
in its sole discretion, require a mandatory lump sum payment of amounts deferred
under the Plan that do not exceed the applicable dollar amount under
Section 402(g)(1)(B) of the Code, provided that the payment results in the
termination and liquidation of the entirety of the Participant’s interest under
the Plan, including all agreements, methods, programs, or other arrangements
with respect to which deferrals of compensation are treated as having been
deferred under a single nonqualified deferred compensation plan under
Section 409A of the Code.
-6-
--------------------------------------------------------------------------------
(e) Payment Upon Income Inclusion Under Section 409A. Subject to the mandatory
six month delay provisions of the Plan following a Participant’s Separation from
Service, the Committee may, in its sole discretion, provide for the acceleration
of the time or schedule of a payment under the Plan at any time the plan fails
to meet the requirements of Section 409A of the Code. The payment may not exceed
the amount required to be included in income as a result of the failure to
comply with the requirements of Section 409A of the Code.
(f) Certain Payments to Avoid a Nonallocation Year Under Section 409(p). Subject
to the mandatory six month delay provisions of the Plan following a
Participant’s Separation from Service, the Committee may, in its sole
discretion, provide for the acceleration of the time or schedule of a payment
under the Plan to prevent the occurrence of a nonallocation year (within the
meaning of Section 409(p)(3) of the Code) in the plan year of an employee stock
ownership plan next following the plan year in which such payment is made,
provided that the amount paid may not exceed 125 percent of the minimum amount
of payment necessary to avoid the occurrence of a nonallocation year.
(g) Payment of State, Local, or Foreign Taxes. Subject to the mandatory six
month delay provisions of the Plan following a Participant’s Separation from
Service, the Committee may, in its sole discretion, provide for the acceleration
of the time or schedule of a payment under the Plan to reflect payment of state,
local, or foreign tax obligations arising from participation in the Plan that
apply to an amount deferred under the Plan before the amount is paid or made
available to the participant (the state, local, or foreign tax amount). Such
payment may not exceed the amount of such taxes due as a result of participation
in the Plan. The payment may be made in the form of withholding pursuant to
provisions of applicable state, local, or foreign law or by payment directly to
the Participant. Additionally, the Committee may, in its sole discretion,
provide for the acceleration of the time or schedule of a payment under the Plan
to pay the income tax at source on wages imposed under Section 3401 of the Code
as a result of such payment and to pay the additional income tax at source on
wages imposed under Section 3401 of the Code attributable to such additional
wages and taxes. However, the total payment under this acceleration provision
must not exceed the aggregate of the state, local, and foreign tax amount, and
the income tax withholding related to such state, local, and foreign tax amount.
(h) Certain Offsets. Subject to the mandatory six month delay provisions of the
Plan following a Participant’s Separation from Service, the Committee may, in
its sole discretion, provide for the acceleration of the time or schedule of a
payment under the Plan as satisfaction of a debt of the Participant to the
Company (or any entity which would be considered to be a single employer with
the Company under Section 414(b) or Section 414(c) of the Code), where such debt
is incurred in the ordinary course of the service relationship between the
Company (or any entity which would be considered to be a single employer with
the Company under Section 414(b) or Section 414(c) of the Code) and the
Participant, the entire amount of reduction in any of the service recipient’s
(as defined in Section 409A of the Code) taxable years does not exceed $5,000,
and the reduction is made at the same time and in the same amount as the debt
otherwise would have been due and collected from the Participant.
(i) Bona Fide Disputes As To A Right To A Payment. Subject to the mandatory six
month delay provisions of the Plan following a Participant’s Separation from
Service, the Committee may, in its sole discretion, provide for the acceleration
of the time or schedule of a payment under the Plan where such payments occur as
part of a settlement between the Participant and the Company (or any entity
which would be considered to be a single employer with the Company under
Section 414(b) or Section 414(c) of the Code) of an arm’s length, bona fide
dispute as to the Participant’s right to the deferred amount.
-7-
--------------------------------------------------------------------------------
(j) Plan Terminations and Liquidations. Subject to the mandatory six month delay
provisions of the Plan following a Participant’s Separation from Service, the
Committee may, in its sole discretion, provide for the acceleration of the time
or schedule of a payment under the Plan as provided in Section 7.02.
(k) Other Events and Conditions. Subject to the mandatory six month delay
provisions of the Plan following a Participant’s Separation from Service, a
payment may be accelerated upon such other events and conditions as the Internal
Revenue Service may prescribe in generally applicable guidance published in the
Internal Revenue Bulletin.
Except as otherwise specifically provided in the Plan, the Committee may not
accelerate the time or schedule of any payment or amount scheduled to be paid
under the Plan within the meaning of Section 409A of the Code.
Section 5.02 Delay of Payments. To the extent permitted under Section 409A of
the Code, the Committee may, in its sole discretion, delay payment under any of
the following circumstances, provided that the Committee treats all payments to
similarly situated Participants on a reasonably consistent basis:
(a) Federal Securities Laws or Other Applicable Law. A Payment may be delayed
where the Committee reasonably anticipates that the making of the payment will
violate federal securities laws or other applicable law; provided that the
delayed payment is made at the earliest date at which the Committee reasonably
anticipates that the making of the payment will not cause such violation. For
purposes of the preceding sentence, the making of a payment that would cause
inclusion in gross income or the application of any penalty provision or other
provision of the Code is not treated as a violation of applicable law.
(b) Other Events and Conditions. A payment may be delayed upon such other events
and conditions as the Internal Revenue Service may prescribe in generally
applicable guidance published in the Internal Revenue Bulletin.
Section 5.03 Actual Date of Payment. To the extent permitted by Section 409A of
the Code, the Committee may delay payment in the event that it is not
administratively possible to make payment on the date (or within the periods)
specified in the Plan, or the making of the payment would jeopardize the ability
of the Company (or any entity which would be considered to be a single employer
with the Company under Section 414(b) or Section 414(c) of the Code) to continue
as a going concern. Notwithstanding the foregoing, payment must be made no later
than the latest possible date permitted under Section 409A of the Code.
Section 5.04 Discharge of Obligations. The payment to a Participant or his
beneficiary of his entire benefit under the Plan shall discharge all obligations
of the Affiliated Group to such Participant or beneficiary under the Plan with
respect to that Plan benefit.
Section 5.05 Compliance With Code Section 409A. It is intended that the Plan
comply with the provisions of Section 409A of the Code, so as to prevent the
inclusion in gross income of any amounts deferred hereunder in a taxable year
that is prior to the taxable year or years in which such amounts would otherwise
actually be paid or made available to Participants or beneficiaries. The Plan
shall be construed, administered, and governed in a manner that effects such
intent, and the Committee shall not take any action that would be inconsistent
with such intent. Although the Committee shall use its best efforts to avoid the
imposition of taxation, interest and penalties under Code Section 409A of the
Code, the tax treatment of deferrals under this Plan is not warranted or
guaranteed. Neither the Company, the other members of the Affiliated Group,
directors, officers, employees, advisers nor the Committee shall be held
-8-
--------------------------------------------------------------------------------
liable for any taxes, interest, penalties or other monetary amounts owed by any
Participant or beneficiary (or any other individual claiming a benefit through
the Participant or beneficiary) as a result of the Plan. Any reference in the
Plan to Section 409A of the Code will also include any proposed, temporary or
final regulations, or any other guidance, promulgated with respect to such
Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.
For purposes of the Plan, the phrase “permitted by Section 409A of the Code,” or
words or phrases of similar import, shall mean that the event or circumstance
shall only be permitted to the extent it would not cause an amount deferred or
payable under the Plan to be includible in the gross income of a Participant or
beneficiary under Section 409A(a)(1) of the Code.
ARTICLE VI
ADMINISTRATION
Section 6.01 Plan Administrator. The Committee shall be responsible for the
general administration of the Plan and carrying out the provisions hereof and
shall be the “plan administrator” for purposes of the Employee Retirement Income
Security Act of 1974, as amended from time to time. Any discretionary
determination provided for in the Plan with respect to the timing, amount, or
form of a Participant’s benefit under the Plan shall be made by the Committee.
The Plan Administrator may retain auditors, accountants, legal counsel and
actuarial counsel selected by it. Any person authorized to act on behalf of the
Plan Administrator may act in any such capacity, and any such auditors,
accountants, legal counsel and actuarial counsel may be persons acting in a
similar capacity for one or more members of the Affiliated Group and may be
employees of one or more members of the Affiliated Group. The opinion of any
such auditor, accountant, legal counsel or actuarial counsel shall be full and
complete authority and protection in respect to any action taken, suffered or
omitted by any person authorized to act on behalf of the Plan Administrator in
good faith and in accordance with such opinion. Notwithstanding the foregoing,
no person shall vote or take action on a matter solely with respect to his own
Plan benefit.
Section 6.02 Expenses. The Company shall pay all expenses incurred in the
administration of the Plan.
Section 6.03 Records. The Company shall keep such records as shall be proper,
necessary or desirable to effectuate the purposes of the Plan, including,
without in any manner limiting the generality of the foregoing, records and
information with respect to the benefits granted to Participants, dates of
employment and determinations made hereunder.
Section 6.04 Legal Incompetency. The Plan Administrator may, in its sole and
absolute discretion, make or cause to be made payment either directly to an
incompetent or disabled person, or to the guardian of such person, or to the
person having custody of such person, without further liability on the part of
the Company, any member of the Affiliated Group, the Plan Administrator, or any
person, for the amounts of such payment to the person on whose account such
payment is made.
Section 6.05 Claim for Benefits. Any person who believes he is entitled to
receive a benefit under the Plan shall make application in writing on the form
and in the manner prescribed by the Plan Administrator. If any claim for
benefits filed by any person under the Plan (the “claimant”) is denied in whole
or in part, the Plan Administrator shall issue a written notice of such adverse
benefit determination to the claimant. The notice shall be issued to the
claimant within a reasonable period of time but in no event later than 90 days
from the date the claim for benefits was filed. The notice issued by the Plan
Administrator shall be written in a manner calculated to be understood by the
claimant and shall include the following: (i) the specific reason or reasons for
any adverse benefit determination, (ii) the specific Plan provisions on which
any adverse benefit determination is based, (iii) a description of any further
material or information which is necessary for the claimant to perfect his claim
and an explanation of why
-9-
--------------------------------------------------------------------------------
the material or information is needed and (iv) an explanation of the Plan’s
claim review procedure and time limits applicable to the Plan’s claim review
procedures, including a statement of the claimant’s right to bring a civil
action under Section 502(a) of ERISA following an adverse benefit determination
on review.
Section 6.06 Review. If the Plan Administrator denies a claim for benefits in
whole or in part, or the claim is otherwise deemed to have been denied, the
claimant or his duly authorized representative may submit to the Plan
Administrator a written request for review of the claim denial within 60 days of
the receipt of the notice of adverse benefit determination, which request shall
contain the following information: (i) the date on which the claimant’s request
was filed with the Plan Administrator; provided, however, that the date on which
the claimant’s request for review was in fact filed with the Plan Administrator
shall control in the event that the date of the actual filing is later than the
date stated by the claimant pursuant to this clause (i), (ii) the specific
portions of the adverse benefit determination which the claimant requests the
Plan Administrator to review, (iii) a statement by the claimant setting forth
the basis upon which he believes the Plan Administrator should reverse the
previous adverse benefit determination and accept his claim as made and (iv) any
written material (offered as exhibits) which the claimant desires the Plan
Administrator to examine in its consideration of his position as stated pursuant
to clause (iii).
The claimant or his duly authorized representative may: (i) submit written
comments, documents, records and other information relating to the claim for
benefits and (ii) review pertinent documents, including, upon request in the
manner and form prescribed by the Plan Administrator and free of charge, be
provided reasonable access to, and copies of, all documents, records, and other
information relevant to the claimant’s claim for benefits.
The review by the Plan Administrator shall take into account all comments,
documents, records, and other information submitted by the claimant relating to
the claim, without regard to whether such information was submitted or
considered in the initial benefit determination. The Plan Administrator shall
furnish a written decision on review not later than sixty days after receipt of
the written request for review of the adverse benefit determination, unless
special circumstances require an extension of the time for processing the
appeal. If an extension of time for review is required because of special
circumstances, written notice of the extension shall be furnished to the
claimant prior to the commencement of the extension, and the Plan Administrator
shall furnish a written decision on review not later than one hundred and twenty
days after receipt of the written request for review of the adverse benefit
determination. The decision on review shall be in writing, shall be written in a
manner calculated to be understood by the claimant, and, in the case of an
adverse benefit determination on review, shall include (i) specific reasons for
the adverse benefit determination, (ii) references to the specific Plan
provisions on which the decision is based, (iii) a statement that the claimant
is entitled to receive, upon request and free of charge, reasonable access to,
and copies of, all documents, records and other information relevant to the
claimant’s claim for benefits, (iv) a statement that there is no voluntary
appeal procedure offered by the Plan and (v) a statement of the claimant’s right
to bring a civil action under Section 502(a) of ERISA following an adverse
benefit determination on review.
Section 6.07 Exhaustion of Remedies. No action for benefits under the Plan shall
be brought unless and until the aggrieved person has (i) submitted a written
claim for benefits in accordance with Section 6.05 within twelve months of the
date the first payment would have been due the aggrieved person under the Plan,
(ii) been notified by the Plan Administrator that the claim has been denied,
filed a written request for a review of the claim in accordance with
Section 6.06, (iii) been notified in writing of an adverse benefit determination
on review and (iv) filed the action within three years of the date the first
payment (or amount, as applicable) would have been due the aggrieved person
under the Plan.
-10-
--------------------------------------------------------------------------------
ARTICLE VII
AMENDMENT AND TERMINATION
Section 7.01 Amendment. The Company reserves the right to amend, terminate or
freeze the Plan, in whole or in part, at any time by action of the Board.
Moreover, the Committee may amend the Plan at any time in its sole discretion to
ensure that the Plan complies with the requirements of Section 409A of the Code
or other applicable law; provided, however, that such amendments, in the
aggregate, may not materially increase the benefit costs of the Plan to the
Company. In no event shall any such action by the Board or Committee adversely
affect any Participant or beneficiary who has a vested benefit under the Plan,
or result in any change in the timing or manner of payment of the amount of a
benefit under the Plan (except as otherwise permitted under the Plan), without
the consent of the Participant or beneficiary, unless the Board or the
Committee, as the case may be, determines in good faith that such action is
necessary to ensure compliance with Section 409A of the Code. To the extent
permitted by Section 409A of the Code, the Committee may, in its sole
discretion, modify the rules applicable to payment elections to the extent
necessary to satisfy the requirements of the Uniformed Service Employment and
Reemployment Rights Act of 1994, as amended, 38 U.S.C. 4301-4334.
Section 7.02 Payments Upon Termination of Plan. In the event that the Plan is
terminated, the vested benefits of a Participant shall be paid to the
Participant or his beneficiary on the dates on which the Participant or his
beneficiary would otherwise receive payments hereunder (or, if applicable, the
2008 Deferred Compensation Plan) without regard to the termination of the Plan.
Notwithstanding the preceding sentence, and to the extent permitted under
Section 409A of the Code, the Company, by action taken by its Board or its
designee, may terminate the Plan and pay Participants and beneficiaries their
entire vested benefit subject to the following conditions:
(a) Dissolution; Bankruptcy Court Order. The termination occurs within twelve
(12) months after a corporate dissolution taxed under Section 331 of the Code,
or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A).
In such event, the vested benefit of each Participant shall be paid at the time
and pursuant to the schedule specified by the Committee, so long as all payments
are required to be made by the latest of: (i) the end of the calendar year in
which the Plan termination occurs, (ii) the first calendar year in which the
amount is no longer subject to a substantial risk of forfeiture, or (iii) the
first calendar year in which payment is administratively practicable.
(b) Change in Control. The termination occurs pursuant to an irrevocable action
of the Board or its designee that is taken within the thirty (30) days preceding
or the twelve (12) months following a Change in Control, and all other plans
sponsored by the Company (determined immediately after the Change in Control)
that are required to be aggregated with this Plan under Section 409A of the Code
are also terminated with respect to each participant therein who experienced the
Change in Control (“Change in Control Participant”). In such event, the vested
benefit of each Participant under the Plan and each Change in Control
Participant under all aggregated plans shall be paid at the time and pursuant to
the schedule specified by the Committee, so long as all payments are required to
be made no later than twelve (12) months after the date that the Board or its
designee irrevocably approves the termination.
(c) Company’s Discretion. The termination does not occur “proximate to a
downturn in the financial health” of the Company (within the meaning of Treasury
Regulation Section 1.409A-3(j)(4)(ix)), and all other arrangements required to
be aggregated with the Plan under Section 409A of the Code are also terminated
and liquidated. In such event, the Participant’s entire vested benefit shall be
paid at the time and pursuant to the schedule specified by the Committee, so
long as all payments are required to be made no earlier than twelve (12) months,
and no later than twenty-four (24) months, after the date the Board or its
designee irrevocably approves the termination of the Plan. Notwithstanding the
foregoing, any payment that would otherwise be paid pursuant to the terms of the
Plan prior to the twelve
-11-
--------------------------------------------------------------------------------
(12) month anniversary of the date that the Board or its designee irrevocably
approves the termination of the Plan shall continue to be paid in accordance
with the terms of the Plan. If the Plan is terminated pursuant to this
Section 7.02(c), the Company shall be prohibited from adopting a new plan or
arrangement that would be aggregated with this Plan under Section 409A of the
Code within three (3) years following the date that the Board or its designee
irrevocably approves the termination and liquidation of the Plan.
(d) Transition Relief. The termination occurs during calendar year 2008 pursuant
to the terms and conditions of the transition relief set forth in Notice 2007-86
and the applicable proposed and final Treasury Regulations issued under
Section 409A of the Code. In such event, the vested benefit of each Participant
shall be paid at the time and pursuant to the schedule specified by the
Committee, subject to the following rules: (i) any payment that would otherwise
be paid during 2008 pursuant to the terms of the Plan shall be paid in
accordance with such terms, and (ii) any payment that would otherwise be paid
after 2009 pursuant to the terms of the Plan shall not be accelerated into 2008.
(e) Other Events. The termination occurs upon such other events and conditions
as the Internal Revenue Service may prescribe in generally applicable guidance
published in the Internal Revenue Bulletin.
Notwithstanding anything contained in this Section 7.02 to the contrary, in no
event may a payment be accelerated following a Participant’s Separation from
Service to a date that is prior to the first business day of the seventh month
following the Participant’s Separation from Service (or if earlier, upon the
Participant’s death).
The provisions of paragraphs (a), (b), (c) and (e) of this Section 7.02 are
intended to comply with the exception to accelerated payments under Treasury
Regulation Section 1.409A-3(j)(4)(ix) and shall be interpreted and administered
accordingly. The term “Company” as used in paragraphs (b) and (c) of this
Section 7.02 shall include the Company and any entity which would be considered
to be a single employer with the Company under Code Sections 414(b) or
Section 414(c).
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Construction and Governing Law. The Plan shall be construed,
enforced, and administered and the validity thereof determined in accordance
with the laws of the State of Delaware, to the extent that applicable federal
law does not apply to the Plan. Words used herein in the masculine gender shall
be construed to include the feminine gender where appropriate and the words used
herein in the singular or plural shall be construed as being in the plural or
singular where appropriate.
Section 8.02 No Employment Rights. Neither the establishment or maintenance of
the Plan nor the status of an employee as a Participant shall give any
Participant any right to be retained in employment; and no Participant and no
person claiming under or through such Participant shall have any right or
interest in any benefit under the Plan unless and until the terms, conditions
and provisions of the Plan affecting such Participant shall have been satisfied.
Section 8.03 Nonalienation. The right of any Participant or any person claiming
under or through a Participant to any benefit or any payment hereunder shall not
be subject in any manner to attachment or other legal process for the debts of
the Participant or person; and the same shall not be subject to anticipation,
alienation, sale, transfer, assignment or encumbrance.
-12-
--------------------------------------------------------------------------------
Section 8.04 Limitation of Liability. No member of the Board and no officer or
employee of any member of the Affiliated Group shall be liable to any person for
any action taken or omitted in connection with this Plan, nor shall any member
of the Affiliated Group be liable to any person for any such action or omission.
No person shall, because of the Plan, acquire any right to an accounting or to
examine the books or the affairs of any member of the Affiliated Group. Nothing
in the Plan shall be construed to create any trust or fiduciary relationship
between any member of the Affiliated Group and any Participant or any other
person.
Section 8.05 Reemployment of a Participant. In the event of the reemployment as
an employee in any capacity by the Company or a member of the Affiliated Group
of a Participant whose employment covered under the Plan has terminated, payment
of his benefits under the Plan shall not be suspended during his period of
reemployment.
Section 8.06 Successors. The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business and/or assets of the Company expressly
to assume this Plan. This Plan shall be binding upon and inure to the benefit of
the Company and any successor of the Company, including without limitation any
persons acquiring directly or indirectly all or substantially all of the
business and/or assets of the Company whether by sale, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed the
“Company” for the purposes of this Plan), and the heirs, beneficiaries,
executors and administrators of each Participant.
IN WITNESS WHEREOF, Windstream Corporation has caused this Plan to be executed
as of this 1st day of January, 2008.
WINDSTREAM CORPORATION By:
/s/ Jeffery R. Gardner
Jeffery R. Gardner President and Chief Executive Officer
-13-
--------------------------------------------------------------------------------
WINDSTREAM BENEFIT RESTORATION PLAN
(Amended and Restated as of January 1, 2008)
EXHIBIT A
GRANDFATHERED PARTICIPANTS
(Section 1.03(a))
[Intentionally Omitted]
-14-
--------------------------------------------------------------------------------
WINDSTREAM BENEFIT RESTORATION PLAN
(Amended and Restated as of January 1, 2008)
EXHIBIT B
COVERED PARTICIPANTS
(Section 1.03(b))
[Intentionally Omitted]
-15- |
John Paul Stevens: We'll now hear argument in Alaska against the United States. Mr. Franklin.
Jonathan S. Franklin: Justice Stevens, and may it please the Court: Because title to lands underlying navigable waters is an inseparable attribute of State sovereignty, this Court has long held that there is a strong presumption that each State receives title to such [email protected]. Under the Court's precedents, the United States cannot defeat the State's title unless Congress has definitely declared an intention to do so or has otherwise made that intention very plain. Turning to the Glacier Bay claim in this case, the United States asserts that it received title to the submerged lands underlying the bay at statehood, but there is no express statement, an unambiguous statement by Congress evidencing an intent to defeat Alaska's title. To the contrary, the proviso to section 6(e) of the Alaska Statehood Act, which is the only statute the United States identifies as ratifying the purported reservation of the bay, in fact shows that title remains with Alaska. Under the plain language of the statute, the proviso applies only to a subset of the lands that would otherwise have been transferred to the State under the main clause. And this is important. In this case it is undisputed by both of the parties and by the special master that the Glacier Bay Monument was not included within the main clause. The submerged lands, therefore, did not--
Sandra Day O'Connor: Well, counsel, you... apparently you agree that the U.S. retained title to the uplands in Glacier Bay National Monument under section 5--
Jonathan S. Franklin: --Yes, Your Honor.
Sandra Day O'Connor: --of the statehood act.
Jonathan S. Franklin: Absolutely.
Sandra Day O'Connor: And why was Federal title to the monument not sufficient to retain title to the submerged lands as well without reference to section 6(e) at all?
Jonathan S. Franklin: Because of section 6(m), Your Honor. Section 5 of the Alaska Statehood Act provides that the Federal Government retained all of the property it previously possessed with one important exception, except as provided in section 6. Section 6 has two exceptions within it that are potentially relevant here. Section 6(m) incorporates the Submerged Lands Act and thereby provides that Alaska was to receive title to all the submerged lands underlying its navigable waters, plus those 3 miles seaward from the coastline, in order to put Alaska on the same equal footing with the rest of the States. Section 6(e) dealt with an entirely different set of properties. What section 6(e) did was to transfer to the State a very specific and narrowly defined class of property, property that was used for the purposes or solely... for the sole purpose of... of fish and wildlife conservation under three designated statutes. Those are the State... local-State fish and wildlife conservation statutes. Again, here it was... it is undisputed that Glacier Bay is not included within the main clause. Therefore, the--
Ruth Bader Ginsburg: --problem, as... you just said that... that the main clause is very, very narrow, and we're told by the Government that no wildlife reservation would come within that main clause, so that there would be nothing to retain under the second clause.
Jonathan S. Franklin: --The Government is incorrect, Your Honor. We have identified two wildlife refuges, the Kenai moose range and the Kodiak bear refuge, that were otherwise encompassed by the main clause but saved by the proviso. And here's why the United States is correct on that. They argue in their brief that those properties were not included in the main clause because they were created under the Alaska Game Law of 1925 rather than the Alaska Game Law of 1943. In fact, Your Honors, those are the exact same statute. The '43 Alaska Game Law simply restated the 1925 law with certain amendments. What that means is that at statehood the Kenai moose range and the Kodiak bear refuge were, in fact, being used for the purposes under the Alaska Game Law of '43, which was the then-existing version. These refuges were created in 1941 prior to the restatement and amendment of the statute. So those are two properties. And... and actually the legislative history... we don't think the Court needs to go to the legislative history because the statute is plain and also because there's a clear statement rule. But the legislative history does indicate that Congress was specifically concerned about those two very large refuges. The Kenai and the Kodiak together comprise an area that is approximately the same size as the State of Connecticut. And Congress' concern or, more specifically, the concern of the Fish & Wildlife Service was that Alaska might not be able adequately to manage those properties. But there was no such concern expressed with the monument that's at issue here because it was never going to be transferred to the State under the main clause.
Sandra Day O'Connor: Why... why shouldn't we look to the tests set out in the Idaho case here?
Jonathan S. Franklin: We are advocating the tests set out in the Idaho case, Your Honor. That test is a two-pronged test.
Sandra Day O'Connor: Right.
Jonathan S. Franklin: First, you have to look and see if there is a--
Sandra Day O'Connor: Whether Congress has notice of the inclusion of the lands and a Federal reservation, which it certainly did for Glacier, did it not?
Jonathan S. Franklin: --That's... that's relevant to the first prong, Your Honor. The second prong--
Sandra Day O'Connor: And second, whether the transfer to the State would undermine the purpose of that reservation. Should we look to that?
Jonathan S. Franklin: --If the Court were examining the... the first prong, Your Honor, I think those factors might be relevant. Here, though, the test is set out in not only the Idaho case but also the Alaska case, and that is that there has to be an explicit action by Congress. And Idaho applies that. Idaho looked very carefully for some action by Congress ratifying the reservation in that case. Here, we need an action by Congress. The United States has identified what they contend is the action of Congress, that is, the proviso to section 6(e) of the Alaska Statehood Act. That proviso, though, just does not cover these lands.
Stephen G. Breyer: Why do you say explicit? I... I thought it said you have to make it plain, which really might matter.
Jonathan S. Franklin: In--
Stephen G. Breyer: What it says... the language I think is... or definitely declared or otherwise made very plain.
Jonathan S. Franklin: --Yes. In the--
Stephen G. Breyer: Is that right? There's nothing that says explicit. Right?
Jonathan S. Franklin: --Well, Your Honor, in the Alaska case... and here I refer the Court to page 44 of the 1997 Alaska case. There the Court said that Congress must, quote, explicitly recognize or that Congress had explicitly recognized the resignation in that case. So the... the Court--
David H. Souter: But doesn't that simply mean that if it explicitly recognizes, it has made it plain.
Jonathan S. Franklin: --Yes.
David H. Souter: But it doesn't mean that it must be explicit in every case. Isn't that correct?
Jonathan S. Franklin: Well, I... I think explicit--
David H. Souter: You don't have to be explicit to make it plain. It's a great way to do it, but that's... it's not the only way.
Jonathan S. Franklin: --It has to be definitely... Justice Breyer, you're correct. It has to be--
Stephen G. Breyer: All right.
Jonathan S. Franklin: --definitely clear or otherwise made plain. Yes.
Stephen G. Breyer: If I'm correct, then... if I'm correct, then I guess the main argument I thought is here we have a national park and we want to keep the national parks as the United States, which you'd expect. It's a national park. And of course, they want to keep the whole thing. I mean, it's obvious. You don't have to write everything that's obvious. They no more want to give all the water in the park to Alaska than they'd want to give the gamekeeper's part to Alaska. A house, or maybe there's a swimming pool somewhere they don't mention either, but it's just obvious that unless there's something very special about the water, that the water in the park is part of the park.
Jonathan S. Franklin: Well, there is something special about the water, Your Honor, and that's what the Court has recognized. The water is a State... an essential attribute of State sovereignty, and just to--
Stephen G. Breyer: I understand that. But I mean, it's like saying we're keeping Yellowstone, but we're giving you the geysers. I mean, that's water too. It's even underground water. But I mean, what the argument I think is... would be is this like that, and the argument that it is like that is that, well, of course, you need this water in order to study the glaciers because there are forests that go down to the edge, because the flora and fauna can't be protected without it. And so though it isn't as strong a case as the geysers in Yellowstone, it's good enough. Now, what's your reply?
Jonathan S. Franklin: --First of all, the geysers are not included because we're talking about navigable--
Stephen G. Breyer: I understand that. I'm using a funny example to--
Jonathan S. Franklin: --Yes. Navigable waters. [Laughter] But let me... let me just assure the Court. There is nothing at all unusual about State-owned submerged lands within national monuments. The reason is simple. The Antiquities Act, which allows the President to designate national monuments, was enacted in 1906. At that time there were 45 States already in the Union. Therefore, any national monument created in those 45 States would necessarily have included State-owned submerged lands unless there had been some conveyance. And let... let me give Your Honors a... a concrete example. In the 1978 California decision decided by this Court, the Court recognized that the Channel Islands National Monument, which is an offshore national monument off the coast of California, included State-owned submerged lands because even though the reservation order was asserted to have included those lands, there was no congressional statement of an intent to defeat the State's title. Another--
Stephen G. Breyer: --Like in Yellowstone. There is a river I think. Who owns that?
Jonathan S. Franklin: --Well, Yellowstone was created before the State of Wyoming and--
Stephen G. Breyer: No. But I mean, does the State or the Feds own the... the river that goes through it?
Jonathan S. Franklin: --One would need to examine the particular reservations and statutes there.
Stephen G. Breyer: What about in Yosemite? I think there's a river down there too. Is the river in Yosemite owned by California or by the... the Feds?
Jonathan S. Franklin: I'm not familiar with that, but I will give you an example that I am familiar with.
Antonin Scalia: Before you do that, Mr. Franklin, is... is the rule that... that we're operating under that Congress had to have made it clear--
Jonathan S. Franklin: Yes.
Antonin Scalia: --that it reserved, or is the rule that it is clear that Congress ought to have reserved it?
Jonathan S. Franklin: No. It's the former rule, Your Honor.
Antonin Scalia: It's the former.
Jonathan S. Franklin: Yes.
Antonin Scalia: So the mere fact that it doesn't make any sense not to have reserved it does not make it clear that Congress reserved it, does it?
Jonathan S. Franklin: Absolutely, Your Honor.
Stephen G. Breyer: Right, but normally you assume, I guess, that Congress does what is... tries to avoid things that are ridiculous. So if they say keep the park, I guess the question would be is that included. I mean--
Jonathan S. Franklin: It's not--
Stephen G. Breyer: --can you read it this way? I... I think it would be relevant, wouldn't it?
Jonathan S. Franklin: --Well, first of all, this is not the ordinary... in this case we presumed the... the opposite. In fact, there's a strong presumption. But let me give you the other example that I was going to refer to you.
Stephen G. Breyer: Yes.
Jonathan S. Franklin: There's something called the California Coastal National Monument. That extends the entire length of California and goes out 12 miles to sea. In that monument, the... the lands, the submerged lands, are both State-owned and Federal-owned, and they are managed cooperatively. And that's what we are seeking to do here. And importantly, the fact--
Antonin Scalia: Mr. Franklin, are... are these submerged lands covered by navigable waters?
Jonathan S. Franklin: --Yes.
Antonin Scalia: What is it that the Government could do, if they owned the submerged lands, by way of protecting wildlife and doing all the good stuff they want to do, that they cannot do simply by... by reason of... of having jurisdiction over the navigable waters?
Jonathan S. Franklin: There are a few things, presumably very localized activities that the State would have the exclusive authority in. Importantly though, the Federal Government, even though the State owns title here, will retain all of its constitutional authority under the Interstate Commerce Clause to regulate activities that affect interstate commerce that--
Sandra Day O'Connor: Yes, but just as a practical matter, tell us what you're arguing about. What does Alaska think it can do if it prevails in the Glacier Monument area by virtue of prevailing, as a practical matter?
Jonathan S. Franklin: --As... as a practical matter, there are issues relating to local subsistence fishing that are important to the State. There are issues relating to local uses of the bay. But more importantly--
David H. Souter: Well, could... could you be concrete? I mean, there... I don't know what you mean. What are the issues? Can you give me an explicit example?
Jonathan S. Franklin: --Well, one explicit example is I think the State would prefer to have more local subsistence fishing in the bay. And the Court... to... to move out a bit, the--
Sandra Day O'Connor: So the State would permit more fishing than the U.S. would allow--
Jonathan S. Franklin: --I think--
Sandra Day O'Connor: --as a practical matter.
Jonathan S. Franklin: --As a practical matter. And... and there... there--
Antonin Scalia: But couldn't Congress forbid that under... by reason of its control of the navigable waters--
Jonathan S. Franklin: --Well, if--
Antonin Scalia: --if it really wanted to?
Jonathan S. Franklin: --If Congress really wanted to, Congress could... could affect activities relating to interstate commerce. But importantly, what Alaska seeks here really is a seat at the table. Right now Alaska has no say over anything that happens in its navigable waters which are its sovereign State lands. What it seeks really is to have its views being considered. Right now... and I'll give you a concrete example that goes to the enclaves that are issue in the... in the next count that I'll discuss. For some time cruise ships were going out into the middle of these enclaves and dumping their untreated sewage because that was outside... or asserted by the Government to be outside the scope of Alaska's pollution laws and not within the scope of Federal laws. That was fixed, but it took an act of Congress to do that. There had to be an act of Congress to prohibit those cruise ships from dumping their sludge out in these, what they used to call, donut holes. Alaska finds it unacceptable to have to go petition Congress every time something comes up on its navigable waters that it believes ought to be regulated or dealt with. Now, if Congress decides to preempt the State under its interstate commerce power, it has the right to do that. I think we also need to keep in mind what waters we're talking about. This is southeast Alaska. The waters of southeast Alaska quite literally define the region. They are central to the economy, the history, the society, and the culture of all the Alaskans who live there and who travel there. Just to take an example, there are still today very few roads anywhere in southeast Alaska, and the... the towns and the cities like the... the State capital of Juneau historically were accessible only by the water. This is an area... the water in particular is an area that is of great importance to Alaska. And they are seeking to confirm that that area does belong to Alaska. And I think we have set forth in quite detail why--
Sandra Day O'Connor: Well, there... there are big differences between the... the analysis concerning the bays that you assert and Glacier Monument. I think they're quite different.
Jonathan S. Franklin: --Well, the... the tests are different. The Glacier Bay test involves... needs to have an explicit reservation... explicit ratification by Congress of a reservation and--
Sandra Day O'Connor: You're lumping them all together, but I think the tests are quite different.
Jonathan S. Franklin: --The tests are different. What I was trying to explain is, in answer to Your Honor's question, why this matters to Alaska. It matters quite--
Stephen G. Breyer: But in... in respect to Glacier Bay--
Jonathan S. Franklin: --Yes.
Stephen G. Breyer: --I... I mean, is the only... you said, for example... is the only dispute about the use of the water that's in the middle of the Glacier Bay park whether there should be more or less fishing, or are there other things that Alaska wants to do with that water in the park that they can't do if the United States owns it?
Jonathan S. Franklin: There are two issues. I think it's fishing and also to allow more local people to visit the area that would otherwise be prohibited by the Park Service. There was... but just to assure Your Honors--
Stephen G. Breyer: How could they do that? You mean they would go into a boat in the middle of the water there, but they couldn't get off the boat?
Jonathan S. Franklin: --Well, that's normally what... what people do is they just visit the--
Stephen G. Breyer: I see.
Jonathan S. Franklin: --by boats. But to assure Your Honor, there... for example, there are no mineral interests here anywhere in the picture.
Stephen G. Breyer: No. All right. So if... if the normal way of visiting the park is to go into a boat and to go up along the waterway and to look at the glaciers on the shore, then it surely is odd that the United States intended to give that waterway to Alaska, for under those circumstances, there would be nothing left of the park. I mean, it would be like... you see, if it's essential to it.
Jonathan S. Franklin: Well, that's not true, Your Honor. 80 percent of the park, even if one assumes it included the submerged lands, is uplands. But it's no more unusual--
Stephen G. Breyer: No. I understand that, but I mean, it's the way of visiting the park.
Jonathan S. Franklin: --Yes, but I just mentioned, for example, the two monuments in California. The Channel Islands National Monument this Court held included the... the submerged lands were State-owned. There's no other way to get to the Channel Islands Monument but to traverse State-owned submerged lands. In fact, I think there are few national parks in this country you can't get to without going across State lands. I think there's another important point here and that is the Property Clause of the Constitution would also allow the Federal Government to regulate activities on lands that abut national parks to the extent that they might affect park activities. But here what we need is an express statement by Congress ratifying the purported reservation of the bay. Without that, Your Honors... and the... the precedents are clear. Without that, the presumption is... in fact, the strong presumption is... that these are State-owned lands. And again, there is absolutely nothing unusual. That is part of our Federal system. It's the way that these monument properties have been managed since 1906 when the President first got the authority. It's the way that Glacier Bay will continue to be managed. We expect, we intend to work cooperatively with the Federal Government to resolve any issues that might remain. What we're seeking here, again, is a seat at the table. We just are seeking to have Alaska's views dealt with because they are the owner.
Ruth Bader Ginsburg: In the... in the '97 case, was the area at issue within the first part of 6(e)? Because this--
Jonathan S. Franklin: Yes. The... the Court expressly stated that it was at pages 60 to 61, and that was in the absence of any contrary argument.
Ruth Bader Ginsburg: --It... it made an assumption.
Jonathan S. Franklin: The Court made an assumption, but in fact--
Ruth Bader Ginsburg: But was it in fact?
Jonathan S. Franklin: --I think there would have been a substantial... had that... had that issue been litigated, there would have been a substantial argument that it was not within the main clause. But again, there was no argument on that point before the Court. The Court at pages 60 to 61 expressly stated... again, it was an assumption, but the Court expressly stated that the lands were within the main clause. Apparently the Court was considering the fact that the application for ANWR did, in fact, reference the purposes that were set forth in the main clause, the Alaska Game Law. The important point of that case for this case, though, Your Honors, is that the Court embraced the construction of section 6(e) that we are advocating here, namely that the proviso exempts and saves for the Federal Government a subset of the properties that would otherwise have been transferred to the State under the main clause. There simply was no need for Congress to have expressed an intent--
Antonin Scalia: I thought we had left that open. I thought we--
Jonathan S. Franklin: --I think what I said is that the Court embraced that position, and it was actually an essential attribute of the... essential premise for the Court's holding. At 60 to 61 and again at page 48 of the... the decision, what the Court made clear is it was concerned that unless the lands were saved by the proviso, all of them, the submerged lands and the uplands, would have passed to Alaska under the main clause, and that was one of the reasons the Court, I think, held that it was covered by the proviso. No such concern is present here. I'd like at this point briefly to turn, if I might, to the count I, which is the historic waters count. There the United States asserts that at statehood the waters of southeast Alaska were riddled with isolated enclaves of international high seas that were wholly surrounded by U.S. territorial waters. The historical record, though, belies that contention. At least from 1903 until 1971, the United States took what this Court has described in the Mississippi Sound case, the Alabama and Mississippi Boundary Case, as the publicly stated policy that the waters of the archipelago were inland and that the political boundary ran along the outside edge. Thereafter, the United States took... consistently based a discriminatory enforcement regime, fisheries enforcement, on that position. What I mean by discriminatory is that the United States allowed U.S. fishing but prohibited foreign fishing in that area.
David H. Souter: Well, the argument on the other side, as I understand it, is that the... the assertion of authority to regulate fishing really is... is relevant. It has no necessary implication for the historic waters doctrine. What... what is your answer to that?
Jonathan S. Franklin: That's the assertion. My answer is that the Court announced to the contrary in the 1975 decision, the Cook Inlet case, there at page 201 and 202, and this is quoted at page 28 of the blue brief. What the Court said there is it examined an incident in which a Japanese fishing vessel had been caught in the general area, and the Court said... and I quote... that incident deserves scrutiny because the seizure of a foreign vessel more than 3 miles from shore manifests an assertion of sovereignty to exclude foreign vessels altogether and, quote, must be viewed as an exercise of authority over the waters in question.
David H. Souter: What... what page was that?
Jonathan S. Franklin: I'm sorry. That's 201 to 202... 201 and 202 of the Cook Inlet case, and that's at 28 of the blue brief. What the law was at statehood is the United States had no authority, after 3 miles out, to enforce discriminatory fishing regulations against foreign vessels. Now, importantly there's a caveat here, and that is that the law has changed. The law has changed since 1971. Beginning in 1976, the United States asserted a 200-mile... what's known as an exclusive economic zone that allows the United States to enforce discriminatory fishing, and in 1982 international law embraced that. But... and we have quoted a U.N. study. In fact, the U.N. study that we have quoted... and that is noted at page 29 of the blue brief. That is the study that's called the Juridical Regime Study. It's the study that this Court itself, in all of its historic waters cases, has used as the authoritative statement of the law. That study quite clearly states that if a... if a country enforced discriminatory fishing rules against foreign vessels outside... that that manifests an assertion of an historic inland waters claim. And what we have here--
Antonin Scalia: --On... on this point, it seems to me there... unlike the first point you were discussing where I think the Federal Government can work its will anyway, on this point there is really a significant Federal interest involved. That is to say, if the United States takes the position that these are, indeed, inland waters, it's going to have to acknowledge similar rights in foreign countries with similar archipelagos.
Jonathan S. Franklin: --No. Your Honor, they assert that, but they don't provide any specific examples. And the reason they can't provide a specific example of any instance abroad where it would affect their position is that each historic waters inquiry is decided on its own facts. The fact that something is an archipelago does not render it historic waters.
Antonin Scalia: No, but... but you say a determinative fact, a conclusive fact is simply... is simply enforcing discriminatory fishing regulations.
Jonathan S. Franklin: It is a claim to the... to the waters, which was made in 1903, accompanied with discriminatory fishing enforcement, accompanied with other statements in this case, including the California brief to this Court. There has to be an... excuse me... examination of all of the facts and circumstances before one can conclude that waters are historic waters. These ones are. Other waters would not be. The United States has not identified any waters abroad that have precisely these constellation of facts. So its... its position is basically: we say it, therefore it must be so. I--
Ruth Bader Ginsburg: But it's not the United States that will be making the judgment about what areas are controlled. It would be the country abroad. And I... I think the argument was, what the United States does other nations will copy.
Jonathan S. Franklin: --Right.
Ruth Bader Ginsburg: And they will decide what looks like the Alaska--
Jonathan S. Franklin: Right. What the United States does, Your Honor, is follow the well-settled international law on historic bays... historic waters. Those are set forth in the convention. Each state will have the same authority where its facts and circumstances dictate it. If there has been a continuous claim asserted by a nation with the acquiescence of foreign nations, then it will qualify as historic waters. But it has to be done based on a... an examination of the particular facts of the case. And one thing else... one thing other that is worth noting, if you have an archipelago like this, a nation can always close it off using article 4 straight baselines. That is permitted under the convention. The U.S. has decided not to do that, but other states are fully able to do that. I think that if the United States is going to be arguing that there is some international precedent here that's going to hurt it adversely, it needs to identify a particular body water abroad that it believes this case is going to affect.
Ruth Bader Ginsburg: --Why should it make that suggestion? It would certainly not be in the interest of the United States.
Jonathan S. Franklin: Well, it... it needs to explain more specifically then, other than just stating we think it might affect our position. The... the facts and circumstances... the Court, for example, applied the historic bay question in Mississippi Sound, in the Mississippi Sound case. I am aware of no instance in which that precedent was ever used adversely and the United States has not identified any... any instance. But more importantly, what this Court did in the Mississippi Sound case is it looked at the evidence and it said is this a historic bay or is it not. The Court concluded that it was and that was the inquiry that the Court follows. At this point, I'd like to reserve the remaining time for rebuttal.
John Paul Stevens: Yes, Mr. Franklin. Mr. Minear.
Jeffrey P. Minear: Thank you, Justice Stevens, and may it please the Court: I would like to begin with the focal point of Alaska's argument, namely Glacier Bay National Park. Alaska's core contention is that section 6(e) of the statehood act does not provide an adequate showing that the United States intended to retain the submerged lands in Glacier Bay. This--
Antonin Scalia: Could... before you go into that, could you tell me how 6(e) begins?
Jeffrey P. Minear: --Yes. In fact, I think it's very helpful. It's listed at page 7a--
Antonin Scalia: I mean, (e)--
Jeffrey P. Minear: --of our... of the gray brief.
Antonin Scalia: --Yes, but the... well... well, the... the introduction to it is... is not listed, is it? I mean--
Jeffrey P. Minear: That may... that may be so.
Antonin Scalia: --I mean, it's incomplete. It... it just says all real and... what about all real and personal property? Is there an intro that says there is hereby... there is hereby granted to the United... to Alaska?
Jeffrey P. Minear: Well, 6(e) I think begins stating that this... these are exceptions to section 5 which is the retention... the general retention provision of the United... for United States lands. But if we look at 6(e) itself, it's--
Antonin Scalia: Well, you say they're exceptions. How... how are the exceptions introduced? I mean, it's incomplete to just read (e) that says all... what about all real and personal property of the United States? There has to be some introductory language. What is it?
Jeffrey P. Minear: --No. Actually there doesn't, Your Honor, because if you go on, it says all real and personal property... then you skip down, about halfway down... shall be transferred and conveyed to the State of Alaska by the appropriate Federal agency. So it is... so this is complete in terms of--
Antonin Scalia: Okay. You're right.
Jeffrey P. Minear: --But if I could walk you through those provisions because I think they're quite important. The first provision says, as you say, all real and personal property which is specifically used for the sole purpose of conservation and protection of wildlife shall be transferred to the United States.
Antonin Scalia: Right.
Jeffrey P. Minear: It's followed by another provision here.
Antonin Scalia: To... to Alaska.
Jeffrey P. Minear: To... to Alaska. Excuse me. And it's followed by another proviso which says that the United States will continue to control fish and game matters in Alaska until the Secretary of Interior has certified that Alaska is ready to do so. Clearly that proviso is not a subset--
John Paul Stevens: Mr. Minear, before you get too far, I also would like to ask a preliminary question that was raised by Justice O'Connor before. Do you agree that section 5 itself, the second part of it that says the United States retains title to its own property, that the response to that is adequately provided in the Submerged Lands Act referred to in subparagraph (m)?
Jeffrey P. Minear: --No, I don't. I don't believe... let me frame the... your... your question, if I may, for you. Section 5 indicates the United States would retain all of the lands that it presently holds. Section 6(m) then makes the Submerged Lands Act applicable to the... to the... to Alaska. In doing so, it recognizes that there are some lands the United States would continue to retain, provided it meets the requirements of the Submerged Lands Act. The particular exception we're concerned about here is the expressly retained exception, in other words, if lands are retained by the United States. This Court said in the Arctic Coast case that that provision adopts the general law that applied before the Submerged Lands Act, that it had to be made plain that the United States would be holding onto these lands. It doesn't require an express statement. It simply requires that it be made plain. Now, our view is that these lands would be retained by the United States, quite apart from 6... the 6(e) exception we're arguing about here on summary judgment. And if you denied our motion for summary judgment, we'd go back and talk about the other exceptions that are applicable. But in this case we're simply focusing on 6(e) and we're focusing on that because the Court's Arctic Coast decision made clear that 6(e)... and I quote... reflects the very clear intent to retain title, unquote, to submerged lands, quote, so long as those submerged lands were among those set apart as refuges or wildlife... or reservations for the protection of wildlife.
Antonin Scalia: Well, we didn't have this issue before us. Let... let me--
Jeffrey P. Minear: Yes, we did.
Antonin Scalia: --let me... why don't you go back to your argument? You said that the first proviso on its face is simply not a subset of the first part of (e).
Jeffrey P. Minear: Yes. It's an example how provisos do not need to be--
Antonin Scalia: But that's not the proviso at issue here.
Jeffrey P. Minear: --Yes.
Antonin Scalia: The proviso at issue here is the second proviso which begins provided that such transfer shall not include lands. Such transfer. Now, this is... the word such refers you back to something. What... what possible transfer could it mean except the end of the introduction, which says shall be transferred and conveyed to the State of Alaska?
Jeffrey P. Minear: Your Honor--
Antonin Scalia: I mean, anybody reading that would... would think that proviso refers to that transfer or at least it is not clear that it provides to... that it applies to every transfer in... in the whole act.
Jeffrey P. Minear: --I disagree with you, Justice Scalia, for these reasons. First of all, the such transfer simply tells you what's not included. That language tells you... this is outside. It doesn't mean that whatever follows necessarily was within the main clause. What Congress was doing here, by making clear that these lands were not transferred--
Antonin Scalia: What does the such refer to?
Jeffrey P. Minear: --It does refer to the transfer before. But what follows here, refuges and reservations for the protection of wildlife, they do not fit within that... that main clause. It's obvious they don't because the only things that fit within the main clause are those lands and real property specifically used for the sole purpose of conservation and protection of wildlife. What we're talking about here... wildlife reservations are multiple purpose lands. They're not used solely for... for the purpose of conservation. The purpose of the first provision here was to transfer vehicles, fish hatcheries, other equipment that the State would need to enforce Alaska game laws. That was the point of... of that first provision. But Secretary Chapman who drafted this made clear in the legislative history that what he was doing was drawing a line between those... those facilities and equipment that are used by a State in its traditional game management and drawing a contrast with the matters that would be retained by the United States.
Stephen G. Breyer: Yes, but where is the language that says that the submerged land that fits the proviso is retained by the United States?
Jeffrey P. Minear: We do not need--
Stephen G. Breyer: What the proviso says is just what Justice Scalia said.
Jeffrey P. Minear: --We do not need express language that expresses--
Stephen G. Breyer: No, no, but where is the implication in that?
Jeffrey P. Minear: --The implication is that we are retaining all of the reservation. And this is what the Court said in the Arctic Coast decision. It saw that this was--
Stephen G. Breyer: That's... that's... it... I mean, in... in... I take it in the Alaska case we were considering a transfer that did fall within the main sentence of (e).
Jeffrey P. Minear: --Justice Breyer, neither party made that argument. This issue came up in a letter that was written after. The... the language--
Stephen G. Breyer: Were we or weren't we?
Jeffrey P. Minear: --You were not considering that.
Stephen G. Breyer: We weren't.
Jeffrey P. Minear: That... that was... simply neither party suggested that ANWR fell within the first provision. And it doesn't. It's clear that it doesn't. It was not land that was specifically used solely for conservation of wildlife under these three listed statutes. The ANWR reservation at that time was set apart. It was BLM land. It was also used for mining and other activities. Likewise, the other matters--
Ruth Bader Ginsburg: But the Court did assume... the Court did assume that.
Stephen G. Breyer: Yes.
Jeffrey P. Minear: --It made that assumption with no briefing, but it did that with regard to the second issue that was presented there. The issue that people were fighting about in the Arctic Coast decision was was this land properly set apart or not for purposes of the proviso. And that's where this discussion takes place.
Stephen G. Breyer: All right. Then--
Jeffrey P. Minear: It's an afterthought that simply reinforces.
Stephen G. Breyer: --All right. Then at best Alaska is a neutral. Because we didn't think it, we're operating as a mistake. It's a neutral. Okay. Now, what's bothering me about the case is just what Justice Scalia said, that... that why I... if I sell you all my clothing and then I put, but not my camping gear, I mean, I can absolutely see you don't get my camping clothing, but you want to say that's a reservation of mess kits from some other transfer? I mean, it has nothing to do with mess kits.
Jeffrey P. Minear: Your Honor, but that's... it's clear that what this is... this is more along the lines if someone said that I will sell you my house, provided that transfer shall not include the detached garage.
Stephen G. Breyer: Fine, and then it doesn't go in that.
Jeffrey P. Minear: In that case--
Stephen G. Breyer: But it doesn't mean that the next--
Jeffrey P. Minear: --Yes, but it was not a part of the house.
Stephen G. Breyer: --Yes.
Jeffrey P. Minear: You know, that's... it's just providing clarification, just that one of the purposes of the proviso is to provide clarification.
Anthony M. Kennedy: This is an abundance of caution?
Jeffrey P. Minear: In other... that is exactly right. And we can tell that from--
Stephen G. Breyer: All right. If it's an abundance of caution, where's the other language that almost reserves it so we need the caution?
Jeffrey P. Minear: --That would be section 5. It indicates the general retention for lands of this sort.
Stephen G. Breyer: But 5 is subject to the Submerged Lands Act and the Submerged Lands Act brings you back to the reservation has to be explicit. And then... see, that's--
Jeffrey P. Minear: Well, Justice Breyer, again, if I can just complete the point--
Stephen G. Breyer: --That's why I was talking about Yellowstone.
Jeffrey P. Minear: --Yes.
Stephen G. Breyer: I was looking for something that would be obvious that they wouldn't have meant to transfer. He comes back and says, well, very often States do control the water.
Jeffrey P. Minear: Your Honor, I just need to make a point. I think it's very important for you to understand this point. First of all, that at page 57 of the Arctic Coast decision, this Court was clearly reading this language, the 6(e) proviso, as sufficient to provide a clear indication of transfer of title, and in doing so, it was recognizing what is clear in the proviso itself, that these particular items that are discussed there are not a part of the main clause and cannot be. And a good example of that is the third thing that's being transferred, facilities that are utilized in connection with general research activities related to fisheries and wildlife. Now, that is not going to be something that's specifically used for the sole purpose of conservation and protection of wildlife. It's the antithesis of that. It makes quite clear that our construction is correct. The subset theory just doesn't work because the items that are here are not things that fit within the main clause. What Congress was doing here was drawing a very clear line--
Anthony M. Kennedy: But why... why doesn't (m) supersede that argument anyway? Let's... can't we say that, well, you may be right so far as the second clause of (e) is concerned, but you still have to deal with (m)?
Jeffrey P. Minear: --Then you have to explain what happened in the Arctic Coast case, why we were able to retain the ANWR lands which did not fall within the main provision. And that is because Congress was making... because this Court concluded that Congress was making clear that wildlife lands are very important and they wanted to make absolutely clear that those lands would not be transferred. And even a provision that could be misconstrued, as I'm afraid this Court did in... in Arctic Coast... could be misconstrued to contain some of these lands, we need to make adequate assurance that... that the courts that read this realize a clear division is being made. We are retaining these wildlife lands. That's--
Antonin Scalia: Mr. Minear, I'm... I'm not sure I agree with you that... that that language, facilities used in connection with general research activities relating to fisheries or wildlife, is not a subpart of the earlier... of the earlier grant, namely property used for the sole purpose of conservation and protection of fisheries and wildlife. Surely one... one can readily regard general research activities relating to fisheries or wildlife to be part of the activity of conserving and protecting fisheries and wildlife.
Jeffrey P. Minear: --But we're talking about a facility here. So a facility that might conduct some... some research tangentially related to wildlife is not a facility that's used for the sole... specifically used for the sole purpose of conservation and wildlife. There's a clear difference here. These two... these two sets do not overlap, and it's even more so with regard to wildlife refuges. Wildlife refuges and wildlife reservations are used for multiple purposes. At the time of statehood, the... the regulations in place, the fisheries regulations and wildlife regulations, made clear that permits could be issued for purposes apart from wildlife conservation. And this Court's own decision in Udall v. Tallman recognized that one of the... the refuges that Alaska cites as being included in the main clause was being used for oil and gas purposes. It was not being used solely for the purposes... specifically used solely for the purposes of conservation.
Antonin Scalia: Mr. Minear, you know, I... I am just overwhelmed by the reality that this is a terrible mess of a statute. I can't figure out what it means.
Jeffrey P. Minear: Well, Your Honor--
Antonin Scalia: And... and it seems to me that's exactly why we have a clear statement rule.
Jeffrey P. Minear: --Your Honor--
Antonin Scalia: There are arguments here, there are arguments there, but it... it does not dawn upon me that... that anything is clear about [email protected].
Jeffrey P. Minear: --Well, this... we believe the statute has been clear for 50 years. That's why these issues have only arisen recently with regard to Glacier Bay National Park.
Sandra Day O'Connor: Mr. Minear, what do you say are the practical consequences from the Federal Government's perspective of going... of disagreeing with the U.S. position? What harm is done? Can the U.S. protect itself in any event under other clauses?
Jeffrey P. Minear: We agree that the United States has the regulatory authority to protect... to limit vessel entries and protect commercial fishing, but that's not what our concern is. Our concern is with the actual use of the submerged lands. This is a laboratory. This is a laboratory for scientific research, and we occupy and use the submerged lands for that purpose. That includes such things as withdrawing cores of materials so we can analyze its historic features. We've installed a 5-mile cable with a hydrophone on the... on the submerged lands so we can listen to vehicle traffic and determine if the... the volume is sufficient to interfere with the whales that migrate through there.
Antonin Scalia: Don't you do that on... on dry land in some States?
Jeffrey P. Minear: Your Honor, in order to hear vehicle traffic--
Antonin Scalia: Doesn't your authority under the Commerce Clause or under... under... over navigable waters allow you to do that kind of stuff?
Jeffrey P. Minear: --Your Honor, we think that... that Alaska would have a realistic argument that we cannot withdraw materials from the submerged land which we use and study. And in fact, I would point out that the park superintendent's affidavit--
Antonin Scalia: Are they likely to do that?
Jeffrey P. Minear: --What?
Antonin Scalia: Are they likely to do that? Is this a real problem?
Jeffrey P. Minear: There are 900 papers, scientific papers, that are cited in the affidavit of the park superintendent. This is exhibit number 8 on count IV. And of those describing the type of research we do in Glacier Bay National Park--
Stephen G. Breyer: Well, I thought--
Jeffrey P. Minear: --scores and perhaps hundreds of those involve submerged lands.
Stephen G. Breyer: --All right. Given what you're saying... and I... you're not accepting this I think, and I... well, there is language in this act which maintains in the United States title to the park.
Jeffrey P. Minear: That is correct.
Stephen G. Breyer: All right. Now, I would have thought when you get title to the park, you mean the park, and by the park, you mean those essential parts of the park.
Jeffrey P. Minear: We--
Stephen G. Breyer: And therefore, if you have a part of the park which is the only part of the park where people look at the park, and it's the only part of the park that brings them into the park, and it's the only part of the park where you do the research, et cetera, that's the park. Just as if I were to sell my house and I list the rooms and forget the kitchen, well, the kitchen is an essential part of the house.
Jeffrey P. Minear: --That's--
Stephen G. Breyer: Now... now, once I made that argument, he said that's a very clever argument, but really, there are all kinds of instances where States have reserved submerged land inside national parks and it's worked fine.
Jeffrey P. Minear: --But those are instances--
Stephen G. Breyer: What's your response to all this?
Jeffrey P. Minear: --The instances... the examples they're giving are cases in which we've created those national monuments or parks after statehood. And in those cases, we cannot acquire those lands because they have already been transferred to the [email protected].
Antonin Scalia: It hasn't resulted in a... in a disaster. That's the point that Justice Breyer is making.
Jeffrey P. Minear: But in this case--
Antonin Scalia: It has not resulted in a disaster.
Jeffrey P. Minear: --But in this case, it is going to impede the... the activities we have there. And a good example of this is in the amicus brief at page 25 where Alaska does not even assent to our authority to control fish and wildlife. The Alaska legislature has passed a statute in which it refuses to assent to our authority to control fish and wildlife within the park. This gives you some sense of the type of difficulties that we're going to encounter.
David H. Souter: Mr.--
Jeffrey P. Minear: And our chief concern--
David H. Souter: --Mr. Minear, may I ask you? At the time the statute was passed, was the national Government conducting these activities?
Jeffrey P. Minear: --Yes, it was. It was created as a national monument. Now, in terms of what degree of activities, the record is not clear, but we're--
David H. Souter: Maybe you were monitoring passages through to see whether the whales were going to be interfered with and doing that sort of thing. Were you taking core samples?
Jeffrey P. Minear: --We were definitely studying the bed of the lake, and our... our briefs below explain. We have an affidavit from our glaciologist which describes the type of research that was being done.
David H. Souter: So in... in other words, you... you're saying it is fair to say that at the time of the passage, this would have been on the congressional mind, going back to Justice Breyer's--
Jeffrey P. Minear: It... it definitely would have. And also I want to point out that when we created the national monument, we also preserved such things as the interglacial forests. These are forests that are left behind as the glaciers retreat and go forward over these submerged lands. The glacial forests are in the submerged lands, and so they become a part of it. As these glaciers continue to retreat, it's likely that other glacial forests will be revealed, and those should remain a part of the park. That was part of the purpose, was to study those--
Stephen G. Breyer: Should. Now, you're not... how far are you prepared to go? You can't go more than your brief and your facts justify. Are you prepared to say that this water is an essential part of the park?
Jeffrey P. Minear: --Yes.
Stephen G. Breyer: Yes?
Jeffrey P. Minear: Yes. Certainly--
Stephen G. Breyer: Have you said that before this minute?
Jeffrey P. Minear: --Not only have we said it, but the Park Service at statehood said that this is a water park when they were describing these lands and saying why they should be retained. They told Congress... the... the park superintendent or the... the director of the Park Service said this is a water park that's mostly... this is, after all, Glacier Bay National Park. And in that... with that respect, I'd like to point out this--
Antonin Scalia: Why did they keep the other 80 percent then?
Jeffrey P. Minear: --Excuse me, Your Honor.
Antonin Scalia: Why did they keep the other 80 percent?
Jeffrey P. Minear: Well, the--
Antonin Scalia: I gather only 20 percent of it is water.
Jeffrey P. Minear: --It's slightly more than 20--
Antonin Scalia: I want to make sure they're giving away the rest.
Jeffrey P. Minear: --We haven't given away. We have all of these lands. The... the uplands here are the glaciers and the mountains that are inaccessible except by the water. You cannot reach these areas. There are no roads in this park except for the park visitors center, and beyond that--
Antonin Scalia: Then make it a water park. I mean, you want to say it's a... it's a water-accessible park, fine.
Jeffrey P. Minear: --Yes. But, Your Honor, the--
Antonin Scalia: 20 percent of the park is under water. Right?
Jeffrey P. Minear: --More than 20 percent. Roughly 25. I'd say close to 25 percent of the park is... within the park boundaries is submerged lands. But there's another point I'd like to make with regard to the establishment of the park. This park was created under the Antiquities Act, and under the Antiquities Act, the President is given authority to create national monuments, but they cannot be disestablished except by act of Congress. Now, Congress could have disestablished this monument if it had meant to give up the land. It could have disestablished some part of it, and it chose not to do so. And yet, that's another indication that Congress was intending to retain these lands. Now, I would like to move on to the other two counts we have here, unless we have further questions about... about Glacier Bay. But I... I think one thing that I do... one thought I want you... to leave you with with regard to Glacier Bay is that these lands are essential to the park. They are understood to be essential at the time that the park was created. And the... the line we're suggesting here is a very reasonable one with regard to this park. Those lands are... continue to be used... the submerged lands for scientific research that is vitally important. Now, I'd like to point out that the master also correctly rejected the claim that the archipelago straits are historic inland waters, and on that basis, Alaska failed to satisfy any part of the Court's three-part test. This Court specifically failed to show a continuous assertion of... of sovereignty to exclude vessels that have... that are visiting the park or passing through in innocent passage or to indicate any acquiescence of foreign nations. During the past 150-year period, neither Alaska nor the United States ever attempted to exclude a vessel based on... merely on innocent passage. Rather, Alaska... Alaska cannot point to a single incident in which we unambiguously did so. The only--
David H. Souter: --Alaska is arguing, as I understand it now, that the... the exclusion for purposes of fisheries regulation has the same implication as a matter of international law, which is a point that you disagree on. What... what is your response to their response to--
Jeffrey P. Minear: --The answer is in order to establish a historic inland water claim, you have to exclude a vessel based on this passing through in innocent passage. Fisheries is not... engaging in fishing activity under the convention is not innocent passage. And so, therefore, an exclusion based on fisheries can never... can never give rise to a claim of--
David H. Souter: --And what's... what's your best authority for that?
Jeffrey P. Minear: --Well, our best authority is the convention itself. The convention makes clear under article 14 that fisheries is... that fisheries activities are not innocent passage. Rather, innocent passage is merely transit through from one point to another. Moreover, the Marguerite incident that they describe involves a single incident; that is, it does not satisfy the continuity requirement that the inland... the historic inland waters test requires. And finally, it also didn't satisfy the acquiescence test since the British Government protested the seizure of the ship. And finally on top of that, this vessel... we don't know exactly where this vessel was at the time that it was seized. There continues to be a dispute and the master was unable to determine whether that... the ship was in... inside or outside the 3-mile limit. Now, I'd also like to speak briefly to the juridical... juridical bay claim as well. This is a matter that Alaska did not touch upon, but I imagine it would address on rebuttal. The master correctly rejected Alaska's extraordinary claim that the Alexander Archipelago can be turned into two large... large juridical bays. And basically it attempted to do so by establishing a headland on an island. Now, that does not suffice the purpose of the convention. The only way that it can establish a bay headland or... or closing point is by showing that it's on the mainland. In order to establish that this is on the mainland, Alaska has to ignore four intervening bodies of water. And as the master recognized, these bodies of water are simply too substantial to ignore. In the case of these bodies of water, Keku Strait is 41 miles long, on average 4 and a half miles wide. It's... simply those intervening waters cannot be ignored in order to establish that this is... is part of the mainland. It's also separated by Wrangell Narrows, which is a 12-mile-long strait that is an important passage for international navigation. That too precludes it from being ignored and treated as dry land. The failure of those two assimilations by itself is sufficient to establish that... that these... that these juridical bays do not exist. And even if that were not enough, the master went on to say that this would not be a well-marked indentation, that even if you were willing to assimilate these lands, it's still the case that the bay itself would not be... the supposed, imaginary bays that Alaska has created here would not be recognizable to a mariner who is passing by. For all those reasons, the juridical bays here are... are simply not well founded, and the master was correct in rejecting them. So what we see--
Sandra Day O'Connor: Mr. Minear, could I go back to Glacier--
Jeffrey P. Minear: --Certainly, Your Honor.
Sandra Day O'Connor: --Park again for a moment and ask why the Government decided to base its claim to the lands in Glacier Bay exclusively on that murky provision of 6(e) rather than to talk about the standards set out in the Idaho case?
Jeffrey P. Minear: Well, Your Honor--
Sandra Day O'Connor: Do you... do you not rely on that standard--
Jeffrey P. Minear: --Quite--
Sandra Day O'Connor: --analysis?
Jeffrey P. Minear: --Quite honestly we thought that under the Arctic Coast decision, the Court is required to create absolutely new... no new law. It had already interpreted 6(e) and it was clear that section 6(e) applied to this case. We think the Idaho provisions provide another opportunity for us to establish it. It's quite clear that the purposes of the... the lands here, the submerged lands, are so essential to the park that it's simply inconceivable that Congress would have intended for those lands to pass out of ownership. However, we relied on--
Anthony M. Kennedy: Would you... would you tell us again why, if you do not prevail on this argument, you still go back before the... the special master to show certain facts?
Jeffrey P. Minear: --Well, first of all, Alaska has not moved for summary judgment. We moved for summary judgment on some of our theories. Other theories would require some factual development. One of the theories that we would... we would go forward with is that these lands are occupied under a claim of right, and that's another exception under the Submerged Lands Act. In addition, we would renew the argument with regard to Antiquities Act, that once Congress takes an area and authorizes the President to set it aside under the Antiquities Act and provides that it cannot be disestablished except by act of Congress, we think that's a very clear indication of Congress' intent to retain those lands.
Anthony M. Kennedy: Well, given the absence of a summary judgment, we wouldn't have to address that.
Jeffrey P. Minear: No. You would not have... we... we believe the master adverted to this claim, but we do not think that he foreclosed it. But rather, I'd like to discuss briefly the relationship of Idaho and Alaska because I think it's important and worthwhile. We think that this case falls squarely within the Alaska Arctic Coast case, and in particular we relied on it primarily because it provides an actual textual basis for showing that the... the United States retain those lands. We do not need to go further and show purpose, although we certainly can. We relied on the Alaska case because we think it provides a very clear example of why retention is... is required in this case. The master agreed with us. He analyzed the Arctic Coast decision and he concluded that the... the proviso here necessarily must be considered an independent retention clause. There's no other way to understand the Arctic Coast decision except on that basis. And we think that's the right interpretation, and we think if we... if you focus on what the Court said on pages 56 to 57, it becomes quite clear. The statement that Alaska relies on to create its so-called subset test is an afterthought at the end of the opinion. It's a statement that's made in the Court's words to reinforce the conclusion it's already reached. It doesn't provide a basis for... for departing from that. And in fact, as I hope I have showed to the Court, the subset test doesn't make any sense, that they're simply... all of those lands that fall within the proviso are lands that would not fall within the main clause. The wildlife refuge is occupied for multiple purposes. It's... the two wildlife refuges that they point to both the record shows were used for multiple purposes. They were not used solely for conservation purposes. And in addition, they were... to the extent that those refuges adverted to any [email protected]... any statutes, they were referring to a 1925 statute, not... not the 1943 statute. Furthermore, there are 24 other refuges that we believe that Congress intended to retain that Alaska has no answer for. One... one of those refuges, in particular, the Semidi Islands, quite clearly describes within its boundaries submerged lands, reefs, and other areas. It clearly is being used for those purposes. We think the right interpretation of the proviso is clearly that it was meant to ensure, to provide the clarity that this Court needs to determine that Congress clearly did intend to retain these lands. That was the point that... that this proviso, as Secretary Chapman himself indicated, and in fact, he stated in... the excerpt appears in page... on page 47, note 37 of our brief. He stated that these reservations... the land and water would be reserved. He clearly was aware and told Congress that that was the purpose here, to reserve both land and water. Finally, I'd like to ask the Court to step back and look at the big picture here. The United States' position overall results in a very sensible division of submerged lands in this case. We have not contested Alaska's right to the vast majority of the submerged lands here that are encompassed in Tongass National Forest. Rather, we've identified two areas where the Federal Government interests are paramount. First of all, with regard to drawing international... developing international principles to establish baselines, which creates these bays and... and pockets, that's a necessary consequence of what our foreign policy requires. Secondly, where the United States has clearly reserved a unique treasure, namely Glacier Bay National Park. This park was set aside for the benefit of the entire Nation. We think that the Court should adopt the master's report in full. Thank you.
John Paul Stevens: Thank you, Mr. Minear. Mr. Franklin, you have about 3 and a half minutes.
Jonathan S. Franklin: Thank you, Your Honor. To get back to the Idaho case, we are, in fact, advocating the principles of that case. It is not sufficient that Congress be on notice of a reservation that might include submerged lands. Congress has to take some action to explicitly ratify that. That was what happened in the Idaho case, according to the Court. And the United States has identified one statute and one statute only that it asserts can... ratifies the bay, and that's section 6(e), the proviso. We think the plain language to section (e)... 6(e) is dispositive in this case. We are operating here under a clear statement rule. The presumption is, in fact, the strong presumption is, that if Congress does not expressly ratify the reservation, Congress is presumed not to have intended that the submerged lands... title to submerged lands be defeated. There was... the statute says such transfer shall not include. There simply was no need for Congress to have included... to have specified that such transfer, the main clause transfer, shall not include submerged lands when they were not included... or excuse me... shall not include properties that were not included in the first place. That includes Glacier Bay.
Antonin Scalia: Would... would you respond to the... to the argument that the Alaska Arctic Coast case decided that the proviso goes beyond subsection (e)?
Jonathan S. Franklin: Well, my... my first response is even the master, who ruled... who... who decided against us, did not find that the Alaska case decided that, and indeed, it could not have because the Court at pages 60 and 61 expressly assumed that the lands would fall within the proviso. Therefore... excuse me. The main clause. Therefore the Court did not hold and could not have held that lands that did not fall within the main clause were included by the proviso. It is important, though, to... to note this, that even if the statute is ambiguous... and we think that it is not... Alaska still prevails here because a... there is a clear statement rule and a clear statement rule cannot be satisfied by definition by an ambiguous statute.
David H. Souter: But the... the argument is that it is clear because the reservation without the reservation of the waters would be crazy.
Jonathan S. Franklin: Well, it--
David H. Souter: Why isn't... I mean, what's... what's the answer?
Jonathan S. Franklin: --We dispute that for the following reason, Your Honor, that... that the... the point of the monument was to study the glaciers and the effects of the glaciers as they recede on dry land. Title to the submerged lands was simply not necessary for that purpose. But I think their sky-is-falling argument really falls apart here. All that the counsel can point to is the idea is that they would like scientists to go scuba diving down there and to perhaps look at the bottom. There is absolutely no contention here that Alaska would... would prevent scientists who want to study this... these lands from doing that. We let scientists onto all of our properties, all of our submerged lands when they have a good reason for doing it. We hope to work cooperatively with the Federal Government on this. The... the idea that Alaska is somehow going to be less receptive to scientific research here I think demeans our Federal structure. We have a Federal structure here under which sovereignty of submerged lands is given to the States because they are viewed as the ones principally affected by the activities that go on there. We are not planning on... on preventing scientists from scuba diving down there. By the way, they did not at the time of the monument, Your Honor, do scuba diving because there... there really wasn't any scuba diving going on. But to... to move on... I see my time is up.
John Paul Stevens: Thank you, Mr. Franklin. The case is submitted. |
Exhibit B NATIONAL LAMPOON, INC. TRANSMITTAL LETTER This Offer expires at 9:00 p.m. Pacific Time on August 6, 2008 unless the Offer is extended. INSTRUCTIONS TO TRANSMITTAL LETTER 1.DEFINED TERMS.All terms used in this transmittal letter but not defined have the meaning ascribed to them in the Offer, dated July 17, 2008.Unless the context requires otherwise, references in this transmittal letter to “National Lampoon,” “we,” “us,” “our,” and “ours” mean National Lampoon, Inc. and its subsidiaries. 2.EXPIRATION DATE.The Offer expires at 9:00 p.m. Pacific Time on August 6, 2008, unless the Offer is extended. 3.EXERCISE OF WARRANT(S).If you intend to exercise your Warrant(s) in accordance with the Offer, you must sign this transmittal letter and send us your Warrant Agreements(s) and good funds in the amount of the Exercise Price.You are not required to exercise any of your Warrant(s).If you hold a Warrant granted in conjunction with your purchase of the Series B Convertible Preferred Stock and a Warrant granted in conjunction with your purchase of the Series C Convertible Preferred Stock, you are not required to exercise both Warrants. 4.DELIVERY OF TRANSMITTAL LETTER.A signed copy of this transmittal letter, together with your Warrant Agreement(s) and good funds in the amount of the Exercise
|
Citation Nr: 0727371
Decision Date: 08/31/07 Archive Date: 09/11/07
DOCKET NO. 04-34 873 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Roanoke,
Virginia
THE ISSUE
1. Entitlement to rating in excess of 30 percent for a post
operative right shoulder disability.
2. Entitlement to a compensable rating for bilateral hearing
loss.
REPRESENTATION
Appellant represented by: Virginia Department of
Veterans Services
WITNESS AT HEARING ON APPEAL
Appellant
ATTORNEY FOR THE BOARD
Joseph R. Keselyak, Associate Counsel
INTRODUCTION
The veteran served on active duty from October 1991 to June
2002.
This matter comes to the Board of Veterans' Appeals (Board)
on appeal from a May 2003 rating decision by the Department
of Veterans Affairs (VA) Regional Office (RO) in Roanoke,
Virginia that granted service connection for a post operative
right shoulder disability, rated zero percent, effective June
12, 2002. During the appeal, an August 2004 decision
increased the rating to 10 percent and a May 2006 decision
increased the rating to 30 percent, effective June 12, 2002.
In May 2007, a Central Office hearing was held before the
undersigned Acting Veterans Law Judge; a transcript of this
hearing is of record.
In May 2007, the veteran submitted a claim seeking service
connection for a back disorder, claimed as secondary to his
service-connected right shoulder disability.
The appeal is REMANDED to the RO via the Appeals Management
Center (AMC), in Washington, DC. VA will notify the
appellant if further action is required on his part.
REMAND
During the May 2007 hearing, the veteran stated that he had
received treatment and an examination of his right shoulder
from the VA medical center in Hampton, Virginia within the
past eighteen month. A review of the record reveals that
these records have not been associated with the claims file.
Since VA records are constructively of record, they must be
obtained. See Bell v. Derwinski, 2 Vet. App. 611 (1992)
The veteran also testified that his condition had worsened
since his last VA examination, which was in August 2004.
Consequently, another examination is needed to determine the
current level of impairment.
In May 2007, the veteran submitted a notice of disagreement
regarding the initial rating assigned for bilateral hearing
loss, which was awarded in a May 2006 rating decision. No
further action has been taken by the RO. Hence, this issue
must be remanded to the RO for the issuance of a statement of
the case. See Manlincon v. West, 12 Vet. App. 238 (1999).
Accordingly, the case is REMANDED for the following action:
1. The RO should obtain all outstanding
treatment records since 2005 for the
veteran's right shoulder disability from
the Hampton VA Medical Center.
2. The RO should then arrange for an
orthopedic examination to determine the
current severity of the veteran's service-
connected right shoulder disability. The
veteran's claims folder must be reviewed
by the examiner in conjunction with the
examination. Any indicated tests or
studies, specifically including ranges of
motion with notation of any further
limitation due to pain, should be
completed. To the extent possible, the
examiner should also determine/opine
whether there is or would be further
impairment of function on use or with
exacerbation and, if so, the degree of
such additional impairment.
3. The RO should issue an appropriate SOC
in the matter of an increased rating for
bilateral hearing loss. The veteran
should be advised that for the Board to
have jurisdiction in the matter, he must
timely file a substantive appeal. If he
files a timely substantive appeal, this
issue be returned for review by the Board.
4. If additional evidence or information
received triggers a need for further
development or assistance, the RO should
ensure such is completed.
5. The RO should then readjudicate the
claim. If it remains denied, the veteran
and his representative should be furnished
an appropriate supplemental supplemental
statement of the case and afforded the
opportunity to respond. The case should
then be returned to the Board, if in
order, for further review.
The appellant has the right to submit additional evidence and
argument on the matter the Board has remanded. Kutscherousky
v. West, 12 Vet. App. 369 (1999). This claim must be
afforded expeditious treatment by the RO. The law requires
that all claims that are remanded by the Board for additional
development or other appropriate action must be handled in an
expeditious manner.
_________________________________________________
D. BREDEHORST
Veterans Law Judge, Board of Veterans' Appeals
Under 38 U.S.C.A. § 7252 (West 2002), only a decision of the
Board of Veterans' Appeals is appealable to the United States
Court of Appeals for Veterans Claims. This remand is in the
nature of a preliminary order and does not constitute a
decision of the Board on the merits of your appeal.
38 C.F.R. § 20.1100(b) (2006).
|
463 P.2d 702 (1969)
Glenn W. WILL et al., Plaintiffs in Error,
v.
W.E. JONES, Jr., et al., Defendants in Error.
No. 42275.
Court of Appeals of Oklahoma Division No. 90.
October 30, 1969.
Farmer, Woolsey, Flippo & Bailey, Tulsa, for plaintiffs in error.
Leoffler & Allen, Bristow, for defendants in error.
*703 MILLS, Judge.
This appeal involves an action for damages for the alleged breach of a contract for the sale of real estate brought by the sellers, plaintiffs, against the purchasers, defendants. The Court granted a summary judgment for the defendants.
The petition so far as material here, alleged the making of the written contract on April 2, 1957, that defendants occupied the premises from April 10, 1957 to October 10, 1957, making all the payments as required by the contract during that period. About October 10, 1957, defendants repudiated the contract, gave plaintiffs the keys to the house, moved out, and have not made or tendered any payments since that time. Plaintiffs further alleged that they were owners of the property, but had not furnished or tendered to defendants an abstract of title nor a deed to the property, and none has been demanded by the defendants. Plaintiffs asked for damages for breach of the contract.
The contract dated April 2, 1957, was subscribed by the defendants before a Notary August 24, 1957, and so far as material here, provided that sellers have a valid title in fee simple, agree to furnish abstract to date of sale and convey said premises by general warranty deed. It provided for certain monthly payments, and that "sellers had the privilege of obtaining a long-term loan on the property."
A written stipulation of facts dated May 23, 1966, was filed in the case, wherein it was agreed, so far as material here, that seller only owned one-fourth of the mineral rights in the land; that the land was subject to an easement for an electric transmission system, and one for a gas pipeline, that there were two liens in substantial amounts of record and unreleased, and that from February, 1957, to June, 1958, the record title to the property was in the name of one Taylor. Taylor made a warranty deed to plaintiffs which was recorded in June, 1958. It was also stipulated in open court, and into the record, as to the taking of possession by defendants and the payments made by them, as alleged, the making of the contract and subscribing thereto, and that defendants were never furnished an abstract of title to the property.
A motion for a Summary Judgment is authorized by Rule No. 13, of the Supreme Court: 12 O.S.Supp. 1967, C. 2, appendix. No such judgment should be sustained where there is a disputed question of fact on the record, or where different conclusions could be reached on undisputed facts, Flick v. Crouch Welding *704 Service (1967) Okl., 434 P.2d 256. It is the duty of a trial court to grant a Motion for a Summary Judgment when the admitted facts and law justify such action. Hill v. Graham, Judge, (1967), Okl., 424 P.2d 35.
The specific allegations of plaintiffs in their petition are binding on them, Gibson Oil Co. v. Hayes Equipment Mfg. Co. (1933), 163 Okl. 134, 21 P.2d 17, 88 A.L.R. 104, as are the stipulations filed in the case, and those made into the record in open Court, Evans v. Raper (1939) 185 Okl. 426, 93 P.2d 754.
The contract provided that sellers have a valid title in fee simple, they agree to furnish an abstract, and convey the premises by general warranty deed. No time for furnishing the abstract or delivery of the warranty deed was imposed in the contract. Even though no time for delivering the abstract was specified, there was still an obligation to do so. No abstract was ever submitted or tendered, Kneeland v. Hetzel, 103 Okl. 3, 229 P. 218. All during the time, from the date of the contract to long after the defendants moved out of the property the record title was in one Taylor. Plaintiffs at no time had a fee simple title. See In re O'Brien's Trust Estate, 197 Okl. 436, 172 P.2d 607 and authorities cited. A vendee is under no obligation to take less than agreed to be sold him. Hurford v. Norvall, 39 Okl. 496, 135 P. 1060. Defendants, under the facts had the right to rescind, Kneeland v. Hetzel, supra; Kendall v. Hastings, 200 Okl. 643, 196 P.2d 998.
Affirmed.
BERRY, P.J., and HARRIS, J., concur.
|
Exhibit 10.49
SECURITY AGREEMENT
DEBTOR:
Name:
eUniverse, Inc.
6060 Center Drive, Suite 300
Los Angeles, CA 90045
SECURED PARTY:
Name:
Address:
VP Alpha Holdings IV, L.L.C.
c/o VantagePoint Venture Partners
1001 Bayhill Suite 300
San Bruno, CA 94066
1.
(a) Debtor, in consideration of the agreement of Secured Party to make a loan to
Debtor pursuant to that certain Secured Note Purchase Agreement, of even date
herewith, between Debtor and Secured Party (the “Purchase Agreement”), and for
other good and sufficient consideration, hereby grants to Secured Party a first
priority security interest in all of Debtor’s right, title and interest in and
to all of the Debtor’s personal property and assets including without limitation
the following property (except as set forth herein), including without
limitation any and all additions, accessions and substitutions thereto or
therefore, whether now held or hereafter acquired (hereinafter called the
“Collateral”): (a) Accounts; (b) Instruments; (c) Documents; (d) Chattel Paper;
(e) Supporting Obligations; (f) Letter of Credit Rights; (g) Equipment; (h)
Fixtures; (i) General Intangibles; (j) Inventory; (k) Investment Property; (l)
Deposit Accounts; (m) cash, money, currency, and liquid funds, wherever held;
(n) Goods; (o) Intellectual Property; and (p) all Proceeds of each of the
foregoing, to secure payment of the unpaid principal amount of and interest on
the Note (as defined in the Purchase Agreement) and all other obligations and
liabilities of Debtor to Secured Party, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Purchase Agreement or this
Security Agreement and any other document executed and delivered in connection
therewith or herewith and each other obligation and liability, whether direct or
indirect, absolute or contingent, due or to become due, or now or hereafter
existing, of the Debtor to Secured Party, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel to Secured
Party) or otherwise (the “Obligations”).
(b) Capitalized terms used herein and not otherwise defined shall have the
meaning set forth in the Uniform Commercial Code of the State of Delaware (the
“UCC”). For purposes hereof, the following definitions shall apply:
--------------------------------------------------------------------------------
“Intellectual Property” means, collectively, all rights, priorities and
privileges of the Debtor relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, inventions, patents, patent licenses,
trademarks, trademark licenses and trade secrets (including customer lists),
domain names, Web sites and know-how, including, but not limited to, the
patents, trademarks and copyrights set forth on Schedule 4(n) of the Purchase
Agreement.
2. Debtor expressly represents, warrants and covenants:
(a) That except for the first priority security interest granted hereby, the
lien in favor of 550 Digital Media Ventures, Inc. (“550 DMV”) which is pari
passu with the security interest created hereby and applies to all of the same
Collateral, and the permitted liens listed on Schedule A hereto (the “Permitted
Liens”), Debtor is the owner of the Collateral free from any adverse lien,
security interest or encumbrances; and that Debtor will defend the Collateral
against all claims and demands of all persons at anytime claiming the same or
any interest therein. The security interest granted pursuant to this Security
Agreement will constitute a valid and continuing first priority perfected
security interest in favor of the Secured Party in the Collateral for which
perfection is governed by the UCC or filing with the United States Copyright
Office or United States Patent and Trademark Office. Such security interest will
be prior to all other liens on the Collateral, except for Permitted Liens.
(b) That Debtor has the full power and authority to enter into this Security
Agreement, that this Security Agreement has been duly authorized, executed, and
delivered by the Debtor and Debtor’s obligations under this Security Agreement
are legal, valid, binding, absolute and unconditional.
(c) That Debtor’s location is as stated above and the Collateral will be kept at
that location or at the locations of Debtor’s subsidiaries.
(d) That Debtor will promptly notify Secured Party of any change in the location
of the Collateral.
(e) That Debtor will pay all taxes and assessments of every nature which may be
levied or assessed against the Collateral.
(f) That, except for liens disclosed herein or in the Schedules hereto, Debtor
will not permit or allow any adverse lien, security interest or encumbrance
whatsoever upon the Collateral and will not permit the same to be attached or
replevined.
(g) That Debtor has used, and will continue to use for the duration of this
Security Agreement, consistent standards of quality in its provision of services
sold under Debtor’s service marks. Debtor shall use its best efforts to do any
and all acts required by Secured Party to ensure Debtor’s compliance with this
subparagraph.
(h) That the Collateral is in good condition, and that Secured Party may examine
and inspect the Collateral at any time, wherever located. Without limiting the
generality of
2
--------------------------------------------------------------------------------
the foregoing, Debtor hereby grants to Secured Party and its employees and
agents the right to visit Debtor’s offices from which services are provided
under any of Debtor’s service marks, and to inspect the quality control relating
thereto at reasonable times during regular business hours.
(i) That Debtor will not do any act, or omit to do any act, whereby Debtor’s
service marks or any registration or application appurtenant thereto, may become
abandoned, invalidated, unenforceable, avoided, avoidable, or will otherwise
diminish in value, and shall notify Secured Party immediately if it knows of any
reason or has reason to know of any ground under which this result may occur.
Debtor shall take appropriate action at its expense to halt the infringement of
Debtor’s service marks and shall properly exercise its duty to control the
nature and quality of the goods offered by any licensees in connection
therewith.
(j) That Debtor will not use the Collateral in violation of any applicable
statutes, regulations or ordinances or rights to any third parties.
(k) That Debtor will keep the Collateral at all times insured against risks of
loss or damage by fire, theft and such other casualties as Secured Party may
reasonably require, all in such amounts, under such forms of policies, upon such
terms, for such periods, and written by such companies or underwriters as
Secured Party may approve, losses in all cases to be payable to Secured Party
and Debtor as their interest may appear. Secured Party may act as attorney for
Debtor in making, adjusting and settling claims under or canceling such
insurance and endorsing Debtor’s name on any drafts drawn by insurers of the
Collateral.
(l) At any time and from time to time, upon the request of Secured Party, Debtor
will promptly and duly execute and deliver any and all such further instruments
and documents and take such further action as Secured Party may reasonably deem
desirable in obtaining the full benefits of this Security Agreement, including,
without limitation, the filing of any financing or continuation statement under
the Uniform Commercial Code with respect to the liens and security interests
granted hereby. Debtor hereby authorizes Secured Party to file any such
financing or continuation statement without the signature of Debtor to the
extent permitted by applicable law.
(m) That Debtor hereby indemnifies and holds Secured Party, its officers,
directors, employees, affiliates, partners and shareholders, harmless from and
against any claim, suit, loss, damage or expense (including reasonable
attorneys’ fees) arising out of this Security Agreement, the Purchase Agreement,
or Debtor’s operation of its business from the use of the Collateral.
(n) That, subject to Secured Party’s Intercreditor Agreement with 550 DMV,
Debtor hereby irrevocably appoints Secured Party, and its successors and
assigns, Debtor’s true and lawful attorney, with full power (in the name of
Debtor or otherwise), after the occurrence and during the continuance of an
Event of Default (defined in Section 4 below), to ask, require, demand, receive,
compound and give acquittance for any and all moneys, claims and other amounts
due and to
3
--------------------------------------------------------------------------------
become due at any time under, or arising out of, the Collateral; to endorse any
checks or other instruments or orders in connection therewith; to enforce all
Secured Party’s rights hereunder, to enter into all agreements or instruments
required to carry out the terms hereof which are required to be performed by
Debtor; to execute such other assignments and mortgages of the Collateral as
Secured Party may deem to be necessary or advisable. Such power of attorney
shall be deemed a power coupled with an interest and, therefore, irrevocable.
(o) Without thirty (30) days’ prior written notice to, and the prior written
consent from, the Secured Party, the Debtor shall not (i) change the Debtor’s
name, state of incorporation or organization, organizational identification
number or place of business (or, if the Debtor has more than one place of
business, its chief executive office).
(p) In no event shall the Debtor, either itself or through any agent,
employee, licensee or designee, file an application for the registration of any
patent, trademark or copyright with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency
without giving the Secured Party prior written notice thereof, and, upon request
of the Secured Party, the Debtor shall execute and deliver any and all security
documents as the Secured Party may request to evidence the Secured Party’s Lien
on such Intellectual Property and the general intangibles of the Debtor relating
thereto or represented thereby. The Debtor hereby authorizes the Secured Party
to amend this Agreement (without any further action or consent from the Debtor)
to include any such patent, trademark or copyright as Collateral hereunder.
3. Until an Event of Default, Debtor may have possession of the Collateral and
use it in any lawful manner, and upon an Event of Default, Secured Party shall
have the immediate right to the possession of the Collateral. The powers
conferred on the Secured Party by this Section 3 are solely to protect the
Secured Party’s interests in the Collateral and shall not impose any duty upon
it to exercise any such powers. The Secured Party shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Secured Party nor any of its officers, directors, employees or
agents shall, in the absence of willful misconduct or gross negligence, be
responsible to the Debtor for any act or failure to act pursuant to this Section
3.
4. Debtor shall be in default under this Security Agreement upon the happening
of any of the following events or conditions (each an “Event of Default”):
(a) default in the payment or performance of any obligation, covenant or
liability contained or referred to herein or in any note evidencing the same;
(b) the making or furnishing of any warranty, representation or statement to
Secured Party by or on behalf of Debtor which proves to have been false in any
material respect when made or furnished;
4
--------------------------------------------------------------------------------
(c) loss, theft, damage, destruction, sale or encumbrance to or of any of the
Collateral, or the making of any levy seizure or attachment thereof or thereon
and, if capable of being remedied, such default shall continue unremedied for a
period of 30 days;
(d) dissolution, termination of existence, insolvency, business failure,
appointment of a receiver of any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceeding under any
bankruptcy or insolvency laws of, by or against Debtor or any guarantor or
surety for Debtor;
(e) any Event of Default under the Purchase Agreement;
and Debtor shall give Secured Party immediate notice of the occurrence of any
matter referred to in clause (d) of this paragraph.
5. Subject to the Intercreditor Agreement with 550 DMV, upon such default and at
any time thereafter, Secured Party may declare all obligations secured hereby
immediately due and payable and shall have the remedies of a secured party under
Article 9 of the Uniform Commercial Code. Secured Party may require Debtor to
assemble the Collateral and deliver or make it available to Secured Party at a
place to be designated by Secured Party which is reasonably convenient to both
parties. Expenses of taking, holding, preparing for sale, or selling the
Collateral or the like shall include Secured Party’s reasonable attorney’s fees
and legal expenses. If an Event of Default has occurred and is continuing, the
Secured Party may exercise, in addition to all other rights and remedies granted
to it in this Agreement and in any other instrument or agreement relating to the
Obligations, all rights and remedies of a secured party under the UCC. Without
limiting the foregoing, the Secured Party, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law) to or upon the Debtor or any other person (all of
which demands, defenses, advertisements and notices are hereby waived), may in
such circumstances collect, receive, appropriate and realize upon any or all of
the Collateral, and/or may sell, lease, assign, give an option or options to
purchase, or otherwise dispose of and deliver any or all of the Collateral (or
contract to do any of the foregoing), in one or more parcels at a public or
private sale or sales, at any exchange, broker’s board or office of the Secured
Party or elsewhere upon such terms and conditions as the Secured Party may deem
advisable, for cash or on credit or for future delivery without assumption of
any credit risk. The Secured Party shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable expenses incurred therein or in connection with the
care or safekeeping of any of the Collateral (including, without limitation,
reasonable attorneys’ fees and expenses) to the payment in whole or in part of
the Obligations, in such order as the Secured Party may elect, and only after
such application and after the payment by the Secured Party of any other amount
required by any provision of law, need the Secured Party account for the
surplus, if any, to the Debtor. To the extent permitted by applicable law, the
Debtor waives all claims, damages and demands it may acquire against the Secured
Party arising out of the exercise by the Secured Party of any of its rights
hereunder. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least ten (10) days before such sale or other disposition. The Debtor
shall remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay
5
--------------------------------------------------------------------------------
the Obligations and the fees and disbursements of any attorneys employed by the
Secured Party to collect such deficiency. In furtherance of the Secured Party’s
rights hereunder while an Event of Default has occurred and is continuing, the
Debtor hereby grants to the Secured Party an irrevocable, non-exclusive license
(exercisable without royalty or other payment by the Secured Party) to use,
license or sublicense any patent, trademark, tradename, copyright or other
Intellectual Property in which the Debtor now or hereafter has any right, title
or interest together with the right of access to all media in which any of the
foregoing may be recorded or stored.
6. No waiver by Secured Party of any Event of Default shall operate as a waiver
of any other Event of Default or of the same Event of Default on a future
occasion. The taking of this Security Agreement shall not waive or impair any
other security said Secured Party may have or hereafter acquire for the payment
of the above indebtedness, nor shall the taking of any such additional security
waive or impair this Security Agreement; but said Secured Party may, resort to
any security it may have in the order it may deem proper, and notwithstanding
any collateral security, Secured Party shall retain its rights of set-off
against Debtor.
7. Secured Party’s rights hereunder shall be senior to the rights of any other
person except for 550 DMV and as listed on Schedule A hereto.
8. All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns; and all promises and duties of Debtor shall bind his
heirs, executors or administrators or his or its successors or assigns. If there
be more than one Debtor, their liabilities hereunder shall be joint and several.
9. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, EXCLUDING CONFLICT OF LAWS
PRINCIPLES THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY OTHER JURISDICTION.
10. This Security Agreement may be executed in counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.
[signature page follows]
6
--------------------------------------------------------------------------------
Dated this 15th day of July, 2003.
Debtor:
Secured Party:
eUNIVERSE, INC. VP ALPHA HOLDINGS IV, L.L.C. ,
By: VANTAGE POINT VENTURE ASSOCIATES IV, L.L.C.,
its Managing Member
By:
/s/ BRAD GREENSPAN
--------------------------------------------------------------------------------
Title:
/s/ ALAN E. SALZMAN
--------------------------------------------------------------------------------
Name:
Brad Greenspan
Name:
Alan E. Salzman
Title:
Chief Executive Officer
Title:
Managing Member
[SIGNATURE PAGE TO SECURITY AGREEMENT]
7
--------------------------------------------------------------------------------
Schedule A
Permitted Liens
Secured Party has agreed that the first priority security interest granted to it
pursuant to the terms of this Security Agreement shall be subordinate to a
revolving, working capital line of credit obtained by the Debtor from a bona
fide commercial lender for the primary purpose of covering day-to-day
operational expenses incurred by the Debtor in the ordinary course of business,
in an amount that does not exceed One Million Five Hundred Thousand Dollars
($1,500,000). Secured Party has further agreed to execute such agreements and
other documents as may be reasonably necessary to effectuate the subordination
provided above.
Secured Party’s security interest in any Collateral subject to a purchase money
security interest shall be subordinated to such purchase money security
interest.
Secured Party’s security interest shall be pari passu with the security interest
of 550 DMV.
Liens for taxes not yet due and payable, materialman’s, warehouseman’s and
mechanics’ liens for amounts not yet due and payable, liens created by statute
for amounts not yet due and payable.
Liens in connection with equipment leases.
Security interests in proceeds in Debtor accounts held with merchant providers. |
Case 9:18-cv-81475-DMM Document 1 Entered on FLSD Docket 10/30/2018 Page 1 of 9
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
WEST PALM BEACH DIVISION
HAYLIE SCIOLI,
Plaintiff, CASE NO.:
v.
OCWEN LOAN SERVICING, LLC,
Defendant.
/
COMPLAINT AND DEMAND FOR JURY TRIAL
COMES NOW Plaintiff, Haylie Scioli, by and through the undersigned counsel, and sues
Defendant, OCWEN LOAN SERVICING, LLC, and in support thereof respectfully alleges
violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq. (“TCPA”) and the
Florida Consumer Collection Practices Act, Fla. Stat. § 559.55 et seq. (“FCCPA”).
INTRODUCTION
1. The TCPA was enacted to prevent companies like OCWEN LOAN SERVICING,
LLC from invading American citizen’s privacy and prevent abusive “robo-calls.”
2. “The TCPA is designed to protect individual consumers from receiving intrusive
and unwanted telephone calls.” Mims v. Arrow Fin. Servs., LLC, -US--, 132 S.Ct., 740, 745, 181,
L.Ed. 2d 881 (2012).
3. “Senator Hollings, the TCPA’s sponsor, described these calls as ‘the scourge of
modern civilization, they wake us up in the morning; they interrupt our dinner at night; they
force the sick and elderly out of bed; they hound us until we want to rip the telephone out of the
wall.”’ 137 Cong. Rec. 30, 821 (1991). Senator Hollings presumably intended to give telephone
1
Case 9:18-cv-81475-DMM Document 1 Entered on FLSD Docket 10/30/2018 Page 2 of 9
subscribers another option: telling the autodialers to simply stop calling.” Osorio v. State Farm
Bank, F.S.B., 746 F. 3d 1242 1256 (11th Cir. 2014).
4. According to the Federal Communications Commission (FCC), “Unwanted calls
and texts are the number one complaint to the FCC. There are thousands of complaints to the
FCC every month on both telemarketing and robocalls. The FCC received more than 215,000
TCPA complaints in 2014." Fact Sheet: Wheeler Proposal to Protect and Empower Consumers
Against Unwanted Robocalls, Texts to Wireless Phones, Federal Communications Commission,
(May 27, 2015), http://transition.fcc.gov/Daily_Releases/Daily_Business/2015/db0527/DOC-
333676A1.pdf.
JURISDICTION AND VENUE
5. This is an action for damages exceeding Seventy-Five Thousand Dollars
($75,000.00) exclusive of attorney fees and costs.
6. Jurisdiction and venue for purposes of this action are appropriate and conferred by
28 U.S.C. § 1331, Federal Question Jurisdiction, as this action involves violations of the TCPA.
7. Subject matter jurisdiction, federal question jurisdiction, for purposes of this
action is appropriate and conferred by 28 U.S.C. § 1331, which provides that the district courts
shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties
of the United States; and this action involves violations of 47 U.S.C. § 227(b)(1)(A)(iii). See
Mims v. Arrow Fin. Servs., LLC, S.Ct. 740, 748 (2012) and Osorio v. State Farm Bank, F.S.B.,
746 F.3d 1242, 1249 (11th Cir. 2014)
8. The current principal place of business of Defendant is in Palm Beach County,
Florida. Accordingly, venue is appropriate with this Court under 28 U.S.C. §1391(b)(1) as it is
the judicial district in which Defendant resides.
2
Case 9:18-cv-81475-DMM Document 1 Entered on FLSD Docket 10/30/2018 Page 3 of 9
FACTUAL ALLEGATIONS
9. Plaintiff is a natural person, and citizen of the State of Pennsylvania, residing in
Montgomery County, Pennsylvania.
10. Plaintiff is a “consumer” as defined in Florida Statute § 559.55(8).
11. Plaintiff is an “alleged debtor.”
12. Plaintiff is the “called party.” See Breslow v. Wells Fargo Bank, N.A., 755 F. 3d
1265 (11th Cir. 2014) and Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242 (11th Cir. 2014).
13. Defendant is a corporation which was formed in Delaware with its principal place
of business located at 1661 Worthington Road #100, West Palm Beach, Florida 33409 and which
conducts business in the State of Florida through its registered agent, CT Corporation Service
Company located at 1201 Hays Street, Tallahassee, Florida 32301.
14. The debt that is the subject matter of this Complaint is a “consumer debt” as
defined by Florida Statute §559.55(6).
15. Defendant is a “creditor” as defined in Florida Statute §559.55(5)
16. Defendant called Plaintiff on Plaintiff’s cellular telephone approximately two-
thousand (2,000) times in an attempt to collect a debt. Due to the amount of calls, Plaintiff was
unable to adequately catalogue each call and thus an accurate number of calls will be determined
after a thorough review of Defendant’s records.
17. Defendant attempted to collect an alleged debt from Plaintiff by this campaign of
telephone calls.
18. Upon information and belief, some or all of the calls the Defendant made to
Plaintiff’s cellular telephone number were made using an “automatic telephone dialing system”
which has the capacity to store or produce telephone numbers to be called, using a random or
3
Case 9:18-cv-81475-DMM Document 1 Entered on FLSD Docket 10/30/2018 Page 4 of 9
sequential number generator (including but not limited to a predictive dialer) or an artificial or
prerecorded voice; and to dial such numbers as specified by 47 U.S.C § 227(a)(1) (hereinafter
“autodialer calls”). Plaintiff will testify that she knew it was an autodialer because of the vast
number of calls she received and because, when she answered her cellular telephone, she heard a
pause before a live agent would come on the line.
19. Plaintiff is the subscriber, regular user and carrier of the cellular telephone
number (610) ***-1208, and was the called party and recipient of Defendant’s calls.
20. Defendant placed an exorbitant number of automated telephone calls to Plaintiff’s
cellular telephone (610) ***-1208 in an attempt to collect an alleged debt.
21. On several occasions since the Defendant’s campaign of calls began, Plaintiff
instructed Defendant’s agent(s) to stop calling her cellular telephone.
22. In or about 2011, Plaintiff communicated with Defendant’s agent from her
cellular telephone number, and was eventually connected to a live representative of Defendant.
Plaintiff explained her changing occupation and degradation of health to the agent. Plaintiff
further explained her financial situation but stressed to the agent that she has always made her
payments. Plaintiff then demanded once again Defendant’s agent/representative to stop calling
her cellular telephone number.
23. Each subsequent call Defendant made to Plaintiff’s aforementioned cellular
telephone number was done so without the “express consent” of the Plaintiff.
24. Despite clearly and unequivocally revoking any consent Defendant may have
believed they had to call Plaintiff on her cellular telephone, Defendant continues to place
automated calls to Plaintiff.
25. Plaintiff’s numerous requests for the harassment to end were ignored.
4
Case 9:18-cv-81475-DMM Document 1 Entered on FLSD Docket 10/30/2018 Page 5 of 9
26. Defendant has a corporate policy to use an automatic telephone dialing system or
a pre-recorded or artificial voice to individuals just as it did to Plaintiff’s cellular telephone in
this case.
27. Defendant has a corporate policy to use an automatic telephone dialing system or
a pre-recorded or artificial voice just as it did to Plaintiff’s cellular telephone in this case, with no
way for the consumer, Plaintiff, or Defendant, to remove the number.
28. Defendant’s corporate policy is structured so as to continue to call individuals like
Plaintiff; despite these individuals explaining to Defendant they wish for the calls to stop.
29. Defendant has numerous other federal lawsuits pending against it alleging similar
violations as stated in this Complaint.
30. Defendant has numerous complaints across the country against it asserting that its
automatic telephone dialing system continues to call despite requests by consumers to stop.
31. Defendant has had numerous complaints from consumers across the country
against it asking to not be called; however, Defendant continues to call the consumers.
32. Defendant’s corporate policy provided no means for Plaintiff to have her number
removed from Defendant’s call list.
33. Defendant has a corporate policy to harass and abuse individuals despite actual
knowledge the called parties do not wish to be called.
34. Not a single call placed by Defendant to Plaintiff were placed for “emergency
purposes” as specified in 47 U.S.C. § 227(b)(1)(A).
35. Defendant willfully and/or knowingly violated the TCPA with respect to Plaintiff.
5
Case 9:18-cv-81475-DMM Document 1 Entered on FLSD Docket 10/30/2018 Page 6 of 9
36. From each and every call placed without consent by Defendant to Plaintiff’s
cellular telephone, Plaintiff suffered the injury of invasion of privacy and the intrusion upon her
right of seclusion.
37. From each and every call without express consent placed by Defendant to
Plaintiff’s cellular telephone, Plaintiff suffered the injury of occupation of her cellular telephone
line and cellular telephone by unwelcome calls, making the telephone unavailable for legitimate
callers or outgoing calls while the telephone was ringing from Defendant’s calls.
38. From each and every call placed without express consent by Defendant to
Plaintiff’s cellular telephone, Plaintiff suffered the injury of unnecessary expenditure of her time.
For calls she answered, the time she spent on the call was unnecessary as she repeatedly asked
for the calls to stop. Even for unanswered calls, Plaintiff had to waste time to unlock the
telephone and deal with missed call notifications and call logs that reflected the unwanted calls.
This also impaired the usefulness of these features of Plaintiff’s cellular telephone, which are
designed to inform the user of important missed communications.
39. Each and every call placed without express consent by Defendant to Plaintiff’s
cellular telephone was an injury in the form of a nuisance and annoyance to Plaintiff. For calls
that were answered, Plaintiff had to go to the unnecessary trouble of answering them. Even for
unanswered calls, Plaintiff had to waste time to unlock the telephone and deal with missed call
notifications and call logs that reflected the unwanted calls. This also impaired the usefulness of
these features of Plaintiff’s cellular telephone, which are designed to inform the user of
important missed communications.
6
Case 9:18-cv-81475-DMM Document 1 Entered on FLSD Docket 10/30/2018 Page 7 of 9
40. Each and every call placed without express consent by Defendant to Plaintiff’s
cellular telephone resulted in the injury of unnecessary expenditure of Plaintiff’s cellular
telephone’s battery power.
41. Each and every call placed without express consent by Defendant to Plaintiff’s
cellular telephone where a voice message was left which occupied space in Plaintiff’s telephone
or network.
42. Each and every call placed without express consent by Defendant to Plaintiff’s
cellular telephone resulted in the injury of a trespass to Plaintiff’s chattel, namely her cellular
telephone and her cellular telephone services.
43. As a result of the calls described above, Plaintiff suffered an invasion of privacy,
as well as stress, anxiety, and depression.
44. Plaintiff informed Defendant of her health issues on many occasions, specifically
her struggle with multiple sclerosis and advised that the stress she was experiencing from the
harassing phone calls was worsening her condition. Despite having such information, Defendant
continued to call Plaintiff’s cell number.
COUNT I
(Violation of the TCPA)
45. Plaintiff fully incorporates and re-alleges paragraphs one (1) through forty-four
(44) as if fully set forth herein.
46. Defendant willfully and/or knowingly violated the TCPA with respect to Plaintiff,
especially for each of the auto-dialer calls made to Plaintiff’s cellular telephone after Plaintiff
notified Defendant that she wished for the calls to stop.
47. Defendant repeatedly placed non-emergency telephone calls to Plaintiff’s cellular
telephone using an automatic telephone dialing system or prerecorded or artificial voice without
7
Case 9:18-cv-81475-DMM Document 1 Entered on FLSD Docket 10/30/2018 Page 8 of 9
Plaintiff’s prior express consent in violation of federal law, including 47 U.S.C §
227(b)(1)(A)(iii).
WHEREFORE, Plaintiff respectfully demands a trial by jury on all issues so triable and
judgment against OCWEN LOAN SERVICING, LLC for statutory damages, punitive damages,
actual damages, treble damages, enjoinder from further violations of these parts and any other
such relief the court may deem just and proper.
COUNT II
(Violation of the FCCPA)
48. Plaintiff fully incorporates and re-alleges paragraphs one (1) through forty-four
(44) as if fully set forth herein
49. At all times relevant to this action Defendant is subject to and must abide by the
laws of the State of Florida, including Florida Statute § 559.72.
50. Defendant has violated Florida Statute § 559.72(7) by willfully communicating
with the debtor or any member of his or her family with such frequency as can reasonably be
expected to harass the debtor or his or her family.
51. Defendant has violated Florida Statute § 559.72(7) by willfully engaging in other
conduct which can reasonably be expected to abuse or harass the debtor or any member of his or
her family.
52. Defendant’s actions have directly and proximately resulted in Plaintiff’s prior and
continuous sustaining of damages as described by Florida Statute § 559.77.
WHEREFORE, Plaintiff respectfully demands a trial by jury on all issues so triable and
judgment against OCWEN LOAN SERVICING, LLC for statutory damages, punitive damages,
actual damages, costs, interest, attorney fees, enjoinder from further violations of these parts and
any other such relief the court may deem just and proper.
8
Case 9:18-cv-81475-DMM Document 1 Entered on FLSD Docket 10/30/2018 Page 9 of 9
Respectfully submitted,
/s/ Octavio Gomez
Octavio Gomez, Esquire
Florida Bar No.: 0338620
Morgan & Morgan, Tampa, P.A.
One Tampa City Center
201 N Franklin Street, 7th Floor
Tampa, Florida 33602
Telephone: (737)466-2638
Facsimile: (737)466-2638
Primary Email: [email protected]
Secondary Email: [email protected]
Attorney for Plaintiff
9
|
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.47WE WILL NOT threaten to lay off our employees in slack periods,eliminateovertime work and retirement benefits, or threaten to discriminate against ouremployees in any other manner because of their union or concerted activities.WE WILL NOTviolate any of the rights which you have under the NationalLabor Relations Act to join a union of your own choice or not to engage inany union activities.All our employees are free to become or remain members of International Unionof Operating Engineers,AFL-CIO,Local 191,or any other umon and they arealso free to refrain from joining any union.WEST TEXAS EQUIPMENT COMPANY,Employer.Dated-------------------By-------------------------------------------(Representative)(Title)This notice must remain posted for 60 days from the date of posting, and mustnot be altered,defaced, or covered by any other material.Employees may communicate directly with the Board'sRegional Office, SixthFloor,MeachamBuilding,110West Fifth Street, Fort Worth, Texas, 76102, Tele-phone No. Edison 5-4211,Extension 2131,if they have any question concerningthisnotice or compliance with its provisions.The Great Atlantic and Pacific Tea Company,Inc.andAmericanFederation of GrainMillers, AFL-CIO,Petitioner.Cases Nos.19-RC-3190, 19-RC-3020, and 19-RC-3221. June 25, 1963DECISION ON REVIEW AND DIRECTION OF ELECTIONUpon petitions duly filed under Section 9(c) of the National LaborRelations Act, hearings were held before hearing officers designatedby the Board. The rulings made at the hearings are free from prej-udicial error and are hereby affirmed.On March 7, 1963, the Regional Director for the Nineteenth Regionissued a decision in Case No. 19-RC-3196 finding, as contended bythe Petitioner, that the employees in the fresh pack department of theEmployer's operation constituted an appropriate unit, and directingan election in that unit.The Employer filed a request with the Boardfor review of the Regional Director's decision, contending that only aplantwide production and maintenance unit is appropriate. On April2, 1963, the Board granted the request and stayed the election.There-after, in view of the Board's action, the Regional Director forwardedto the Board for decision the petitions subsequently filed by Petitionerin Cases No. 19-RC-3220 and 19-RC-3221, in which Petitioner soughtunits comprised of the maintenance group and the frozen food depart-ment, respectively.As the three petitions involve identical partiesand similar issues, the Board has decided to consolidate them fordecisional purposes.Pursuant to the provisions of Section 3 (b) of the Act, the Board hasdelegated its powers in connection with these cases to a three-memberpanel [Chairman McCulloch and Members Rodgers and Leedom].143 NLRB No. 11 48DECISIONS OF NATIONAL LABOR RELATIONS BOARDUpon the entire record in these cases, the Board finds :1.The Employer is engaged in commerce within the meaning ofthe Act.2.The labor organization involved claims to represent certain em-ployees of the Employer.3.A question affecting commerce exists concerning the representa-tion of employees of the Employer within the meaning of Section9(c) (1) and Section2(6) and (7) of the Act.4.At its operation involved herein, located at Burley, Idaho, theEmployer is engaged primarily in processing potatoes into frozenfrench fries, although some potatoes are processed and shipped freshfrom the plant.The Employer has a complement of approximately250 production and 16 maintenance employees, all of whom are locatedin a single building.About 75 production employees work in thefresh pack department, and about 175 work in the frozen food depart-ment.They are seasonally employed from about September to May.In some years, the frozen food department may operate a week or twolonger than the fresh pack department, and in such event, the freshpack employees normally are offered available jobs in the frozen fooddepartment until it, too, closes for the season.Some maintenanceemployees, however, work the year round.The Petitioner seeks torepresent in separate units, the fresh pack (Case No. 19-RC-3196),the frozen food (Case No. 19-RC-3221), and the maintenance (CaseNo. 19-RC-3220) employees.The Employer contends that only aplantwide production and maintenance unit is appropriate.Thereis no history of bargaining for any of these employees.The Employer buys "field run" potatoes from growers in the areaand transports them by truck to the plant.There the potatoes areunloaded into a water flume which carries them to the fresh pack de-partment where they are washed, inspected, and graded.One gradeof potatoes are those which will be processed into frozen french friesby the frozen food department.Another grade, called U.S. No. 1Standard, is for quality potatoes that are packed and shipped in theirfresh state.A third grade are "culls" which are unsuitable for anyuse and are discarded.The frozen food and fresh pack departments are in one building butare separated by a partition for sanitary reasons.The potatoesdestined for the frozen food department are placed in retaining binswhich feed into the frozen food department at a predetermined rate offlow.In the frozen food department, the potatoes are lye-peeled,washed, inspected, sliced, blanched, fried, frozen, and packed for ship-ment.The frozen food department operates three shifts daily while thefresh pack department operates on a one-shift basis.Although the THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.49employees in each production department have separate parking lots,entrances, and timeclocks, they receive the same pay and fringe bene-fits, except that, for reasons not clear in the record, the fresh packemployees are not eligible for unemployment compensation.Bothproduction and maintenance employees share the same restrooms andeating facilities, and are subject to the same company personnel poli-cies.A plant manager is in charge of the overall operation, but thesuperintendents of the two production departments consult directlywith each other concerning production matters. Two maintenance em-ployees who spend most of their time in the fresh pack department areunder the supervision of the superintendent of that department.The employees in the maintenance group inspect, maintain, and re-pair production equipment, performing most of their work in theproduction areas.The Employer does not require of them any specialtraining for the job, as the maintenance men receive on-the-job train-ing and are supplied with all the necessary tools and equipment.When a vacancy exists in the maintenance group, production em-ployees are given the first opportunity to apply for the job.Mainte-nance employees are paid higher rates than production employees.After working for a prescribed period of time, the maintenance em-ployees acquire "permanent" status which entitles them to work duringthe summer months when equipment is repaired or overhauled andwhen production operations are shut down.At the present time 9 ofthe 16 maintenance employees are treated as permanent.Because of the integrated nature of the Employer's operation, thesimilarity in the conditions of employment of the employees involved,the same ultimate supervision, the lack of bargaining history, and thefact that the same union seeks to represent all production and mainte-nance employees, albeit on a departmental basis, we believe that onlya plantwide production and maintenance unit is appropriate here.'As the Petitioner has not indicated that it is unwilling to participatein an election in the overall unit and as its showing of interest is ade-quate, we shall direct an election in a unit comprised of all productionand maintenance employees, including the quality control employees,whom the parties have agreed to include.Accordingly, we find that a unit of the following employees is ap-propriate for the purposes of collective bargaining within the meaningof Section 8 (b) of the Act :All production and maintenance employees at the Employer'sBurley, Idaho, operation, including quality control employees, but ex-cluding office clerical employees, professional employees, guards, andsupervisors as defined in the Act.i G. L. WebsterCompany, Incorporated,138 NLRB440; cf.J.R. Simplot Co.,130NLRB272 and 1283. 50DECISIONS OF NATIONAL LABOR RELATIONS BOARD5. In accordance with our usual practice in operations of this kind,we direct that the election be held about that time during the seasonwhen peak employment has been attained, on a date to be determinedby the Regional Director, among the employees in the appropriate unitwho are employed during the payroll period immediately precedingthe date of the issuance of the notice of election by the RegionalDirector.[Text of Direction of Election omitted from publication.]CocaCola BottlingCompany of LouisvilleandMilk,Ice CreamDrivers andDairy EmployeesLocal No. 783,InternationalBrotherhood of Teamsters,Chauffeurs,Warehousemen andHelpers of America, Charging PartyCoca ColaBottling Companyof LouisvilleandMilk, Ice CreamDriversand Dairy EmployeesLocal No. 783,InternationalBrotherhood of Teamsters,Chauffeurs,Warehousemen andHelpers of America,Petitioner.CasesNos. 9-CA-2739 and9-RC-5057.June 35, 1963DECISION, ORDER, AND DIRECTION OFSECOND ELECTIONOn April 9, 1963, Trial Examiner George A. Downing issued hisIntermediate Report in the above-entitled proceeding, finding thatthe Respondent had engaged in and was engaging in certain unfairlabor practices in violation of Section 8(a) (1) of the Act, and recom-mending that it cease and desist therefrom and take certain affirma-tive action, as set forth in the attached Intermediate Report.TheTrial Examiner found further that this conduct wasgrounds forsetting aside the September 19, 1962, election in the representationcase.The Trial Examiner also found that the Respondent-Employerhad not engaged in certain other unfair labor practices and recom-mended that the complaint be dismissed as to such allegations.There-after, the Respondent-Employer and the Charging Party-Petitionerfiled exceptions to the Intermediate Report and supporting briefs.Pursuant to the provisions of Section 3(b) of the National LaborRelations Act, the Board has delegated its powers in connection withthis case to a three-member panel [Members Leedom, Fanning, andBrown].The Board has reviewed the rulings of the Trial Examiner madeat the hearing herein, and finds that no prejudicial error was commit-ted.The rulings are hereby affirmed.The Board has considered143 NLRB No. 1. |
Case 1:18-cv-20394-RNS Document 33-3 Entered on FLSD Docket 06/11/2019 Page 1 of 2
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
UNITED STATES OF AMERICA ex rel. )
DEREK LEWIS and JOEY NEIMAN, )
)
) No. 18-20394
vs. )
)
COMMUNITY HEALTH SYSTEMS, )
INC. et al. )
ORDER GRANTING MOTION TO APPEAR
PRO HAC VICE, CONSENT TO DESIGNATION AND REQUEST TO
ELECTRONICALLY RECEIVE NOTICES OF ELECTRONIC FILING
THIS CAUSE having come before the Court on the Motion to Appear Pro Hac
Vice for David E. Morrison, Consent to Designation, and Request to Electronically Receive
Notices of Electronic Filing (the "Motion"), pursuant to the Special Rules Governing the
Admission and Practice of Attorneys in the United States District Court for the Southern
District of Florida and Section 2B of the CM/ECF Administrative Procedures. This Court
having considered the motion and all other relevant factors, it is hereby
ORDERED AND ADJUDGED that:
The Motion is GRANTED. David E. Morrison may appear and participate in this
action on behalf of Plaintiffs Derek Lewis and Joey Neiman. The Clerk shall provide electronic
notification of all electronic filings to David E. Morrison, at
[email protected].
Case 1:18-cv-20394-RNS Document 33-3 Entered on FLSD Docket 06/11/2019 Page 2 of 2
DONE AND ORDERED in Chambers at ______________, Florida, this
______day of June 2019.
Robert N. Scola, Jr.
United States District Judge
Copies furnished to:
All Counsel of Record
-2-
|
685 F. Supp. 1200 (1988)
Edward G. SCHEPP, Plaintiff,
v.
FREMONT COUNTY, WYOMING, a political subdivision of the State of Wyoming; Tim McKinney, sheriff of Fremont County, Wyoming, in his official and individual capacity; and William Eichelberger, county and prosecuting attorney for Fremont County, Wyoming, in his official capacity, Defendants.
No. C87-0292J.
United States District Court, D. Wyoming.
February 9, 1988.
*1201 Stephen L. Pevar, American Civil Liberties Union Foundation, Inc., Denver, Colo., Ronald N. Rogers, Cheyenne, Wyo., for plaintiff.
Edward L. Newell, II, Lander, Wyo., Elizageth Z. Smith, Cheyenne, Wyo., Jeffrey A. Donnell, Worland, Wyo., for defendants.
ORDER GRANTING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
JOHNSON, District Judge.
I. FACTS
The material facts in this case are not disputed. On 2 March 1981 an Information was filed in the District Court for the Ninth Judicial District of the State of Wyoming, charging Edward G. Schepp with drawing three fraudulent checks in violation of Wyo.Stat. § 6-3-110 (1977). At his 18 March 1981 arraignment, Mr. Schepp was represented by Donald Hall. After Mr. Schepp pled guilty to the charged offense, Judge Robert Ranck ordered a presentence report and set sentencing for 25 June 1981. Mr. Schepp was then released on his own recognizance.
*1202 On 25 June 1981 Judge Ranck sentenced Mr. Schepp to the maximum penalty of one year in the Fremont County Jail; the sentence was suspended to a year of unsupervised probation provided the insufficient funds checks were paid within 30 days. Judge Ranck signed the Judgment and Sentence on 13 July 1981, and it was filed with the clerk of court at Lander, Wyoming, on 17 July 1981. Judge Ranck has his office and residence at Jackson, Wyoming. He regularly attends court at Lander, Wyoming, within the Ninth Judicial District. Mr. Schepp made restitution on one of the three checks.
On 9 July 1982, Travis Moffat, a deputy county attorney, prepared a petition for revocation of Mr. Schepp's probation for failure to make full restitution. This petition was not filed until Monday, 19 July 1982. Judge Ranck set this matter for hearing for 29 July 1982, but vacated that hearing when Mr. Schepp could not be found. On 17 January 1983, Judge Ranck issued a bench warrant for the arrest and return of Mr. Schepp.
Donna Jones is a deputy sheriff for Maricopa County, Arizona. She handles most of the extradition matters for that county. She reports in her affidavit that Mr. Schepp was arrested in that county on 30 October 1984. Mr. Schepp contested extradition on Judge Ranck's outstanding bench warrant and was released on bail during the pendency of the proceedings. On 10 December 1984, Donna Jones's office received a governor's warrant from Wyoming. On 14 January 1985, Donna Jones notified the Fremont County Sheriff's office that Mr. Schepp could not be located at the address he gave.
On 16 May 1986, Mr. Schepp was again arrested in Maricopa County, on charges of fictitious license plates. On 20 May 1986, Mr. Schepp appeared before Judge Ryan, Superior Court of Arizona, Maricopa County. Mr. Schepp was then advised that he had ten days in which to file a writ of habeas corpus to contest the legality of the extradition. Mr. Schepp did not contest legality of the extradition by filing a writ.
On 1 June 1986, at about 9:15 P.M. Mr. Schepp arrived at the Fremont County Jail at Lander, Wyoming, from Arizona. The next morning Mr. Schepp was served with a copy of the bench warrant, and the Fremont County Attorney's office was advised that Mr. Schepp was in jail. On 5 June 1986, the jailer informed Sheriff Tim McKinney that Mr. Schepp had written a grievance and wished to speak with Sheriff McKinney. At about 8:30 A.M. that day, they spoke and Sheriff McKinney advised Mr. Schepp that he did not have a right to a trial within seventy-two hours. Sheriff McKinney also informed him that he had no authority to schedule court hearings for Judge Ranck, but provided him with a phone. Mr. Schepp had previously made phone calls on 1 June 1986 and 4 June 1986. On 5 June 1986, he called Judge Ranck's office at Jackson, Wyoming. Mr. Schepp got no further than Judge Ranck's secretary. The county attorney's office some time later advised Sheriff McKinney that Judge Ranck had set a hearing on 23 June 1986 when Judge Ranck was scheduled for court hearings in Lander. On 19 June 1986, a written order to this effect was served upon Mr. Schepp.
At the 23 June 1986 hearing, Mr. Schepp stated that he needed an attorney to win before a jury. Judge Ranck informed him that he was not entitled to a jury trial and noted that Mr. Schepp had admitted the allegations in the petition to revoke probation. Judge Ranck denied appointed counsel.
Judge Ranck then revoked Mr. Schepp's probation and remanded him to the custody of the sheriff for the sentence that was originally imposed. Mr. Schepp then explained to Judge Ranck that he had a ten year old son with brain cancer. In substance Schepp claimed that financial pressures from his son's illness had prevented him from making restitution on time. He also assured the court that a check was being mailed from Phoenix by express mail that would cover the outstanding checks that he was originally charged with having drawn. With these circumstances in mind, Judge Ranck agreed to suspend Mr. Schepp's sentence to time served upon arrival *1203 of the Phoenix check and payment of the insufficient funds checks. This condition was soon satisfied and Mr. Schepp was released from custody.
II. AMENDED COMPLAINT
By his amended complaint, Mr. Schepp sues under 42 U.S.C. § 1983 for an alleged violation of his sixth, eighth, and fourteenth amendment rights. He asserts liability against Sheriff McKinney and the present county attorney, Eichelberger, on grounds of reckless conduct exhibited by a callous indifference to Mr. Schepp's constitutionally protected rights. He asserts liability against Fremont County for failure to instruct, supervise, and control the individual defendants and for failure to properly supervise and control the operation of the Fremont County Jail.
Mr. Schepp seeks compensatory damages from Fremont County, Sheriff McKinney (in his individual and official capacity), and County Attorney Eichelberger (in his official capacity). Punitive damages are sought against Sheriff McKinney. A declaratory judgment under 28 U.S.C. §§ 2201, 2202 is sought as to violation of Mr. Schepp's federal constitutional rights. Finally, Mr. Schepp seeks attorney's fees and costs under 42 U.S.C. § 1988.
III. REDRESS UNDER 42 U.S.C. § 1983
A party alleging a civil rights violation under section 1983 must prove that one acting under color of law deprived him of a federally secured right. 42 U.S.C. § 1983. Violation of a state law ordinarily is not cognizable under section 1983. It is cognizable, however, when a state statute supplies the basis for the claim of a constitutional rightfor example, state law creates the property interests that the fourteenth amendment protects. See, e.g., Davis v. Scherer, 468 U.S. 183, 193, 104 S. Ct. 3012, 3018, 82 L. Ed. 2d 139 (1984); Arcoren v. Peters, 829 F.2d 671, 676-77 (8th Cir.1987); Myers v. Morris, 810 F.2d 1437, 1470 (8th Cir.1987); Pollnow v. Glennon, 757 F.2d 496, 501 (2nd Cir.1985).
IV. THE FOURTEENTH AMENDMENT: UNTIMELY INITIATION OF REVOCATION OF PROBATION PROCEEDINGS
At the time of Mr. Schepp's revocation hearing, Wyoming law concerning timeliness of revocation proceedings was as follows:
The period of probation or suspension of trial or sentence and the conditions thereof shall be determined by the court and may be continued or extended. Upon the satisfactory fulfillment of the conditions of suspension of trial or sentence or probation the court shall by order duly entered discharge the defendant. At any time during the period of suspension of trial or sentence or probation, the court may issue a warrant and cause the defendant to be arrested for violating any of the conditions of probation or suspension of trial or sentence. As soon as practicable after the arrest the court shall cause the defendant to be brought before it and may proceed to deal with the case as if no suspension of trial or sentence or probation had been ordered.
Wyo.Stat. § 7-13-304 (1977).[1]
In Lackey v. State, 731 P.2d 565 (Wyo. 1987), the Wyoming Supreme Court interpreted *1204 this statute, focusing on the key language "during the period of probation." The court observed that "[w]hile this section obviously does not require that revocation proceedings be completed within the probationary period, it does require that such proceedings be initiated during the period." Id. at 568. Therefore, the court implicitly recognized that a warrant could come after the imposed probationary period had run provided that a petition for revocation had come before then.
Under the rule of Lackey, the revocation proceedings against Mr. Schepp were untimely. This is so since the petition for revocation was filed after Mr. Schepp's one-year probation had run. Not surprisingly, Mr. Schepp relies heavily on Lackey. For two reasons, the court finds that Lackey does not control this case. First, Lackey was decided months after Mr. Schepp's revocation hearing. Second, the statute that it interpreted was not clear on its face. As noted by Lackey's two dissents, the court could have read the statute in such way that the initiation of proceedings against Mr. Schepp would have been timely. Under two conditions, Justice Brown was willing to declare revocation proceedings timely even though commenced after the imposed probation had run. First, the probation violation must have occurred while the probation period was running, and second, the proceedings must have been commenced within a reasonable time after the stated probationary period ends. Id. at 569. Defendants cannot be faulted for proceeding according to this or another view before Lackey was decided.
Even if Lackey did apply to Mr. Schepp's case, the named defendants still would not be liable. It was Judge Ranck's bench warrant that caused Mr. Schepp's return to Wyoming, not the petition for revocation filed by County Attorney Eichelberger's predecessor. Sheriff McKinney's fault is even more difficult to discern.[2] There is no basis for imposing liability upon Fremont County under this claim.
V. THE FOURTEENTH AMENDMENT: FAILURE TO AFFORD AN INITIAL OR PROBABLE CAUSE HEARING
Mr. Schepp states two grounds to support this claim, namely, the constitutional rule contained in Morrissey v. Brewer, 408 U.S. 471, 92 S. Ct. 2593, 33 L. Ed. 2d 484 (1972), and Gagnon v. Scarpelli, 411 U.S. 778, 93 S. Ct. 1756, 36 L. Ed. 2d 656 (1973), and Wyoming Rule of Criminal Procedure 5. Morrissey and Gagnon set forth minimum due process protections that must be given when revocation of probation or parole is sought. Arising from purely administrative revocation schemes, those cases required a probable cause hearing. Mr. Schepp perceives that he was not given such a hearing and sues the sheriff, prosecutor, and county for violating his fourteenth amendment rights. The flaw in this claim is that none of these defendants had any authority to provide Mr. Schepp a probable cause hearing. Accordingly, the fourteenth amendment claim must fail. Mr. Schepp can at least show a connection between the acts of a named defendant and Wyoming Rule of Criminal Procedure 5, which allows that claim to be discussed now.
Mr. Schepp argues that Sheriff McKinney had a duty under Wyoming Rule of Criminal Procedure 5 to take him without unreasonable delay before the nearest available commissioner. Rule 5 provides as follows:
*1205 (a) Appearance before the commissioner. An officer making an arrest under a warrant issued upon a complaint or any person making an arrest without a warrant shall take the arrested person without unnecessary delay before the nearest available commissioner. When a person arrested without a warrant is brought before a commissioner, the complaint shall be filed forthwith.
(b) Statement by commissioner.The commissioner shall inform the defendant of the complaint against him and of any affidavit filed therewith, of his right to retain counsel, of his right to request the assignment of counsel if he is unable to obtain counsel, and of the general circumstances under which he may secure pretrial release. He shall inform the defendant that he is not required to make a statement and that any statement made by him may be used against him. The commissioner shall also inform the defendant of his right to a preliminary examination. He shall allow the defendant reasonable time and opportunity to consult counsel and shall admit the defendant to bail as provided in these rules.
Rule 5 does not apply to this case. Sheriff McKinney was neither "[a]n officer making an arrest under a warrant issued upon a complaint" nor "a person making an arrest without a warrant." The suggested liability against Sheriff McKinney must fail.
Mr. Schepp's inability to fit Sheriff McKinney in Rule 5 arises because that rule does not cover probation revocation proceedings. The rule seeks "to provide officers from illegally obtaining statements during a defendant's initial confinement, but prior to an appearance before the magistrate[.]" Cherniwchan v. State, 594 P.2d 464, 466 (Wyo.1979) (citing 5 Am.Jur.2d, Arrest, § 75, p. 752 (1962)).[3] Initial confinement differs from confinement pending a probation revocation hearing.
Wyoming Rule of Criminal Procedure 33(f) governs the required hearing in the probation revocation context. That rule provides in relevant part as follows:
Revocation of probation.The court shall not revoke probation except after a hearing at which the defendant shall be present and apprised of the grounds on which such action is proposed. The defendant may be admitted to bail pending such hearing.
Mr. Schepp received this hearing before Judge Ranck. The court again sees no connection between the named defendants and any alleged deprivation of Mr. Schepp's federally secured rights.
Mr. Schepp next claims that he was entitled to an initial hearing to determine identity. To support this, he refers the court to Weisser v. State, 600 P.2d 1320, 1324 (Wyo. 1979) (Rooney, J., concurring). Justice Rooney found no error in that case "because appellant acknowledged his identity and signed an extradition waiver prior to being taken into custody under the probation violation warrant. He also subsequently acknowledged his identity at the revocation hearing." Id. at 1325. On 5 May 1986 Mr. Schepp received a governor's warrant hearing in Arizona, and he has always acknowledged his identify after his return to Fremont County. As in Weisser, no error resulted from failure to provide an initial identification hearing. Furthermore, the named defendants had no authority to provide such a hearing.
VI. THE SIXTH AMENDMENT: FAILURE TO PROVIDE MR. SCHEPP WITH COUNSEL
Mr. Schepp asserts two grounds to support this claim. First he cites and argues the constitutional rule concerning counsel as contained in Gagnon v. Scarpelli, 411 U.S. 778, 93 S. Ct. 1756, 36 L. Ed. 2d 656 (1973). Because this sets the standard on the sixth amendment right to counsel in revocation of probation proceedings, it is a proper ground under section 1983. The problem for Mr. Schepp is that it concerns the judge's responsibility for decisions as to appointment of counsel and has no connection to any of the named defendants. In short, the defendants had no say in *1206 Judge Ranck's decision not to appoint counsel.
Mr. Schepp also claims that the defendants violated his sixth amendment rights by their failure to meet their duties contained in certain statutes from the Wyoming Public Defender Act. Mr. Schepp argues that Sheriff McKinney had a duty to clearly inform him of the right of a needy person to be represented by an attorney at public expense. Because Mr. Schepp had no attorney, he argues, Sheriff McKinney had further duty to notify the public defender that he was not represented.[4]
Mr. Schepp's claim, even if true, does not support a section 1983 claim. The state statute offered does not supply the basis of a sixth amendment claim. See, e.g., Davis v. Scherer, 468 U.S. 183, 193, 104 S. Ct. 3012, 3018, 82 L. Ed. 2d 139 (1984); Arcoren v. Peters, 829 F.2d 671, 676-77 (8th Cir. 1987); Myers v. Morris, 810 F.2d 1437, 1470 (8th Cir.1987); Pollnow v. Glennon, 757 F.2d 496, 501 (2nd Cir.1985). The limits of the federal sixth amendment right to counsel are announced in Gagnon, not the Wyoming statutes. Section 1983 is not a proper remedy for a sheriff's alleged failure to conform with Wyo.Stat. § 7-1-111 (1977). The statute does not empower the sheriff to appoint counsel.
The sixth amendment claim also fails against County Attorney Eichelberger. No duty or authority is imposed upon him in this area. To his credit, he filed with Judge Ranck a motion for appointment of counsel and later discussed the case with the public defender in Riverton. The defendants are not liable on Mr. Schepp's sixth amendment claim.
VII. THE EIGHTH AMENDMENT: FAILURE TO ALLOW MR. SCHEPP TO POST BAIL
Mr. Schepp argues that "once a state creates an opportunity for bail, as Wyoming has done for probationers in Rule 33(f), it may not fail to consider an application by someone entitled to apply." Plaintiff's Reply Brief at 6. He then argues that "Judge Ranck's affidavit concedes that he did not consider granting bail to Schepp following his arrest and incarceration." Id. at 6-7. These arguments suffer from the same defect that plagues many of the other claims in this caseJudge Ranck is not a defendant and his actions were beyond the control of the named defendants.
Mr. Schepp attempts to tie this claim to Sheriff McKinney by arguing that he had a duty to take Schepp before the nearest available commissioner who could have ruled on bail. This duty arises under Mr. Schepp's belief that Wyoming Rule of Criminal Procedure 5 applies to probation revocation. As previously spelled out, the court rejects that position.
County Attorney Eichelberger went so far as to file a motion for bail. Neither he nor any other defendant deprived Mr. Schepp of a federally secured right to bail.
VIII. CONCLUSION
None of the defendants have deprived Mr. Schepp of the federally protected rights that he asserts. Accordingly, the COURT NOW ORDERS that defendants' motions for summary judgment be GRANTED and that plaintiff's motion for partial summary judgment be DENIED.
NOTES
[1] This statute has been renumbered and amended to read as follows:
(a) The period of probation or suspension of sentence under W.S. 7-13-302 shall be determined by the court and may be continued or extended.
(b) Upon the satisfactory fulfillment of the conditions of suspension of sentence or probation under W.S. 7-13-302 the court shall enter an order discharging the defendant.
(c) For a violation of a condition of probation occurring during the probationary period, revocation proceedings may be commenced at any time during the period of suspension of sentence or probation under W.S. 7-13-302, or within thirty (30) days thereafter, in which case the court may issue a warrant and cause the defendant to be arrested. If after hearing the court determines that the defendant violated any of the terms of probation or suspension of sentence, the court may proceed to deal with the case as if no suspension of sentence or probation had been ordered.
(d) The time for commencing revocation proceedings shall be automatically extended for any period of time in which the probationer is incarcerated outside this state during the probationary period for the conviction of an offense which is a violation of the conditions of probation, unless the probationer has made a valid request for final disposition under the interstate agreement on detainers, W.S. 7-15-101 through 7-15-101 [§§ 7-15-101 through 7-15-105].
Wyo.Stat. § 7-13-305 (Supp.1987).
[2] "It is not the duty of a law enforcement officer to investigate the procedure which led to the issuance of a warrant. He can rely on the warrant; his duty is to make the arrest. He need not pass judgment on the judicial act or reflect on the legal effect of the adjudication." Kimbley v. City of Green River, 663 P.2d 871, 883 (Wyo.1983) (citing Herndon v. County of Marin, 25 Cal. App. 3d 933, 102 Cal. Rptr. 221 (1972)).
[3] Even had Mr. Schepp's rights been violated, his relief would be exclusion of evidence tainted by illegal detention and not dismissal. Cherniwchan, 594 [email protected].
[4] The Wyoming Public Defender Act, now [email protected]. §§ 7-6-101 through 7-6-114 (Supp.1987), governs this case and was [email protected]. §§ 7-1-107 through 7-1-121 (1977).
|
968 F.2d 158
61 USLW 2021
UNITED STATES of America, Appellant,v.Frank JACKSON, Defendant-Appellee.
No. 1082, Docket 91-1664.
United States Court of Appeals,Second Circuit.
Argued March 16, 1992.Decided June 15, 1992.
Thomas McC. Souther, Asst. U.S. Atty., S.D.N.Y., New York City (Otto G. Obermaier, U.S. Atty., S.D.N.Y., Annmarie Levins, Asst. U.S. Atty., S.D.N.Y., New York City, of counsel), for appellant.
David B. Levitt, The Legal Aid Society, Federal Defender Services Appeals Unit, New York City, for defendant-appellee.
Before: MESKILL and PRATT, Circuit Judges, and NICKERSON,* District Judge.
MESKILL, Circuit Judge:
1
The government appeals from a decision entered in the United States District Court for the Southern District of New York, Lasker, J., declaring the enhanced penalty provisions of 21 U.S.C. § 841(b) and United States Sentencing Guidelines (Guidelines) § 2D1.1 void for vagueness because the provisions do not define the term "cocaine base." United States v. Jackson, 768 F. Supp. 97 (S.D.N.Y.1991). Those provisions impose substantially greater sentences for offenses involving cocaine base than for offenses involving the same amount of cocaine. 21 U.S.C. § 841(b); Guidelines § 2D1.1.
2
Defendant-appellee Frank Jackson was convicted, upon a plea of guilty, of "possession with intent to distribute cocaine ('crack')" in violation of 21 U.S.C. §§ 812, 841(a)(1), 841(b)(1)(A) and 18 U.S.C. § 2. Because the district court determined that the enhanced penalty provisions were unconstitutionally vague, it sentenced Jackson to the lesser punishment that would have been proper if the substance involved in the offense had been cocaine.
BACKGROUND
3
In May 1989 police officers stopped a car in which Jackson and co-defendant Frank Culmer were passengers. The police found a brown paper bag containing 300 grams of a substance the government identified as cocaine base or "crack" and 125 grams of a substance the government identified as cocaine. Jackson was charged with one count of unlawfully, intentionally and knowingly possessing with intent to distribute approximately 300 grams of mixtures and substances that contain a detectable amount of cocaine base in violation of 21 U.S.C. §§ 812, 841(a)(1), (b)(1)(A) and 18 U.S.C. § 2, and one count of unlawfully, intentionally and knowingly possessing with intent to distribute approximately 125 grams of mixtures and substances that contain a detectable amount of cocaine in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(C) and 18 U.S.C. § 2. Jackson entered a plea of guilty on the first count of possession with intent to distribute cocaine base. The second count was dismissed.
4
At his plea allocution Jackson explained that Culmer had told him that Culmer could get some "crack" and promised that if Jackson accompanied him, Culmer would give Jackson a share of the proceeds from a drug sale. Judge Lasker specifically asked Jackson if Jackson knew that the substance in Culmer's possession was "crack." Jackson responded "yes."
5
Despite this plea, Jackson later professed not to know what type of drugs Culmer intended to purchase. In a letter to Judge Lasker in connection with his sentencing Jackson wrote that Culmer "never even told me what kind of drugs or how much he was going to get but I also figured it would be some types [sic] of cocaine."
6
After Jackson pleaded guilty, a report of the Drug Enforcement Administration (DEA) Laboratory, dated June 2, 1989, identified the alleged "crack" cocaine as cocaine base with a purity of 27 percent. On November 8, 1990, in response to the substance's low purity level, Jackson moved for either an order directing the government to produce samples of the substance alleged to be cocaine base or an order directing retesting by the government chemist and a precise description of the procedures used by the chemist. In an affidavit in support of the motion, defense expert Dr. Morris S. Zedeck explained why a retesting was necessary and described the test to be used. Judge Lasker responded to the motion by permitting Dr. Zedeck and another doctor to retest the alleged cocaine base.
7
After performing two tests on the sample Dr. Zedeck concluded that the substance was cocaine base. Because the substance was highly impure, however, he questioned whether the substance could have been used as "crack." Specifically Dr. Zedeck's conclusion was as follows:
8
Based on the GC/MS scans, the ion ratios, the solvents used to extract the pellets and the volumes of solvent employed, the data indicate that the material was cocaine base. There are several indications that this sample of "crack" is highly impure. First, the DEA calculated that the sample contained 27% cocaine. In our limited study to determine form of cocaine and not quantitation, using only a two point standard curve, our data are similar with those of the DEA; we found the sample to contain 22.7% cocaine. The form of the material being soft, sticky, oily and brownish indicates the presence of impurities. Pure cocaine would not have left an oily residue after ether extraction. Crack is supposed to be a whitish, dried, hard pellet. It is difficult to predict whether this material could have been used as crack.
9
(emphasis added).
10
At sentencing Jackson contended that the provisions that punish cocaine base offenses more severely than offenses involving cocaine are unconstitutional because they are impermissibly vague with regard to what constitutes cocaine base.
11
The district court agreed with Jackson and held that the failure of the statute and Guidelines to define "cocaine base" rendered the enhanced penalty provisions unconstitutionally vague both on their face and as applied to Jackson's case. Troubling to the court was the failure of the courts of appeals to reach a consensus as to the meaning of "cocaine base." The court reasoned that the provisions were void for vagueness because "the substance in question may or may not be cocaine base depending upon which definition the chemist, the prosecutor or the court chooses to adopt." Jackson, 768 F. Supp. at 101.
12
Accordingly at sentencing Judge Lasker calculated Jackson's offense level based on possession of cocaine rather than possession of cocaine base. This resulted in a Guidelines range of 63 to 78 months. The judge sentenced Jackson to 63 months imprisonment followed by a three year term of conditional supervised release. The government brought this appeal in response to the court's ruling on the constitutionality of section 841(b) and Guidelines § 2D1.1 and its sentencing of Jackson.
DISCUSSION
13
In 1986 Congress passed the Anti-Drug Abuse Act that, inter alia, amended 21 U.S.C. § 841(b)(1) to provide for enhanced penalties for possession with intent to distribute specified amounts of controlled substances. See P.L. 99-570, § 1002(2). As a result, section 841(b)(1) and the corresponding Guideline, § 2D1.1, impose a substantially greater penalty for possession with intent to distribute cocaine base than for possession with intent to distribute cocaine. The enhanced penalty provisions' failure to define "cocaine base" has generated numerous appeals. See, e.g., United States v. Shaw, 936 F.2d 412, 413-16 (9th Cir.1991); United States v. Thomas, 932 F.2d 1085, 1090 (5th Cir.1991), cert. denied, --- U.S. ----, 112 S. Ct. 887, 116 L. Ed. 2d 791 (1992); United States v. Turner, 928 F.2d 956, 959-60 (10th Cir.), cert. denied, --- U.S. ----, 112 S. Ct. 230, 116 L. Ed. 2d 187 (1991); United States v. Avant, 907 F.2d 623, 624-27 (6th Cir.1990); United States v. Pinto, 905 F.2d 47, 49-50 (4th Cir.1990); United States v. Williams, 876 F.2d 1521, 1525 (11th Cir.1989); United States v. Brown, 859 F.2d 974, 975-77 (D.C.Cir.1988) (per curiam).
14
Section 841(b) imposes mandatory minimum prison terms for narcotics offenses that involve specified amounts of controlled substances. 21 U.S.C. § 841(b). For example, an individual convicted of possession with intent to distribute five kilograms of a mixture or substance containing a detectable amount of "cocaine, its salts, optical and geometric isomers, and salts of isomers" faces a minimum prison term of ten years, 21 U.S.C. § 841(b)(1)(A)(ii); for possession of 500 grams, the minimum prison term is five years, id. § 841(b)(1)(B)(ii). A much smaller amount of cocaine base is required to trigger the same penalties. Possession with intent to distribute merely fifty grams of "cocaine base" triggers the ten year mandatory minimum, id. § 841(b)(1)(A)(iii), while only five grams results in the mandatory minimum of five years, id. § 841(b)(1)(B)(iii).
15
Guidelines § 2D1.1 sets sentencing ranges for controlled substance offenses based on the sentences mandated by section 841(b), see Guidelines § 2D1.1, Application Note 10, and uses the same terminology as the statute.
16
The impact of differentiating between cocaine and cocaine base in Jackson's case is substantial. Jackson was convicted of possession with intent to distribute 300 grams of cocaine. If the substance is classified as "cocaine" the statute imposes no mandatory minimum and the Guidelines sentencing range under the applicable criminal history category of IV--before any reductions--is 63 to 78 months. If the substance is classified as "cocaine base" the statute imposes a mandatory minimum of ten years and the Guidelines range is 210 to 262 months.1
17
A penal statute is not void for vagueness if it "define[s] the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement." Kolender v. Lawson, 461 U.S. 352, 357, 103 S. Ct. 1855, 1858, 75 L. Ed. 2d 903 (1983) (citations omitted); accord United States v. McElroy, 910 F.2d 1016, 1021 (2d Cir.1990). "[I]f arbitrary and discriminatory enforcement is to be prevented, laws must provide explicit standards for those who apply them. A vague law impermissibly delegates basic policy matters to policemen, judges, and juries for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application." Grayned v. City of Rockford, 408 U.S. 104, 108-09, 92 S. Ct. 2294, 2299, 33 L. Ed. 2d 222 (1972) (footnotes omitted); see also Kolender, 461 U.S. at 358, 103 S.Ct. at 1858.
18
Vagueness challenges to statutes that do not involve First Amendment interests are examined in light of the facts of the [email protected]. Maynard v. Cartwright, 486 U.S. 356, 361, 108 S. Ct. 1853, 1857, 100 L. Ed. 2d 372 (1988); United States v. Mazurie, 419 U.S. 544, 550, 95 S. Ct. 710, 714, 42 L. Ed. 2d 706 (1975). Although the district court recognized this principle it ruled that the statutory and Guidelines provisions are unconstitutionally vague both on their face and as applied. Because this challenge does not implicate First Amendment freedoms the district court's conclusion that the provisions are facially invalid was erroneous and must be reversed.
19
We turn to the question whether the enhanced penalty provisions are void for vagueness as applied to the facts of this case. We are called on to decide whether a substance that has been identified as "cocaine base" by chemists but that may not be pure enough to be used as "crack" falls within the meaning of "cocaine base" under 21 U.S.C. § 841 and Guidelines § 2D1.1. We believe that it does.
20
"[W]here Congress has used technical words or terms of art, 'it [is] proper to explain them by reference to the art or science to which they [are] appropriate.' " Corning Glass Works v. Brennan, 417 U.S. 188, 201, 94 S. Ct. 2223, 2231, 41 L. Ed. 2d 1 (1974) (citations omitted); see also McDermott Int'l v. Wilander, --- U.S. ----, 111 S. Ct. 807, 811, 112 L. Ed. 2d 866 (1991) (absent contrary congressional indication when statute contains a term of art, court assumes Congress intended the term to have its established meaning).
21
"Cocaine base" clearly is a scientific term. The court had before it the transcript of the testimony of Dr. George Robert Schwartz, an expert chemist who testified at a sentencing proceeding in another case. See generally United States v. Turner, 928 F.2d 956 (10th Cir.), cert. denied, --- U.S. ----, 112 S. Ct. 230, 116 L. Ed. 2d 187 (1991). Dr. Schwartz stated that the meaning of the base form of cocaine is undisputed in the scientific community. He defined the term as "a substance which when combined with an acid produces a salt." According to Dr. Schwartz, the chemical formula for cocaine base is C sub17 H sub21 NO sub4 ; the formula for cocaine hydrochloride--a chemical term for cocaine--is C sub17 H sub21 NO sub4 HCl. He explained that the two forms have different solubility levels, different melting points and different molecular weights. Dr. Schwartz concluded that "just about any chemical laboratory would be able to distinguish the difference between cocaine base and cocaine salt or other forms."Therefore, according to expert testimony, "cocaine base" has a precise definition in the scientific community. The differences between cocaine base and cocaine are well enough defined to prevent arbitrary enforcement of the enhanced penalty provisions.
22
We decline to equate cocaine base with "crack" cocaine. It is apparent that Congress in imposing the enhanced penalties was concerned with the scourge of "crack." While we believe that Congress contemplated that "cocaine base" would include cocaine in the form commonly referred to as "crack" or "rock" cocaine, Congress neither limited the term to that form in the plain language of the statute nor demonstrated an intent to do so in the statute's legislative history. Congress used the chemical term "cocaine base" without explanation or limitation.
23
The First Circuit has recently accepted an expert chemist's determination that a substance was cocaine base on facts similar to those before us. In United States v. Lopez-Gil, 965 F.2d 1124, 1135 (1st Cir.1992) (per curiam), an expert chemist determined, after performing a chemical analysis, that a controlled substance was cocaine base. The expert chemist also testified, however, that the substance was not "crack." The district court sentenced defendant using the enhanced penalty provisions applicable to violations involving cocaine base. On appeal the First Circuit observed that
24
[d]istrict judges are forced to rely on the expert testimony of chemists who specialize in drug analysis in order to determine the identity of a substance.
25
In this instance, Chemist Vallejo clearly testified that although the substance was not crack, it was indeed cocaine base. This convincing testimony formed the basis for the district court's sentence.
26
Id. at 1135. The court of appeals then remanded the case to the district court for a specific factual finding concerning the [email protected].
27
The Ninth Circuit, by contrast, has rejected a chemical definition of "cocaine base." Shaw, 936 [email protected]. The Ninth Circuit in Shaw rested its decision on a single reference to "crack" in a commentary to Guidelines § 2D1.1, comments in the Congressional Record and definitions from the New Dictionary of American Slang to reach the conclusion that Congress intended "cocaine base" to mean "crack." 936 [email protected]. We are not persuaded by this analysis. In Guidelines § 2D1.1 the only reference to "crack" is found in a drug equivalency table for the purpose of converting different types of controlled substances into a marihuana equivalent. That table provides: "1 gm of Cocaine Base ("Crack") = 20 kg of marihuana." Guidelines § 2D1.1, Application Note 10. We do not believe that a parenthetical phrase in a drug equivalency table in an application note to a Guideline is enough to narrow the meaning of the chemical term selected by Congress. Nothing in the legislative history directly supports the Ninth Circuit's conclusion that Congress did not intend a chemical definition of "cocaine base."
28
The Shaw Court also gleaned a definition of "cocaine base" from definitions of "cocaine freebase" that arguably refer to "crack." Congress, however, did not use the term "cocaine freebase" in the statute but instead selected the term "cocaine base." As the Ninth Circuit observed:
29
The Senate and the House each had a version of a bill to amend 21 U.S.C. § 841(b). The House version provided tougher penalties for "cocaine freebase," while the Senate version provided penalties for "cocaine base." Congress ultimately enacted the Senate version by incorporating it into H.R. 5484, which became the Anti-Drug Abuse Act of 1986.
30
Shaw, 936 F.2d at 415 (citations omitted). The definition of "cocaine freebase"--a term found in a version of the proposed bill that was considered by Congress and rejected in the bill's final form--sheds little light on the meaning of a different term selected by Congress. Moreover, the Shaw Court's definition of "cocaine freebase" relies on a dictionary of questionable force and on a report of the House Committee on the Judiciary that relates not to the amendments at issue but instead to a White House conference on drug abuse advocated by the committee. Id. at 415-16.
31
Ironically the Ninth Circuit stated that there are no congressional statements "indicating that 'cocaine base' refers to cocaine that is a 'base' for chemistry purposes" and concluded that Congress did not intend the term "cocaine base" to be defined "by its testing basic rather than acidic." Id. at 416. We believe that the language of the statute itself speaks to the issue. Congress selected a chemical term, a term whose meaning is undisputed in the scientific community. Although "crack," the most common form of cocaine base, arguably has a meaning discernible by the community, see Thomas, 932 F.2d at 1090 ("[E]ven many children on the street know the difference between powdered cocaine and crack."), Congress did not use the term "crack." Rather, it chose a term of art that should be defined by reference to the scientific community from which it derives. See Corning Glass Works, 417 U.S. at 201, 94 S.Ct. at 2231.
32
Just because other courts of appeals differ in their definitions of a term does not mean that the term is void for vagueness. In this case the district court had before it Dr. Schwartz's testimony that there was agreement in the scientific community as to the definition of "cocaine base." He provided a chemical formula and discussed methods of distinguishing cocaine base from cocaine hydrochloride. Dr. Zedeck also indicated that a properly performed test could differentiate cocaine base from other forms of cocaine; he performed two such tests on the [email protected].
33
Applying the chemical definition of "cocaine base" to the facts of this case it is clear that the substance was cocaine base. Both the DEA chemist and Dr. Zedeck, Jackson's expert chemist, identified the substance as cocaine base. On the facts of this case--the proper inquiry for a void-for-vagueness challenge not involving the First Amendment--there was no dispute over whether the substance was cocaine base.
34
There was instead a question whether the substance was pure enough to be used as "crack." As we already have discussed, the definition of "cocaine base" is not limited to "crack." Admittedly, the drug's low level of purity is troublesome. Nonetheless Congress did not mention the purity of cocaine base as a factor in the enhanced penalty provisions.
35
Moreover, Jackson cannot complain that he was not on notice that he would be subject to enhanced penalties. See, e.g., Kolender, 461 U.S. at 357, 103 S.Ct. at 1858. Jackson pleaded guilty to possession with intent to distribute cocaine base. At Jackson's plea allocution Judge Lasker confirmed that Jackson was aware that Jackson faced a ten year mandatory minimum prison term. In addition, we have held that the enhanced penalty provisions do not violate due process even if a defendant does not know the specific nature and amount of the controlled substance. See United States v. Collado-Gomez, 834 F.2d 280 (2d Cir.1987) (per curiam), cert. denied sub nom. Quintero-Gonzalez v. United States, 485 U.S. 969, 108 S. Ct. 1244, 99 L. Ed. 2d 442 (1988).
36
Regarding the "more important aspect of the vagueness doctrine[,] ... 'the requirement that a legislature establish minimal guidelines to govern law enforcement,' " Kolender, 461 U.S. at 358, 103 S.Ct. at 1858 (citation omitted), as we have explained we believe that "cocaine base" has a chemical definition that should prevent arbitrary and discriminatory enforcement by courts or prosecutors.
CONCLUSION
37
Expert testimony in this case established that there is a clear definition of "cocaine base" undisputed in the scientific community. It is that meaning that Congress intended section 841(b) to have. That other courts of appeals have interpreted the statute differently does not render it void for vagueness. Applying the scientific meaning of "cocaine base" to the facts of this case, it is clear that Jackson is subject to the enhanced penalty provisions of section 841(b) and Guidelines § 2D1.1 and therefore those provisions as applied are not void for vagueness.
38
Accordingly, we vacate the decision of the district court and remand for resentencing pursuant to the enhanced penalty provisions.
*
Honorable Eugene H. Nickerson, United States District Judge for the Eastern District of New York, sitting by designation
1
We are confused by the district court's calculation of Jackson's sentence for possession with intent to distribute cocaine. The presentence report recommended a reduction of two levels for acceptance of responsibility. The government did not oppose this reduction. The court in calculating the sentencing range for cocaine base had indicated a willingness to reduce the sentence by two levels for a base offense level of 32. When the court determined that Jackson would be sentenced for possession of cocaine it made no reduction for acceptance of responsibility. To our knowledge no one has objected to the court's failure to consider the reduction nor has the issue been raised on appeal
|
Filed 6/25/13 P. v. Juarez CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
THE PEOPLE,
Plaintiff and Respondent, E055235
v. (Super.Ct.No. FSB056525)
DAVID MICHAEL JUAREZ, OPINION
Defendant and Appellant.
APPEAL from the Superior Court of San Bernardino County. Bryan Foster,
Judge. Affirmed with directions.
Kevin D. Sheehy, under appointment by the Court of Appeal, for Defendant and
Appellant.
Kamala D. Harris, Attorney General, Dane R. Gillette, Chief Assistant Attorney
General, Julie L. Garland, Assistant Attorney General, and Anthony Da Silva and
Christopher P. Beesley, Deputy Attorneys General, for Plaintiff and Respondent.
1
I. INTRODUCTION
In November 2011, a jury found defendant David Michael Juarez guilty of the first
degree murder of Diana Burch. (Pen. Code, § 187, subd. (a).)1 The murder occurred
around April 10, 1989, over 20 years before trial. Defendant was sentenced to 25 years
to life in prison.
Defendant principally claims that the court violated his federal due process rights
and section 1369 when, on March 13, 2009, the court did not immediately conduct a
hearing on defendant’s competency to stand trial, even though it had just received the
report of Randall Norris, Ph.D., a court-appointed psychologist, that defendant was
incompetent to stand trial. Rather than immediately conduct the hearing, the court
granted the prosecution’s request to appoint another psychologist, Steven Jenkins, Ph.D.,
to assess defendant. After Dr. Jenkins reported that defendant was competent, the court
appointed a third expert, Kenneth Fischer, Ph.D., to assess defendant. After Dr. Fischer
reported that defendant was competent, the court conducted the competency hearing and
the jury found defendant competent. Defendant was later tried and found guilty of the
murder. We find no due process or statutory violation in the court’s refusal to conduct
the competency hearing until after Drs. Jenkins and Fischer evaluated defendant.
(§ 1369, subds. (a), (c); see Baqleh v. Superior Court (2002) 100 Cal. App. 4th 478, 489-
490.)
1 All further statutory references are to the Penal Code unless otherwise indicated.
2
Defendant further claims, and the People agree, that defendant’s presentence
custody credits were improperly calculated, and that defendant should have been awarded
3,243 total credits rather than 2,901 total credits. We agree and modify the judgment to
award defendant the additional presentence custody credits. In all other respects, we
affirm the judgment.
II. FACTS AND PROCEDURAL HISTORY
A. The Murder of Diana Burch
On April 11, 1989, the body of 19-year-old Diana Burch was found in a green
duffel bag at a turnout along Highway 330. Defendant’s initials “DJ” were on the duffel
bag, and his DNA matched semen taken from the victim’s vagina and skin found
underneath the victim’s fingernails. Defendant’s DNA was also consistent with DNA
found on the duffel bag and on an electrical cord around the victim’s neck. During a
January 2006 police interview, defendant admitted that he killed a person who offered
him sex in exchange for drugs, around 17 years earlier. In June 2006, defendant was
charged with the murder of Burch.
B. Proceedings Concerning Defendant’s Competency to Stand Trial
On February 28, 2007, defense counsel (Wright) told the court that he doubted
defendant’s competency to stand trial. The court then suspended the criminal
proceedings and appointed a mental health professional, Abraham Argun, Ph.D., to
evaluate defendant. On April 3, 2007, the court adopted Dr. Argun’s written opinion that
defendant was competent to stand trial and reinstated the criminal proceedings.
3
On September 24, 2007, defense counsel (Drake) declared a new doubt as to
defendant’s competency to stand trial. Members of defendant’s family were in court and,
according to defense counsel, indicated that defendant had “a long history of mental
health issues.” The court again suspended the proceedings and appointed another mental
health professional, Robert Postman, Ph.D., to evaluate defendant. On October 23, 2007,
after reviewing Dr. Postman’s written opinion that defendant was not competent to stand
trial and required psychotropic medications to be restored to competency, the court
declared defendant incompetent, and the criminal proceedings remained suspended.
On November 16, 2007, the court ordered that defendant be committed to Patton
State Hospital (PSH) until his mental competence was restored (with a maximum three-
year time of commitment) and that PSH administer antipsychotic (psychotropic)
medication, involuntarily if necessary. On February 22, 2008, after reviewing a PSH
progress report, the court ordered that defendant be retained and [email protected]. On July
7, 2008, after reviewing PSH reports and a certificate of mental competence, the court
found that defendant’s competency had been restored and reinstated the criminal
proceedings.2
On December 9, 2008, the court proceeded with the preliminary examination and
bound defendant over on the murder charge.
2 Defendant expressly waived his right to confront witnesses on the PSH progress
report, and defense counsel joined in the waiver.
4
On December 16, 2008, defendant entered pleas of not guilty and not guilty by
reason of insanity on the murder charge, and the court appointed two doctors, Jungyeol
Oh, Ph.D. and Michael Perrotti, Ph.D., to evaluate defendant’s sanity at the time of the
offense. (§§ 1368, 1026.) In his report, Dr. Oh determined that defendant required
involuntary antipsychotic medications, and stated that defendant was probably sane at the
time of the offense, but it was not possible to render a more concrete analysis of his
sanity because he refused to be more forthcoming. Dr. Perrotti also concluded that it was
not possible to determine defendant’s sanity at the time of the offense. Dr. Perrotti noted
that defendant’s thoughts were disorganized and his ability to reason was so impaired that
he would be unable to testify on his own behalf.
On February 20, 2009, after reviewing the reports of Drs. Oh and Perrotti, defense
counsel and the court declared doubts as to defendant’s competency, and the court again
suspended criminal proceedings. The court then appointed a new mental health
professional, Dr. Norris, to evaluate defendant. (§ 1368.)
On March 13, 2009, after reviewing Dr. Norris’s report that defendant was
incompetent to stand trial and required psychiatric hospitalization, the court kept criminal
proceedings in suspension and, after granting the People’s request for “a second doctor
evaluation,” appointed another doctor—Dr. Jenkins—to evaluate defendant. The court
rejected defense counsel’s request to adopt Dr. Norris’s evaluation and recommit
defendant to PSH. The prosecutor asked that the second evaluation be conducted because
defendant had already been committed to PSH where his competency had been restored.
5
On April 3, 2009, after reviewing Dr. Jenkins’s report that defendant was
competent to stand trial and noting that the reports of Drs. Norris and Jenkins reached
“opposing conclusions” concerning defendant’s competency, the court appointed a third
mental health professional, Dr. Fischer, to evaluate defendant. Like Dr. Jenkins, Dr.
Fischer concluded that defendant was competent to stand trial. On May 14, 2009,
defense counsel told the court he was unwilling to stipulate to Dr. Fischer’s report and
demanded a jury trial on defendant’s competency. The court initially set the jury trial on
July 13, 2009.
Following several continuances, the jury trial on defendant’s competency was held
on January 26 to 28, 2010. After hearing testimony from several health professionals,
including Drs. Norris, Jenkins, and Fischer, the jury determined that defendant was
competent to stand trial.
III. DISCUSSION
Defendant claims that the court violated his federal due process rights and state
law (§ 1367 et seq.) in refusing to immediately try the issue of his competency to stand
trial, when, on March 13, 2009, the court received the written report of Dr. Norris that
defendant was incompetent to stand trial. We find this claim utterly without merit.
A. Applicable Law
Federal due process principles and state statutory law prohibit the state from trying
or convicting a criminal defendant while he is mentally incompetent. (Drope v. Missouri
(1975) 420 U.S. 162, 181; People v. Rogers (2006) 39 Cal. 4th 826, 846-847.) A
6
defendant is incompetent to stand trial if he lacks a “‘“sufficient present ability to consult
with his lawyer with a reasonable degree of rational understanding”’” and “‘“a rational as
well as a factual understanding of the proceedings against him.”’ [Citations.]” (People v.
Rogers, supra, at pp. 846-847; § 1367.)3
“[A]n accused has a constitutional right to a hearing on present sanity if he comes
forward with substantial evidence that he is incapable, because of mental illness, of
understanding the nature of the proceedings against him or of assisting in his defense.
Once such substantial evidence appears, a doubt as to the sanity of the accused exists, no
matter how persuasive other evidence—testimony of prosecution witnesses or the court’s
own observations of the accused—may be to the contrary.” (People v. Pennington
(1967) 66 Cal. 2d 508, 518; Pate v. Robinson (1966) 383 U.S. 375, 383-386.) The
defendant has the burden of proving his incompetency by a preponderance of the
evidence. (§ 1369, subd. (f); People v. Marks (2003) 31 Cal. 4th 197, 215.)
The court’s decision whether or not to hold a competency hearing is entitled to
deference, because the court has the opportunity to observe the defendant. (People v.
Rogers, supra, 39 Cal.4th at p. 847.) “The failure to declare a doubt and conclude a
hearing when there is substantial evidence of incompetency, however, requires reversal
of the judgment of conviction.” (Ibid.; Drope v. Missouri, supra, 420 U.S. at p. 181.)
3 Section 1367, subdivision (a), provides: “A person cannot be tried or adjudged
to punishment while that person is mentally incompetent. A defendant is mentally
incompetent . . . if, as a result of mental disorder or developmental disability, the
defendant is unable to understand the nature of the criminal proceedings or to assist
counsel in the conduct of a defense in a rational manner.”
7
California’s procedure for determining a defendant’s competence to stand trial is a
creature of statute. (See §§ 1368, 1369.) As pertinent, section 1369 states: “A trial by
court or jury of the question of mental competence shall proceed in the following order:
[¶] (a) The court shall appoint a psychiatrist or licensed psychologist, and any other
expert the court may deem appropriate, to examine the defendant. In any case where the
defendant or the defendant’s counsel informs the court that the defendant is not seeking a
finding of mental incompetence, the court shall appoint two psychiatrists, licensed
psychologists, or a combination thereof. One of the psychiatrists or licensed
psychologists may be named by the defense and one may be named by the
prosecution. . . .” (Italics added.)
B. Analysis
Defendant maintains that the trial court violated his federal due process rights and
state law when, on March 13, 2009, and after reviewing Dr. Norris’s March 9, 2009,
report that he was incompetent to stand trial, the court refused to immediately conduct a
jury trial to determine his competency and instead appointed two more experts, Drs.
Jenkins and Fischer, to assess his competency.
As defendant points out, Dr. Norris’s report constituted substantial evidence that
defendant was incompetent to stand trial, and was sufficient to trigger defendant’s federal
due process and state statutory right to a hearing or jury trial on his competency. (People
v. Pennington, supra, 66 [email protected]. 518-519.) But this does not mean that the court
violated defendant’s federal due process rights or state law in appointing Dr. Jenkins, or
8
in later appointing Dr. Fischer, to further evaluate defendant’s competency before
conducting the jury trial on defendant’s competency.
To the contrary, and as the People point out, defendant “received precisely what
the [C]onstitution demanded: a hearing as to his competence.” (People v. Pennington,
supra, 66 Cal.2d at p. 518.) Further, nothing in the statutory scheme governing
competency proceedings (§ 1367 et seq.) prohibited the court from appointing the
additional experts to evaluate defendant’s competency before conducting the competency
hearing, even though Dr. Norris’s report constituted substantial evidence that defendant
was not competent and triggered the court’s duty to conduct a competency hearing.
(§§ 1367-1369; People v. Pennington, supra, at p. 518.)
As indicated, section 1369 states that “[t]he court shall appoint a psychiatrist or
licensed psychologist, and any other expert the court may deem appropriate, to examine
the defendant.” (§ 1369, subd. (a), italics added.) Ostensibly, the statute authorized the
trial court to appoint Drs. Jenkins and Fischer to examine defendant before the court
conducted the competency hearing. In addition, section 1369, subdivision (c), states that
“[t]he prosecution shall present its case regarding the issue of the defendant’s present
mental competence,” and specifically contemplates that the prosecutor may present
expert testimony of defendant’s competency. (See Baqleh v. Superior Court, supra, 100
[email protected]. 489-490 [§ 1369 authorizes the court to order a defendant to submit to
mental competency examination by an expert retained by the prosecution].)
9
C. Additional Presentence Custody Credits
Defendant claims, and the People agree, that defendant’s presentence custody
credits were erroneously calculated, and that defendant is entitled to additional
presentence custody credits. We agree.
As the parties explain, defendant was correctly awarded 1,935 days of actual
custody credits and should have been awarded 1,308 conduct credits, rather than 966
conduct credits, for total credits of 3,243 days, rather than total credits of 2,901 days.
Defendant was taken into custody on August 23, 2006. At that time and until January 25,
2010, section 4019 specified that a defendant would accrue two days of conduct credit for
every four days in local custody. (People v. Brown (2012) 54 Cal. 4th 314, 318.)
Effective January 25, 2010, section 4019 was amended to provide for two days of
conduct credit for every two days in local custody. (People v. Brown, supra, at p. 318.)
Thus, a defendant in continuous custody before and after January 25, 2010, accrued
conduct credits at two different rates. (Id. at p. 322.)
Defendant therefore earned 1,251 actual credits and 624 conduct credits from
August 23, 2006, through January 25, 2010. After January 25, 2010, he earned 684
actual days credit and 684 days conduct credits. He should have been awarded total
credits of 3,243 days, not 2,901 days, or 342 additional conduct credits.
IV. DISPOSITION
The judgment is modified to award defendant 3,243 total days of presentence
custody credits, consisting of 1,935 actual days plus 1,308 conduct days. The matter is
10
remanded with directions to amend defendant’s abstract of judgment to reflect this
modification, and to forward a copy of the amended abstract to the Department of
Corrections and Rehabilitation. In all other respects, the judgment is affirmed.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
KING
J.
We concur:
RAMIREZ
P. J.
MILLER
J.
11
|
Magic Software Enterprise Ltd. September 29, 2016 Securities and Exchange Commission Division of Corporation Finance Office of Information Technologies and Services treet, N.E. Washington, D.C. 20549 Attention: Craig D. Wilson VIA EDGAR Re:Magic Software Enterprises Ltd. Form 20-F for the Fiscal Year Ended December 31, 2015 (the “2015 Form 20-F”) Filed April 27, 2016 File No.000-19415 Dear Mr. Wilson: We are providing the following response to the comment of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) concerning the above-referenced filing that was provided to our company by the Staff in its letter dated September 14, 2016 (the “Comment Letter”).To assist your review, we have retyped the text of the Staff’s comment below and have provided our company’s response immediately following the comment. Form 20-F, Part III Item 18. Financial Statements Notes to Consolidated Financial Statements Note 2:- Significant Accounting Policies Research and development costs, page F-17 1. Please tell us how your capitalization of research and development costs for software complies with ASC 985-20-35-1 to 4 in regards to cessation of cost capitalization, amortization and net realizable value determination. We respectfully acknowledge the Staff's comment. ASC 985-20-35 requires that a product be amortized when the product is available for general release to customers. We consider a product to be available for general release to customers when we complete our internal validation of the product that is necessary to establish that the product meets its design specifications including functions, features, and technical performance requirements. Internal validation includes the completion of coding, documentation and testing that ensure bugs are reduced to a minimum. The internal validation of the product takes place a few weeks before the product is made available to the market. In certain instances, we enter into a short pre-release stage, during which the product is made available to a selected number of customers as a beta program for their own review and familiarization. Subsequently, the release is made generally available to our customers from our download area. Once a product is considered available for general release to customers, the capitalization of costs ceases and amortization of such costs to "cost of sales" begins as described below. Magic Software Enterprise Ltd. As for amortization period and method, specifically, paragraph 35-1, states that the annual amortization will be the greater of the amounts computed using (1) the ratio that current gross revenues for a product bears to the total of current and anticipated future gross revenues for that product (“revenue curve”); and (2) the straight-line method over the remaining estimated economic life of the product including the period being reported on (“straight-line”). We have been amortizing the capitalized product costs on a straight-line basis over five years which provides greater amortization expense compared to the revenue-curve method. Based on the our sales forecasts and past sales history, we estimate that the economic life of its internally-developed products (“the products”) will be at least five years due to their high rates of acceptance, the continued reliance on these products by existing customers, and the demand for such products from prospective customers, all of which validate our expectations. Although the determination of the useful life of the products above is subjective in nature, we believe that the estimated useful life of these products is at least five years. Therefore this is the period we estimate that the products will contribute to the future cash flows of our company. We monitor and evaluate such estimates during each reporting period. At each year end, the unamortized capitalized cost of each of the products is compared to its net realizable value. If the unamortized capitalized costs exceed its net realizable value, the excess amount is expensed immediately. The net realizable value is the estimated future gross revenues from each product reduced by the estimated future costs of completing and disposing of it, including the estimated costs of performing maintenance and customer support. In performing this calculation, we use internally generated projections of future revenues generated by the products, cost of completion of products and cost of delivery to customers. Based on our five-year forecast period, we forecast the net realizable value of these products - to be more than $40 million.When compared to the capitalized software cost of $14.0 million on our balance sheet, we find that the net realizable value is well in excess of it. We acknowledge to the Commission that: · Our company is responsible for the adequacy and accuracy of the disclosure in the filing; · Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and · Our company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. We appreciate your time and attention to our responses to the Staff’s comments set forth in this letter.Should you wish to discuss this letter at any time, please do not hesitate to contact the undersigned at+972-3-5389-284or by facsimile at4163778926. Sincerely, /s/ Asaf Berenstin Asaf Berenstin Chief Financial Officer Magic Software Enterprise Ltd.
|
The conviction is for the possession of a mash and still for the purpose of manufacturing intoxicating liquor; punishment fixed at confinement in the penitentiary for a period of five years.
While looking for a Mexican named Antone Benevides, the officers were directed to a house on Mary Street in the City of Houston. One of the officers walked to the door for the purpose of making inquiry for Benevides and observed a still in operation. He walked away and called to his companion. When he returned to the house the appellant attempted to leave and was arrested. The officer who first observed the still obtained a search warrant, and upon searching the house found a 20-gallon still in operation and making whisky, also two barrels of mash and several gallons of whisky. The mash was suitable for the manufacture of whisky.
The appellant testified that he was 55 years of age, had five children and was a sick man; that about three weeks before his arrest he bought a Still and made about twelve gallons of whisky; that he was engaged in making liquor at the time of his arrest; that he was making it for his own use because he was sick; that he needed it for his sickness; that he made it for his own use and not for sale; that he intended to make no more liquor.
The admissibility of the testimony of the officers is challenged upon several grounds, among them that the officer was a trespasser when he first observed the still in operation before obtaining the *Page 286
search warrant. According to the officer, when he walked to the rear door to make inquiry he saw the still sitting in a room and in operation. Whether the circumstances rendered the officer a trespasser upon the appellant's premises is not made clear by the evidence, and the decision of it is not necessary in the disposition of the case. It has been held that where an officer, without trespassing, observes an offense committed in a private residence the right to arrest the offender would arise therefrom and the right to the arrest would carry with it the authority to make a search of the place in which the offense was committed. See Agnello v. United States,269 U.S. 20, 70 Law Ed. 145. The rule has been followed by this court in Hodge v. State, 107 Tex.Crim. Rep.; Greenwood v. State,9 S.W.2d 352; Melton v. State, 10 S.W.2d 385; Haynes v. State, 9 S.W.2d 1043; Bevins v. State, 7 S.W.2d 352; Levine v. State, 4 S.W.2d 553. However, the legality of the testimony touching the conditions observed by the officer before the search warrant was obtained would not be determinative of the validity of the conviction for the reason that it appears that the same facts in much more detail were ascertained by the officers acting under the authority of a search warrant. Moreover, the testimony of the appellant that he possessed the still and was making whisky and had already made twelve gallons of it would render any error in receiving the officers' testimony unimportant. The criminative facts revealed by the officers were conceded. Therefore, a reversal could not result even if the officers' testimony had been improperly received. See Gonzales v. State, 299 S.W. Rep. 901; McLaughlin v. State, 4 S.W.2d 54; Sifuentes v. State, 5 S.W.2d 144; Ross v. State, 5 S.W.2d 516; Tate v. State,12 S.W.2d 210.
The refusal of the court to withdraw the testimony of the officers upon the request of the appellant would not be reversible error for the reason, as stated above, that the same testimony came voluntarily from the mouth of the appellant.
The court gave an appropriate charge covering the issues in the case, including the defensive theory advanced by the appellant, namely, that he was guilty of no offense in that he possessed the mash and still for the purpose of manufacturing whisky for medicinal use. No complaint is made of the manner in which the issues were submitted. The mash and still on hand and the circumstances detailed, including the testimony of the appellant that he had made twelve gallons of whisky, were sufficient under the law to overcome *Page 287
the presumption of innocence and to justify the verdict of the jury rejecting his claim that the still and mash were possessed for the purpose of manufacturing whisky for medicinal purposes. The possession of the mash and equipment made a prima facie case under the statute, Art. 671, P. C., 1925.
The judgment is affirmed.
Affirmed. |
Exhibit 10.27
SEPARATION AND INDEPENDENT CONTRACTOR AGREEMENT
InnerWorkings, Inc. (“Company”) and Jonathan Shean (“Shean” and “Employee”), in
consideration of the premises and the mutual covenants and promises contained
herein (the “Agreement”) and for other good and valuable consideration, agree as
follows:
Section 1—Separation from Employment
1.1 In consideration of executing this release, Shean’s employment
with the Company will terminate effective January 19, 2011 (“Separation Date”),
provided that Shean’s last day in the office will be January 7, 2011.
1.2 Effective January 19, 2011, Shean and Company hereby enter into an
independent contractor agreement, which shall commence on January 19, 2011 and
terminate on July 1, 2011 (“The Consulting Term”). Shean will be available for
consulting services up to 5 hours per month either in person or telephonically,
at Shean’s discretion. Company will provide Shean with reasonable advance
notice for any requested consulting services and Shean will have discretion
during what times he provides such services so as not to interfere with other
commitments he may have.
1.3 In consideration of Shean’s services hereunder and in full
satisfaction of Company’s severance obligations to Shean, Company agrees to: 1)
Continue to pay Shean his current salary on a bi-monthly basis ($270,000 on an
annualized basis) for a period of 6 months following his termination date with
the Company (through July 19, 2011); 2) Shean shall continue to vest in his
previous stock grants through December 1, 2011 as if he had remained an employee
of the Company, 3) pay Shean a $50,000 payment within two weeks of his execution
of this Agreement; 4) pay Shean a bonus equal to $50,000 on April 1, 2011
representing his bonus eligibility for the 2010 fiscal year (calculated base on
the anticipated 2010 results of the Company), 5) to pay for Employee and
Employee’s COBRA payments to continue family’s current Company medical and
dental benefits through December 31, 2011; and 6) to continue to pay Employee’s
current Company life insurance and long term disability Company coverage through
December 31, 2011.
1.4 Nothing in this Separation and Independent Contractor Agreement shall
prevent Shean from accepting other employment during the Consulting Term, except
as otherwise prohibited by Section 6 of this Agreement.
1.5 Company shall transfer ownership to the current Company laptop computer
being used by Shean after the Company has had the opportunity to clean all
Company files and data from the computer.
1
--------------------------------------------------------------------------------
Section 2—Waiver and Release of Claims; Indemnification
2.1 Except as prohibited by law, and expressly conditioned upon
Company’s performance of it obligations under entirety of Section 1 of this
agreement, then Shean and
the Company mutually waive and release each other from any and all claims,
liability and damages, of whatever kind or nature, whether arising in equity or
under federal, state or local statutory, administrative or common law, and
whether known or unknown, and which arose from or pertain in any way to Shean’s
employment, any employment agreements Shean has or has had with the Company, and
his separation from employment with the Company. Such claims include, but are
not limited to claims involving obligations by the Company arising under any
employment agreement, laws against discrimination, including discrimination
based upon the Shean’s sex, race, color, national origin, religion, disability,
age, or any other category protected by state or federal law; any type of
workplace harassment claim, including those based upon the foregoing list of
protected categories; retaliation claims; whistleblower claims; wrongful
discharge claims; public policy claims; contract claims; tort claims, including
intentional torts; claims against current or former Company employees or
supervisors related in any way to the claims being brought against the Company;
and claims for an alleged violation of any federal, state, or other governmental
law, common law, statute, regulation, or ordinance, including, but not limited
to, any state civil rights statute, Title VII of the Civil Rights Act of 1964,
the Fair Labor Standards Act, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the Family and Medical Leave Act, or the
Whistleblowers’ Protection Act.
2.2 Acknowledgment of Waiver of Claims under ADEA. Shean acknowledges that he
is waiving and releasing any rights he or she may have under the Age
Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and
release is knowing and voluntary. Shean and the Company agree and understand
that by law, this waiver and release does not apply to any rights or claims that
may arise under ADEA after the effective date of this Agreement. Shean further
acknowledges that he has been advised by this writing that (a) he or she should
consult with an attorney prior to executing this Agreement; (b) under the
Federal Older Workers Benefit Protection Act, he or she has at least twenty-one
days within which to consider this Agreement; (c) he or she has at least seven
days following the execution of this Agreement by the Parties to revoke the
Agreement; and (d) this Agreement shall not be effective until the revocation
period has expired. Nothing in this Agreement will preclude Shean from seeking a
judicial determination regarding the validity of any waiver as it pertains to
the ADEA.
2.3 Shean covenants and agrees that he or she shall never in any way
voluntarily aid in the institution or prosecution of any suit, action or claim
of any kind for relief against the Company arising from or related in any way to
his employment, his employment duties, the termination of my employment with the
Company, and/or any other occurrence up to and including the effective date of
this Agreement. Shean acknowledges that it is his intention in executing this
Agreement that the release contained herein shall be effective as a bar to each
and every claim, demand, and cause of action herein described. Shean expressly
consents that the release in this Agreement shall be given full force and effect
according to each and all of its provisions, including those relating to unknown
and unsuspected claims, demands or causes of action, as well as those relating
to any other claims, demands or causes of action herein specified. Shean
acknowledges and agree that the release in this Agreement is an essential and
material term of the Agreement, and that without such release, no agreement
would have been reached by the parties.
2
--------------------------------------------------------------------------------
2.4 Company’s indemnification obligations as set forth in Article V of the
Company’s Bylaws (which are attached hereto) shall survive Shean’s termination
of employment.
2.5 Company agrees to indemnify and reimburse Shean for any interest and/or
penalties that are assessed against him by the IRS or Illinois Department of
Revenue relating to Company’s failure to properly report or withhold taxes from
Shean’s 2008 stock grant vesting event, provided that Shean agrees to remain
responsible for the principal amount of taxes that were due as a result of this
vesting event.
Section 3—Non-Admission
3.1 The parties understand that this Agreement is to be regarded as a
“no-fault” settlement, and, as such, this Agreement is not intended and will not
be construed to constitute an admission or statement by either party as to the
validity or invalidity of any legal or factual contention advanced in this
matter. This Agreement is not to be cited as evidence of discrimination or as
background information in any other case or dispute involving the employer or
its employees.
3.2 The parties further agree that the consideration for the Agreement
is provided solely for the purposes of compromise and settlement and that the
Company does not hereby admit any liability on account of any said claims or
matters, but expressly denies all of such liability whatsoever.
3.3 The parties agree and acknowledge that Shean’s termination from
the Company was not for cause.
Section 4—Confidential and Proprietary Information
4.1 Shean acknowledges that he or she has been exposed to certain of
the Company’s confidential, proprietary and trade secret information.
4.2 If Shean has previously signed one or more conflict of interest
and/or nondisclosure agreements, Shean agrees that such agreements remain in
full effect and are incorporated by reference into this Agreement.
4.3 Shean further expressly agrees in this Agreement that he or she
will not disclose to any third party or use for his or her own benefit, or for
the benefit of any third party, any of the Company’s trade secret and/or
Confidential Information. In the event that Shean is requested or required (by
oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand, any informal or formal investigation by
any government or governmental agency or authority or otherwise) to disclose any
confidential, proprietary, or trade secret information, Shean will notify the
Company promptly in writing, within 48 hours, prior to disclosure so that the
Company may seek a protective order or other appropriate remedy or, in the
Company’s sole discretion, waive compliance with the terms of this Agreement.
Shean agrees not to oppose any action by Employer to obtain a protective order
or other appropriate remedy. In the event that no such protective order or other
remedy is obtained, or that the Company waives compliance with the terms of this
Agreement, Shean will furnish only that portion of the confidential,
proprietary, or trade secret information which Shean is advised in writing by
counsel that he is legally required to furnish and will exercise his reasonable
best efforts, at the Company’s expense, to obtain reliable assurance that
confidential treatment will be accorded to that information, including but not
limited to seeking written prohibitions on further use or disclosure.
3
--------------------------------------------------------------------------------
Section 5—Confidentiality
5.1 Shean agrees that he or she will keep the existence of the Agreement, the
negotiations and discussions leading to the Agreement, and terms of this
Agreement confidential. However, Shean may disclose the terms and existence of
this Agreement to his or her spouse, attorney, accountant, pursuant to a valid
subpoena, or to any governmental agency that inquires into the existence of this
Agreement. If Shean is required by law through subpoena or otherwise to disclose
information described in this paragraph, Shean will notify the Company promptly
in writing so that the Company may seek a protective order or other appropriate
remedy or, in the Company’s sole discretion, waive compliance with the terms of
this Agreement. Shean agrees not to oppose any action by Employer to obtain a
protective order or other appropriate remedy. In the event that no such
protective order or other remedy is obtained, or that the Company waives
compliance with the terms of this Agreement, Shean will furnish only that
portion of the information which Shean is advised in writing by counsel that he
is legally required to furnish and will exercise his reasonable best efforts, at
the Company’s expense, to obtain reliable assurance that confidential treatment
will be accorded to the information.
Section 6—Non-Compete/No Solicitation
6.1 If Shean has previously signed one or more non-compete or no
solicitation agreements, including but not limited to Sections 6 and 7 of the
Employment Agreement between Company and Employee dated October 1, 2007,
Employee agrees that such agreements remain in full effect and are incorporated
by reference into this Agreement.
6.2 In addition, for a period of one year from the Separation Date,
Shean agrees that he will not 1) directly or indirectly solicit, induce or
attempt to induce any employee of the Company to leave his or her employment
with the Company and 2) perform services for (whether as an employee, agent,
consultant, advisor, independent contractor, proprietor, partner, officer,
director or otherwise), have any ownership interest in (except for passive
ownership of five percent (5%) or less of any entity whose securities have been
registered under the Securities Act or Section 12 of the Securities Exchange Act
of 1934, as amended), or participate in the financing, operation, management or
control of, any firm, partnership, corporation, entity or business that engages
or participates in a “competing business purpose” (as defined below);or 3)
induce or attempt to induce any customer, potential customer, supplier,
licensee, licensor or business relation of the Company to cease doing business
with the Company, or in any way interfere with the relationship between any
customer, potential customer, supplier, licensee, licensor or business relation
of the Company or solicit the business of any customer or potential customer of
the Company, whether or not Shean had personal contact with such entity.
For the purpose of this Agreement, the term “competing business purpose” shall
mean the sale or provision of any printed materials, items, or other products
that are competitive with in any manner the products sold or offered by the
Company. The term “Geographic Area” shall mean the United States of America.
4
--------------------------------------------------------------------------------
6.3 The covenants contained in this Section 6 shall be construed as a
series of separate covenants, one for each county, city, state, or any similar
subdivision in any Geographic Area. Except for geographic coverage, each such
separate covenant shall be deemed identical in terms to the covenant contained
in the preceding Sections. If, in any judicial proceeding, a court refuses to
enforce any of such separate covenants (or any part thereof), then such
unenforceable covenant (or such part) shall be eliminated from this Agreement to
the extent necessary to permit the remaining separate covenants (or portions
thereof) to be enforced. In the event that the provisions of this Section 6 are
deemed to exceed the time, geographic or scope limitations permitted by
applicable law, then such provisions shall be reformed to the maximum time,
geographic or scope limitations, as the case may be, permitted by applicable
laws.
6.4 The parties expressly acknowledge that any breach or failure to
comply with this Section 6 by Employee shall cause serious and substantial
irreparable damage to the Company. Accordingly, upon such breach or a threatened
breach of this Agreement by Employee, the Company shall be entitled to and
Employee hereby stipulates to the entry of injunctive relief, including but not
limited to a temporary restraining order and preliminary injunction, restraining
Employee from such breach or failure or any threatened breach or failure,
without the requirement of posting a bond. All remedies expressly provided for
herein are cumulative of any and all other remedies now existing at law or in
equity, including but not limited to the right of the Company to seek specific
enforcement of this Section and recovery of monetary damages suffered by the
Company to the extent those damages are ascertainable. Resort to any remedy
provided for herein or otherwise provided by law or in equity shall not prevent
the concurrent or subsequent exercise of any other appropriate remedy or
remedies or preclude the recovery by the Company of monetary damages.
Section 7—Non-Disparagement
7.1 Shean agrees that he or she will not disparage, criticize, condemn
or impugn the Company or its products to any persons whether a third party or an
employee of Company. In addition, Shean agrees that he or she will not directly
or indirectly interfere with, adversely affect the Company’s business
relationships, reputation, contracts, pricing or other
relationships that the Company has with its former, current or prospective
customers, suppliers, clients, employees, businesses, financial institutions,
stockholders or other person or entities with whom the Company relates. Shean
understands that a breach of this Section shall constitute a breach of this
Agreement relieving Company from its severance obligations.
7.2 In addition, Company agrees that it or its employees will not
disparage, criticize, condemn or impugn Shean or his work results. In addition,
Company agrees that it will not directly or indirectly interfere with, adversely
affect Shean’s business relationships, personal reputation, future potential
employers, employment contracts, or other relationships that Shean has with
former, current or prospective customers, suppliers, clients, employees,
businesses, financial institutions, stockholders or other person or entities
with whom Shean relates.
Section 8—Miscellaneous
8.1 This Agreement constitutes the whole agreement between the
parties, and except as expressly stated otherwise in this Agreement, cancels and
supersedes all other prior oral or written understandings or agreements. No
modification to this Agreement will be binding unless such modification is in
writing, dated subsequent to the effective date of this Agreement, and is signed
by both parties.
8.2 This Agreement is to be interpreted and enforced in accordance
with the laws of the State of Illinois, regardless of any state’s choice of law
analysis. The parties further agree that any judicial action permitted under
this Agreement shall be brought in a state or federal court situated in and
having competent jurisdiction over claims in Cook County, Illinois.
8.3 In the event any part of this Agreement is deemed to be void or
unenforceable as a matter of law, then to the extent possible, such provision
shall be rewritten so as to make the provision enforceable to the maximum extent
permitted by law. If not enforceable at all, then only that unenforceable
provision shall be voided and severed from this Agreement. The balance of this
Agreement shall be interpreted and enforced to the maximum extent permitted by
law.
8.4 By entering into this Agreement, the Company does not make any
admission of wrongdoing, nor that it violated any statutory, administrative or
common law.
5
--------------------------------------------------------------------------------
8.5 This Agreement is binding on the parties, their spouses, family,
heirs, administrators, successors and assigns.
8.6 Shean acknowledges that prior to signing this Agreement, he had
adequate time within which to consider the final version of this Agreement and
to consult with an advisor of his or her choice regarding it, if desired. Shean
acknowledges that he or she has relied solely on his or her own judgment and/or
that of his or her attorney regarding the consideration for the terms of this
Agreement. Shean acknowledges he or she understands the scope and impact of
this Agreement. Shean also acknowledges that his or her consent to all of the
Agreement’s provisions is given freely, voluntarily, and with full knowledge and
understanding of the Agreement’s contents.
Date: January 19, 2011
Jonathan Shean:
/ S / JONATHAN M. SHEAN
FOR: InnerWorkings, Inc.
Date: January 19, 2011
By:
/ S / J OSEPH M. B USKY
|
1 Reported in 260 N.W. 206.
Proceedings instituted by the county of Rice against relator herein to enforce payment of taxes for the years 1929, 1930, and 1931 on certain property in the city of Faribault, Minnesota. L. 1933, c. 414, § 1, 3 Mason Minn. St. 1934 Supp. § 2139 1/2, provides:
"In the event that the taxes of 1926 and all prior years against any parcel of land have been paid, or sold or assigned to a purchaser other than the state, but the taxes for 1927 or 1928, or any part thereof remain delinquent and held by the state, the county *Page 248
auditor and treasurer are authorized and directed to accept in full payment and discharge of all taxes and assessments and interest and penalties thereon, or for an assignment thereof, an amount equal to three-fifths of such taxes and assessments as originally assessed and taxed, without penalty or interest. In the event that the taxes for 1928 and all prior years against any parcel of land have been paid, or sold or assigned to a purchaser other than the state, but the taxes for 1929 or 1930 or any part thereof remain delinquent and held by the state, the county auditor and treasurer are authorized and directed to accept in full payment and discharge of all taxes and assessments and interest and penalties thereon, or for an assignment thereof, an amount equal to four-fifths of such taxes and assessments, as originally assessed and taxed."
August 29, 1933, relator duly tendered payment of the taxes for the years 1929, 1930, 1931, and 1932, deducting a fraction from the amount originally assessed in accordance with the discount provision of this statute. This tender was refused by A.W. Luecke, county auditor of Rice county. Thereupon relator petitioned the district court and obtained an alternative writ of mandamus directing said A.W. Luecke to accept the offered payment in full satisfaction of the taxes for those years. Answer to the writ was duly interposed, and upon trial the district court made an order discharging the writ and denying the peremptory writ. From this order relator appeals.
The case squarely puts in issue the constitutionality of L. 1933, c. 414, § 1, by which it is provided that under certain circumstances delinquent taxes may be satisfied in full by the payment of a fraction of the amount originally assessed. This is the only question in the case.
The discussion divides itself into two parts:
(1) Is this a statute allowing a discount or remission to a delinquent taxpayer, or is it merely a statute permitting the state to sell forfeited land or to satisfy at a discount and on public sale a claim represented by a judgment which it holds for delinquent taxes against any certain property? *Page 249
(2) If this is a statute allowing a discount or remission to a delinquent taxpayer, does it violate the uniformity clause of Minn. Const. art. 9, § 1?
1. It is patent at the outset that the section of the statute here under consideration differs radically from all previously enacted statutes of this general character with the exception of L. 1931, c. 129, § 2. Our attention has been called to the following statutes: L. 1893, c. 150; L. 1899, c. 322; L. 1907, c. 430; L. 1911, c. 30; L. 1913, c. 333; L. 1917, c. 303; L. 1919, c. 337; L. 1921, c. 386; L. 1925, c. 208; L. 1927, c. 119; L. 1929, c. 415. All of these enactments are concerned with delinquent tax sales and with the disposition of property held by the state. They deal with the state's disposal of property which has been forfeited to it or against which it holds a judgment. When the state secures a judgment for delinquent taxes, it holds a claim against such realty, which claim is property of the state in the same sense as the buildings and personalty used and operated by the various departments of the state government are also the property of the state. So, just as the state can sell its buildings or other property, this claim may be disposed of by the state in such manner as the legislative branch of the state government may deem fit. The state may keep it, or, if it so chooses, it may satisfy such claim at a public sale for a fraction of the amount represented thereby. The same applies to sale of property forfeited to the state. True, when a tax delinquency sale is had, the owner is allowed to bid the property in himself under certain circumstances. Further, if he does not bid it in, he is allowed to redeem from whomsoever purchases. Thus he receives a remission. But, he is assuming the risk that at such public sale someone will bid the property in for more than the amount of the claim. Nowhere in any of these statutes (except the 1931 and 1933 enactments) is the owner or anyone else given a prior right to come in and to satisfy the claim for delinquent taxes by paying a fraction of the amount represented thereby. All must stand alike at a public sale. That statutes such as these tax sale statutes are valid no one can doubt. By virtue of these the state is allowed to realize upon and to satisfy a legitimate obligation owing to it. But *Page 250
it is clear beyond need for further elucidation that the provision of the statute in the case at bar is quite different from those above discussed, for the statute in the case at bar permits an owner to pay merely a fraction of his delinquent taxes and to secure thereby a full satisfaction without there being held a public sale or without any further procedure. While it is true that in an individual case the result may be the same whether the delinquent owner pays a fraction of the originally assessed taxes directly or whether an annual tax judgment sale is had and he bids the property in for the same fraction, yet the result is not necessarily always the same. The very cogent possibility that the result might well be otherwise controls and serves as a basis for distinguishing the two types. The theory underlying the two types of statutes is different and easy of distinction, and the fact that the result may be the same in a particular case is not of importance.
2. Having decided that this statute, L. 1933, c. 414, § 1, is a statute allowing a remission or discount to a delinquent taxpayer, the next consideration is whether such statute violates Minn. Const. art. 9, § 1, which provides in part:
"Taxes shall be uniform upon the same class of subjects * * *."
It is well settled that the legislature may make such classes of taxable subjects as it chooses and that the same will not be disregarded by this court unless clearly unreasonable, fanciful, or arbitrary. Raymond v. Holm, 165 Minn. 215, 218,206 N.W. 166; State ex rel. Youngquist v. Common Sch. Dist. No. 78, 180 Minn. 44, 47, 230 N.W. 115; Reed v. Bjornson,191 Minn. 254, 253 N.W. 102.
"A classification must be reasonable, and such as is suggested by essential differences of nature, situation, or circumstances, or by characteristics which make it desirable on grounds of public policy to apply to the members of the class a particular method of taxation, and impracticable to apply thereto the ordinary methods of taxation." Mutual Benefit L. Ins. Co. v. Martin, 104 Minn. 179, 181-182, 116 N.W. 572, 573.
It is clear to us that the statute being considered (and the similar provision of L. 1931, c. 129, § 2) is violative of this provision of *Page 251
our constitution. The classification of subjects here attempted is unreasonable and fanciful. Realty owners are divided into two classes, those who pay taxes promptly and those who do not. The latter pay a smaller amount than the former. No reasonable basis founded on essential differences of nature or circumstances suggests itself for this classification. In determining the reasonableness of a classification set up by the legislature, the court will not concern itself with the question of public policy involved and the expediency of the measure. Reed v. Bjornson, 191 Minn. 254, 253 N.W. 102. Yet, in determining the reasonableness of a classification, a legitimate object for the court's consideration is the practical effect the classification is bound to have on business and organized society generally. In this connection it readily can be seen that the statute here concerned encourages and fosters tax delinquencies in the state. Taxpayers are prompted to allow taxes to become delinquent in order thereafter to be able to satisfy them in full by the payment of a fraction of the amount originally assessed. Such result is not desirable and demonstrates the unreasonableness of the classification. While several courts have determined that statutes remitting interest and penalties on delinquent taxes before the period of redemption has passed are constitutional, State ex rel. Pierce v. Coos County, 115 Or. 300, 237 P. 678; Jones v. Williams, 121 Tex. 94, 45 S.W.2d 130,79 A.L.R. 983; State ex rel. Crutcher v. Koeln, 332 Mo. 1229,61 S.W.2d 750; contra, Sanderson v. Bateman, 78 Mont. 235,253 P. 1100, such cases are based on the grounds that the interest is not payment for the use of money but rather a penalty and that, since a penalty is not part of the tax, the uniformity requirement did not apply to remissions thereof.
Of note here is the case of LeDuc v. City of Hastings,39 Minn. 110, 38 N.W. 803, where the court held unconstitutional a statute which required the issuance of an order upon the treasurer for the amount of taxes assessed on the land of those who had been in the service of the United States and honorably discharged. The court was there of the opinion that the legislature had no power to relieve property by releasing or refunding taxes after such have been levied. *Page 252
A very interesting and recent comment on the statute here under consideration is to be found in 18 Minn. L.Rev. 849, 859, where it is said:
"To the extent that the Minnesota statutes allow a remission of taxes and charges constituting a lien on land by allowing the owner of the land to redeem from the purchaser at a forfeiture sale by payment of the sum paid at the forfeiture sale plus interest, the statutory provisions seem to be constitutional. But the constitutionality of the laws permitting reductions of taxes before the period of redemption has expired is more doubtful because they in effect give exemptions to delinquent taxpayers which are not granted to those who pay their taxes promptly. Insofar as those statutes allow remissions of penalties and interest, however, most of the authorities that have considered the problem hold them valid. Although the principal statute allowing reduction of taxes before the period of redemption has expired, Minnesota Laws 1933, ch. 414, sec. 1, is a temporary enactment, applying only to payments made before December 31, 1934, it is difficult to sustain its validity on the ground that it is an emergency measure. Certainly, it is questionable whether statutes of this type do not tend to put a premium on tax delinquency rather than to encourage tax payment."
We are not here called upon to decide whether the state has any lien for taxes after giving its receipt in full under the statute herein discussed. The legislature may, if it so desires, clarify the question by declaring such payments, sales, or assignments of the said taxes to constitute payment in full and thus relieve property in this state of any possible cloud on title.
We hold here that L. 1931, c. 129, and L. 1933, c. 414, are invalid only insofar as they provide that taxes which are current or merely delinquent may be satisfied in full by the payment of a fraction of the amount originally assessed. We think the various sections of the two chapters are severable and that the reasoning which leads to the conclusion that part thereof is invalid does not apply to nor invalidate the other parts thereof on the same ground. *Page 253
Though apparently there is but little judicial authority on the precise question, we perceive that a law permitting a delinquent taxpayer to pay a portion of delinquent taxes in full satisfaction thereof might be valid under certain circumstances. If, for instance, the amount to be paid in full satisfaction of delinquent taxes was made to depend upon the value of the property, an investigation of the owner's ability to pay, and perhaps other considerations, such a law might be sustained despite the fact that the period of redemption had not expired. There would then be no unreasonable classification, and the evil of the case at bar would be avoided. There would and could be no voluntary delinquencies. The taxing authorities under such a law as is suggested should endeavor to collect by all legal and proper means the amounts due in full; but, having exhausted such means, it follows that such officials would not be forbidden to collect any amount whatsoever simply because they could not collect all, as long as delinquencies are not deliberately and effectively fostered and encouraged.
Affirmed. |
846 F. Supp. 354 (1994)
FORT WASHINGTON RESOURCES, INC., Plaintiff,
v.
Robert H. TANNEN, PH.D., Defendant/counterclaimant,
v.
Kirk PENDLETON, Counterclaim defendant.
and
Fort Washington Resources, Inc., Plaintiff/counterclaim defendant.
No. 93-CV-2415.
United States District Court, E.D. Pennsylvania.
March 9, 1994.
*355 *356 Allan C. Preziosi, Lightman & Associates, Philadelphia, PA, for Fort Washington Resources Inc. and Kirk Pendleton.
Laurence I. Tomar, Elizabeth A. Hunter, Law Office of Laurence I. Tomar, Yardley, PA, for Robert H. Tannen.
Memorandum & Order
JOYNER, District Judge.
Presently before the Court are the crossmotions for summary judgment of the parties pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiff, Fort Washington Resources, Inc., commenced this action in May, 1993 against Dr. Tannen seeking recovery of damages for breach of contract, negligent performance of professional services, intentional interference with prospective business advantage and conversion. Defendant then filed a counterclaim against both plaintiff and Kirk Pendleton, the Chief Executive Officer of plaintiff, alleging claims of fraudulent misrepresentation, negligent misrepresentation, libel and slander and breach of contract. Defendant now seeks summary judgment against plaintiff on all counts of plaintiffs complaint. Additionally, plaintiff and Kirk Pendleton now seek partial summary judgment with respect to all of defendant's counterclaims as well as plaintiffs claims of breach of contract and conversion.
Facts
The pertinent facts to this case are as follows. Plaintiff is a Pennsylvania corporation engaged in the funding and development of drug called Flausterone, which may have *357 certain applications for the treatment of diabetes, cancer, cholesterol and certain skin diseases such as psoriasis. Plaintiff was granted a license to develop the drug and bring it to market pursuant to a licensing agreement between it and Research Corporation Technologies (referred to as "RCT"). One of the terms of the licensing agreement called for plaintiff to submit a regulatory document known as an Investigational New Drug application (referred to as "IND") to the United States Food and Drug Administration ("FDA") on or before April 15, 1993. The IND was the first of many steps required for marketing the drug, and if approved by the FDA, it would allow plaintiff to begin testing the drug on human beings in order to further develop it.
On or about June 4, 1992, defendant and plaintiff entered into a consulting agreement whereby defendant was hired to aid in the preparation and filing of the IND.[1] During the course of defendant's employment, he submitted several proposed time and event schedules indicating what work was to be completed and when he estimated the work would be done. Included in these schedules were the dates defendant estimated the IND would be filed by. For instance, one such schedule indicated the IND would be filed in December 1992, another revised schedule indicated it would be filed in March 1993. It appears that in March 1993, plaintiff requested that defendant attend a meeting and bring all his files containing his work on the IND with him. Plaintiff alleges that this meeting was prompted by defendant's latest revised schedule which predicted that the IND would not be filed until August or September 1993. Defendant refused to attend the meeting and to turn over his files to plaintiff. Thereafter, on April 2, 1993, plaintiff terminated defendant. Additionally, the IND was not filed by. the April 15 deadline.
Standard
In considering a motion for summary judgment, the court must consider whether the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, show there is no genuine issue as to any material fact, and whether the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). The court is required to determine whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). In making this determination, all reasonable inferences must be drawn in favor of the nonmoving party. Anderson, 477 U.S. at 256, 106 S.Ct. at 2512. While the movant bears the initial burden of demonstrating an absence of genuine issues of material fact, the nonmovant must then establish the existence of each element of its case. J.F. Feeser, Inc., v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3rd Cir.1990), cert. denied, 499 U.S. 921, 111 S. Ct. 1313, 113 L. Ed. 2d 246 (1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986)).
In cases where the parties have filed crossmotions for summary judgment, each side essentially contends that no issue of material fact exists from its perspective. United States v. Hall, 730 F. Supp. 646, 648 (M.D.Pa. 1990). The court must, therefore, consider each motion for summary judgment separately. Id. Nor do the standards under which the court grants or denies summary judgment change because cross-motions are filed. Id. Each party still bears the initial burden of establishing a lack of genuine issue of material fact. Id. Such contradictory claims do not necessarily guarantee that if one party's motion is rejected, the other party's motion must be granted. See id. (quoting Rains v. Cascade Indus., Inc., 402 F.2d 241, 245 (3d Cir.1968)).
Discussion
For purposes of ease, we will approach the discussion of the motions by the various claims alleged by the parties.
*358 I. Breach of contract
A. Plaintiffs claim for breach of contract
Plaintiff has sued defendant for breach of contract alleging that defendant failed to abide by the terms of the consultancy agreement by failing to perform his obligations thereunder. In its complaint, plaintiff states "Defendant entered into a certain contract dated June 4, 1992 with [plaintiff] as evidenced by Exhibit `A'." Complaint, para. 33. Exhibit A is a letter dated June 4, 1992 from Mr. Pendleton to defendant and reads as follows:
By this letter I confirm the Fort Washington Resources, Inc. (FWR) offer for you to consult for a six-month period of time in the area of IND preparation and filing. Your compensation for this work will be $50,000 payable monthly in six equal payments of $8,333.33. In addition you will be reimbursed for all approved out-of-pocket expenses.
Should the IND filing be successful and we mutually agree to continue a relationship, it is our intent to offer you a position as an employee of FWR on terms and conditions satisfactory to both parties. One of these conditions would be your participation in a stock option program which will be presented for approval in the future.
Attached is a sheet given to me showing your participation in the shares credited to Temple University. Although the number of shares is not correct, as we have split the stock, I believe your percentage of the Temple shares is. I will however confirm this.
Both plaintiff and defendant seek summary judgment on plaintiffs breach of contract claim. Defendant argues that summary judgment should be granted because as evidenced by the June 4 letter, there was no obligation imposed on defendant to have the IND filed by April 15, 1993, and therefore, plaintiff cannot establish any breach. Defendant essentially argues that the June 4 letter constitutes the contract between the parties, and because it is unambiguous, the Court must enforce the terms as they are written. Defendant further argues that there has been no damage by any alleged breach. Finally, defendant argues that summary judgment is warranted because it is undisputed that plaintiff made it impossible for defendant to perform his duties because it failed to adequately fund the project.
On the other hand, plaintiff argues that it is entitled to summary judgment on its breach of contract claim. Plaintiff argues that it has established the essential elements of its claim; that a contract existed between the parties, that plaintiff paid defendant for his services, but that defendant failed to provide the product plaintiff contracted for the IND application. In so stating, plaintiff argues that the contract consists not only of the June 4 letter, but that it is also evidenced by a letter from defendant dated March 1991, oral discussions between Mr. Pendleton and defendant, and defendant's time and event schedules. Plaintiff argues that defendant had many contractual duties as is evidenced from the contract and they were not performed by defendant as is established by his own testimony. Plaintiff further argues that the contract does not contain a term regarding its obligation to fund the project, and therefore defendant's defense of impossibility is without merit. Plaintiff also contends that at all times there was sufficient money to complete the IND filing.
Where the written agreement purports to be the entire agreement between the parties, and the terms are unambiguous, then it must be enforced as written by the parties. Steuart v. McChesney, 498 Pa. 45, 48-49, 444 A.2d 659, 661 (1982). However, determining whether a written agreement is the entire agreement between the parties is a question of law for the court. Seidman v. American Express Co., 523 F. Supp. 1107, 1109 (E.D.Pa. 1981). Where it is shown that no single writing embodies the entire agreement between the parties, courts allow the introduction of parol evidence to add to the written agreement. Id. Likewise, it is for the factfinder to determine the contents of mixed oral and written contracts, or oral contracts alone, when there is conflicting evidence. McCormack v. Jermyn, 351 Pa. 161, 164-65, 40 A.2d 477, 479 (1945) (it is job of jury to determine terms of disputed oral contract and understanding of parties regarding those *359 terms); Peugeot Motors v. Stout, 310 Pa.Super. 412, 456 A.2d 1002, 1005 (1983).
It is clear that neither party is entitled to summary judgment on plaintiffs breach of contract claim because the record is rife with issues of material fact which must be determined by the factfinder. In this case, there is obviously a dispute over what constitutes the agreement itself. First, both parties contradict themselves as to whether or not the confirmation letter constitutes the contract between the parties. While defendant argues for purposes of the motion that it does, he states in his answer, deposition testimony and answers to interrogatories that the parties did not enter into a written agreement, and that the agreement was oral and based upon promises made during negotiations and during his [email protected]. See defendant's answers to first set of interrogatories, nos. 1 and 3, defendant's deposition pp. 201-02, defendant's answer to complaint §§ 9, 33. Likewise, plaintiff argues that the contract consists of both oral promises and the confirmation letter for purposes of the motion, however, it appears to suggest that the confirmation letter alone constitutes the entire contract in both the complaint and the answer to defendant's counterclaim. For instance, in response to defendant's seventh affirmative defense that the contract was not reduced to writing and violates the statute of frauds, plaintiff states that the terms of the contract are adequately evidenced by the confirmation letter. See also complaint, §§ 9, 33.
Second, a thorough reading of the confirmation letter suggests that it does not embody the entire agreement between the parties. The language of the letter does not state that it is a contract, rather, it states that plaintiff is confirming its offer to defendant. Further, the letter merely indicates what some of the terms of the offer are. However, the letter does not clarify what defendant's exact duties are, thus suggesting that at least part of the employment contract was oral or else embodied in another document.
Judging from the above, the confirmation letter cannot consist of the entire agreement between the parties. However, both parties admit that a contract exists, and that it was based in part, on oral promises. What the terms of that oral contract were is a question of fact for the factfinder. Furthermore, the parties dispute that defendant was obligated to file the IND by the April 15 deadline. As such, it is for the factfinder to determine whether this was a term of the contract. For these reasons, defendant's argument that he is entitled to summary judgment on plaintiffs breach of contract claim because the contract is clear and unambiguous fails.
Likewise, plaintiffs argument that it is entitled to summary judgment on its breach of contract claim also fails. Plaintiff states that defendant failed to abide by the terms of the contract and failed to provide it with the completed IND application. In making its argument, plaintiff refers to the schedules submitted by defendant and notes that many of the events that defendant refers to in those schedules were not performed, and as such, he breached the contract. Defendant disputes that he did not comply with the agreement, and while he admits in his deposition that many of the steps were not performed, he also provides evidence that some of the steps were. However, given that there is an issue as to what the terms of the contract were, it becomes an issue for the factfinder as to whether defendant was bound to follow the steps in his schedules as conditions of his contract, and whether he was obligated to provide a completed IND application to plaintiff. Indeed, the confirmation letter only states that defendant is being hired to consult in the area of IND preparation and filing. Because we hold that the letter does not embody the entire agreement, it is up to the factfinder to determine what defendant's duties and obligations were, and whether he breached them by not submitting a completed IND and not following his time and event schedules.
Defendant's other two arguments in support of his motion for summary judgment also fail. First, defendant claims plaintiff has not been damaged by his alleged breach. However, plaintiff disputes this and provides evidence that it was damaged by paying defendant over $86,000, by paying other persons, by incurring delay costs associated with *360 the development of the drug, costs with filing the IND and costs associated with replacement of defendant's services and yet never receiving the IND. In finding that an issue of fact exists, we need only reach defendant's claim that he earned the salary paid to him and therefore, plaintiff was not damaged. As it is disputed whether or not defendant complied with the terms of his employment contract, obviously, it becomes disputed whether or not defendant actually earned the $86,000. As such, defendant's argument fails.
Finally defendant claims that it is undisputed that plaintiff made it impossible for him to perform due to lack of funding of the project. Defendant presents voluminous evidence through his deposition, and the depositions of Abe Bavley and Arthur Schwartz, two scientists affiliated with the development of the drug, to show that Kirk Pendleton repeatedly delayed payments, suggested cost-cutting measures in conjunction with the filing of the IND, and that plaintiff ran into financial difficulties in the beginning of 1993. However, plaintiff presents evidence which shows that at all times it had the funds available (approximately between $200,000 and $500,000) in order to fund the project. As such, it becomes a question of fact as to whether defendant's defense of impossibility has any merit.
Thus, for all the above reasons, neither party is entitled to summary judgment of plaintiffs breach of contract claim.
B. Defendant's counterclaim for breach of contract
Defendant has filed a counterclaim against Mr. Pendleton and plaintiff alleging that they breached the consultancy agreement in the following manner: 1) they failed to reimburse defendant for expenses incurred, 2) they failed to adequately fund the IND, 3) they failed to retain defendant through the completion of the IND process, and 4) they failed to hire defendant as an employee of plaintiff.
Plaintiff and Kirk Pendleton now make several arguments to support their claim that they are entitled to summary judgment on defendant's breach of contract counterclaim. They first argue that they had the right to refuse to approve defendant's expenses pursuant to the terms of the contract, therefore, there is no breach of contract. Second, they argue that there is no evidence that adequate funding was a condition of the contract, and even if it was, there is no evidence that there were not adequate funds. Third, they argue that even if funding was a term of the contract, there is no evidence that defendant was damaged by any alleged breach because there was no guarantee to defendant of future employment after the six month period. Finally, they argue that there can be no cause of action against Mr. Pendleton because he was acting as an employee of the corporation, and as such, cannot be personally liable for the contract.
While defendant refutes all of these arguments, we only need to reach the argument surrounding the expenses because we find an issue of fact exists. Defendant provides an affidavit stating that all of his expenses were pre-approved, and that plaintiff's failure to pay his last phone bill constitutes a breach of the contract. As stated previously, the confirmation letter states that all approved expenses would be paid. Further, plaintiff provides an affidavit stating that defendant's final telephone bill was not approved. Thus, while it is undisputed that plaintiff failed to pay defendant's last phone bill, it is disputed as to whether that bill was pre-approved. As such, we must deny plaintiffs motion for summary judgment because there exists a dispute about the expenses. However, because Kirk Pendleton faces liability separate from plaintiff, we still need to consider the argument pertaining to him.
Defendant argues that he can state a claim against Mr. Pendleton for breach of contract because Mr. Pendleton was acting in his individual capacity and not as an employee of plaintiff, and as such, this Court should pierce the corporate veil so as to impose liability on Mr. Pendleton. Although defendant asserts that he has filed a motion to amend his counterclaims to add a claim for piercing the corporate veil, we recently denied that motion on the ground that defendant's claim failed to state a claim for which relief could be granted and therefore was meritless. See Fort Washington Resources, *361 Inc. v. Tannen, No. 93-CV-2415, 1994 WL 57077 (E.D.Pa. Feb. 23, 1994).
In the absence of a claim that the corporate veil should be pierced, a corporate officer cannot be held individually liable for breaches of contract by the corporation. Pell v. Weinstein, 759 F. Supp. 1107, 1115-16 (M.D.Pa.1991), aff'd, 961 F.2d 1568 (3rd Cir. 1992). This is because the corporate officer is acting within his scope of authority and on behalf of the corporation when he enters into the contract, thus, the contract itself is between the party and the "legal entity of the artificial being created by the charter." Id. 759 F.Supp. at 1115-16 (quoting Bala Corp. v. McGlinn, 295 Pa. 74, 79, 144 A. 823, 824 (1929)); Daniel Adams Assoc. v. Rimbach Publishing, Inc., 360 Pa.Super. 72, 79-80, 519 A.2d 997, 1000-01 (1987), allocatur denied, 517 Pa. 597, 535 A.2d 1056 (1987). Given that we have already found defendant's claim for piercing the corporate veil to be without merit, there can be no breach of contract claim against Mr. Pendleton for personal liability. See Pell, 759 F.Supp. at 1116 (holding that breach of contract claim against corporate officer was subject to dismissal because there were no allegations of piercing the corporate veil). As such, Mr. Pendleton is entitled to summary judgment on the breach of contract claim against him.
C. Plaintiffs claim for conversion
Plaintiff has filed a claim against defendant for conversion, alleging that "Defendant was responsible for preparing, compiling and contracting for the preparation of certain documentation necessary to the IND filing" and that although plaintiff repeatedly requested that defendant turn over the documentation to plaintiff, defendant has refused to do so. Complaint, §§ 49-51.
Both plaintiff and defendant now seek summary judgment on the conversion claim. Defendant argues that he is entitled to summary judgment because plaintiff has failed to establish the essential elements for conversion. Defendant claims that there is no proof that plaintiff was the owner of the documentation; rather, the documentation belonged to Dr. Schwartz who is a co-inventor of the drug and an employee of Temple University, and the various sub-contractors whom defendant contracted with for work on the IND. Defendant also argues that because plaintiff did not attempt to obtain the documentation from the subcontractors, he was not under any obligation to provide the documentation to plaintiff. He also argues that there is no proof that he exercised exclusive dominion and control over this material. Finally, he asserts that he has now relinquished all of the documentation but the letters and correspondence from the various subcontractors. Plaintiff, on the other hand, asserts it has proven the elements of conversion, and as such, is entitled to summary judgment. For the following reasons, we agree with plaintiff.
Conversion is an act by which another deprives one of his right of property in, or possession of, or use of a chattel, without lawful justification and without the owner's consent. Norriton East Realty Corp. v. Central-Penn Nat'l Bank, 435 Pa. 57, 60, 254 A.2d 637, 638 (1969); Eisenhauer v. Clock Towers Assoc., 399 Pa.Super. 238, 582 A.2d 33, 36 (1990) (citations omitted). There are several ways in which conversion can be committed: 1) acquiring possession of the chattel with the intent to assert a right to it which is adverse to the owner; 2) transferring the chattel and thereby depriving the owner of control; 3) unreasonably withholding possession of the chattel from one who has the right to it; and 4) misusing or seriously damaging the chattel in defiance of the owner's rights. Norriton, 435 Pa. 57, 60, 254 A.2d 637, 638 (1969) (quoting Prosser, Torts § 15 (2d ed. 1955)). Where one lawfully comes into possession of the chattel, a conversion occurs if a demand for the chattel is made by the rightful owner and the other party refuses to deliver. Norriton, 435 Pa. at 61, 254 [email protected]. Additionally, defendant need not have a conscious intent of wrongdoing to be liable for conversion, as long as he has exercised wrongful control over the goods. Id. at 60, 254 [email protected]. Finally, the person alleging conversion need not be the actual owner of the chattel as long as he was entitled to be in possession or was in possession of the chattel at the time of the *362 conversion. Eisenhauer, 399 Pa.Super. 238, 582 [email protected].
From the evidence, it is clear that the elements of conversion have been met, and that there is no genuine issue of material fact. Plaintiff submits a memo from Kirk Pendleton to defendant dated March 22, 1993 where Kirk Pendleton requests defendant to bring his entire "FWR file including your work to date on the IND" to a meeting the following day. It is undisputed that defendant failed to attend the meeting, and that he failed to turn over his files. Deposition of defendant, pp. 83-4, 97. Defendant asserts in his deposition and an affidavit that he was prohibited by Dr. Schwartz to turn over the files when the request was first made. He also provides a letter from Dr. Schwartz which affirms this. Defendant further states in a letter to plaintiff dated April 16, 1993, where he confirms his termination, that plaintiff had no legal right to his files. Defendant testified that he was advised of this by his legal counsel at the time. However, there is also a letter dated May 28, 1993 in which Dr. Schwartz retracts his original prohibition stating that he and Temple University have no objection to defendant turning over the files. Both defendant and plaintiff also provide affidavits stating that defendant eventually turned over the files pertaining to Dr. Schwartz, but that defendant has not turned over the files pertaining to the subcontractors.
Thus, the facts in this case are undisputed. Defendant failed to turn over his files when originally requested, he has now turned over a portion of the files, however, he has retained another portion of the files pertaining to the subcontractors. It is clear that defendant has unlawfully exerted control over the files and in so doing, has deprived plaintiff of the use of the files.
Defendant's reasons for retaining the files are of no matter. First, the tort of conversion is a strict liability offense. United States v. New Holland Sales Stables, 619 F. Supp. 1162, 1165 (E.D.Pa.1985). Second, it does not matter that plaintiff could have obtained the various documents from each of the subcontractors. Defendant admits in his deposition that he contracted with the subcontractors on plaintiff's behalf and that he was employed by plaintiff as a consultant. Defendant's deposition, pp. 81-83, 98. As such, the files prepared by defendant in his scope of employment were the property of plaintiff, and defendant had no property right in them. See Parents Against Abuse v. Williamsport, 140 Pa.Cmwlth. 559, 594 A.2d 796, 804 (1991) (school had right to contract that files containing work product of its employee, a school psychologist, would be turned over to parents of children he interviewed, and that employee had no property right in his files). Third, even though defendant has now relinquished some of his files, that is not a defense to conversion.[2]See Prosser & Keeton, Torts § 15, at 106 (5th ed. 1984). As such, the undisputed facts clearly show that defendant is liable for conversion, and that plaintiff is entitled to summary judgment in its favor on Count IV of its complaint.
D. Negligent performance of professional services
Plaintiff has also asserted a claim of negligent performance of professional services against defendant for failing to do the following: adequately perform his duties, keep plaintiff advised of his activities, provide plaintiff with his work product and advise plaintiff that he could not meet the required deadlines for the IND. Defendant now seeks summary judgment on this claim on the basis that it is undisputed that defendant exercised reasonable care in the performance of the duties for which he contracted.
A professional is bound to use reasonable care in the exercise of his professional duties for which he contracts. Bloomsburg Mill, Inc. v. Sordoni Constr. *363 Co., Inc., 401 Pa. 358, 164 A.2d 201 (1960); Robert Wooler Co. v. Fidelity Bank, 330 Pa.Super. 523, 531, 479 A.2d 1027, 1031 (1984). As with the claims for breach of contract, it is disputed that defendant exercised his duties with reasonable care. Defendant presents evidence that both Abe Bavley and Arthur Schwartz testified that defendant performed his duties as he was supposed to, see deposition of Abe Bavley, p. 49, and that he did a very good job and was hard working, see deposition of Arthur Schwartz, p. 32. Plaintiff, however, presents a report of its expert witness, Hanni Ellis, who replaced defendant after he was fired, stating that defendant did not have an understanding of how to prepare an IND, nor the knowledge or experience to prepare an IND. She further states that "he did not begin even the most rudimentary tasks needed to prepare an IND." See report of Hanni Ellis. Defendant also submits an affidavit which refutes the opinions contained in Ms. Ellis' report.
Moreover, because it is disputed as to what defendant's exact duties were, and what deadlines he was supposed to meet, clearly there are questions of fact as to whether defendant performed these duties with reasonable care. As such, defendant's motion for summary judgment on the negligent performance claim is without merit.
E. Intentional interference with prospective business advantage
Plaintiff has also stated a claim against defendant for intentional interference with prospective business advantage on the basis that defendant knew plaintiff had a license with RCT regarding the drug, and that defendant's actions in failing to timely perform his obligations and intentionally misleading plaintiff about the IND schedule were deliberately done so as to disrupt and harm plaintiffs relationship with RCT. Defendant now seeks summary judgment on the basis that plaintiffs relationship with RCT has not been damaged, and there is no evidence that defendant intentionally misled plaintiff about the IND schedule.
In order to establish a claim for intentional interference with prospective business advantage, the following elements must be shown. First, there must be a prospective contractual relationship. Second, there must be an intent to harm plaintiff by preventing the relationship from occurring. Third, there can be no privilege or justification by defendant. Finally, there must be actual damage from defendant's conduct. Zions First Nat'l Bank v. United Health Club, 704 F.2d 120, 125 (3rd Cir.1983) (citing Restatement of Torts (Second) § 766B (1979)); Vintage Homes, Inc. v. Levin, 382 Pa.Super. 146, 554 A.2d 989, 994 (1989), allocatur denied, 524 Pa. 622, 571 A.2d 384 (1989) (citations omitted).
We agree that there is no evidence to support plaintiff's claim, and therefore, hold that defendant is entitled to summary judgment on this claim. The undisputed evidence shows that Kirk Pendleton admitted in his deposition that RCT gave plaintiff two extension dates in which to file the IND. The first date was April 15, 1993. The second date was January 1, 1994. Mr. Pendleton states that the second extension was granted because the IND was not ready to be filed by April 15, 1993. Deposition of Kirk Pendleton, pp. 38, 41-42. Further, although there were problems because plaintiff allegedly did not pay Temple University some royalty payments which were due under the licensing agreement between RCT and plaintiff, Mr. Pendleton admits that RCT never threatened to terminate the licensing agreement as a result, and eventually the problem was resolved and all the parties were happy. Id. at 100-105.
Based on the above, there is no evidence that any prospective relationship with RCT was damaged.[3] Even viewing the evidence in a light most favorable to plaintiff, and assuming that defendant was the reason why *364 the IND was not filed on time, plaintiff has failed to provide any evidence of damage. Rather, the evidence indicates that plaintiffs relationship with RCT has not been threatened in any manner, especially because RCT granted plaintiff another extension even after it missed the first deadline.
Plaintiff attempts to defeat defendant's motion by stating that its complaint is not limited to its relationship with RCT but with various contractors in the field with whom its prospective relationships may have been damaged as a result of defendant's actions. It further argues that it intends to introduce evidence that its reputation and ability to obtain additional work from these contractors have been [email protected].
These arguments are insufficient to avoid a motion for summary judgment however. First, nowhere in plaintiffs complaint is it stated that plaintiffs future relationships with outside contractors were affected by defendant's actions. The complaint clearly states that plaintiff "believes and therefore avers that Defendant's actions were taken with deliberate intent to disrupt and harm [plaintiffs] relationship with RCT" and that defendant's conduct "[has] adversely affected [plaintiffs] relationship with its licensor, RCT." Complaint, §§ 44, 45. Plaintiff cannot now expand its claim beyond its pleadings simply to avoid a motion for summary judgment. See Ige v. City of Philadelphia School District, 647 F. Supp. 641, 644 (E.D.Pa.1986) (court will not review allegations of § 1983 claim in response to a motion for summary judgment where such claim was never plead in the complaint). Further, as previously stated, defendant presents undisputed evidence regarding the lack of damage. Plaintiffs claim that it intends to show evidence of such damage at trial does not survive a motion for summary judgment. See Fed.R.Civ.P. 56(e). As such, summary judgment on Count III of plaintiffs complaint is granted in defendant's favor.
F. Defendant's claim of libel and slander
Defendant alleges claims of libel and slander against plaintiff and Kirk Pendleton, stating that they have published and communicated to others that defendant wrongfully converted plaintiffs property to his own use, and that the IND was not filed because of defendant's professional inaptitude. Both plaintiff and Kirk Pendleton now seek summary judgment on the basis that defendant has failed to identify any specific statement allegedly made by them in order to show defamation. Second, they argue that any allegations of incompetence and that defendant committed conversion are covered by a qualified business privilege. Finally, they argue that the alleged statement regarding conversion is an opinion and therefore not defamatory.
On the contrary, defendant asserts that he has sufficiently identified the defamatory statements. He also asserts that there is no business privilege in this situation because the statements were communicated to other persons than those merely affiliated with the project. He further argues that the statements were not true and were maliciously made. Finally, he states that the statement that one is a thief is actionable per se.
A defamatory statement under Pennsylvania law is one that tends to harm another's reputation by lowering him in the eyes of the community or by deterring third persons from dealing or associating with him. U.S. Healthcare v. Blue Cross, 898 F.2d 914, 923 (3rd Cir.1990), cert. denied, 498 U.S. 816, 111 S. Ct. 58, 112 L. Ed. 2d 33 (1990) (citations omitted). Whether or not a statement has defamatory meaning is a preliminary question for the court. Id.; Burns v. Supermarkets Gen. Corp., 615 F. Supp. 154, 157 (E.D.Pa.1985). If the statement is capable of defamatory meaning, then it is for the jury to decide whether the reader or listener understood it to be defamatory. U.S. Healthcare, 898 F.2d at 923; Burns, 615 F.Supp. at 157. However, the defendant can defend against allegations of defamation by proving the truth of the statement, or by asserting that the statement was privileged. Id. Whether or not the privilege applies is a question of law. Krochalis v. Insurance Co., 629 F. Supp. 1360, 1367 (E.D.Pa.1985); Medico v. Time, Inc., 509 F. Supp. 268, 272 (E.D.Pa. 1980), cert. denied, 454 U.S. 836, 102 S. Ct. 139, 70 L. Ed. 2d 116 (1981). Once defendant raises the defense of privilege, it is for the *365 plaintiff to show that the privilege has been abused. U.S. Healthcare, 898 [email protected]. Whether or not the privilege has been abused is a question of fact for the jury. Krochalis, 629 F.Supp. at 1367.
Additionally, an opinion can be defamatory if there are certain undisclosed facts justifying the opinion that are understood to be defamatory. Habe v. Fort Cherry School Dist., 786 F. Supp. 1216, 1219 (W.D.Pa.1992). As was explained by the Third Circuit:
Although there may be no such thing as a false opinion, an opinion which is unfounded reveals its lack of merit when the opinion-holder discloses the factual basis for the idea. If the disclosed facts are true and the opinion is defamatory, a listener may choose to accept or reject it on the basis of an independent evaluation of the facts. However, if an opinion is stated in a manner that implies that it draws upon unstated facts for its basis, the listener is unable to make an evaluation of the soundness of the opinion. In such circumstances, if the underlying facts are false, the Constitution does not protect the opinion.
Burns v. Supermarkets Gen. Corp., 615 F. Supp. 154, 158 (E.D.Pa.1985) (quoting Redco Corp. v. CBS, Inc., 758 F.2d 970, 972 (3rd Cir.1985), cert. denied, 474 U.S. 843, 106 S. Ct. 131, 88 L. Ed. 2d 107 (1985)).
In the present case, Abe Bavley testified that at one point, Kirk Pendleton made a statement to him and Dr. Schwartz which implied that defendant had not performed on the project as he thought would be proper under the circumstances. Deposition of Abe Bavley, pp. 113-14. Defendant also testified that Kirk Pendleton told various people including certain contractors, and parties at RCT and Temple University that he was incompetent in his performance and that he took documents for his own use. Defendant's deposition, pp. 204-07. He also claims that someone from plaintiff made the same statements to a reporter from the Philadelphia Business Journal, which featured an article about this lawsuit. Id. at 204-05. There is also a letter from Kirk Pendleton to both Dr. Schwartz and Dr. Bavley stating that defendant was terminated because of failing to attend a critical meeting and for "what may amount to theft of [plaintiff's] critical documents." Both Dr. Schwartz and Dr. Bavley then submit affidavits which state the letter is the basis for their claims that Kirk Pendleton stated defendant was incompetent, and that defendant stole documents. Another affidavit submitted by Marvin Lewbart, a contractor with whom defendant dealt, also states that Kirk Pendleton informed him why plaintiff was having problems getting the IND filed and that defendant's name was used in connection with these difficulties. He further states that Kirk Pendleton told him that defendant had retained plaintiffs documents. In an affidavit from Kirk Pendleton, he admits to advising shareholders that defendant was terminated for failing to meet his deadlines. However, he denies that anyone from plaintiff ever spoke to a reporter from the Philadelphia Business Journal. Finally, in defendant's answers to interrogatories he states that Kirk Pendleton defamed him by stating in conversations to six persons that he converted plaintiffs property to his own use.
From the evidence, it is clear that we are dealing with two alleged defamatory statements, 1) that defendant was incompetent and 2) that defendant converted documents. We need not deal with the statement concerning the conversion of the documents, however, because we have found that plaintiff is entitled to summary judgment on this claim, and as such, truth is an absolute defense to such statements. See Krochalis v. Insurance Co., 629 F. Supp. 1360, 1367 (E.D.Pa.1985). However, the issue remains as to whether plaintiff and Kirk Pendleton defamed defendant by stating to others that he was incompetent, or some statement that had the implication that he was incompetent.[4]
*366 We must first determine whether the statements at issue have any defamatory meaning. Given the definition of defamatory meaning, we hold that the alleged statements could be defamatory if others were told that defendant was performing incompetently when in fact he was not. If in fact defendant was actually performing well, (as Abe Bavley and Arthur Schwartz both testify) but others in the field were told that defendant was not performing well, then it is possible that defendant's reputation in this field and his chances for another job could also be damaged. See e.g. Frymire v. Painewebber, Inc., 87 B.R. 856, 860 (Bankr.E.D.Pa.1988) (holding that employer's statements that employee did not produce satisfactorily on the job could be construed as being defamatory).[5]
However, plaintiff and Kirk Pendleton have raised the defense of business privilege, and it is clear that when an employer makes remarks to its employees with respect to matters of common concern relative to the operation of the business, then those remarks are covered by a qualified privilege. Krochalis v. Insurance Co., 629 F. Supp. 1360, 1367 (E.D.Pa.1985). See also Burns, 615 F.Supp. at 158 (stating conditional privilege attached where "some interest of the person to whom the matter is published or some other third person is involved."). If, in fact, Kirk Pendleton told persons affiliated with the project why defendant was terminated, then that would be covered by this privilege.
In the present case, however, defendant alleges that Kirk Pendleton abused his privilege by excessive publication of the statement, in other words, stating the remark to others who were outside the privilege. Indeed, defendant states in his deposition that the remark was made to Gary Munsinger (an employee at RCT), Hanni Ellis, Antonio Gonzales (a representative at Temple University), as well as an attorney at Temple University. Further, Kirk Pendleton admits to making remarks to various shareholders. Whether these persons were within the privilege is a question for the factfinder. See Krochalis, 629 F.Supp. at 1367 (summary judgment denied because it was a jury question as to whether certain employees who heard the remark came within the realm of the privilege).[6] As such, plaintiffs motion for summary judgment on the libel and slander claim fails.
G. Fraudulent and negligent misrepresentation
Plaintiff and Kirk Pendleton seek summary judgment on defendant's claims of fraudulent and negligent misrepresentation. However, during the pendency of this motion, we granted defendant leave to amend his counterclaims in order to add a paragraph to both of these claims. The paragraph essentially alleges an additional misrepresentation by plaintiff and Kirk Pendleton. As a result, this part of plaintiff and Kirk Pendleton's motion has been rendered moot and therefore, their motion shall be denied. However, we note that this decision does not preclude them from filing an additional dispositive motion with respect to these two claims once defendant has filed the amended counterclaim, should they feel it is warranted.
Conclusion
In sum, there exists genuine issues of material fact as to whether there has been a breach of contract by both parties, and as such, both plaintiffs and defendant's motions are denied with respect to those claims. However, because Kirk Pendleton cannot be *367 held personally liable for a breach of contract by the corporation, he is entitled to summary judgment on defendant's claim. There are also genuine issues with respect to the claims for negligent performance of professional services and libel and slander.
With regard to plaintiffs claim for conversion, there is no genuine issue of material fact, and summary judgment is granted in its favor. Likewise, there is no genuine issue with respect to plaintiffs claim for intentional interference with prospective business advantage, and summary judgment is entered in defendant's favor. Finally, the claims of summary judgment by plaintiff and Kirk Pendleton with regard to the negligent and fraudulent misrepresentation claims are denied as moot. An appropriate Order follows.
ORDER
AND NOW, this 9th day of March, 1994, upon consideration of the cross-motions of the parties for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, and all responses thereto, it is hereby ORDERED:
1) that defendant's motion for summary judgment is GRANTED IN PART with respect to Count III of plaintiffs complaint (intentional interference with prospective business advantage); and
2) that defendant's motion for summary judgment is DENIED IN PART with respect to all other counts of the complaint;
3) that plaintiff and Kirk Pendleton's motion for summary judgment is GRANTED IN PART with respect to Count IV (conversion) of the complaint; and
4) that Kirk Pendleton's motion for summary judgment is GRANTED IN PART with respect to Count IV of defendant's counterclaim (breach of contract);
5) that plaintiff and Kirk Pendleton's motion for summary judgment is DENIED AS MOOT with respect to Counts I and II of defendant's counterclaim (fraudulent and negligent misrepresentation); and
6) that plaintiff and Kirk Pendleton's motion for summary judgment is DENIED IN PART with respect to the other outstanding claims.
7) It is further ORDERED that Kirk Pendleton and plaintiff shall have thirty (30) days from the date that defendant files his amended counterclaim in which to file any dispositive motions pertaining to the claims of negligent and fraudulent misrepresentation.
NOTES
[1] Apparently, defendant was actually in charge of gathering and conducting various studies, hiring subcontractors for further research and then putting everything together in the written form of the IND application.
[2] Nor does it matter that defendant may have originally thought the files were not the property of plaintiff. Defendant was given permission to relinquish the files of Dr. Schwartz sometime in May, and it appears that defendant did not give that part of the files to plaintiff until several months later. Thus, even while his actions may have been excusable at first, his acts of delay and ultimately retaining the portion of the files regarding the sub-contractors constitute a wrongful withholding of plaintiff's property.
[3] We question the applicability of plaintiff's cause of action because it had already entered into a contractual relationship with RCT. As previously stated, it must be shown that there is a prospective contractual relationship. However, defendant has failed to raise this point in his motion, and given our holding, the argument is moot anyhow. Nonetheless, for purposes of this motion, we are assuming that plaintiff was referring to prospective future relationships with RCT, although it is not so stated in the complaint.
[4] Although we don't have the exact statements made by plaintiff, and to whom they were made, it is undisputed that Kirk Pendleton at least told the shareholders and Drs. Schwartz and Bavley that defendant was fired for not adequately performing (or words to that effect). For this reason, we reject plaintiff and Kirk Pendleton's argument that defendant's claim fails for lack of specificity.
[5] Additionally, we note that while plaintiff has not raised the claim that this particular statement was an opinion, it would still be actionable assuming there were undisclosed facts surrounding the statement.
[6] In considering the issue of excessive publication, we do not consider defendant's allegation regarding the reporter from the Philadelphia Business Journal because defendant has not presented any evidence to support his claim. Plaintiff provides an affidavit stating that nobody from plaintiff spoke to a reporter, and this evidence is unrefuted. Simply because the article exists is not sufficient evidence to support defendant's claim. Nonetheless, there still exists an issue of material fact with respect to the other persons spoken to.
|
In the
United States Court of Appeals
For the Seventh Circuit
No. 99-3307
United States of America,
Plaintiff-Appellee,
v.
Louis J. Wesela,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 99-CR-24--Rudolph T. Randa, Judge.
Argued January 18, 2000--Decided August 3, 2000
Before Easterbrook, Kanne, and Diane P. Wood, Circuit
Judges.
Diane P. Wood, Circuit Judge.
I
At approximately 1:15 a.m. on Tuesday, January
26, 1999, the Milwaukee Police Department
received a 911 call from Mrs. Elizabeth Wesela.
She told the operator that her husband, Louis
Wesela, had a gun, had been threatening to kill
her, and had shot and killed a family cat. Mrs.
Wesela reported that her husband had fallen
asleep, and she asked the police to come to her
home.
When the police arrived, Mrs. Wesela admitted
them to the couple’s apartment. The officers
asked where the man with the gun was; Mrs. Wesela
responded that he was in the bedroom, and she
volunteered that the gun was next to him on the
bed. The police found Louis Wesela laying on the
bed in the bedroom. After getting him up, the
police ordered him out of the room and placed him
under arrest. One officer then searched the
bedroom for the gun and found it on a table under
a pile of clothes. While in the bedroom, the
officer noticed a pair of white tennis shoes
stained with a drop of blood as well as a blood
stain on the carpet. The officer then looked
under the bed and saw cat feces against the wall.
After the bedroom search, Wesela was taken to the
hospital for medical treatment.
Detectives Schmitz and Corbett arrived at the
Wesela home at 2:15 a.m. After a uniformed police
officer briefed them, Detective Schmitz
interviewed Mrs. Wesela in the apartment’s living
room. During the half-hour interview, Mrs. Wesela
explained that she and her husband had been
arguing since Sunday (January 24, 1999). She told
Detective Schmitz that her husband had threatened
to kill her. During the argument, he had behaved
violently: he confronted an upstairs neighbor
with the gun, shot the gun into the ceiling, and
shot and killed one of the family’s cats. Mrs.
Wesela explained that he threw the dead cat in
the garbage container behind the apartment
building. After preparing himself a drink, Wesela
went to sleep at around 10:00 p.m. Mrs. Wesela
waited in the living room until she was certain
he was sleeping. She then called the police.
As Detective Schmitz spoke with Mrs. Wesela,
Detective Corbett went about collecting evidence.
He did not ask Mrs. Wesela for permission to
conduct the search, but Mrs. Wesela did not
object to what he was doing. A uniformed police
officer directed the detective to the evidence
that had been discovered prior to the detectives’
arrival. Detective Corbett found the dead cat in
the outside garbage bin as Mrs. Wesela had
reported and observed a trail of blood leading
from the container to the apartment’s back door.
He also located a bullet hole in the ceiling and
noted the location of the gun, ammunition, and
blood stain in the bedroom. Detective Corbett
also found an uncovered cardboard box in the
bedroom, with books, paperwork, and a box for a
Taurus .22 revolver inside. While searching the
bedroom, Detective Corbett overheard Mrs. Wesela
describe how her husband shot the cat while it
was underneath the bed. Detective Corbett then
looked under the bed, moved it away from the
wall, and found a bullethole in the baseboard
where the cat had been shot. He removed the
bullet.
After a trial, Wesela was convicted of being a
felon in possession of a firearm in violation of
18 U.S.C. sec.sec. 922(g), 924(e). The only issue
disputed at trial was Wesela’s possession of the
firearm, as the parties stipulated that Wesela
had previously been convicted of a felony. Wesela
raises several issues in this appeal. Because any
errors made were harmless in the face of the
overwhelming evidence, we affirm Wesela’s
conviction.
II
A. Constitutionality of the Felon in
Possession Statute
Wesela first argues that one of the statutes
under which he was convicted, 18 U.S.C. sec.
922(g), is unconstitutional because it exceeds
Congress’s powers under the Commerce Clause. We
have already rejected this with respect to sec.
922(g). See United States v. Williams, 128 F.3d
1128 (7th Cir. 1997). Williams distinguished sec.
922(g) from the statute the Supreme Court
considered in United States v. Lopez, 514 U.S.
549 (1995), on the ground that sec. 922(g),
unlike the Lopez statute (18 U.S.C. sec. 922(q)),
specifically requires that the possession must be
"in or affecting interstate commerce." 128 [email protected]. Nothing in United States v. Morrison,
120 S. Ct. 1740 (2000), or in Jones v. United
States, 120 S. Ct. 1904 (2000), causes us to
think that a different result is now required for
sec. 922(g). In Morrison, the Court struck down
the Violence Against Women Act, 42 U.S.C. sec.
13981, on the ground that it exceeded Congress’s
power under the Commerce Clause, but the Court
was careful to note that the Act did not contain
a jurisdictional element. Morrison, 120 S. Ct. at
1751. In Jones, the Court held that the arson
statute, 18 U.S.C. sec. 844(i), covered only
arson of property that itself was currently used
in interstate commerce or in an activity
affecting commerce. Nothing in either case casts
doubt on the validity of sec. 922(g), which is a
law that specifically requires a link to
interstate commerce.
B. Motion to Suppress
Before trial, Wesela filed a motion to suppress
evidence gathered from his apartment and
incriminating statements he made following his
arrest. The district court denied the motion and
allowed all of the evidence in. In reviewing a
district court’s denial of a motion to suppress,
we review findings of historical fact and
credibility determinations for clear error.
United States v. Johnson, 170 F.3d 708, 712-13
(7th Cir. 1999). We review de novo mixed
questions of law and fact such as determinations
of probable cause or reasonable suspicion. Id.,
citing Ornelas v. United States, 517 U.S. 690,
699 (1996).
1. Evidence Gathered During Searches
Wesela first contests the legality of the
officers’ search for his gun immediately
following his arrest. His theory is that Mrs.
Wesela allowed the officers to enter her home for
one very limited purpose: to arrest him. He
contends that Mrs. Wesela did not consent to a
search for the gun, or, in the alternative, that
even if she impliedly consented to a search for
the gun, the officers exceeded the scope of that
implied consent. (He concedes that if the search
for the gun was permissible, then evidence of the
rest of the items discovered during that search,
such as the blood-stained tennis shoes, cat
feces, and blood stain on the rug, were
admissible under the plain view doctrine.) Wesela
also contests the admission of evidence related
to items found during Detective Corbett’s search
of the home (the bullet in the baseboard, the gun
box, and the shell casings). For the latter
search, he argues again that his wife did not
give her express consent and, because she was
being interviewed by Detective Schmitz while
Detective Corbett searched, she could not have
impliedly consented either.
Following a hearing on the motion to suppress,
Magistrate Judge Gorence made several findings of
fact, which the district court adopted in their
entirety. The district court, however, drew
different legal conclusions from those findings.
Both judges agreed that Mrs. Wesela consented to
the police entry of her apartment to arrest her
husband and to search for the gun. The magistrate
judge, who found that the scope of her consent
was limited to looking for the gun, would have
suppressed the items Detective Corbett found,
because Mrs. Wesela never broadened her consent.
The district court saw things differently. It
concluded that Mrs. Wesela’s failure to object
constituted general consent to the search, and
all evidence discovered by Detective Corbett--the
documents in the gun box, the bullet in the
baseboard, and the two shell casings deep inside
the garbage bag--was admissible.
Under the Fourth Amendment, the standard for
measuring the scope of an individual’s consent is
"objective reasonableness": "what would the
typical reasonable person have understood by the
exchange between the officer and the [person
giving consent]?" Florida v. Jimeno, 500 U.S.
248, 251 (1991). The scope of a search is
generally defined by its "expressed object." Id.
To determine whether a search was within the
boundaries of consent is determined according to
the "totality of all the circumstances." United
States v. Torres, 32 F.3d 225, 230-31 (7th Cir.
1994).
We agree with the district court that these
facts demonstrate Mrs. Wesela’s consent to search
the apartment for both her husband and the gun.
She called the agents for the express purpose of
ridding her house of the threat posed by her
(armed) husband, and she allowed the officers to
enter her house in order to arrest him. At the
suppression hearing, one of the officers
testified that she consented to the officers’
entering the apartment to secure both the man and
the gun. Mrs. Wesela herself told the officers
where they could find the gun. The fact that
there was no direct verbal exchange between
Detective Corbett and Mrs. Wesela in which she
explicitly said "it’s o.k. with me for you to
search the apartment," is immaterial, as the
events indicate her implicit consent. Mrs. Wesela
was in the living room while the search was going
on in the bedroom; the bedroom was not visible
from the living room, but Detective Corbett was
able to overhear her description of events while
he was in the bedroom and she was able to hear
and respond to his question about the ownership
of the tennis shoes. Due to the proximity of the
rooms, Mrs. Wesela was probably aware of what was
going on in the bedroom and elsewhere in the
apartment. Had she wished to do so, she could
have objected to Detective Corbett’s search. See
United States v. Stribling, 94 F.3d 321, 324 (7th
Cir. 1996); Gerald M. v. Conneely, 858 F.2d 378,
884-85 (7th Cir. 1988).
The district court reasonably concluded that
Mrs. Wesela at the very least implicitly
consented to the search. Had Detective Corbett
conducted an all-out search of the Wesela home,
perhaps the result would be different. But
everything he did was narrowly confined to
finding evidence related to the events of that
evening: the gun, the bullets, the shell casings,
and the dead cat. He did not go through drawers,
rummage through closets, or search other rooms of
the house in an attempt to find drugs, money, or
any other extraneous evidence of other possible
illegal activities. Under the circumstances here,
the court did not err in denying Wesela’s motion
to suppress.
2. Post-Arrest Statements
After his arrest, Wesela made two statements to
the police that he argues should have been
suppressed. He made the first one on the morning
of January 26, 1999, during questioning by
Detective Corbett. The detective read Wesela his
Miranda rights and asked him if he understood
them. After responding that he did, Wesela asked,
"Could I get a lawyer?" Detective Corbett
responded that he could not call one for
him.Wesela then stated, "I can’t call one either.
All right here’s what happened." Wesela then
described the events leading to his arrest.
Wesela made more incriminating statements on
February 1, 1999, to Special Agent Darin ("SA
Darin") of the United States Bureau of Alcohol,
Tobacco and Firearms. SA Darin had the job of
transporting Wesela to the federal courthouse in
Milwaukee for his initial appearance. En route,
SA Darin gave Wesela a copy of the criminal
complaint and explained federal court procedures
to him. Wesela made an unsolicited comment to SA
Darin, who responded that he was not going to
advise Wesela of his Miranda rights and that he
did not want to discuss the facts of the case.
Later that day, SA Darin escorted Wesela to a
courtroom. As they were waiting outside the
courtroom on a bench, Wesela again began talking
about the facts of the case. SA Darin again
warned Wesela that he did not want to talk about
the facts of the case, and he told Wesela that he
might have an appointed attorney already.
Undeterred, Wesela then described his argument
with his wife and (in great detail) why and how
he had shot the cat.
Wesela argues that his statements to SA Darin
should have been suppressed as fruits of the
poisonous tree (the alleged poisonous tree being
Detective Corbett’s initial statement he could
not get a lawyer for him, in lieu of leaving
Wesela alone). The first problem Wesela faces is
that, under Duckworth v. Eagan, 492 U.S. 195, 201
(1989), there was no poisonous tree here.
Detective Corbett’s statement was similar to the
one the Court found acceptable in Eagan, where
the police told the defendant that he had a right
to a lawyer, but that they had no way of giving
him one. Id. at 198. Furthermore, even if some
distinction between this case and Eagan could be
found (if, for instance, that particular part of
the case were seen as dicta), Wesela’s statements
were still admissible under Brown v. Illinois,
422 U.S. 590 (1975). Brown identifies a number of
factors that help to show whether statements
following illegal police conduct are admissible:
the voluntariness of the statement, the temporal
proximity of the illegal conduct and the
confession, the presence of any intervening
circumstances, and the purpose and flagrancy of
the official misconduct. Id. at 603-04. See also
United States v. Patino, 862 F.2d 128, 132 (7th
Cir. 1988) (discussing Brown factors). "But if a
suspect requests counsel at any time during the
interview, he is not subject to further
questioning until a lawyer has been made
available or the suspect himself reinitiates
conversation." Davis v. United States, 422 U.S.
452, 458 (1981), citing Edwards v. Arizona, 451
U.S. 477, 484-85 (1981).
Wesela’s statement to SA Darin is not
inadmissible under Brown or Edwards. There can be
no doubt that Wesela volunteered his statements
to SA Darin. SA Darin repeatedly informed Wesela
that he did not want to talk about the facts of
the case. Indeed, we are hard pressed to imagine
a more conscientious refusal to take advantage of
the situation than SA Darin’s. Wesela ignored SA
Darin’s requests not to speak with him about the
case. Instead, he kept talking, eventually
incriminating himself by describing how he shot
the cat (and thereby essentially admitting he had
possession of the gun). Moreover, Wesela’s
statements to SA Darin were made six days after
his interview with Detective Corbett. Six days
was a sufficiently long period of time for Wesela
to reflect on his predicament, collect his
thoughts about his interview with Detective
Corbett, and decide whether he wanted to speak
with an attorney before making any further
statements. The fact that he was in custody
during the six intervening days is not
dispositive of his case. Cf. Patino, 862 F.2d at
133 (defendant had "complete freedom" in
intervening six days). Wesela reinitiated
conversation with the police of his own volition;
he made the statements voluntarily and they were
unrelated to any possible Fifth Amendment
violations during earlier questioning. See Davis,
512 U.S. at 458 (stating if suspect requests
counsel, questioning must cease "until a lawyer
has been made available or the suspect himself
reinitiates conversation") (emphasis added),
citing Edwards, 451 U.S. at 484-85. The district
court did not err in allowing the admission of
Wesela’s statements to SA Darin.
C. Statements of Mrs. Wesela
At trial, the government used Detective Schmitz
to introduce statements made by Mrs. Wesela
during her interview with Detective Schmitz at
2:18 a.m. on January 26, 1999, including her
description of the events of January 24 and 25.
Detective Schmitz’s account of what Mrs. Wesela
told her during their conversation was, of
course, hearsay. The government offered three
bases for admitting the hearsay testimony for its
truth: Fed. R. Evid. 803(1) (present sense
impression); 803(2) (excited utterance); and 807
(residual or catchall exception for statements
having "circumstantial guarantees of
trustworthiness"). The district court initially
admitted the testimony pursuant to the residual
hearsay exception, Rule 807, and reserved the
question of admissibility under Rules 803(1) and
803(2). At trial, however, the court also cited
Rule 803(2) as justification for its admission.
Wesela contests only the admission under Rule
803(2).
We review evidentiary decisions for abuse of
discretion. United States v. Singleton, 125 F.3d
1097, 1106 (7th Cir. 1997)--that is, has the
district court done something so far out of line
that "no reasonable person could agree" with its
rulings. United States v. Sinclair, 74 F.3d 753,
756 (7th Cir. 1996). Rule 803(2) defines an
excited utterance as "[a] statement relating to
a startling event or condition made while the
declarant was under the stress of excitement
caused by the event or condition." Fed. R. Evid.
803(2). Hearsay statements are admissible under
the excited utterance exception if (1) a
startling event occurred; (2) the declarant made
the statement while under the stress of
excitement caused by the startling event; and (3)
the declarant’s statement relates to the
startling event. United States v. Sowa, 34 F.3d
447, 453 (7th Cir. 1994) (citations omitted). The
basis of the exception is that "such statements
are given under circumstances that eliminate the
possibility of fabrication, coaching, or
confabulation." Id. at 452-53, quoting Idaho v.
Wright, 497 U.S. 805, 820 (1990). The timing of
the statement is important but not controlling.
Gross v. Greer, 773 F.2d 116, 119-20 (7th Cir.
1985). "All that the exception requires is ’that
the statement be made contemporaneously with the
excitement resulting from the event, not
necessarily with the event itself.’" Smith v.
Fairman, 862 F.2d 630, 636 (7th Cir. 1988),
quoting United States v. Moore, 791 F.2d 566, 572
n.4 (7th Cir. 1986).
Wesela argues that it was an abuse of
discretion to allow in the statements pertaining
to the events of the 24th and the morning of the
25th. He contends that at the time Mrs. Wesela
made those statements, she was stressed and
excited, but her stress and excitement did not
stem from the events that occurred on the 24th
and the morning of the 25th; instead, she was
agitated because of the events of the evening of
the 25th. The court disagreed and found that the
events over the 24th and 25th were part of a
continuing course of conduct which left Mrs.
Wesela in a stressed and excited condition. The
court therefore allowed in the statements
regarding all of the events.
The government is correct that some courts have
found statements following a long lapse in time
to fall within the excited utterance exception.
However, these cases generally involve young
children who are the victims or witnesses of
crime. See, e.g., Sowa, 34 F.3d at 449, 453;
Gross, 773 F.2d at 120; United States v. Iron
Shell, 633 F.2d 77, 85-86 (8th Cir. 1980). In the
case of an adult declarant, courts are much less
likely to find any statements made to fall within
the exception. See, e.g., United States v. Zizzo,
120 F.3d 1338, 1355 (7th Cir. 1997) (finding no
excited utterance where startling event took
place at O’Hare Airport and statement was made at
the Dirksen Building in downtown Chicago).
Several hours passed between the events of the
morning of January 24 and 25 and the time Mrs.
Wesela spoke to Detective Schmitz. Mrs. Wesela
was not under a continuous threat; to the
contrary, she was at work and away from Wesela
for a full workday. That she was able to go to
work demonstrates that she had regained at least
some of her composure and emotional control.
Therefore, although Wesela engaged in a pattern
of threatening behavior, one cannot say that Mrs.
Wesela was under continuous, uninterrupted stress
and excitement. By accepting a lesser state of
mental angst as enough to satisfy Rule 803(2),
the district court applied the wrong legal
standard. It thus abused its discretion in
admitting Mrs. Wesela’s statements regarding the
24th and the morning of the 25th.
The error, however, was harmless. Because the
parties had stipulated that Wesela was a felon,
the only contested issue at trial was whether
Wesela possessed a firearm. The evidence seized
from the Weselas’ apartment (e.g., the dead cat,
shell casings, gun, and gun box) combined with SA
Darin’s testimony regarding Wesela’s admission of
why and how he shot the cat provided
incontrovertible evidence that Wesela possessed
the gun. Detective Schmitz’s testimony regarding
Mrs. Wesela’s statements were completely
unnecessary to gain Wesela’s conviction.
Our finding of harmless error makes it
unnecessary as well for us to decide whether Mrs.
Wesela’s testimony could have been admitted under
Rule 807. We note, however, that Sixth Amendment
Confrontation Clause problems can arise if
evidence from an unavailable witness is used
against a defendant. As Justice Stevens put it in
Lilly v. Virginia, 527 U.S. 116 (1999), "[w]hen
the government seeks to offer a declarant’s out-
of-court statements against the accused, and, as
in this case, the declarant is unavailable,
courts must decide whether the Clause permits the
government to deny the accused his usual right to
force the declarant to submit to cross-
examination, the greatest legal engine ever
invented for the discovery of truth." Id. at 124,
quoting from California v. Green, 399 U.S. 149,
158 (1970) (footnote and internal quotations
omitted). These concerns can be overcome only
when the evidence "falls within a firmly rooted
hearsay exception," or it contains particularized
guarantees of truthfulness such that adversarial
testing would be expected to add little to its
reliability. 527 U.S. at 124-25, reiterating
framework from Ohio v. Roberts, 448 U.S. 56, 66
(1980). See also Idaho v. Wright, 497 U.S. at
815.
Here, Mrs. Wesela was arguably unavailable,
because it appeared that she might have been
prepared to invoke her spousal privilege under
Fed. R. Evid. 501. In addition, Rule 807 almost
by definition is not a "firmly rooted" or
"longstanding exception" to the hearsay rule. To
the contrary, it is the "residual" exception--the
catchall. Thus, before evidence can come in under
that rule there must be equivalent circumstantial
guarantees of its trustworthiness. These
questions would be worth exploring but for two
facts: first, Wesela never argued that his
confrontation rights would be violated if
Detective Schmitz’s hearsay statements about Mrs.
Wesela were admitted only under Rule 807, and
second, like most errors even of constitutional
dimension, this one is subject to harmless error
analysis. Delaware v. Van Arsdall, 475 U.S. 673,
684 (1986); Smith, 862 F.2d at 638; see also
Arizona v. Fulminante, 499 U.S. 279, 306-07
(1991). The same reasons that persuaded us that
the error under Rule 803(2) was harmless are
equally compelling here.
III
Wesela stipulated that he had previously been
convicted of a felony, and he admitted that he
shot the cat with a gun. Finding no error in the
district court’s suppression rulings, and nothing
that amounted to more than harmless error in its
evidentiary decisions, this was more than enough
to support his conviction, which we Affirm.
|
This action was brought for the purpose of having the commercial co-partnership, composed solely of plaintiff and defendant, dissolved and liquidated. It was alleged in the petition that the parties entered into an agreement to conduct a drug store business, the defendant to furnish the initial capital and the plaintiff to furnish his services as manager of the business; that the interest of the defendant in the partnership was to be two-thirds, and the plaintiff, one-third, the assets being owned in that proportion, the profits to be shared on that basis and the liabilities to be assumed in that ratio; that the partnership commenced operations January 1, 1938, and continued until shortly before the suit was filed November 29, 1938; that the defendant has *Page 1003
taken charge of the business as the sole owner thereof, dispossessing plaintiff of his interest without process of law; that he has appropriated the funds and assets belonging to the firm to his own use and purposes all in violation of the agreement and the law; that, unless the defendant is restrained, he will continue to conceal, part with or dispose of the assets of the partnership; and that a writ of judicial sequestration should issue to preserve the assets pending this litigation.
The trial judge ex officio issued the writ of judicial sequestration, without bond, and the sheriff took possession of the contents of the drug store.
The defendant filed a motion to rescind the order on the grounds: (1st) that the judge was without authority to issue the writ of judicial sequestration to seize movable property, the right being confined to immovable property; and (2nd) that the judge was powerless to issue the writ without a hearing.
The record does not show that the defendant filed an answer, denying the allegations of the plaintiff's petition, and the trial judge set a rule nisi to show cause why the sequestration should not be recalled. After considering the legal points on which the defendant sought the rescission of the writ, the trial judge, in this same hearing, offered the defendant the opportunity of introducing any evidence which he might care to offer, tending to show that the writ was wrongfully or improvidently issued, but the defendant declined to do so, electing to stand upon the legal grounds urged. Whereupon the *Page 1004
district judge recalled the rule nisi and entered judgment maintaining the sequestration.
The defendant filed a motion for a suspensive appeal, which the judge refused to grant on the ground that the judgment was an interlocutory one and the defendant would suffer no irreparable injury, but he did grant the defendant a devolutive appeal. After due notice the defendant applied to this Court for writs of certiorari, prohibition and mandamus. We granted a rule to show cause why the writs should not be issued and, in response thereto, the plaintiff and the trial judge, as respondents, answered, denying that the relator was entitled to the writs, assigning reasons and citing authorities in support of their contentions.
The law is clear that the district judge has authority to judicially sequester movable property. Article 273, Code Prac.; Schwan v. Schwan et al., 52 La.Ann. 1183, 27 So. 678, and Bogalusa Ice Company v. Moffett, 188 La. 598, 177 So. 679.
The jurisprudence is uniform that the law vests the power in the district judge to ex proprio motu and without bond judicially sequester property without a hearing, where, after considering all the pleadings and the facts and circumstances alleged by the parties, he is of the opinion that the ends of justice require such action and this decision is left largely to his discretion. Articles 273 and 274, Code Prac.; Allen, West and Bush v. Whetstone et al., 35 La.Ann. 846; Eltringham v. Clarke et al., 49 La.Ann. 340, 21 So. 547; Ramos Lumber *Page 1005
Company v. Sanders, 112 La. 614, 36 So. 625; Succession of Drysdale, 128 La. 151, 54 So. 701; Dickinson v. Texana Oil Company et al., 144 La. 489, 490, 80 So. 669; Barrow v. Duplantis et al., 147 La. 461,462, 85 So. 205; Succession of Pavelka,157 La. 480, 102 So. 579; and Bogalusa Ice Company v. Moffett,188 La. 598, 177 So. 679.
The mere fact that the litigants requested a writ of sequestration has no effect on the validity vel non of the order granting it ex officio. Allen, West and Bush v. Whetstone, 35 La.Ann. 846.
In the case, Succession of Pavelka, 157 La. 480, 102 So. 579, 580, we said:
"Relatrix also prays that this court order the district judge to issue the writ of judicial sequestration for which she applied. We are unable to grant such order. It is within the judicial discretion of the judge to allow or to disallow a judicial sequestration. Code Prac. arts. 273, 274; Schwan v. Schwan, 52 La.Ann. 1183, 27 So. 678; Ramos Lumber Company v. Sanders, 112 La. [614], 616, 36 So. 625; Succession of Drysdale,128 La. 151, 54 So. 701. And it is too well settled to require the citation of authority to sustain the proposition that mandamus will not lie to control matters resting purely within the discretion of an inferior court."
Counsel for relator has referred us to the case of Dickinson v. Texana Oil Company, 144 La. 489, 490, 80 So. 669, 671, as being in point here. The Court set aside the judicial sequestration issued ex parte, without bond, not because the trial judge failed to previously conduct a hearing but *Page 1006
because he predicated his action solely upon the allegations of the plaintiff's petition, without considering the facts and circumstances contained in the other litigant's pleadings. The Court said:
"To allow the allegations of one of the litigants to govern is to practically surrender to this litigant the discretion which the law has intrusted to the judge himself. In such cases the judge acts of his own motion; and the reason of his action is that all the facts and circumstances of the case, taken together, suggests the advisability of so doing."
In the instant case it is true that the trial judge issued his order upon the allegations contained in the plaintiff's petition, but when the defendant filed his motion to rescind the order, the judge, on the hearing thereof, informed defendant that he was ready and willing to hear any evidence which would tend to show that the sequestration had been unlawfully obtained or improvidently granted and upon a proper showing the judge, in accordance with the facts and circumstances of the case, would amend, modify or recall the order. The defendant refused to avail himself of this opportunity for the relief he now seeks here, being content to stand on the soundness of the legal questions raised. At this point we wish to say that in the relator's application to this Court for the remedial writs, he stated that he was ready and willing on the trial of the rule nisi in the lower court to offer evidence to show that the writ had been wrongfully issued, but that the plaintiff objected to this procedure. In the returns of the respondents *Page 1007
it is shown that this was an error and that just the converse was true.
It does not appear from the record that the defendant had filed an answer to the merits, denying the allegations of the facts contained in the plaintiff's petition, and when the defendant declined the court's invitation to deny or contradict the facts and serious charges upon which the writ was issued, the judge had no alternative except to maintain the seizure. The defendant's conduct under these circumstances confirmed the district judge's opinion that defendant was placing these movable assets of the partnership beyond the reach of the court and would continue to do so unless deprived of the custody and possession thereof. It is, therefore, apparent that the two cases are not similar. Surely we can not say that the learned trial judge abused his discretion and acted arbitrarily in maintaining the writ of sequestration.
Complaint is also made that the sheriff, in executing the writ, closed the drug store, which was a going concern, instead of appointing a sequestrator so that the business could continue in operation. This point does not appear to have been raised in defendant's pleadings in the lower court, but the fact that the sheriff, in executing the writ, acted illegally would not be a basis for setting aside the order of the district judge granting the writ of judicial sequestration. If the sheriff has acted illegally, defendant has first to exhaust *Page 1008
his right to have the wrong corrected in the lower court before applying here for writs. However, again we say that the relief sought here is the rescission of the judge's order granting the sequestration and not relief from its improper execution.
Finally, relator contends that the trial judge erred in refusing to grant him a suspensive appeal. A litigant is not entitled to a suspensive appeal from an interlocutory decree unless irreparable injury will result from the judgment. To have allowed the defendant a suspensive appeal would have defeated one of the purposes of the suit, and by the court maintaining custody and possession of the property, the matter was kept status quo so that neither party would gain advantage over the other. Schwan v. Schwan et al., 52 La.Ann. 1183, 27 So. 678; State ex rel. Des Allemands Lumber Company v. Allen, 110 La. 853, 34 So. 804.
For the reasons assigned, the rule nisi is vacated and dismissed at the relator's costs.
O'NIELL, C.J., dissents on the ground that there is no authority, in article 274 of the Code of Practice, or elsewhere, for a judge to order a sequestration of the property of a commercial partnership, without bond, either ex proprio motu or at the instance of a member of the partnership, in a suit for a dissolution and liquidation of the partnership. *Page 1009 |
Exhibit 10.1
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as
of August 13, 2014, by and among RENTECH NITROGEN PARTNERS, L.P., a Delaware
limited partnership (“Partnership”), RENTECH NITROGEN FINANCE CORPORATION, a
Delaware corporation (“RNFC”; and together with Partnership, the “Borrowers” and
each individually as a “Borrower”), RENTECH NITROGEN, LLC, a Delaware limited
liability company (“RNLLC”), RENTECH NITROGEN PASADENA, LLC, a Delaware limited
liability company (“RNPLLC”), and RENTECH NITROGEN PASADENA HOLDINGS, LLC, a
Delaware limited liability company (“RNPH” and, collectively together with RNLLC
and RNPLLC, the “Subsidiary Guarantors” and each individually as a “Subsidiary
Guarantor”), the lenders signatory hereto (each individually a “Lender” and
collectively the “Lenders”), and GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation (in its individual capacity, “GE Capital”), as agent (in
such capacity, “Agent”) for the Lenders.
RECITALS
A. Borrowers, Subsidiary Guarantors, Lenders and Agent have entered into that
certain Credit Agreement dated as of July 22, 2014 (the “Credit Agreement”),
pursuant to which Agent and Lenders are providing loans and other financial
accommodations to or for the benefit of Borrower and Guarantor upon the terms
and conditions contained therein. Unless otherwise defined herein, capitalized
terms or matters of construction defined or established in Article XI to the
Credit Agreement shall be applied herein as defined or established therein.
B. Borrowers and Subsidiary Guarantors have requested that Agent and Lenders
amend the Credit Agreement, and Agent and Lenders are willing to do so subject
to the terms and conditions of this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the continued performance by each Credit
Party of its respective promises and obligations under the Credit Agreement and
the other Loan Documents, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Credit Parties,
Lenders, and Agent hereby agree as follows:
1. Ratification and Incorporation of Credit Agreement and Other Loan Documents;
Additional Acknowledgements. Except as expressly modified under this Amendment,
(a) each Credit Party hereby acknowledges, confirms, and ratifies all of the
terms and conditions set forth in, and all of its respective obligations under,
the Credit Agreement and the other Loan Documents, and (b) all of the terms and
conditions set forth in the Credit Agreement and the other Loan Documents are
incorporated herein by this reference as if set forth in full herein. Each
Credit Party hereby reaffirms the granting of all Liens previously granted
pursuant to the Loan Documents to secure all Obligations (as such term is
defined in the Credit Agreement as modified hereby).
FIRST AMENDMENT
--------------------------------------------------------------------------------
2. Amendments to the Credit Agreement. The Credit Agreement is hereby amended as
follows (and all section references in this Section 2 shall, unless the context
otherwise requires, be references to sections of the Credit Agreement):
(a) Section 4.1(b) of the Credit Agreement is hereby deleted in its entirety and
replaced with the following in lieu thereof:
“(b) within (i) with respect to the Fiscal Quarter ending June 30, 2014, sixty
(60) days after the end of such Fiscal Quarter and (ii) forty-five (45) days
after the end of each Fiscal Quarter thereafter, a copy of the quarterly report
filed by Partnership with the Securities and Exchange Commission in accordance
with the Exchange Act which includes a copy of the consolidated and
consolidating financial information regarding Partnership and its Subsidiaries,
including (x) unaudited balance sheets as of the close of such Fiscal Quarter
and the related statements of income and cash flow for that portion of the
Fiscal Year ending as of the close of such Fiscal Quarter and (y) unaudited
statements of income and cash flows for such Fiscal Quarter, in each case
setting forth in comparative form the figures for the corresponding period in
the prior year, all prepared in accordance with GAAP (subject to normal year-end
adjustments); and”
3. Conditions to Effectiveness. The effectiveness of this Amendment is subject
to satisfaction of each of the following conditions:
(a) receipt by Agent of this Amendment duly executed by each Credit Party, Agent
and each Lender; and
(b) after giving effect to this Amendment, the absence of any Defaults or Events
of Default as of the date hereof.
4. Entire Agreement. This Amendment, together with the Credit Agreement and the
other Loan Documents, is the entire agreement between the parties hereto with
respect to the subject matter hereof. This Amendment supersedes all prior and
contemporaneous oral and written agreements and discussions with respect to the
subject matter hereof.
5. Representations and Warranties. Each Credit Party hereby represents and
warrants that the representations and warranties contained in the Credit
Agreement, except to the extent that (a) a particular representation or warranty
by its terms expressly applies only to an earlier date or (b) any Credit Party,
as applicable, has previously advised Agent in writing of a particular
representation or warranty as not being or which will not be true and correct as
of the date hereof (as contemplated under the Credit Agreement), are true and
correct in all material respects as of the date hereof.
6. Miscellaneous.
(a) Costs and Expenses. Each Credit Party reaffirms its obligations to pay, in
accordance with the terms of Section 9.5 of the Credit Agreement, all costs and
expenses of Agent and Lenders in connection with the preparation, negotiation,
execution and delivery of this Amendment and all other Loan Documents entered
into in connection herewith, including the reasonable fees and disbursements of
McDermott Will & Emery LLP, counsel for Agent with respect thereto.
(b) Counterparts. This Amendment may be executed in identical counterpart
copies, each of which shall be an original, but all of which shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature
page to this Amendment by either (i) facsimile transmission or (ii) electronic
transmission in either Tagged Image Format Files (TIFF) or Portable Document
Format (PDF), shall be effective as delivery of a manually executed counterpart
thereof.
2 FIRST AMENDMENT
--------------------------------------------------------------------------------
(c) Headings. Section headings used herein are for convenience of reference
only, are not part of this Amendment, and are not to be taken into consideration
in interpreting this Amendment.
(d) Recitals. The recitals set forth at the beginning of this Amendment are true
and correct, and such recitals are incorporated into and are a part of this
Amendment.
(e) Effect. Upon the effectiveness of this Amendment, from and after the date
hereof, each reference in the Credit Agreement to “this Agreement,” “hereunder,”
“hereof,” or words of like import shall mean and be a reference to the Credit
Agreement as amended hereby and each reference in the other Loan Documents to
the Credit Agreement, “thereunder,” “thereof,” or words of like import shall
mean and be a reference to the Credit Agreement as amended hereby.
(f) No Novation. The execution, delivery, and effectiveness of this Amendment
shall not (i) except as expressly provided in this Amendment, (A) limit, impair,
constitute a waiver of, or otherwise affect any right, power, or remedy of Agent
or any Lender under the Credit Agreement or any other Loan Document or
(B) constitute a waiver of any provision in the Credit Agreement or in any of
the other Loan Documents or (ii) except as expressly provided in this Amendment,
alter, modify, amend, or in any way affect any of the terms, conditions,
obligations, covenants, or agreements contained in the Credit Agreement or any
other Loan Document, all of which are ratified and affirmed in all respects and
shall continue in full force and effect.
(g) Conflict of Terms. In the event of any inconsistency between the provisions
of this Amendment and any provision of the Credit Agreement, the terms and
provisions of this Amendment shall govern and control.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
3 FIRST AMENDMENT
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, this First Amendment to Credit Agreement has been duly
executed as of the date first written above.
BORROWERS: RENTECH NITROGEN PARTNERS, L.P. RENTECH NITROGEN FINANCE
CORPORATION By: /s/ Dan. J. Cohrs By: /s/ Dan. J. Cohrs Name: Dan J.
Cohrs Name: Dan J. Cohrs Title: Chief Financial Officer Title: Treasurer
SUBSIDIARY GUARANTORS: RENTECH NITROGEN PASADENA, LLC RENTECH NITROGEN
PASADENA HOLDINGS, LLC By: /s/ Dan. J. Cohrs By: /s/ Dan. J. Cohrs
Name: Dan J. Cohrs Name: Dan J. Cohrs Title: Treasurer Title: Treasurer
RENTECH NITROGEN, LLC By: /s/ Dan. J. Cohrs Name: Dan J. Cohrs
Title: Treasurer AGENT AND LENDER: GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Justin Grimm Name: Justin Grimm Duly Authorized
Signatory
FIRST AMENDMENT |
IN THE SUPREME COURT OF PENNSYLVANIA
EASTERN DISTRICT
COMMONWEALTH OF PENNSYLVANIA, : No. 640 EAL 2019
:
Respondent :
: Petition for Allowance of Appeal
: from the Order of the Superior Court
v. :
:
:
SHAUN MYRICK, :
:
Petitioner :
ORDER
PER CURIAM
AND NOW, this 1st day of June, 2020, the “Application for Remand” and Petition
for Allowance of Appeal is DENIED.
|
Subsets and Splits